Indonesia is a few steps closer to becoming the largest digital economy in the region, as one of Silicon Valley’s largest players, Plug and Play, has expressed interest in investing in dozens of Indonesian start-ups.
Despite Silicon Valley firms being discouraged from investing abroad recently, Plug and Play seems to see huge potential in Indonesia’s digital economy, as the US tech giant signed a joint venture agreement with local investment firm Gan Kapital to establish Plug and Play Indonesia.
State-owned lenders Bank Negara Indonesia (BNI) and Bank Tabungan Negara (BTN) will be actively involved in the mobile financial technology-focused start-up accelerator.
The local branch will be officially established next January and invest in up to 50 early-stage start-ups per year. They will receive funding, mentorship and complimentary co-working space for a three-month period.
Plug and Play CEO and founder Saeed Amidi said the company hoped to establish 200 Indonesia start-ups in its portfolio by 2020 in response to the visit of Indonesian delegates, led by President Joko “Jokowi” Widodo earlier this year.
“It took us a few months to come here but we are super excited to start this journey together and work together to build a better economy, what we call knowledge-based economy and digital economy, here in Indonesia,” he said following a meeting with the President on Tuesday.
During his visit to Plug and Play’s headquarters in Silicon Valley, as part of his visits to the headquarters of US technology giants, Jokowi expressed his expectation to have the company partake in Indonesia’s efforts to become Southeast Asia’s biggest digital economy.
He even wrote “Start it up together, prosper together” at Plug and Play’s headquarters, from which up to 100 start-ups across the globe are developed every year, including Dropbox, with US$3.5 billion in funds raised by its start-ups since 2006.
Gan Kapital Group chief financial officer Wesley Harjono, who will also be managing director of Plug and Play Indonesia, said it will allocate around $10 million per year for the 50 start-ups that they have chosen to support.
“If there are 50 start-ups and we give an average of $500,000 per start-up, then we can prepare $10 million per year,” he stated, adding that start-ups would also enjoy exposure to the global market in hopes that investors abroad would also start to take part.
Communications and Information Minister Rudiantara highlighted the importance of Plug and Play’s presence in Indonesia to attract more foreign investment in the country’s e-commerce sector.
“He has come here even at a time when Silicon Valley is being discouraged from investing abroad. He said he is confident about Indonesia and this is a positive factor,” he said.
The government issued its 14th economic policy package last week, aimed at supporting the digital economy. The government expects the new policy package, dubbed the e-commerce road map, to create 1,000 “technopreneurs” and $130 billion in business value by 2020.
The road map is intended to better protect national interests and give priority to small and medium enterprises and start-ups, and will offer grants or subsidies to boost their chances of surviving in the tough e-commerce industry.