Microfinance Institutions (MFIs) Profit Sharing Pattern for the Development of Micro and Small Enterprises (MSEs) in Indonesia

MSEs have a strategic role in the Indonesian economy. MSEs face some obstacles that do not provide optimal role in the economic development. Internal problem, MSEs operate only with limited capital and external problem is the absence of financial institutions that can lend capital to all MSEs. This paper is a study of literature with a case study on MSEs in Indonesia by Indonesian standard industrial classification codes. Data were obtained from the Central Bureau of Statistics and the Indonesian Islamic Banking Statistics. Data were analyzed with descriptive comparatif on frequency of five variables of MSE. Conclusions and implication, it is necessary MFIs are close physically and psychologically with MSEs, friendly, easy and fast in process of lending, growing from initiative of MSEs, by MSEs and for MSEs community, and operate in accordance with the traditional values of indigenous people of Indonesia. These MFIs are MFIs profit sharing pattern. MFIs profit sharing pattern which should be developed are MFIs that have a good track record. For the sustainability of MFIs activities, the government needs to help increase funding MFIs in the form of grant and loan.