The ability of Small and Medium-sized Enterprises (SMEs) to survive amid globalization and world trade liberalization is highly important to Indonesia for at least two reasons. First, SMEs have historically been one of the key economic actors in the Indonesian economy, accounting for over 90 per cent of all the enterprises across sectors and providing employment opportunities for over 90 per cent of the country’s total workforce. Second, the Indonesian trade regime has shifted significantly from a highly protected market to a more open economic system. By focusing on SMEs in Indonesia, this policy paper analyzes the impact of international trade liberalization on SMEs in Indonesia.