GetCraft Strengthen Its Position as Southeast Asia’s Creative Hub

Recently, SOSV Chinaccelerator global VC officially announced the seed funding with an undisclosed amount to GetCraft marketing platform. According to SOSV representatives, GetCraft is the only investment portfolio from Indonesia in this batch.

Chinaccelerator’s Partner & Managing Director, Oscar Ramos said that his team saw the potential of local creative economy growing in Indonesia and began to strengthen its position in the Southeast Asian market. “GetCraft was founded in Indonesia but has a strong position as a creative space in the region,” Ramos said.

With additional funding from SOSV Chinaccelerator in December 2020, GetCraft has now recorded four funding rounds. Previously, this Jakarta-based platform has received investment from Convergence Ventures and 500 Startups.

GetCraft was founded in 2014 by Patrick Searle and Anthony Reza. Based on company data, it has posted revenue of more than $8 million in 2020 and has organized creative and marketing products by more than 1,500 brands and agencies.

In 2018, GetCraft launched a marketplace platform that connects creative business people with marketers in marketing activities. This marketplace allows marketers to estimate costs and potential audiences based on their chosen content creator or sponsored content partner. This capability makes it easier for marketers to plan their content marketing campaigns.

Expansion and strenghtening position in Southeast Asia

In separate interview with DailySocial, GetCraft avoids to reveal its plans and strategies in Indonesia as it is focusing on closing a new funding round.

However, GetCraft has the opportunity to expand its business scale. Especially during the Covid-19 pandemic where marketers began to shift marketing campaigns along with changes in consumer behavior. Currently, GetCraft is available in Indonesia, the Philippines, Kuala Lumpur and Singapore. The pandemic could have create opportunities for expansion into other markets.

Based on data from the Focus Economy Outlook 2020, the creative economy contributed IDR 1,100 trillion to Indonesia’s Gross Domestic Product (GDP) throughout 2020. This is strong evidence that this sector can survive during the pandemic.

In addition, the need for digital marketing content, influencers, and native ads is quite high. This is highlighted by the increasing number of active internet and social media users in Indonesia. We Are Social’s data as of January 2021 recorded that mobile and internet users in Indonesia has reached 345.3 million and 202.6 million, respectively.

Meanwhile, the number of active social media users reached 170 million. Some of the social media most accessed by the Indonesian people include YouTube (93.8%), WhatsApp (87.7%), Instagram (86.6%), Facebook (85.5%), and Twitter (63. 6%).

In terms of competition, GetCraft already has a strong position in the regional market as mentioned by Ramos. For the Indonesian market alone, GetCraft seems to be superior to similar platforms whose numbers may not be as many and the services offered are limited to certain categories.

Meanwhile, GetCraft enters through a wider scope of creative marketing content services, not only writing, but also videos, animations, and illustrations. Outside the marketplace, GetCraft has even entered the community segment through its paid services Crafters and MarketingCraft.

Crafters is a premium service that provides a variety of content to improve creator’s skills, such as pitching tips, creating entertainment content, and business monetization. The difference with MarketingCraft, this content is intended to sharpen the skills of marketers.

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Original article is in Indonesian, translated by Kristin Siagian

Golden Gate Ventures’ Report on Startup Ecosystem Trend in the Next 10 Years

Celebrating their 10th Anniversary, Golden Gate Ventures (GGV) launched a report on the startup ecosystem in Southeast Asia. It elaborates essential points about the trend of the startup ecosystem in the last 10 years and its predictions in the next 10 years.

Founded in 2011, GGV has invested in around 60 startups and launched four fund initiatives. The investment thesis focuses on the growing presence of the consumer class in Southeast Asia. In Indonesia, its portfolio includes Alodokter, BukuWarung, Side, Alami, and GoPlay.

Startup ecosystem trend in the past 10 years

In the past decade, startups in the Southeast Asia region have experienced very fast growth. Especially in terms of capital inflows, it is estimated to have increased by 50x from $130 million in 2010 to $6.5 billion in 2020.

In its report, GGV noted more capital coming from the United States. These include Kleiner Perkins, Accel, KKR, Tiger Global and Warburg Pincus. In addition, funding also came from countries such as China and Japan. Not only are these countries leading large-scale funding, but these countries have also invested heavily in large companies in Southeast Asia.

The venture capitalists that later became leaders include Sequoia, Softbank, Tencent, and Alibaba. The business verticals that have received the most funding over the last 10 years are e-commerce, fintech, and entertainment. Meanwhile, GGV also noted that the fastest growing business verticals were food and logistics.

GGV’s report on Southeast Asia’s investment / GGV

An interesting fact discovered by GGV is that the expansion in various stages of funding is getting more mature in line with the growing interest of regional and global investors for SEA. Series A round became the funding stage that experienced the fastest growth. Meanwhile, later stage funding (series C and above) experienced the highest jump (worth 100x) considering that there was no such round in the previous decade. The number of early stage and seed funding rounds has increased by up to 30x.

Another interesting point that GGV presented in its report is the increasing presence of Corporate Venture Capital (CVC) in Southeast Asia. There were only a handful of CVCs in 2010, which were usually branches of businesses established in family businesses, telecommunications companies, or super apps. Currently, there are more than 50 CVCs are listed.

In 2020, several CVCs have been involved in around 8.7% of all VC transactions and have led several funding rounds, especially in seed and series A. In Indonesia, several CVCs that are quite active in investing include MDI Ventures and Prasetia Dwidharma .

Indonesia also surpassed Singapore to become the country with the highest startups concentration with the best capital. On average, Indonesian startups have closed relatively larger funding rounds. Singapore recorded the largest VC capital is in 2010 (90%) but their share shrank to 40% in 2020.

Another captivating infornmation by GGV is that Indonesia has become a market demand for around 75% of unicorns in Southeast Asia, and is claimed to be the most successful market for investing in the Southeast Asian region.

Startup ecosystem trend in the next 10 years

In its report, GGV also conveys a number of trends in the startup ecosystem in the next 10 years. Among those is the increasingly widespread presence of social commerce. Its GMV is predicted to exceed $5 billion by 2025 and $25 billion by 2030 as it will continue to increase in e-commerce adoption, mixed with per capita GDP growth over the next decade.

In addition, another sector that is predicted to experience growth is healthtech. In this case, it is a platform that provides access to healthcare for a larger demographic, and improves infrastructure in Southeast Asia, especially after the pandemic.

Another prediction by GGV is the increasing number of IPO activities in Southeast Asia, which is expected to exceed 300 IPOs by 2030, as more local startups seek potential exits in the domestic public market.

Meanwhile, for Indonesia and Malaysia, it is estimated that there will be larger market growth for platforms that target Muslims. Indonesia and Malaysia’s market size will grow about 8x from its current size by 2030, including the Muslim lifestyle/halal economy in various industries such as fashion, food and finance.

Another trend that discussed in the report is that startups targeting media and entertainment will gain a stronger following and funding as the industry begins to shift its focus to digital solutions, including TV/film, live streaming, and esports. Funding in this area is predicted to exceed $700 million by 2030.

The large number of unbanked population in Southeast Asia creates huge opportunities that can trigger the growth of unicorn startups specifically for fintech. Potential services to be disrupted by fintech platforms include digital wallets, Neobanks, BNPL, and other forms of financing.

Mergers and acquisitions (M&A) activities are also predicted to increase in the next 10 years. As companies continue to compete for the top positions in its verticals, there will be more mega-mergers in Southeast Asia.

After Indonesia, which became the most targeted market by venture capitalists in the last 10 years, GGV predicts that within the next 10 years, Vietnam will become the targeted country for investors in Southeast Asia. Vietnam will emerge in 2022 as the premier startup ecosystem in Southeast Asia. This is visible with the increasing number of venture capitalists who then allocate their funds to invest in startups from Vietnam.

Meanwhile, for venture capitalists, it is predicted that within the next 10 years, the Assets Under Management (AUM) will be doubled. AUM has been increasing on a steady track over the last decade and it is estimated that it will exceed $300 billion by 2030.

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Original article is in Indonesian, translated by Kristin Siagian
Gambar Header: Depositphotos.com

Desty Bags 46 Billion Rupiah Pre-Series A Led by 5Y Capital

Desty micro site provider startup announced a pre-series A funding round worth of $3.2 million or around 46 billion rupiah. The new funding was led by 5Y Capital. Some investors also participated, including Fosun RZ Capital, January Capital, IN Capital, and East Ventures.

For further information, 5Y Capital is a China-based VC (formerly Morningside Venture Capital) that focuses on early-stage funding. 5Y Capital has invested in Xiaomi and Kuaishou. Currently, Desty is 5Y Capital’s first investment portfolio in Indonesia.

Desty is a digital platform that helps content creators, influencers and sellers on social media to market and sell their products. Users can create a mini site placed on a social media bio link or online store for free in just a few minutes. The concept is similar to Linktree with broader features.

Desty was founded in October 2020 by Mulyono Xu (CEO) and Bill Wang (COO). Both have experience and expertise in building e-commerce for 17 years under the Alibaba Group. The startup has previously secured an undisclosed amount of seed funding from East Ventures.

Through this additional investment, the company is still focused on increasing the number of teams and its user base. Xu said, Desty team is currently backed by talents with working experience in giant technology companies, from Alibaba, Facebook, Google, and Bukalapak.

In addition, he said, Desty also continues to ensure that sellers who have joined its ecosystem can develop their business efficiently. The platform is said to have been used by hundreds of thousands of users. Especially in the Covid-19 pandemic situation, sellers or merchants should be able to adapt to manage their business digitally.

“We’ve seen Desty’s exponential growth at the right time due to the rapid growth of e-commerce in Indonesia during the pandemic. Therefore, we believe merchants need various options for where to shop for consumers, either through marketplaces, independent websites, or social media,” Xu said.

East Ventures’ Co-founder & Managing Partner, Willson Cuaca agreed on this. He said, the pandemic has had a positive impact in accelerating digital adoption to the wider community. Desty is considered to have paved the way for merchants, influencers, and creators to start digitizing product sales digitally.

Based on data compiled by Desty from several sources, the number of e-commerce transactions jumped 18.1% to 98.3 million with an additional 12 million new users throughout 2020. Indonesian people has three main destinations to shop, marketplaces (97%) ), independent business domain/website (91%), and social media (82%).

5Y Capital’s VP of Investment, Hanson Hu added that links are very important key in the internet ecosystem as they can bring people together, online with offline, and demand with supply.

“In terms of e-commerce, links open up great opportunities in connecting social and content with e-commerce transactions as we have seen this trend in China. We believe Desty can become the infrastructure for links in Southeast Asia’s e-commerce industry. Therefore, its presence can contribute to creating a closer content, social and e-commerce ecosystem,” he added.

Currently, Desty offers two main products, Desty Page and Desty Store. Desty Page is a landing page service to optimize the link feature on social media accounts, especially Instagram. Meanwhile, Desty Store is a complement to the marketplace channel that provides a platform to help users easily open online stores.

As a supporting product, Desty also developed Desty Academy as an information and training center for users who want to develop their business.

Amartha Appoints Rudiantara as a Commissioner, Introducing Amartha Plus App

Amartha announced Rudiantara, the former Minister of Communication and Information for the period 2014-2019, as a President Commissioner effective per July 1, 2021. Rudiantara’s mature experience in technology is expected to contribute to the company’s ambition to accelerate MSME digitization.

In a virtual press conference the company held (19/7), Amartha’s Founder and CEO, Andi Taufan Garuda Putra said that one of Rudiantara’s important achievements was to develop policies regarding digital infrastructure in remote areas to support MSMEs.

“Amartha is honored to welcome Mr. Rudiantara to be part of Amartha’s big exit. Amartha is optimistic that his presence will provide insight and wisdom in building leadership and partnerships with company stakeholders,” he said.

Rudiantara added, he is also honored to be able to work together with Amartha in accelerating financial services for the unserved and underserved groups with no access to the banking sector. He said, not only focusing on microfinance, Amartha also focuses on the women’s segment.

“This is the reason I joined Amartha. It is based on technology, but what makes it different is that they target MSMEs with a broad social impact, MSMEs, productive women, and sustainable business. This is what makes me honored to join Amartha,” Rudiantara said.

Amarta Plus app

On the same occasion, Amartha’s Chief Commercial Officer, Hadi Wenas said the company launched the Amartha Plus application specifically for Amartha borrowers to be more familiar with technology. This application complements the previous two platforms that are specifically designed for field agents and lenders.

The launching also in line with the realization of an investment of $28 million led by Women’s World Banking (WWB) through WWB Capital Partners II and MDI Ventures in early May 2021.7.19

“Prior to this application, the field agent was tasked with inputting the online registration process. However, partners can now apply directly through the application, our field agent will be a sampling surveyer, therefore, the funds will be disbursed faster in about 15 minutes,” Hadi said.

Amartha Plus currently has three features, Warung Loan Non Mitra, Warung Loan Mitra, and Amartha Pulsa/PPOB. In the first feature, the company becomes a financial partner for paylater products for stall partners who are included in the Sampoerna Retail Community (SRC) network. This collaboration allows SRC’s warung partners to pay the due date for each stock purchase.

“This has only been running in June, the number of partners who have joined is about hundreds for the first batch. Soon, we are targeting tens of thousands as the SRC network already has millions of stalls, but there are hundreds of thousands already online.”

Next for the Warung Loan Mitra feature, it allows stall partners in the Amartha network to purchase FMCG product stocks wholesale through Tanihub, an agritech partner that is partnered with the company. As of now, it has operated at 11 points in East Java, there are more than 100 partners who shop regularly, and there are more than 4 thousand SKUs available.

“Last, is Amartha Pulsa, which service is more straight forward for topping up balance and PPOB payment. This service has been used in 93 points out of our 497 network points.”

Wenas said this new application could deepen the smartphone penetration in Indonesia, especially in rural areas. “Next we will develop other innovations related to intensifying smartphone penetratio, therefore, it can be used for business, and helping partners to have less cash for installment payments.”

Currently, of the 719 thousand Amartha partners who have joined as borrowers, around 60% of them are engaged in trading businesses, such as food stalls, grocery, fashion, children’s toy shops, and others. The composition of food stall and grocery business owners dominates around 20%-30% in this business group.

During the first half of this year, Amartha has disbursed loans of Rp914 billion, up 35% YOY to 203 thousand partners. Interestingly, about 60% of this distribution portfolio is channeled outside Java (Sumatra and Sulawesi). This number increased by 196.62% YOY.

Taufan said that this performance would continue to be improved considering the need for micro-financing outside Java is still very broad and has not been fully explored by fintech players at this time. “We are targeting to empower up to 1 million partners by the end of this year,” he said.

Fintech lending business performance

Based on OJK’s statistical data as of May 2021, there are 118 conventional and 9 sharia fintech lending providers. In total, the total assets owned reach 4.1 trillion Rupiah. The platforms also managed to accommodate around 8.7 million lender accounts (p2p) channeling 13.8 trillion Rupiah of funds.

Indonesia’s Fintech lending statistic per May 2021 / OJK

The number of loan disbursements also continues to increase from time to time. The productive sector also tends to get a slightly larger portion than the consumptive sector.

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Original article is in Indonesian, translated by Kristin Siagian

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KitaBisa Shuts Down Saling Jaga Crowdinsurance Platform Due to Permission Issue

After decided to continue with the registered donors, Saling Jaga crowdinsurance service by Kitabisa is now officially shutdown. Previously, the Investment Alert Task Force (SWI) asked Kitabisa to stop operating the platform as it was yet to obtain license from OJK.

DailySocial tried to confirm on this closure, but the team directed us to the official website which contains information on the closure and the next process for the donors involved.

“The statement said, “Saling Jaga is a mutual cooperation innovation product initiated by KitaBIsa Foundation. The Foundation and its programs, including Saling Jaga, are intended as a donation-based social program under the Money and Goods Collection Law (PUB). Ministry of Social Affairs. However, as an innovation product, we understand and respect the decision of the Financial Services Authority to re-evaluate the form of Saling Jaga licensing. Therefore, after considering various issues, and respecting the OJK’s direction in May 2021, it is with a heavy heart that we decide Saling Jaga to stop the operation. See you in another good will innovation program.”

The website also mentioned the return process for donors to send back the fund to their respective account. This application process will be opened from July 16 to July 31, 2021 and will be distributed on August 16 to 30, 2021. The balance distributed is the remaining balance as of August 16, 2021 (the current balance).

Permission issue

In a previous interview, Kitabisa’s Co-Founder & CEO, Alfatih Timur, revealed to DailySocial that Saling Jaga product has been registered with the OJK regulatory sandbox and currently waiting for further direction from the authorities. This service alone has been introduced to the public since April 2021.

“Kitabisa as a donation crowdfunding platform will still be held under the Money and Goods Raising Permit (PUB) of the Ministry of Social Affairs of the Republic of Indonesia,” Alfatih said.

Licensing issues became an obstacle which then triggered the closure of Saling Jaga service. Although it has registered with OJK’s regulatory sandbox, the concept, which resembles crowdinsurance and involves many people in the form of mutual cooperation, has gained regulator’s attention.

As of March 2021, Kitabisa noticed that there were more than 650 thousand members who had joined Saling Jaga and had distributed a total donation of Rp. 2 billion to 500 members who were diagnosed with Covid-19 or critically ill.

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Original article is in Indonesian, translated by Kristin Siagian

Oy! Raises 653 Billion Rupiah Funding, Soon to be Centaur

Afintech platform providing transfer service, Oy! reportedly raises series A funding worth of $45 million or equivalent to 653.4 billion Rupiah. Softbank Ventures Asia and MDI Ventures led the round with some investors including Pavilion Capital, AC Ventures, Alfamart, Central Capital Ventura, Wavemaker Partners.

Apart from already registered with the regulator, parties that involves in this agreement confirmed the new round. The total funding is said to take the company’s valuation to $108 million. AC Ventures entrance also brought one of its founding partners, Pandu Sjahrir, to the ranks of Oy!’s board members.

Oy!’s seed round has been raised from 2017 to 2020, several investors involved including MDI Ventures, Wavemaker Partners, Pavilion Capital, and Central Capital Ventures.

Oy! Indonesia offers several services, both for consumers and business. On the B2C sector, they have the Oy! Indonesia app to accommodate fund transfer between banks. Its capabilities also include remittances, enabling transfers between countries.

In terms of business, they provide API services to facilitate transactions, both for sending and receiving funds. Based on our observation, with the development of existing features, Oy! Indonesia seems more serious in working on the B2B segment. The open finance service potential is really impressive as business are transforming and trying to provide efficiency in the financial transaction process on its platform.

In the interbank transfer feature for consumers, Oy! is in close competition with the Flip app. We have specifically conducted an analysis of the two platforms. The market share is quite large for this service, based on BI data throughout 2019, the volume of domestic transactions was recorded at more than 218.89 million with a nominal value of Rp84.47 trillion. The remittance business alone recorded 37.7 million transactions with a value of Rp90.67 trillion.

This service is also available to resolve the interbank transfer fees issue. Alfamart entrance as a strategic partner shows interesting indication, regarding the potential of Oy! to enter the online-to-offline (O2O) model in selling its services. This is in line with one of fintech’s visions to serve the underbanked, which still a big number in Indonesia.

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Original article is in Indonesian, translated by Kristin Siagian

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Vidio to Strengthen Strategy Amidst the Momentum of OTT Business Growth

The over the top (OTT) platforms are reaching its highest growth momentum. Social restrictions due to the pandemic, encourage people to look for alternative entertainment when they are at home. Video apps have become one of the most popular choices — at least as mentioned by several surveys, including the recent one by The Trade Desk and Kantar.

Obviously, the industry players won’t waste this opportunity, especially local players. Vidio, an OTT platform under Emtek, has recently become a hot topic. Apart from its impressive performance, with the constant position at the top of the rankings for apps in the entertainment/video category, they are also rumored to have planned some strategic actions.

It was rumored that the on-demand video giant Netflix was interested in investing in Vidio. But when we confirmed, the company replied that so far the information is market speculation. Meanwhile, company executives, in several interviews with the media, said that at this time Vidio was indeed open to obtaining external funding [beyond the injection of the parent conglomerate group].

Business growth

Vidio’s Vice President Marketing, Rezki Yanuar, said that growth in terms of revenue in Q1 2020 increased by 3-4 times compared to the previous year. This is also driven by the number of users who heavily increased. The exponential traffic occurred around April 2020, at that time one of Vidio’s strategies was to offer free access, also to facilitate changes in consumer behavior in the first phase of PSBB.

Vidio’s Vice President Marketing, Rezki Yanuar / Vidio

The growth is also supported by the applied business model. There are two approaches, the first is free access to certain content [movies, series, TV streaming] with advertisements. Next, the premium access to exclusive content such as football match. The first model is considered to be a good bridge to convert new audiences, especially those who are unfamiliar with OTT services or [free] TV viewers.

“OTT is similar to e-commerce services in the past. At first, people were not familiar with the fact that shopping had to be charged for shipping, but now they are getting used to it. It’s the same with OTT, when people get value or benefit from the shows that are presented, they can understand when they have to pay. to watch certain shows,” Rezki said.

To date, Vidio already has more than 1.5 million paid subscribers. In addition to sports broadcasts, his team said that original content was the most popular. For this reason, they are quite aggressive in production this year, there are currently 7 series ready to be aired. The aggressive move of local content is also seen as a way for Vidio to reach more Indonesian filmmakers.

Indonesia’s OTT market

Persaingan aplikasi video streaming Indonesia / DailySocial — Indonesia’s streaming app competition / DailySocial

The OTT industry is in fact, very competitive. The premature market results in massive penetration of foreign players. For local players like Vidio, unique selling points are crucial in order to bring more value to its users.

Responding to market competition, the Vidio team is quite confident that with their knowledge of the local content industry they believe they can better understand the entertainment needs of the Indonesian people. Moreover, Vidio has the support of one of the oldest media companies in Indonesia.

“The most significant OTT competition is content. Marketing and good products are useless without content that can fulfill user needs. For that, we have three pillars related to content, live streaming, sports, and original series/films,” Rezki added.

Understanding of Indonesian culture is very useful as a strong capital for companies to compete. This includes the old habit of consuming pirated content. Vidio has an anticipatory step by having a special team that works with other digital platform providers such as Google or Facebook.

Collaboration with telco

Another strategy taken to expand its content coverage is to collaborate with other content producers. There are several collaboration agendas, but the Vidio team cannot reveal anything yet to the public. Fox Sports is an example of Vidio’s company partner to enter its content ecosystem. Sports shows such as F1 racing or MotoGP are considered to have a fairly good level of demand in Indonesia.

Collaboration is also intended to launch a monetization strategy. Vidio collaborates with some telecommunications and broadband companies as service distribution channels. In fact, the conversion of premium users from this partnership is quite large. In its form, Vidio access is used as an add-on to telecommunications/data services sold to customers. Also, payment options include paying for a Vidio subscription with a balance cut mechanism. Regarding this payment, the portion is quite large compared to others.

Business plan

Despite the rumors circulating about the fundraising plan, Vidio is indeed trying to become a stronger and independent business entity. He admitted that he aggressively escalating business since last year. The OTT market is very sexy, the company group also provides support, therefore, Vidio is getting serious working on its potential.

“Emtek as a group is well aware that even the future of the entertainment business is digitization. This is a strong reason to push Vidio to go further,” Rezki said.

In general, there are several aspects to be accelerated as a strategy to grow the business. First, the content expansion. Second, product innovation — including supporting live streaming activities, interactive quizzes for complementary events, and other gamification features. And third, Vidio seeks to increase marketing and distribution channels, not only to the smartphone platform but also to smart tv.

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Original article is in Indonesian, translated by Kristin Siagian

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The Crypto Fever: From Regulation through Technology Development

Over the past year, the trading price of crypto assets recorded a significant upward trend. Bitcoin, for example, is still experiencing a strengthening over 40% year-to-date as of May 19, 2021. Meanwhile, over the past year, it shot up to 320%. This trend has attracted many Indonesian investors.

The high transaction of crypto assets has made many countries take steps to protect the ecosystem. Globally, Asia has played a significant role in the development of the crypto asset industry over the past decade.

In this region, each country is competing to take part as a hub for crypto and blockchain assets. According to CoinGecko’s report, there were 318 new exchanges, an increase of 706% in the last 18 months.

As many as 40% of them come from Asia.

Indonesia, as the fourth most populous country in the world, is home to a large proportion of the digital business community. Quoting from the e-Conomy 2019 report, as many as 92 million Indonesians are still unbanked, followed by 42 million people in the underbanked group. The rest, there are 42 million people who already use financial or banked services.

This great opportunity is at the same time a serious challenge for the financial industry, many financial analysts believe that unbanked users could be the next potential market in digital currency or crypto.

In Indonesia alone, crypto assets are regulated by the Government through the Ministry of Trade and specifically formulated a special agency under it, the Commodity Futures Trading Supervisory Agency (CoFTRA). This was marked by the issuance of Minister of Trade Regulation No. 99 of 2018 concerning General Policy for the Implementation of Crypto Asset Futures Trading.

CoFTRA has also discussed the establishment of a special exchange for crypto assets. In an interview with DailySocial, Head of CoFTRA, Indrasari Wisnu Wardhana, said that this plan is going through the verifying process the required documents submitted by the Exchange to CoFTRA. In the application, there are several requirements to be fulfilled/completed by the prospective Crypto Asset Physical Market Exchange.

He encouraged candidates for the Crypto Asset Physical Market Exchange to fulfill the requirements as soon as possible, therefore, CoFTRA can immediately issued for approval as a Crypto Asset Physical Market Exchange. “The presence of the Crypto Asset Exchange is very important, but we need to prepare it well, therefore, nothing happened that can harm the community. The Ministry of Trade through CoFTRA is finalizing the establishment process of the institution,” he said.

He continued, the presence of the Futures Exchange in physical trading of crypto assets has a strategic role to oversee physical trading transactions of crypto assets and mitigate risks, especially crypto assets that can be traded on the physical market of the variants that have been set by CoFTRA.

According to CoFTRA’s records, until April 2021, crypto asset customers who actively transact at crypto asset traders reached 4.8 million people with a transaction value of around IDR 237.3 trillion (January-April 2021). Wisnu thought, customers make investments or crypto transactions because they see the value/price of crypto assets that tend to rise from time to time.

The price movement of crypto assets, especially Bitcoin, from January 1, 2021 to April 30, 2021, increased by 95.82% to Rp. 807.3 billion from the previous Rp. 412.2 billion. “This is what drives crypto asset customers to have a high interest in making crypto asset transactions.”

The issued regulation

After the Minister of Trade Regulation No. 99 of 2018, CoFTRA issued another derivative rule in the form of a Perba (CoFTRA Regulation) No. 5 of 2019 concerning Technical Provisions for the Implementation of the Physical Market for Crypto Assets on the Futures Exchange and the amended regulations, as well as CoFTRA Regulation No. 7 of 2020 concerning the Establishment of a List of Crypto Assets that can be Traded in the Crypto Asset Physical Market.

The CoFTRA regulations set out several institutions involved in Physical Trading of Crypto Assets, those are the Futures Exchange, Futures Clearing, Depository Managers and Crypto Asset Traders.

The rapid development has forced CoFTRA to formulate other regulations, including provisions regarding the obligation of prospective Crypto Asset Physical Traders to report to CoFTRA all the identities of registered customers; report all managed wallets; every Customer acceptance process for prospective Crypto Asset Physical Merchants must be carried out with know your customer (KYC) system.

Then, customers are given an understanding or explanation regarding the risks and implementation of Crypto Asset transactions. Another oversight carried out by CoFTRA is the issuance of the Circular Letter of the Head of CoFTRA No. 758/BAPPEBTI/SE/12/2019 concerning Submission of Periodic and Occasional Reports in the context of monitoring the activities of physical traders of crypto assets.

In order to stay in line with developments, CoFTRA has amended CoFTRA Regulation No. 5 of 2019 three times with Commodity Futures Trading Supervisory Agency Regulation Number 3 of 2020 concerning the Third Amendment to Commodity Futures Trading Supervisory Agency Regulation Number 5 of 2019 concerning Technical Provisions for the Implementation of Physical Markets. Crypto Assets on the Futures Exchange.

The summary of the technical provisions in this policy contains:

1. The transaction mechanism that occurs in the Crypto Asset Physical Trader System in the Physical Futures Exchange Market, some of the Crypto Assets are stored in a wallet where the deposit is held and some are stored in the Crypto Asset Physical Trader’s Storage, the deposit of funds, both buying/selling of funds is recorded and kept in a separate account of the Clearing House (70%) and a separate account of a Physical Crypto Asset Trader (30%) and also reported and supervised by the Futures Exchange and CoFTRA;

2. Crypto Asset Physical Merchant is required to have ISO 27001 (information Security Management System) and ISO 27017 (cloud security) and ISO 27018 (cloud privacy) certifications whether Crypto Asset Physical Merchant uses the cloud;

3. Servers used as trading systems must be placed in the country. It’s the same for Crypto Asset Storage Managers;

4. In order to guarantee the Crypto Assets secured, CoFTRA requires that the storage be carried out in the form of hot storage and cold storage, where 50% of the total Crypto Assets managed by the Crypto Asset Physical Merchant must be placed with the Crypto Asset Storage Manager and those with agreement guarantee cooperation with the Crypto Asset Storage Insurance;

5. Of the 50% Crypto Assets kept by Physical Traders of Crypto Assets, at least 70% of them are stored offline or in cold storage and 30% at most are stored online or hot storage;

6. It is prohibited to trade other types of Crypto Assets other than those stipulated in the Perba concerning the list of types of Crypto Assets that can be traded in the Crypto Asset Physical Market, including the prohibition of selling Crypto Assets created by the prospective Crypto Asset Physical Trader concerned or its affiliated party;

7. Mandatory denomination in IDR;

8. In terms of ownership of customer funds, CoFTRA stipulates that Crypto Asset Physical Traders must place 70% of customer funds in a separate account placed with the Futures Clearing House.

CoFTRA’s intention towards all these regulations is to protect the public in crypto assets trading. Reflecting on other countries, there are many platforms that take away the money of their customers or investors.

Limited to trading

As we look closely, all the regulations issued by CoFTRA covers only crypto trading. This means that crypto assets stored for a certain period of time on a platform, are exchanged for other products of the same type, and can be bought or sold by investors through a futures exchange, which is fully regulated by CoFTRA.

Indonesia is one of the countries that recognizes crypto assets as a commodity, not as a currency.

In the Selasatartup session held by DailySocial, Tokocrypto’s COO, TK Hermanda mentioned the regulation regarding crypto’s derivative products, one of which is decentralized finance (DeFi) and centralized finance (CeFi) which is yet to be included in Indonesia’s regulation.

“When it involves trading, it will be under CoFTRA, but when it becomes a new instrument that involves finance, it should be under OJK. That’s my opinion. This discourse will surely develop. OJK should be open with a new variant [crypto]. Therefore, it can’t be limited to trading, there are many derivative crypto assets beyond that to be accommodated,” said the man familiarly called Manda.

Apart from that, Chairman of the Indonesian Blockchain Association (ABI) Oham Dunggio highlighted that the current crypto asset business processes, is it clearing, depository, and exchange processes, occur individually in each entity. He said, this is quite basic issue that should be highlighted by CoFTRA before entering into other matters, such as taxation.

“In my opinion, this crypto asset business process is only in one entity assisted by blockchain technology. For me, this is only basic before it penetrates on other things, such as taxation,” Oham said.

The presence of ABI and ASPAKRINDO (Indonesian Crypto Asset Traders Association) is tasked with guarding the crypto industry to grow healthy. ABI is an association that focuses on blockchain technology with two main focuses, advocacy and education. Meanwhile, ASPAKRINDO has a vision to realize the growth and development of the crypto asset industry in Indonesia.

ASPAKRINDO’s Secretary, Robby argued, CoFTRA has high concerns as it involves consumer funds, therefore they are more careful in making rules and policies.

He even considered that CoFTRA is the most prepared regulator for the Crypto Asset Trading policy. The reason is, there are some foreign exchanges that do not follow the regulations in their country.

“ASPAKRINDO’s role is to bridge the needs of Crypto Asset Physical Traders registered in Indonesia with CoFTRA in formulating the best rules for Indonesian consumers,” Robby said.

In addition to the marketplace for trading crypto assets, derivative products have emerged, such as DeFi (decentralized finance), NFT (Non Fungible Token), and others present in Indonesia. Tokocrypto and Pluang are two examples that offer such services to their investors. Next, there is NOBI that specifically offers passive income for crypto investors through three DeFi-based products (staking, saving, and strategy).

Responding to this derivative product, Wisnu said that since CoFTRA Regulation Number 5 of 2019, people who want to trade crypto assets must be careful, study the characteristics of the investment instrument, and know the background/profile of the trader in charge, whether the trader has registered with CoFTRA.

To date, CoFTRA has recorded as many as 13 Physical Crypto Asset Traders who have met the requirements to trade crypto assets. Then set as many as 229 crypto asset coins eligible for trading on the Crypto Asset Physical Trader. Tokocrypto is the first company registered with CoFTRA since November 2019.

He said, with optimism and targeted policies, it is not impossible that crypto asset trading will grow and have competitive diversification from other types of investment assets, including stocks in the future.

“Looking at what is happening right now, there are already many types of diversification of crypto assets, ranging from stable coins and other types of crypto assets based on the development of Ethereum as the backbone.”

Wisnu also sees that the implementation of crypto asset trading will have many challenges. If not closely monitored, this instrument can be exploited by irresponsible parties such as marketing through MLM or Ponzi schemes which are currently rife in trading crypto assets that have not been approved by CoFTRA.

“Not to mention that crypto assets can be used as a means of money laundering and suspicious transactions for illegal acts such as terrorism. For this reason, it is necessary to supervise and cooperate with relevant authorities in monitoring crypto asset trading such as PPATK and the Police to prevent transactions that are prohibited in physical trading of crypto assets,” Wisnu said.8

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Original article is in Indonesian, translated by Kristin Siagian
Gambar header: Depositphotos.com

The Essentials of Crypto as a Digital Asset

Before the Bitcoin price went public, Lawrence Samantha, who currently serves as Founder & CEO of a cryptocurrency investment platform called “Nobi”, was already interested in studying this digital asset based on blockchain technology. With a programming background, he began to explore the various types of digital currencies until he finally believed that crypto was the most perfect digital asset.

However, behind the perfection of crypto assets, there are many things one must learned in order to understand the whole process. Although crypto assets in Indonesia are currently limited to commodities, there are already several platforms that offer easy ways to profit from various types of crypto assets, one of which is Nobi.

In addition, Lawrence also said some other reasons to encourage people to invest in crypto assets. The decentralized technology on top of the blockchain platform allows users to monitor movements and carry out transactions without intermediaries, in other words, this technology offers a more transparent system. In terms of price, one of crypto’s many variants, Bitcoin, is referred to as the asset with the highest increase over the last 10 years.

Several facts mentioned above will sound tempting to some people. However, with all the advantages it has to offer, it is important to learn the whole practice of crypto as a digital asset.

Risk profile and high volatility

With the high level of security offered, crypto assets are also known to be highly volatile, meaning the price can go up rather quickly and then suddenly drop as well. Then, the question arises, are crypto assets suitable for the market in Indonesia?

Quoting from Coindesk, “Crypto markets are volatile because there’s no central authority to stop them from being so. Crypto asset prices, therefore, can be assumed to represent investor sentiment more fairly. This hints at what a “pure” market could look like.”

Lawrence also said that Indonesia is actually quite behind in terms of crypto assets with only 2% understanding rate, while there are more than 10% of people who have used this product in the United States. Regarding high risk, Lawrence emphasized, “All investments will have high risk if we’re not willing to learn.”

Crypto’s variants

The Ministry of Trade (Kemendag) recorded that crypto asset investors as of May 2021 have reached 6.5 million people with a transaction value of IDR 370 trillion. It has exceeded the number of capital market investors on the Indonesia Stock Exchange. This proves the high interest of Indonesian people to invest in crypto assets.

There are more than 3,000 types of crypto assets circulating around the world, and there will be more in the future. Recently, CoFTRA published a list of 229 crypto assets allowed to use for trading in Indonesia. Some of the popular types are include Ethereum, Dogecoin, Ripple, Stellar and the most used is Bitcoin. There are only 21 million bitcoins worldwide.

Among the many crypto assets with high volatility in circulation, it turns out that there is a category of stablecoin. Quoting from Coinbase, Stablecoins is a digital currency that are pegged to a “stable” reserve asset such as the US dollar or gold. Stablecoins are designed to reduce the volatility associated with non-pegged cryptocurrencies such as Bitcoin.

Continuous lesson

When we started something, there are always some must-followed learning processes. It is similar to when the internet’s first penetration in Indonesia, not everyone understands how to use it. However, as time goes by and the benefits are getting real, people are increasingly interested in learning further.

It is not much different with crypto assets, which are also referred to as investment alternatives in this digital era. In terms of technology, there have been a lot of innovations that have emerged in the last ten years in the cryptocurrency industry. More derivative products are delivered from crypto as digital assets. This shows that the more people who are involved in this industry, the more innovation will be present.

As someone who has studied crypto assets from the beginning, Lawrence advised that everyone who wants to get into crypto asset investing must be willing to learn. Understand the most fundamental in investing and its products [crypto assets]. Recognize its nature and continue to monitor its movements. That goes with the saying that represents if you don’t know it, how would you love it.

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Original article is in Indonesian, translated by Kristin Siagian

Gambar Header: Depositphotos.com

Payfazz Secures E-money License from BI, Focusing on User Base in Rural Area

Currently focused on providing access to financial services to people in rural areas, Payfazz will soon enter the electronic money (e-money) business. It was marked by obtaining a license from Bank Indonesia on June 28, 2021 as a server-based Electronic Money Provider through PT Cashfazz Teknologi Nusantara, a subsidiary of Fazz Financial Group.

Was founded in 2017, Payfazz has helped more than 700 thousand MSMEs or agents providing more than 80 million people through its application. It enables merchants to serve various types of transactions, including PPOB payments.

“This is a very significant achievement that we have been waiting for for a long time. With the electronic money license, we can bring the company’s goal closer to becoming an integrated financial service provider application for people without access to banking services.” Payfazz’ Co-Founder & CEO, Hendra Kwik said.

Furthermore, this license will be used by the company to create more opportunities to facilitate agents, especially to assist global and local corporate clients at Xfers in collecting payments from the unbanked community.

Previously, Fazz Financial Group had obtained a remittance license through Bank Indonesia, activated payment gateways for both global and local companies through its investment in Xfers (Licence for Large Payment Institutions – MAS), penetrated the digital banking industry through collaboration with BRI Agro (BRI’s subsidiary), and developed loan services through its investment in Modal Rakyat (OJK licensed for P2P financing).

“We expect this license to bring positive impact on the company’s business as a financial service provider and drive transaction volumes three times up the current one. This electronic money license has the potential to strengthen synergies between Payfazz and other financial products within the Fazz Financial Group,” Hendra said.

As of May 2021, Fazz Financial Group claims to have processed transaction volume over $10 billion per year through its product ecosystem, and this electronic money license can increase the transaction volume even higher.

Partnership expansion

Over the past two years, Payfazz has continued to expand partnerships with fintech startups and other related services, by presenting attractive products and services for MSME players in the country. Starting from Payfazz Buku, supported by Credibook, and launching several products for MSME players.One of the products is Warung Online, which allows orders from customers to be recorded directly in the Payfazz application.

Payfazz’ basic services in particular provide bill payments, money transfers, merchant payments, loans, and deposit/savings services for the unbanked through platform partnerships with various financial institutions.

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Original article is in Indonesian, translated by Kristin Siagian

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