Indonesia is likely to have more than five startups worth at least $1 billion each by 2019, with healthcare and education the most promising sectors to spawn new unicorns in Southeast Asia’s biggest economy, the communications minister told Reuters.
Driven by a youthful population of more than 250 million people owning at least 100 million smartphones, Indonesia has seen a rapid growth in the number of startups trying to capitalize on this potential in a growing economy.
The country currently has four unicorns – companies that have reached $1 billion in valuation without tapping the stock markets – including ride-hailing company Go-Jek, travel site Traveloka, and market places Bukalapak and Tokopedia.
“In ASEAN (the Association of Southeast Asian Nations) we have seven unicorns and, out of seven, four are coming from Indonesia,” said Minister of Communication and Information Rudiantara, noting that even one of the unicorns in the region outside Indonesia derived most of its revenue from the country.
“I believe that we’ll have more than five unicorns until 2019,” Rudiantara, who uses one name, said in an interview.
Investors in Go-Jek include Tencent Holdings, with Alphabet Inc’s Google joining the latest fundraising. Tokopedia has backing from Alibaba and SoftBank Group, while Traveloka’s backers include Expedia and JD.com. Bukalapak investors include Singapore’s GREE Ventures.
The minister said that a unicorn was likely to come from the education sector.
“If we see the numbers, I project that has to come from the education (sector),” he said.
Under Indonesia’s constitution, the government has to spend a fifth of its annual budget on education, so even excluding private spending an app or startup only needed to get a small percentage of this “huge” potential, he said.
Indonesia’s state budget for education was 400 trillion rupiah ($29.50 billion) in 2017.
The minister said the biggest local app for education currently was Ruanguru.
The other most promising sector to develop a unicorn is healthcare, which has a state budget of more than 100 trillion rupiah, he said.
He noted the development of startups like HaloDoc offering online medical consultation, while others include Alodokter.
On funding, the minister said that he wanted to help make it easier for unicorns to apply for initial public offerings in Indonesia. Local regulations prevent listings before companies have made a profit for a number of years.
“If necessary, I will go to the OJK (financial regulator) to solve this issue,” he said, adding the government should no longer be just a regulator.
“It’s an old model. The government has to be the facilitator,” said Rudiantara.