How Indonesia can be the central tech hub in Southeast Asia

Photo credit: Wikimedia.

Indonesia is becoming more international through the years. Foreign investment in the country has hit US$22.5 billion in the first half of 2016, 14.8 percent higher than the same period last year.

Education portal HarukaEdu’s CEO and co-founder Novistiar Rustandi has high hopes that Indonesia would be the “center of the tech ecosystem of Southeast Asia.” But first, Indonesia has to go international.

“I want to see more and more international startups that choose Indonesia as a base and local startups that target not only the Indonesian market but also ASEAN and the global market,” says Novistiar.

Take the best insights, leave the rest

Indonesia President Joko Widodo tours Facebook’s headquarters with CEO Marc Zuckerberg. Photo credit: Facebook.

Indonesia’s startups traditionally focus on local problems and issues, and understandably so. With a large population of willing users and plenty of room for new players, there isn’t much need for an Indonesian startup to expand beyond their hometown. Some of Indonesia’s biggest unicorns, Go-Jek and Tokopedia, only have a presence in Indonesia.

However, the injection of international corporations into Indonesia, like Alibaba’s investment of Lazada, could help boost the economy. According to Novistiar, the entrance of international brands and talent could help validate Indonesia’s market potential and educate the market significantly.

Andreas Surya, Kejora Investments’ VP of investments and portfolio, echoes this sentiment. “The Southeast Asia market has a lot of cross-country opportunities. Cross-national collaboration is also good within one company especially tech startups, where one can learn from others’ diverse ideas, background, and culture — take the best insights, leave the rest.”

The presence of new competition may drive local tech players to be more innovative and disruptive. Along with the low cost of labor and abundant problems to be fixed, startups expanding into the country can and must scale quickly.

“Indonesian tech startup founders need to be able to show they are able to step up or already be in the same class as established startups,” said Andreas.

To help attract more international talent into Indonesia, local telco Indosat Ooredoo has opened up their annual innovation contest to international entrants for the first time. The Indosat Ooredoo Wireless Innovation Contest (IWIC) is a long-running mobile application competition aimed at encouraging young Indonesians to create digital solutions for real life problems.

The need for government support

Photo credit: Bindalfrodo.

While international talent could boost the Indonesian startup ecosystem, the country isn’t easy to enter. According to the World Bank and the International Finance Corporation, Indonesia ranks 109th in the world for ease of doing business.

Starting a business in Indonesia could also be worse for technology companies. Indonesia has a Negative Investment List that specifies sectors of the economy in which foreign ownership is limited or even prohibited entirely. While the government now allows 100 percent foreign investment in ecommerce sectors, it does come with certain criteria.

“I have been approached by many foreign players, who have expressed interest to invest in Indonesia. But they are still waiting for the revised DNI list,” head of BKPM Franky Sibarani told DealStreetAsia in March 2016.

Government regulations are also notoriously strict. They have banned big technology players from entering, including Netflix, Vimeo, and Reddit. Transportation companies like Uber and Grab are still facing difficulties establishing themselves in the country. Laws in Indonesia are always changing, and depending on a company’s business, there might be a unique set of rules to follow.

Novistiar believes that the government needs to support young people by supporting the innovative products they create, especially those that are “ahead of or even against existing laws and regulations.”

“If these products provide real values to a lot of people, instead of banning them, the government should accommodate them by changing the law and make it more relevant to the current condition,” said Novistiar.

About Indosat Ooredoo Wireless Innovation Contest (IWIC)

IWIC is part of Indosat Ooredoo’s CSR program dedicated to innovation and education. It has been widely recognized as one of the most original efforts to encourage digital entrepreneurship amongst Indonesian youth. Indosat Ooredoo has inspired Indonesia’s youth since 2006 to innovate in the field of wireless digital application and develop these innovations into promising and successful businesses. IWIC has received over 7000 applications in the 10 years since its founding, and 2016 is the first year in which it has opened applications to international participants. Deadline for submission is September 30.

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from Tech in Asia https://www.techinasia.com/indonesia-international-tech-hub
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