Inhibiting factors for the development of MSMEs in Palu city of Indonesia: an economic study
Inhibiting factors for the development of MSMEs in Palu city of Indonesia: an economic study

Summary/Abstract: An exploratory descriptive research approach has been followed in the current study to find out the determinants of MSMEs growth in Palu City in Indonesia (the capital of Central Sulawesi Province). The hindering factors include government policy, production, marketing, human resources, financing, and suppliers. Data was gathered in 2023 using field observations and semistructured interviews with 120 actors of MSMEs and employees of the City’s Offices of Cooperatives, SMEs & Manpower, and the Local Business Development Agency (Perindag). Factor analysis was done using 24 indicators that are measured on five-point agreement scale. The result indicated that all six factors are significant hindrances for MSMEs development and account for 55.25% of total variance. The individual indicators which affect MSMEs the most are supplier pricing (loading 0.867), selling price (0.802), capital (0.783), fuel price policy (0.775), experience (0.757), and inventory (0.756). Our findings show that Indonesia’s MSMEs, which form the majority of the private sector activities in the country and contribute greatly to socioeconomic activities, face numerous financial, managerial, and marketing challenges. Hence, continuous policy, resource, market, and capacity support is vital for maximizing their potentials in contributing to the country.

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