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Government pushes startups to go public amid profitability uncertainties, IPO costs

The government and the Indonesia Stock Exchange (IDX) signed a memorandum of understanding (MOU) on April 3, as a joint effort to facilitate the development of startups.

News Desk (The Jakarta Post)
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Jakarta
Mon, December 9, 2019

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Government pushes startups to go public amid profitability uncertainties, IPO costs Starting up: A worker works at the Jakarta Smart City Hive (JSCHive) coworking space in Karet Kuningan, South Jakarta. (The Jakarta Post/Seto Wardhana)

T

he government has urged Indonesian startups to launch initial public offerings (IPOs) as an exit strategy to boost their businesses but a lack of certainty with regard to profitability and the high cost of an IPO mean the companies remain lukewarm about the idea.

The Tourism and Creative Economy Ministry’s nonbanking capital access director, Syaifullah, said in a media briefing on Friday that the government was trying to push startup companies in Indonesia to launch IPOs as an investment option.

“We are encouraging startup companies to launch IPOs, instead of aiming to become unicorns,” he said, adding that the roadmap for startups to going public was clearer than trying to achieve unicorn status (when a company’s value reaches US$1 billion or more).

The Creative Economy Agency (Bekraf), which has now been merged into the ministry, and the Indonesia Stock Exchange (IDX) signed a memorandum of understanding (MOU) on April 3 in a joint effort to facilitate the development of startups.

Syaifullah said the agreement also included plans to push startup companies to file an IPO.

Read also: Gojek, Tokopedia, Traveloka: Tech IPOs in the cards

Some of the biggest startup companies in Indonesia, namely online transportation startup Gojek, online marketplace Tokopedia and online travel startup Traveloka have expressed plans to go public.

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