ABSTRACT
This chapter examines the development and growth of Small-Scale Industries (SSIs) in Indonesia, by analysing secondary data from Indonesian Central Bureau of Statistics (CBS) on the manufacturing sector by size categories. In Indonesia, small and medium industries (SMIs) are very important to create large employment opportunities, and hence to generate income, especially in rural areas. The main reason that poverty in Indonesia remains a predominantly rural phenomenon, is because, on one hand, the majority of the population are still living in rural areas, even though it declined from 84 per cent in 1965 to 70 per cent in 1989, and to 67 per cent in 1993. While, on the other hand, despite significant growth in agricultural production over the past 30 years, the sector has been proven to be unable to create productive employment opportunities to the increasing population and hence labour force in the rural areas.
