Indonesia: Incubators cut MSME failure risk by up to 90 percent

..754 incubators across Indonesia are registered with the Ministry of MSMEs, with the majority located in Java.

Jakarta (ANTARA) - Business incubators are crucial to ensuring long-term sustainability and reducing the risk of failure for various early-stage businesses, said Riza Damanik, Deputy for Entrepreneurship at the Ministry of Micro, Small, and Medium Enterprises (MSMEs).

According to him, a proper incubation process can reduce the failure rate of early-stage MSMEs by 80 to 90 percent, a success metric that has already been demonstrated in countries like South Africa, New Zealand, and Germany.

“Minimizing this risk will naturally boost confidence among financial institutions, strategic partners, and the market, making them more willing to build stronger collaborations with our MSMEs,” he said during the Islamic Financial Dialogue in Jakarta on Wednesday.

Riza emphasized that incubation goes beyond standard mentoring, it is a core government strategy to safeguard business continuity and investment security.

He further said that incubation serves as a training ground to refine business models, financial management, and entrepreneurial mindsets before MSMEs enter competitive market.

He noted that currently, 754 incubators across Indonesia are registered with the Ministry of MSMEs, with the majority located in Java. Among these, 17 are classified as Grade A, while the remainder fall into Grades B and C.

"Hopefully, they can serve as an extension of our arm to ensure that the risk of failure among our MSMEs can be minimized early on,” he remarked.

In addition to sustaining operations, he continued, incubation aims to equip MSMEs with the capacity to expand. This includes helping them broaden their networks and reach wider markets, which will automatically create more stable, high-quality jobs.

To enhance the incubation process, the Ministry of MSMEs is running two programs. The first is Prokesra, which aims to create 10 million employed people and entrepreneurs through improved and enhanced training and mentoring.

The second is Bursa Wirausaha Unggulan (Premier Entrepreneur Exchange), an ecosystem designed for the final stage of incubation, which provides access to financing, bootcamps, and market expansion opportunities.

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Translator: Fitra Ahari, Raka Adji

Editor: M Razi Rahman

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