From Village to Stock Exchange: Time to Democratize Capital

20 Feb 2026

Written by Saidu Solihin, Director of Business Development and Operations of PT KBI.

Indonesia often refers to MSMEs as the backbone of the national economy. They number more than 64 million businesses and employ a large portion of the workforce. In rural areas, MSMEs are not only economic actors but also maintain social stability.

However, behind this strategic role, there is a fundamental question that we rarely ask honestly: is the financing system we have built truly capable of elevating MSMEs?

For the past two decades, Indonesian financial inclusion has been synonymous with credit expansion. Various financing programs, interest subsidies, and even micro-enterprise loans (KUR) have helped businesses survive amidst economic pressures. We should appreciate these achievements.

However, credit, no matter how large, remains debt.

Debt provides liquidity, but does not automatically increase ownership. Debt keeps businesses afloat, but it does not necessarily change their bargaining position in the value chain. Many village businesses still sell commodities at low prices due to cash flow needs. They remain price takers, not price setters.

This is where we need to shift our perspective: from debt-based inclusion to ownership-based inclusion.

Austrian economist Joseph Schumpeter once asserted that economic growth stems from financing innovation. A healthy financial system not only disburses credit but also directs capital to expand productive capacity.

Ross Levine's research also shows that the quality of financial intermediation—not simply the volume of credit—drives long-term growth. This means the question is no longer how much lending is disbursed, but whether the financing truly strengthens the business structure.

For Indonesia's rural economy, the challenge lies not only in access to funds but also in the structure of added value.

Farmers and commodity-based MSMEs often face price volatility. During peak harvests, prices fall. Lacking adequate storage facilities and access to financing, they are forced to sell at low prices.

However, with the right system, commodities can be treated as financial assets. Through a warehouse receipt system under the supervision of the Commodity Futures Trading Regulatory Agency (BJB), businesses can store commodities in standardized warehouses and obtain receipts that can be used as collateral for financing.

This concept is simple, but the implications are profound: commodities are no longer just commodities, but financial instruments.

However, commodity-based financing alone is not enough to drive sustainable class advancement. We also need to open access to equity.

Indonesia has a rapidly growing capital market through the Indonesia Stock Exchange. The number of domestic investors has increased significantly in recent years. This represents tremendous social and financial capital.

Unfortunately, most MSMEs still lack access to capital markets. Stock listing requirements are designed for medium-sized and large-sized companies with established governance. As a result, a gap exists: MSMEs are too large to rely solely on microcredit, but not yet large enough to enter the stock exchange's main board.

Some countries provide special pathways for growing companies. China, for example, established the Beijing Stock Exchange as a platform for innovative small and medium-sized companies before they can be elevated to the main board.

Indonesia could learn from this gradual approach.

The idea of ​​establishing an MSME Exchange—a semi-autonomous entity integrated with the IDX—is worth considering. This exchange could be designed with more proportionate requirements, accompanied by governance support over several years, and a mechanism for migration to the main board.

The goal is not to fragment liquidity, but to provide a clear evolutionary path.

When integrated with a warehouse receipt system, the ecosystem becomes complete: villages produce, commodities are stored and financed, businesses grow, and then gain access to equity capital (not debt) through the SME exchange. Within a few years, mature companies can rise to the top of the market.

This isn't just financing. It's a design for upgrading.

Economist Mariana Mazzucato reminds us that the state must act as a market shaper, not just fix market failures. In the context of village financing, simply expanding credit is not enough; we need to design an architecture that enables structural transformation.

At the national level, Sumitro Djojohadikusumo's thinking emphasizes the importance of building an economic structure that strengthens domestic production. Access to equity for village MSMEs is part of the effort to strengthen that structure.

Of course, such reforms carry risks. Liquidity fragmentation, weak governance, or excessive speculation must be anticipated. Therefore, implementation must be gradual, with strict oversight, investor education, and a system of issuer mentoring.

However, there's no reason to stop innovating.

If 1,000 MSMEs can raise an average of IDR 25 billion in five years, the potential capital mobilization reaches IDR 25 trillion. The economic impact could be multiplied through multiplier effects on production, employment, and taxes.

Beyond these figures, what we are building is a shift in mentality: from dependence on debt to participation in ownership.

Democratizing capital means opening up access to ownership for economic growth. Villages are not just producers of raw materials, but owners of shares, owners of added value, and owners of their economic future.

We have successfully expanded the first stage of financial inclusion—access to accounts and credit. The next stage is ownership inclusion.

The question now is no longer whether we can disburse more credit, but whether we have the courage to redesign the system so that villages become the primary subjects of national growth.

Villages don't need pity.
Villages need a system that enables them to become owners of growth.

And that system can only be realized if we have the courage to move from microcredit to capital democratization.