Supporting the MSME Ecosystem Within Indonesia's Just Energy Transition
March 2025
Indonesia launched the Just Energy Transition Partnership at the 2022 G20 summit to secure £17B in financing to accelerate the country’s shift from fossil fuels, which account for 60% of national power generation, to renewable energy.
This transition disrupted coal-dependent and carbon-intensive sectors, creating increased operational and input costs for Micro, Small, and Medium Enterprises (MSMEs), which often face limited access to financing and technical support. Given their critical role in Indonesia’s economy, disruptions to these businesses could trigger job losses, reduced household income, and local economic stagnation, deepening existing inequalities and slowing inclusive growth. Proactive measures are therefore essential to mitigate these socio-economic impacts.
Economic Output
61%
Contribution to national GDP
Workforce
97%
Contribution to Indonesia’s employment
Lack of Financing
~£130B
Credit gap for MSMEs
Growth Gateway worked to strengthened Indonesia’s MSME ecosystem by mobilising investment and technical assistance from investors and partners to address these challenges. The initiative focused on West Java, one of Indonesia’s most coal-dependent provinces and the site of its first early coal power plant retirement, to generate jobs in green and low‑carbon sectors. This enabled an inclusive energy transition that protected livelihoods and built economic resilience, aligning with the UK’s ambitions in climate leadership and economic diplomacy.
Support Provided
Identified MSME Investment Opportunities In West Java
Conducted outreach to over 590 MSMEs, sourced via public sources and incubator networks, including businesses operating in, but not limited to, 5 priority sectors:
- Manufacturing
- Electricity & Gas
- Water & Waste
- Information & Comms.
- Health & Social Work
Through further engagement, 20 MSMEs were identified as investment-ready businesses with strong job creation potential, including 19 green MSMEs and 8 women-led MSMEs
Mobilising Funding On Investment Ready MSMEs
Conducted outreach to 140+ investors and secured interest from 28 across various asset classes to align capital with MSME financing needs, including:
- Venture Capital: Equity funding for high-growth MSMEs
- Philanthropies: Grant and concessional debt for MSMEs w/ strong social impact, incl. informal MSMEs
- Banks: Debt funding for stable, operational MSMEs
- Non-Bank Financial Institutions (BFIs): Debt funding for informal MSMEs
Profiles of investment-ready MSMEs were shared with interested investors to generate interest and initiate commercial discussions
Identified Key Enablers To Catalyse Investment & Strengthen MSME Investment Readiness
Identified key financial, operational, and regulatory barriers through extensive engagements with MSMEs and investors to design cross-cutting solutions:
- MSME-focused programmes: Mapped 14 active programmes across Indonesia, with 5 showing strong alignment for partnership
- Policy reform: Identified gaps in MSME-targeted government policies, referencing comparative policies in other markets
- Enabling institutions: Engaged communities, incubators, corporate social responsibility (CSR) programmes, and deal aggregators to explore support mechanisms for MSMEs
- Trade opportunities: Identified 14 MSMEs currently trading with, or having the potential to trade with the UK, to mobilise off-taker support from UK businesses
Impact Achieved
2,600-3,250
Direct, indirect, and induced jobs potentially created from investments on high-potential MSMEs
£8M+
Potential deal value from commercial discussions
£10M+
Potential trade (import and export) value between MSMEs and the UK
To find out more about our impact, follow Growth Gateway on Linkedin or contact us