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Lessons from Indonesian fintech startups in time of the pandemic

Financial technology (a.k.a. fintech industry) has shown clear potential at helping economies recover during the coronavirus pandemic. 

A conducive regulatory environment could aggressively help the economy make a rebound. 

In Indonesia, the COVID-19 pandemic necessitated the the use of electronic money. In April 2020, value of total electronic transactions reached USD$ 1.1 billion. 

This can be attributed to the high number of workers, growing internet users and a sub-group of those who have not been touched by banking services. These are the sectors considered as opportunities for the fintech industry to boost economic growth. 

Indonesia has the highest number of so-called unicorn startup companies in Southeast Asia. We hear a lot of success stories from local startups, such as Gojek, Bukalapak, Traveloka, and Tokopedia. These stories have sparked interest and enthusiasm for other new startups. 

The potential of increasing number of internet users in Indonesia, from year to year (65% of the population or 171 million users), has thus become a catalyst for forming a startup company. 

The growth potential for a startup is not only for the domestic market but also international expansion, such as in the case of GoJek. The international market expansion carried out by GoJek to Vietnam (Go-Viet), Thailand (GET), and Singapore was considered an inevitable necessity in line with the enormous economic benefits that provided for the needs of consumers in each country. 

Another Indonesian startup, Halodoc, which specializes in the digital health sector, became the only Southeast Asian company to be included in the Digital Health 150 list for the Virtual Care Delivery category in 2020. It was first included in the list in 2019. As an Indonesian tech company that aims to simplify access to health services for the public, Halodoc continues to provide solutions that suit the needs of the community. 

By 2019, Indonesia ranked fifth globally, with 2,193 tech startups, behind the US, India, UK, and Canada. 

Four Indonesia tech companies became Unicorn startups with Southeast Asian presence, namely Tokopedia, Traveloka, Bukalapak, and OVO. 

Meanwhile, the Indonesian startup GoJek has became a ‘decacorn’ after obtaining investor funding that raised its total valuation to more than USD$ 10 billion. Gojek started as a motorcycle ride-hailing phone service in 2010. They initially focused on being a ‘super app’, offering such services as food delivery, grocery shopping, and even on-demand make-up artists. By 2019, Gojek includes more than two dozen different product lines with no signs of stopping there. Its services include utility bill payments, travel reservations, money transfers, online/offline payments, and more. It also enables businesses to accept online payments via credit/debit cards. Its mobile app is available for iOS and Android devices. 

Despite the pandemic, 24 other Indonesian startups received funding since the beginning of 2020. These include Pintek (fintech lending of education startup) which received venture capital (seed stage) from the United States; Accion Venture Lab. Gudang Ada – a startup in fast-moving consumer goods (FMCG) – received Series A funding amounting to USD$ 25.4 million from Sequoia India and Alpha JWC Ventures, followed by Wavemaker Partners; Insurtech Qoala received series A budget amounting to USD$ 13.5 million from Centauri Fund, a joint venture company of South Korean Kookmin Bank and Telkom Indonesia; Investree (fintech lending) received series C funding amounting to USD$ 23.5 million from Japanese investors MUFG Innovation Partners (MUIP) and BRI Ventures. 

Startup business development in Indonesia are classified into three: game startups, educational application startups, and trade-focused startups such as e-commerce. 

Common in the success stories of Indonesian startups are good human resource teams, proper timing, intense creativity, and trust from investor. 

Behind these success stories, the Indonesian government is proud to support these startups through such programs as BEKUP, which was formed by the Ministry of Tourism and Creative Economy / Tourism and Creative Economy Agency. The program was established in 2016 to help creative economy players in Indonesia develop their digital startups. In the last four years, BEKUP helped startups in more than 17 cities in Indonesia by mentoring and developing specific tech skills needed by startups. 

The Ministry of Tourism and Creative Economy also formed the Baparekraf Developer Day (BDD) program to support startup through application developing systems. BDD is a program that hones the technical skills of application developers in Indonesia. This allows the transfer of knowledge and industry standards directly from successful practitioners, particularly in application development. Moreover, the Ministry of Research and Technology of Indonesia also offers to give funding to startups that promises huge potential. They can submit a proposal and then be selected and assessed. 

On the other hand, the Indonesian government provides a startup standard business orientation through ignition events, workshops, incubation, etc.. The government also initiated the Nexticorn program that brings investors and startup owners together through local and international conferences. 

The popular startups in Indonesia include:

NONAMEValuation
(In $ Billion)
CATEGORY/PLATFORM
1GOJEK10.0ONLINE MULTI SERVICES
2TOKOPEDIA7.0E-COMMERCE
3OVO2.9ONLINE FINANCIAL SERVICES
4TRAVELOKA4.5ONLINE TRAVEL/HOTEL BOOKING
SERVICES
5BUKALAPAK2.5E-COMMERCE
6RUANGGURU0.15ONLINE SELF-LEARNING
7AMARTHA0.16ONLINE PEER TO PEER LENDING
8HALODOC0.10APP FOR DOCTOR CONSULTATION

Peering into their success stories, Indonesian startups can share their experiences, lessons learned and proven practices with startups in the Philippines. 

This partnership can trigger access to venture capital funding, enhance technological innovation, or open market opportunities in both countries.

For further information, please contact Embassy of the Republic of Indonesia in Manila, through email ekonomi.manila@kemlu.go.id.

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