Many Foreign Investors Owned Startup in Indonesia
The rapid flow of foreign investment to technology startup in Indonesia is like a double-edged sword. When it can accelerate the growth of a company into a unicorn or even decacorn, most foreign funds make majority ownership in the company controlled by foreigners.
At present, there are at least five large companies from Indonesia namely Gojek, Tokopedia, Traveloka, and Bukalapak who have repeatedly received funds in various series to become unicorns in about 10 years. Gojek, for example, obtained foreign funds from Google, Tencent Holdings, Mitsubishi Corporation, and Sequoia Capital India.
Indef’s researcher, Bhima Yudhistira Adhinegara, said that companies, especially those engaged in the market, also contributed to the increase in imports of consumer goods. Citing e-commerce association data, he said 93 percent of goods sold in the market were imported. And only 7 percent are local products.
Foreign funds flowing into unicorns have several interests, such as horizontal integration where companies in Indonesia are used as supply chains for other companies’ products. For example, unicorn e-commerce companies are used to market Taobao products, Alibaba from China.
Investor Affiliation Companies Get Foreign Workers
Also, horizontal integration affects the entry of foreign workers or outsourcing from other highly skilled countries to investor affiliated companies. As a result, the absorption of semi-skilled and high-skilled workers is still limited. Data collection in these companies must be monitored.
Issues of personal data collected from the public regarding citizenship, finance, to daily mobility by companies must also be considered. The data tends to be misused and used to map consumer behavior or ‘market intelligence’ for marketing strategies of affiliated foreign companies.
Aside from the large market size, a factor causing a large number of local company shares owned by foreigners is that investment funds are sourced from venture capital, not from conventional financing sources such as banks. Unfortunately, venture capital is not well developed in Indonesia.
Meanwhile, the Indonesia Stock Exchange (IDX) does offer convenience for companies to hold an Initial Public Offering (IPO). However, this has not been much enlivened by prospective issuers from corporate companies. Bhima considered that one way to support venture capital was to provide incentives from the government.
The government’s task is to provide incentives and regulatory looseness for venture capital, especially those that inject capital into companies. Incentives can be in the form of fiscal and non-fiscal terms. Tax incentives can be made through a zero percent income tax on venture capital.
New Company Does Not Obtain Credit from Local Banks
Bhima explained that reducing dependence on short-term funds is what is needed in current venture capital. On the other hand, banking as a financial service with the largest asset control has funds that are ready to be disbursed. However, banks are still reluctant to give credit to companies. Some of the new companies that exist are:
This company is engaged in a person’s mental health. Here everyone has the right to ask questions or confide in with a psychologist who will answer and help solve the problem expressed.
This company has a very unique idea, there will be many offers in terms of leasing parking area. This is a business that has the possibility to be widely used by the community, considering that there are so many vehicles nowadays.
Gordi is a company engaged in the sale of coffee beans on a subscription basis. This company will spoil coffee lovers because here there are many types of coffee beans that can be purchased.
Ignatius Untung said that the amount of capital in the country was not lacking, but local investors were not yet familiar with the business model. Banks avoid financing to start a company on the grounds of risk factors and the absence of collateral. It cannot be denied that the company has a large risk of failure. Around 70 percent of startup fails within the first 3 years.