The Contribution of Indonesia's micro and small medium enterprises (MSMEs) digitalization to the economic integration in Southeast Asia

Suharso, Alam Primanda (2023) The Contribution of Indonesia's micro and small medium enterprises (MSMEs) digitalization to the economic integration in Southeast Asia. Masters thesis, Universitas Pelita Harapan.

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Abstract

The digitalization of MSME that is running in Indonesia has made an essential contribution to the strength and resilience of the country's economy; even though there was a contraction during the COVID-19 pandemic, recovery is relatively fast, and digitalization is accelerating due to limited human mobility. The rapid development of technology in globalization has become the nerve of the digitalization of MSMEs. Organically, business owners as non-state actors must digitalize the business to increase scalability, productivity, and profits. That is why the Indonesian government, as a state actor, has been aggressively incubating the digitalization of MSMEs; besides bringing benefits domestically, it is expected to be the power train for regional economic integration, which is one of the strategies to envision the AEC 2015 goals. My argument in this research reveals that the MSMEs' digitalization process runs naturally, and the main actors are non-state actors; the liberalism framework is the most suitable perspective as it provides an in-depth analysis of how the digitalization of MSMEs in Indonesia can accelerate regional economic integration in Southeast Asia and why the government's role is vital. Furthermore, the MSMEs' digitalization in Indonesia can contribute to accelerating regional economic integration as it has the largest population of MSMEs, which is considered a primary capital, good technological infrastructure, and the availability of digital platforms to reach a broader market. The government's role also proved crucial in building various regulations and programs to create a conducive ecosystem of MSMEs and performing international diplomacy through the stage of ASEAN and G20.

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