T

he Financial Services Authority (OJK) plans to collect funds from investors and conglomerates to support local start-ups in a bid to grow Indonesia'€™s domestic creative industry amid a domestic economic slowdown.

OJK head Muliaman Hadad said recently that the OJK would pool funds from investors to drive the creative industry.

'€œThe venture capital will be managed by a legal entity that we expect to be officially established by the year'€™s end,'€ he said.

The move, according to Muliaman, is expected to grow the country'€™s creative industry in order to offset pressures on the country'€™s declining commodity exports.

Earlier this week, associations of financial companies as well as state and regional-owned insurers signed an agreement with state financing firms to support the country'€™s creative industry and its exports.

The memorandum of understanding (MoU) was signed by the Indonesian Financing Firms Association (APPI) and the Indonesian Association of Insurance Companies (Asippindo) as well as state financial company Indonesia Eximbank.

The agreement establishes several areas of partnership between the participants, including financing commitments from private companies and credit insurance from state and regional-owned insurers for creative industry players.

APPI chairman Suwandi Wiratno said at least ten private financing firms were preparing to finance creative projects and start-ups with financing worth Rp 500 billion (US$34.06 million) this year.

The ten financing firms are BFI Finance, Adira Finance, Astra Finance (FIF Spektra), Trihamas Finance, Al-Ijarah Finance, Olympindo Finance, Mega Finance, Procar Finance, Sinar Mitra Sepadan (SMS Finance) and Sinarmas Multifinance.

Finance Minister Bambang Brodjonegoro said that it was time for the country to find sources other than commodities to boost the economy.

'€œWe'€™ve been through long periods where we moved from oil and gas to manufacturing, then to commodities after the 1998 crisis,'€ he said.

The creative industry, which was less prone to crisis, could be the answer, he went on to say.

India, for example, could survive amid a strengthening US dollar because it did not rely so heavily on commodities. Instead, it had developed a creative economy including an expanding information and technology (IT) industry, according to Bambang.

India recorded 7 percent growth in its economy in the second quarter of this year, still relatively higher than the economic growth of most developing nations.

Indonesia recorded a 12.7 percent year-on-year (yoy) slump in its exports in the January-August period of this year and an 18.96 percent yoy plunge in imports during the same period.

Slowing global demand and falling prices in Indonesia'€™s export commodities, as well as weakening local purchasing power, have contributed to a slump in both exports and imports.

Voicing a similar view, Creative Economy Agency (Bekraf) head Triawan Munaf said that creative economies usually acted as a savior for Indonesia amid economic slowdowns, even though it accounted for only 7.8 percent of total gross domestic product (GDP) between 2010 and 2013, according to data from the Central Statistics Agency (BPS).

Currently, the government recognizes 16 subsectors in the creative economy. Some of the subsectors include architecture, culinary, fashion, music, cinema and graphic design.

The country'€™s export of animation, video, film and photography products stood at $66 million in 2013, according to Trade Ministry data.

The amount was a far cry compared to imported animation products, which amounted to $2.3 billion in 2013, showing a lack of supply from local producers to fill rising domestic demand as Indonesia'€™s middle-income population grows.

Indonesia Eximbank, which is also known as LPEI, is also committed to financing creative industry players who wish to export their products.

Bambang said the government would always urge the Indonesia Eximbank to prioritize creative industry in its business, including shipments to export destinations beyond the country'€™s traditional partners, such as Africa, Eastern Europe, South Asia and South America.

In order to support Indonesia Eximbank'€™s efforts, Bambang said the government had issued a regulation on the National Interest Account (NIA), which is a policy that, despite being commercially non-viable, may help boost exports.

BEK'€™s Triawan said the MoU had created a solid foundation for stakeholders in creative industries to seek access to funding, which often stands as a problem for players in the sector.

'€œWe have been waiting for this agreement, which can help the industry to grow in the future. According to a global study, the potential of exports from the world'€™s creative industry has a valuation two-times higher than oil shipments from Saudi Arabia,'€ Triawan said.