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Building an Inclusive and Creative Economy - The State of Social Enterprise in Indonesia

Interest in social enterprises in Indonesia is growing alongside increased emphasis on entrepreneurship in general. This is evident in the growing number of events, research, and government activities focused on social enterprise. The concept of social enterprise was formally acknowledged for the first time by the Government of Indonesia in 2015, when the People’s Representative Council introduced the National Entrepreneurship Draft Bill and included a definition of social enterprise.

Indonesia’s economy features many Micro, Small and Medium Enterprises (MSMEs), which contribute 57.6% to the GDP and comprise nearly 97% of the total labour force. Roughly 3.1% Indonesia’s population are of the identified as entrepreneurs, an increase of 1.4% in two years. Just like other enterprises, social enterprises seek to generate a profit. The difference is that social enterprises are also motivated by a social mission and reinvest significant proportion of its profits towards their stated mission. These businesses address a range of issues, from the environment to economic inequality and beyond, and often work to empower marginalised people by providing access to education, health and other services.

This study is based on quantitative information obtained from a total of 495 survey respondents from 27 provinces across Indonesia. The data has been supplemented by in-depth interviews with key stakeholders including ecosystem enablers, government agencies, higher education institutions, funders and financiers, and other key players. Our research suggests an optimistic future for social enterprises in Indonesia, based on the rapid growth of social enterprises and the emergence of a strong enabling environment over the last five years.

The British Council and United Nations ESCAP commissioned this research in order to better understand the state and scale of social enterprise in Indonesia as well as the opportunities and issues that need to be addressed in order to improve the sustainability of social enterprises. We hope that this research provides a baseline to help guide decision making and support the development of social enterprises and the broader ecosystem in Indonesia.

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