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Jokowi tasks SOEs to actively aid homegrown start-ups
President Joko “Jokowi” Widodo has asked SOEs along with their venture-capital arms to be more involved in aiding home-grown start-ups, hoping it could boost the country’s digital-economic resilience amid a highly competitive tech-firm market.
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resident Joko “Jokowi” Widodo has asked state-owned enterprises (SOEs) along with their venture-capital arms to be more involved in aiding home-grown start-ups, hoping it can boost the country’s digital economic resilience amid the highly competitive tech-firm market.
Jokowi said on Monday that he was aware many start-ups had been facing a high probability of failure, as around 80-90 percent of them went bust in their early stages.
He noted that two major reasons behind their failures were inability to respond to the market needs as well as running out of funds before they could make significant growth. He hoped that if these problems were encountered in Indonesia, then they could be addressed with the help of SOEs.
“This will be the task of venture capitals and SOEs, so that we can connect our large ecosystems with each other. Thus, all [Indonesian start-ups] could be assisted and would not fail to enter the market,” Jokowi said during an event held by SOEs Ministry.
Read also: Global layoff storm disrupts Indonesia's tech companies
The "e-Conomy SEA 2021" report released by technology-company Google, Singaporean state-owned investment firm Temasek Holdings and business-consultant Bain & Co estimate that Indonesia’s internet economy -- measured in gross merchandise value (GMV) -- will reach US$70 billion in 2021, marking a 49 percent growth from $47 billion last year.
The report also projects that the figure may double to $146 billion in the next four years, signaling Indonesia’s strong presence in the ASEAN region, as it will come on top of the digital-economy size compared to its neighboring countries.
State-Owned Enterprises (SOEs) Minister Erick Thohir said in the same event that several SOEs have already begun forming their own venture capitals, implying they were up to the tasks to help build the country’s own digital ecosystem.
State-owned lenders Mandiri and BRI, he said, had established Mandiri Capital and BRI Ventures respectively, while BNI was expected to follow in their footsteps.
Read also: Shopee joins start-up layoffs trend in RI, blames global economy
Other SOEs, like telco PT Telkom Indonesia with its venture-capital arm MDI Ventures, has also joined the fray. The ministry has also formed Merah Putih Fund to aid start-ups that already reached more advanced stages.
“When a start-up is in its growing stage and its valuation is already large enough, we often do not have any presence on those companies. Now that we have this Merah Putih Fund, we could invest there,” Erick said.
“Of course, the investment will be done [through Merah Putih Fund], but [the recipient start-up’s] founders must be Indonesians, have their office in Indonesia and pay taxes in our country,” Erick added.
