ABSTRACT
The era of trade liberalisation for the ASEAN Economic Community (AEC) began in December 2015 and brought about economic liberalisation in the Southeast Asian region. This era is competitive and the ASEAN member states (AMSs) almost do not have full power of sovereignty to govern their own economic national matters. In this globalised dependence era, the majority of states in the world have to adjust and adopt as well as adapt their national laws to internationalised rules of law. This trade liberation era also has forced companies and other business entities, including Small and Medium Enterprises (SMEs) and Cooperatives in Indonesia to compete with each other in order to tap the benefits of international trade liberalisation. In this context, SMEs and Cooperatives in Indonesia need some kind of protection from the government that does not oppose international regulations on trade. While the number of SMEs and Cooperatives is 98 per cent, their contribution to Indonesian export is small, at only 19 per cent. They are weak in terms of capacity building and access to capital, information technology, global markets as well as integration with regional and global market chains. This research paper evaluates SMEs and Cooperatives in Indonesia in terms of facing AEC trade liberalisation, i.e., what has done and should be done by the authority is to give proper protection to the SMEs in Indonesia by focusing on the manufacturing SMEs as this sector has the best chance of boosting SMEs’ export capacity and building the competitiveness of Indonesian SMEs in order to be equal with other SMEs in the ASEAN region.
