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Start-ups are great, just don’t bank on them for mass employment
To be clear, the tech industry cannot be the backbone of an emerging economy like Indonesia’s.
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High value: These eight tech companies are among Indonesia's most valuable unicorns. (JP/Wendra Ajistyatama)
O
ver the past few weeks, many in Indonesia have issued gloomy forecasts of a “start-up winter” in the country, and the main signs of this, supposedly, are lay-offs at tech companies both at home and abroad.
Numerous reports in the press suggest that venture capital (VC) is drying up and that it is all downhill from here as monetary tightening led by the United States Federal Reserve reverberates across the globe and limits funds available for investment in high-risk emerging market tech.
Such pessimism is misguided, of course, because as soon as the current economic crisis ebbs away, we will be back in a risk-on environment and Indonesian start-ups can tap into a growing pool of VC from foreign and – increasingly – domestic investors.
The news about staff cuts at firms ranging from online retail and fintech to e-learning is understandably received with disappointment, not just by the people directly affected, but also by society at large.
After all, many had placed high hopes in the tech industry to lift Indonesia out of the economic doldrums, given that e-commerce, food delivery and edutech apps shone brightly early on in the pandemic while shops, restaurants and schools were wholly or partially shut down.
Others have hailed the sector as a way to address longstanding shortcomings in Indonesia’s economic foundations, such as a large unbanked population, inefficient logistics and a lack of quality employment opportunities for the country’s young population.
President Joko “Jokowi” Widodo’s administration embarked on its second term with a deliberate and well publicized focus on the digital economy.
