As Indonesia continues to look for ways it can expand the creative sector and turn it into synergies with the country’s first digital boom. The new wave of rising fintech startups might just be the answer.
Ever since Indonesian president Joko ‘Jokowi’ Widodo took office in 2014, he has pledged to revitalize the country’s creative industry, aiming to obtain 12 per cent of GDP from the sector this year. In 2014, creative industry contributed more than 7.5 percent to the country’s GDP, provided jobs for 11.8 million workers and created more than 5 million new business units.
To prove his commitment, President Jokowi created the Indonesian Creative Economy Agency, or locally known as Badan Ekonomi Kreatif (BEKRAF). Since then, BEKRAF has established partnerships with financial institutions – both conventional and tech based – to help more businesses get access to finance.
“Fintech startups could significantly help us because most of these creative businesses don’t have the track records needed to go to banks,” said Prabowo, head of venture capital sub-directorate at BEKRAF, in an interaction with DEALSTREETASIA recently.
There are 16 sub-sectors of creative businesses listed on BEKRAF. They are apps and game development, architecture, interior design, visual communication design, product design, fashion, film, video and animation, photography, handicrafts, culinary, music, publishing, advertising, performance art, visual arts, and television and radio.
These businesses make up the largest target market for fintech companies, such as peer-to-peer (P2P0 lending startup Investree. In its latest report, almost 40 per cent of Investree’s disbursed loans have gone to the creative sector.
CEO and Founder of Investree Adrian Gunadi said his company aims to disburse up to Rp 100 billion ($7.7 million) in loans by mid 2017. Businesses in the creative economy sector are predicted to remain the largest applicant for loans.
“Creative industry’s portion will still be above 30 per cent. We are hoping to help them develop good track record in P2P lending platforms so they can later borrow from banks,” said Adrian.
In June, BEKRAF spokeswoman Hanifah said the agency has partnered with several venture capital firms to provide funding for 16 sub-sectors in the creative industry.
The VCs include Kinara, Fenox Venture Capital, Mandiri Capital Indonesia, and Astra Venture, among others. “However, we are still compiling the data on how much they are willing to invest,” said Hanifah.
In a visit to Silicon Valley earlier this year, Indonesia President Joko Widodo delivered an ambitious speech where he presented the dream of becoming Asia’s ‘digital economy engine’.
Still in a bid to realize this dream, the Indonesian government has said that it was looking at a new regulation that would allow the inception of a micro VC firm with lower capital requirement compared to a regular VC.
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.