Indonesian regulator to introduce micro VCs, other incentives to boost startup ecosystem

Visual from the OJK website

The Financial Services Authority (OJK) said that it is looking at a new regulation that will allow the inception of a micro venture capital (VC) firm with lower capital requirement compared to a regular VC – in a bid to encourage the creation of a wider startup ecosystem in Indonesia.   

The government also plans to provide more tax incentives for startups and small businesses in a bid to encourage entrepreneurship in the country, create new jobs and increase purchasing power.

Dumoly F. Pardede, deputy commissioner of non-bank financial institutions for OJK said, the micro version of VC firm will requires capital Rp 1 billion ($76,000) in capital. 

The micro VC firms will be in a position to operate, offer funds and expertise to smaller startups in rural and remote areas in Indonesia, he added. 

According to OJK’s data as of December 2015, there were 61 VCs in Indonesia, with assets totaling Rp 8.98 trillion.

The guidelines for VCs, which came into effect December 31, 2015, now require a VC fund or investor to set up a limited company (PT) with a minimum paid-up capital of Rp 50 billion or a limited partnership (CV) and cooperative for Rp 25 billion. Overseas venture investors can hold up to 85 per cent in the JV.

In the case of an Islamic-based VC company, the minimum paid-up capital requirement is Rp 20 billion for a PT and Rp 10 billion for either a cooperative or CV.

OJK is also planning to work with the Ministry of Communications and Information to regulate online companies offering various financial services like crowd-funding, financial technologies business and others .

The regulator is already coordinating with the Investment Coordinating Board (BKPM) to discover angel investors, including the majority of overseas investors, who were scouting for promising startups in the country.

“We will also intensify monitoring of the foreign venture capital firms which have entered local incubators,” he said.

Pardede added that the Creative Economy Agency (BeKraf) would regulate the tax relief from the government to help stimulate the growth of these incubators.

Meanwhile, Deputy Finance Minister Mardiasmo explained that the government is looking to give more fiscal and non fiscal incentives for startup business in the country.

He did not say what type of incentives the government will offer to small or startup businesses, saying the ministry is still weighing up several options with the OJK and Bekraf.

Also Read: 

Want to invest in Indonesian startups? Show $3.6m in paid-up capital, tie up with local partner & obtain licence 

Indonesia’s regulator grants licences to 4 venture capital firms 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.