Challenges

Socioeconomic development often relies on a country’s production structures and dynamics. Economic diversification in the form of value-added production and employment in higher productivity sectors often brings about GDP growth and other socioeconomic gains. Industry drives economic growth, provides opportunities for entrepreneurship, skilled jobs and stimulates the expansion of both agriculture and services sectors.  

Despite recent gains, the economies of least developed countries (LDCs) such as Afghanistan, Bangladesh, Bhutan, Lao PDR, Myanmar, and Nepal still largely rely on unmechanized agriculture and other low-value-added activities. In order to achieve the Sustainable Development Goals (SDGs) and support the development of vibrant and diversified industrial sectors, these countries need to invest in capacity development, including in government agencies and officials, entrepreneurs and improve their overall investment environment. 

Toward a Solution

The Capacity Building Programme on Enhancing the Development of Small and Medium Industry (SMI) is a South-South cooperation initiative by the Government of Indonesia, in collaboration with the Colombo Plan. Indonesia has been an important player in South-South cooperation by making beneficial contributions to international development through various means. One of them is by conducting capacity-building programmes for fellow developing countries. Indonesia has implemented capacity-building programmes in various fields, such as small and medium industry, climate change, agriculture, health, gender equality, women’s empowerment and others. Particularly, in the field of small and medium industry, Indonesia has implemented the Capacity Building Programme since 2016 and has implemented five programmes for 109 beneficiaries from 18 countries (including some LDCs, such as Afghanistan, Bangladesh, Bhutan, Lao PDR, Myanmar and Nepal). Through this collaboration, Indonesia’s objective is to contribute to the achievement of SDG 9, to promote sustainable industrialization and foster innovation as well as SDG 17 to strengthen partnerships for sustainable development. This is also in line with the Istanbul Programme of Action (IPoA) priority area 5 on human and social development. 

The Capacity Building Programme provides capacity building for participants, which include government officials and entrepreneurs, to improve their knowledge in developing small and medium industry in their home countries. In implementing the programme, the Government of Indonesia, represented by the Ministry of State Secretariat and the Ministry of Industry, collaborate with the Colombo Plan under a triangular cooperation scheme. The training features various speakers from government institutions dealing with small and medium enterprises as well as sharing of experience from small and medium business owners. In addition to lecture session, the programme also takes participants to visit various small and medium businesses in Indonesia to directly observe their business process and learn about their success in running their businesses. 

At the end of the programme, participants are expected to create an action plan on the actions that they will take to address the issues in their countries. By carrying out this action plan, the participants implement what they have learned from the programme and transfer the knowledge that they have gained to their home countries. The programme has been carried out every year since 2016, and each year, it incorporates different themes in order to widen its scope and accommodate other topics related to it. For instance, the theme of the 2019 was “Small and Medium Industry Empowerment through Business Development Services” and the theme of the 2020 programme was “The Impact of Industry 4.0 in Enhancing the Development of Small and Medium Enterprises, especially during the COVID-19 Pandemic”. The programme has been beneficial for the participants, as they gained new knowledge and ideas on how to improve small and medium industry in their countries.  

Initially, the programme was implemented offline where participants were invited to Indonesia to attend it. However, since the COVID-19 pandemic, the programme has been implemented online as international travel is restricted to curb the spread of the virus. Online programmes enable the Government of Indonesia to accommodate more participants as travelling is not required. Although the programme is delivered online, participants’ enthusiasm is undiminished from previous years. Nevertheless, Indonesia is looking forward to implementing future programme offline as they are more effective in engaging the participants so that they can gain more insights and directly observe small and medium industry in Indonesia.  Additionally, as an effort to assess the effectiveness of the programme, participants are asked to provide their feedback and suggestions to improve the programme in the future. Communications with programme alumni are also maintained in order to follow up on the progress of their action plan implementation and to measure the impact of the programme in beneficiary countries. 

The programme has highlighted the challenges faced by the participants in developing small and medium industry in their countries. It has also shown that each country faces similar issues regarding the development of small and medium industry, such as lack of access to financial aid and lack of technological utilization among small and medium businesses. Therefore, countries can learn from each other and implement best practices from fellow country participants so that they can gain similar benefits. Through this programme, Indonesia and fellow developing countries are able to identify each strength and weakness, as well as potential collaboration in the future.