Indonesia’s MSMEs versus Chinese goods

[serious_fun]

This article discusses how Indonesia's micro, small and medium-sized enterprises (MSMEs), which employ nearly all Indonesian workers, are increasingly abandoning production and reinventing themselves as sellers of Chinese goods to compete.

These firms account for roughly 90-95% of all employment. They anchor regional economies, absorb workers with limited formal education and provide the foundation for Indonesia’s ambitions to move up the value chain. When MSMEs stop making things, Indonesia loses not only jobs but also the potential to develop its own industrial ecosystem.

Waves of unrest across the country in 2026? Indonesia's dreams of military modernization* tempered by increased domestic spending to compensate for the MSME sector layoffs? (don't forget the HUGE amount needed to recover from flooding in Sumatra)


* win-win strategy for China? dump overproduction on Indonesia while simultaneously creating domestic chaos and slowing/stopping military modernization? The US would gladly step in and "assist" in such a scenario...

 

[gemima]

This article discusses how Indonesia's micro, small and medium-sized enterprises (MSMEs), which employ nearly all Indonesian workers, are increasingly abandoning production and reinventing themselves as sellers of Chinese goods to compete.



Waves of unrest across the country in 2026? Indonesia's dreams of military modernization* tempered by increased domestic spending to compensate for the MSME sector layoffs? (don't forget the HUGE amount needed to recover from flooding in Sumatra)


* win-win strategy for China? dump overproduction on Indonesia while simultaneously creating domestic chaos and slowing/stopping military modernization? The US would gladly step in and "assist" in such a scenario...

This is having a HUGE impact on cosmetics in Indonesia over the past 3 years and its getting worse and worse.
The Chinese companies are manufacturing so cheaply that they can do it cheaper than it is to make locally (even taking account of importation taxes).
The local contract manufacturing companies are being hit hard and lots of huge chinese contract manufacturers are coming here to set up their own local factories (where at least they will hire locals but they will be the low skill jobs).

I dont think China is dumping overproduction - I think they are trying to stop manufacturing development within their sphere of influence. I suspect a lot of the companies have chinese government support. They are so impressive and professional.

 

[harryopal1]

I daresay much of these replacement imports will not be made by lots of small Indonesian entrepreneurs but rather a discrete number of cashed up business people with "connections" to enable them to seize opportunities of enrichment. The loss of local employment will not have them losing much sleep.

 

[serious_fun]

I daresay much of these replacement imports will not be made by lots of small Indonesian entrepreneurs but rather a discrete number of cashed up business people with "connections" to enable them to seize opportunities of enrichment.

Those products will not be made here. That's the point of the article. Nobody will be taking up the slack, filling the void, etc. No more manufacturing, just resale & distribution.

The loss of local employment will not have them losing much sleep.

They must be cognizant of the potential for civil unrest in an economic downturn. The 'big players' live on a steady diet of foreign investment, and that could dry up quickly unless bread & circuses continue in one form or another.