Southeast Asia is fast becoming a global technology hub with Malaysia, Singapore, Vietnam, and Thailand all successfully growing their tech sectors. The largest country in the region, Indonesia, is also ramping up its presence in the startup industry, thanks to Venture Capitalist(VC) investments. VC trends in 2021 are giving the investment scene in Indonesia a helping hand as it develops a vibrant startup ecosystem. Startups, entrepreneurial ventures, and state-backed companies are all ready to enhance their listing in the coming year.
The first trading day of 2021 was almost as strong as the most valuable listing in the previous year for the ASEAN’s largest economy. This renewed strength in the stock market gives investors hope for the future of startups in Indonesia.
Positive trends and a hopeful year
The hope for a prosperous year comes from one of the first trades of 2021, when the FAP Agri IPO rose to 1 trillion rupiahs ($72 million USD) on Jan. 4. FAP Agri runs 860 sq. km of oil palm plantations and processing plants and is considered a promising prospect in the coming year for going public.
We explore how Indonesian startups fared in 2020
The biggest IPO of 2020 was Metro Healthcare Indonesia, raising around $63 million USD in a year, in a time where stock exchange funds were the lowest in the past five years of stock market history.
Tokopedia expected to go public in 2021
As the COVID-19 vaccine rollout starts to materialize, Indonesia’s economy is set for growth once more, boosted by the hopes of robust IPO listings. Tokopedia, the country’s largest eCommerce unicorn, is expected to go public in the year 2021. It has hired Morgan Stanley and Citibank to advise on its initial public offering.
“We are considering accelerating our plan to go public, and we have appointed Morgan Stanley and Citi to be our advisers,” a Tokopedia representative stated. He also said that the pandemic affected the startup positively, and it grew its profits during the lockdowns and movement restrictions. Tokopedia is still researching the listing options, and details are under discussion. The company has also discussed its merger plans with Bridgetown Holdings, a renowned special purpose acquisition company by the Hong Kong billionaire Richard Li and investor Peter Thiel.
The Omnibus law
In 2020, the Indonesian courts sought to improve the business environment by passing job creation legislation known as the omnibus law. The law introduces regulations that stipulate corporate tax cuts designed to enhance corporate sector growth. Thanks, in part, to these improvements, Indonesia’s big state-owned enterprises and startups are likely to create more valuable stock market listings in the future.
The omnibus law has 79 regulatory revisions, reducing bureaucratic procedures for businesses. Corporate tax will fall to 22%, down from 25% last year and some companies will also be eligible for a further reduction in taxes to 17% next year.
Digitization of Indonesia
The digital revolution in Indonesia has gained interest from hefty investors all over the world. One of the country’s major startups, Warung Pintar is focused on digitizing the country’s marketplace. The startup has pulled in around $27.5 million USD in funding so far with more promised to come.
Its main competitor, Bukalapak, is a million-dollar eCommerce company presently evolving its business and aiming to help street stall traders to tap into the internet market. Bukalapak has gathered further funding early in 2021 with global financial services company Standard Chartered the latest to invest.
Automation sector is on the rise
The country’s government has outlined ten national priorities to develop an integrated road map to fulfil its Making Indonesia 4.0 plans. Investment is needed to grow the automation sector if they wish to move towards a more digitalized society. It has launched multiple initiatives focused on skill-building and job diversity to enhance the pace of technology adoption by companies and strengthen Indonesia’s investment scene.
Jakarta-based Intudo Ventures has faith in its home country’s growing technology ecosystem and focuses solely on shoring up the archipelago’s startups. It states that investing in “Indonesian homegrown early-stage companies”, particularly those in the agricultural, education and logistics sectors, amongst others, is its mission.
Intudo has 20 companies in its portfolio at present and closed second-round funding deals to the value of $50 million USD in 2019 alone. The pandemic has shone a spotlight on the significance of hyper localization in investment operations for the company, and it will continue to support the founders of startups in Indonesia into the future.
The stock market and investment scene in Indonesia can become a star of the region in the coming year. With the vibrant scene for startups in Indonesia, a population of over 275 million people and the VC trends of 2021 all creating a growth environment, this ASEAN country’s industries are likely to be on the receiving end of a fundraising boom.