Good News for Startups in Indonesia, Financial Boost from Govt

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Pesona Indonesia

startupbatampos.co.id – The Minister for Communications and Technology of Indonesia plans to introduce new funding support for startups in 122 eligible districts and cities including Jakarta, Nias, Bima, Bandung, Bali, and Alor.

He plans to use the Universal Services Obligation fund (USO) to give much needed financial assistance to new businesses. The fund which is valued at Rp 2 trillion was originally started to provide telecommunications infrastructure to the outskirts of Indonesia where historically investment has been low, but the funds may now be diverted to to startups.

This follows the announcement in July, by President Joko Widodo that he aims to make Indonesia the “Digital Energy of Asia.” To achieve this he launched the 1,000 Startup Movement in a bid to develop 1,000 startups by 2020 with a targeted value of US$ 10 billion. The initiative consists of hackathons, boot camps and workshops, providing a knowledge platform for startups to gain the necessary skills to develop their fledgling business.

Indeed, Indonesia is building a reputation as a global player for technology startups. Ahlijasa an on-demand laundry startup will represent Indonesia in the 2017 Startup World Cup championships in Silicon Valley. Each competitor will pit their wits against each other to win the grand prize of US$1 million in March next year.  It would be no surprise to anyone if Indonesia became Asia’s Silicon Valley in the next five years and representing the country in events like this put the country on the startup map.

However, there is a problem with attracting talent. Large tech companies criticise Indonesia’s education system. Highly skilled workers make up just 10 percent of total employment making it the lowest ratio of any major Southeast Asian nation, this is according to the World Economic Forum. Some startups are forced to offshore tech work as they seek to grow; this bottleneck could be an explaining factor in why no private Indonesian tech firm has reached a US$1 billion valuation.

The government has made promises to tackle the skills shortage by introducing coding and other tech skills in the public school curriculum, and by facilitating knowledge transfers from foreign investors. “While we commend the government for seeking to address the problem of funding, the real issue is the skills shortage,” said Mart Polman founder of Lamudi Indonesia—the online property platform.

For Indonesia to breed its first unicorn—startup valued at US$ 1 billion— large scale changes need to be brought in from the grass roots of education through to the transfer of skills at the incubation level; failing it evolve here will limit Indonesia’s potential to be the top tech startup hub in Asia. ***

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