Without a clear legal framework, MSMEs face various challenges. One of the biggest challenges is unfair competition. Many large business actors operate without regard to existing regulations, so MSMEs are often marginalized in the competition. BPS data shows that around 40% of MSMEs experience losses due to unfair business practices from large companies (BPS, 2024)⁴.  

In addition, MSMEs are also vulnerable to legal risks. Without legal protection, MSME actors often become victims of fraud or breach of contract. For example, cases of product counterfeiting involving MSMEs often occur, and without legal support, they find it difficult to fight for their rights (Izzuddin & Shaidra, 2024)⁵. 

The legal powerlessness experienced by MSMEs not only has an impact on the business actors themselves, but also on the national economy as a whole. According to data from BPS, the MSME sector contributes 61% to GDP, but many of them are forced to stop operating due to legal uncertainty (BPS, 2024)¹. This results in the loss of jobs and a decrease in people's purchasing power. 

Furthermore, legal uncertainty also hinders innovation and the development of new products among MSMEs. Without adequate protection, MSME actors are reluctant to invest in research and development, which in turn reduces their competitiveness in the global market (Puspadini, 2025)⁶.