International Journal of Business, Humanities and Technology Vol. 3 No. 1; January 2013 21 Strengthening the Internal Factors of Batik Cluster SMEs in Indonesia: A Case of Six Districts in South - Central Java Christina Tri Setyorini Faculty of Economics Universitas Jenderal Soedirman Jalan H.R Bunyamin, Purwokerto Jawa Tengah Indonesia 53122 Margani Pinasti Faculty of Economics Universitas Jenderal Soedirman Jalan H.R Bunyamin, Purwokerto Jawa Tengah Indonesia 53122 Hijroh Rokhayati Faculty of Economics Universitas Jenderal Soedirman Jalan H.R Bunyamin, Purwokerto Jawa Tengah Indonesia 53122 Abstract The aim of this study was to identify the internal factors that limit the growth and the success of Batik Cluster SMEs in South District of Central Java and to suggest recommendations for addressing such factors. This study uses qualitative research method. In-depth interviews have been performed, which included participant from six batik SMEs and from six officials representing six organizations in the six districts of south part of Central Java. Focus Group Discussion (FGD) was conducted in Banyumas and it explored the depth and nuances of opinions regarding factors affecting the development of batik SMEs clusters (i.e. education, raw material, marketing, partnerships, technology, capital, cooperative, and coordination among instititutions). The result from this study was to address some similar problems confronting batik cluster SMEs (e.g. inadequate education and training, materials, insufficient capital, lack of coordination among institution, etc.) Based on findings, it is recommended to strengthen the batik cluster SMEs by facilitating the development of PERBAIN as the batik cooperative that can serve the needs of funds and raw materials, improving the institution's assistance of batik craftsman skills, increasing coordination among government agencies, develop a South - Central Java batik association (i.e Yayasan Batik Indonesia) to promote batik in both national and global businesses. Keywords: Batik Cluster SMEs, Internal Factors, South - Central Java, Institutions Assistance, Coordination 1. Background of Study In line with the Strategic Plan of the Ministry of Cooperatives and Small and Medium Enterprises Year 2010 - 2014, as well as the Strategic Plan of the Ministry of Industry and Commerce 2010-2014, and also Master Plan for the Acceleration and Expansion of Indonesia's Economic Development Coordinated by the Ministry of Economic Affairs in 2011-2025, the SMEs (Small and Medium-sized Enterprises) is a strategic objective for the three ministries in facing global economic challenges. Based on the Ministry of Cooperatives and Small and Medium Enterprises’ mapping in 2008, the SMEs growth was reached 51.3 million units. This number tells that SMEs constitute dominant economic players and they become the national economic actors. As most of SMEs are located in remote areas, it is expected that within the year of 2011-2014 SMEs can play a significant role in national economy and can support Gross Domestic Product (GDP) by 6%, increase productivity by 5%, absorb labor workforce by 5%, increase the value of the investment by 10%, and increase export value by 15% per annum (KUKM, 2010).