Encourage MSME procurement

Current Policy

The government has made enormous strides in making procurement more accessible for MSMEs. Government Regulation No. 7 of 2021 on the Ease, Protection, Empowerment of Cooperatives and MSMEs (GR 7/2021) obliges ministries, non-ministerial government institutions and regional officials to allocate at least 40 percent of the budget to procure goods and services from the domestic production of micro and small enterprises¹. Meanwhile, GR 7/2021 also stipulates that the fulfillment of goods and services by medium or large enterprises can be carried out through a supply chain partnership pattern that prioritizes the procurement of goods produced by micro and small enterprises, as long as they meet the necessary quality standards of the required goods and services². Incentives for such partnerships include regional tax and fee reduction or relief for medium and large enterprises³. However, at the current time, there is an absence of an operational regulation on private sector procurement which may affect the effectiveness of policy implementation.