Increase in Living Cost to Affect Startup Verticals

The government presents a “reward” of increasing rate on some products and services after the turn of the year. The public, particularly those with middle to low income is certainly the most affected.

The increase rate and services become highlighted issues by Indonesia’s digital service providers. The question is how much the increase in living costs will affect the business and consumers.

The increasing rate and costs

The contribution rate of the Social Security Organizing Agency (BPJS) for Health is the most highlighted issue. Based on Presidential Regulation (Perpres) Number 75 of 2019, BPJS Health contribution rate increased by around 65% – 115% for three different classes.

The cigarette excise tax is another issue for some Indonesian people. With the number of smokers reaching 65.19 million people, the increase in cigarette excise at 21.55% is pressuring for smokers who are mostly come from the middle class.

In the transportation sector, rates on some toll roads are also increasing this year. The Jakarta-Cikampek Toll Road, Surabaya-Gempol, Belawan-Medan-Tanjung Morawa, are some of the toll roads with increasing rates. The rising price is to be followed by the government’s plan to revoke the 3 kg LPG subsidy. It’s still under discussion, however, if it’s true, the price per bottle estimated to reach Rp 35,000 according to market prices.

Above all, the current global economic situation expected to remain depressed along 2020. The neverending trade war between US and China and the global recession create another external issue in the local economy.

Impact on digital service providers

Bima Yudhistira, an INDEF economist, agrees that this year will be a difficult year for owners of digital services. The first thing he highlighted was the flow of funding for tech companies would rather difficult given the most funding came from the US, Europe, China, and Japan, where the global recession effect is projected to hit severely than in Indonesia.

In terms of demand, the increase rate of products and services will make people think twice to spend money. “In 2020 they will probably save some money because the increase in living costs is not followed by a significant increase in income, therefore, I thought the demand will not be as high as in the previous years,” said Bima.

This kind of situation will encourage investors in the digital ecosystem to be more aware of their investment. Bima believes the “money-burning contests” often performed by the on demand platforms, such as Gojek and Grab, e-commerce, online travel applications (OTA), and peer-to-peer lending will be much reduced this year.

MDI Ventures’ Head of Strategist, Aldi Adrian has a rather different opinion. He said the global economic slowdown had no effect on the domestic digital business ecosystem. Aldi actually sees what happened to WeWork and Uber as factors that will influence the startup business, especially in terms of acquiring new customers using unrealistic discounts.

“The outside sentiment, from the US in particular, such as WeWork and Uber, is much greater. That is a sign that they must change methods and cannot depend much on discounts, yet to have a more sustainable strategy, must be more positive, a business which capable of cashcow,” he added.

Moreover, Aldi also predicts that there will be types of startups that can grow better in this difficult year. He mentioned startups in the category of software as a service (SaaS), B2B2C e-commerce, and social commerce.

From the consumer’s perspective, in this case, those people who have been spoiled with discounts, the situation forced them to spend money wisely. Bank Indonesia (BI) has projected this year’s inflation to grow at 3.1%, and the food supply chain rate will be a shock. The combination of the economic situation with the demand for a new method has created a conclusion that the digital service providers will act more rationally.

“In 2019, the inflation rate is low because there’s no increase in living cost, while this year everything is significantly increasing, people should think twice to spend in order to save money,” Bima said.

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Original article is in Indonesian, translated by Kristin Siagian

Pros and Cons of Indonesia’s Ban on Netflix

Since the original content from Netflix in 2015, the video streaming platform keeps improving in quality. One of its validation comes from the Oscars 2020 where its original content successfully took 24 nominations. Two of those, The Irishman and Marriage Story managed to be in the list of Best Movies of the year.

Apparently, the public company that used to be a Silicon Valley startup now aligns with Hollywood’s giant, such as Warner Bros, Universal Pictures and many more. The high-quality content has encouraged users to pay more (compared to similar apps), including in Indonesia.

Entering the middle of last decade, around 2014-2016, Netflix’s business model has been replicated around Southeast Asia. There’s iflix (2014), Hooq (2015), and Viu (2015). They offer identical services with coverage reached up to Indonesia. Not only purchasing the airing license, but they also create original series.

Absolute rejection since its debut

In January 7th, 2016, Netflix announced to expand globally, coverage in 130 countries, including Indonesia. The plan raised various reactions of some parties. As the regulator, Kominfo listed some administrative requirements for OTT (Over The Top) players. Two of which to be highlighted are permanent business establishment and censorship commitment.

In addition, OTT involves content, such as data, information, and multimedia which is running and accessible through internet media. In terms of regulation, those content are considered “depending” on the telco’s network.

“Netflix will be assisted in terms of regulation because of some concerns in the community that must be protected, particularly for content,” Rudiantara said as the current Kominfo Minister then.

Aside from the government, associations also signaling rejection to the NFLX-code company. Indonesia’s Telematics Communities (Mastel) said some missed regulations, the Presidential Regulation No. 39 of 2014 on questioning the provisions of the organizers of film and TV subscription services. In addition, Law No. 32 of 2002 and Law No. 33 of 2009 concerning the formation of legal entities.

On January 27th, 2019 at 12 am, Netflix is no longer accessible from any kind of Telkom’s internet network.

Remain to be the first alternative

As quoted from Statista, Netflix has a total active user of 418 thousand per 2019 in Indonesia, it’s projected to increase to 906 thousand this year. From different research, as quoted from AppAnnie’s report titled “State of Mobile 2020”, Netflix still managed to be in the top 5 streaming apps of smartphone users in Indonesia.

The most popular video streaming app in various countries / AppAnnie

Outside Telkom’s internet coverage, Netflix is still accessible. In general, non-red plate operators will prohibit only the site or application that is already listed in TrustPositif – a channel for the list of officially banned websites by the Ministry of Communication and Information.

In Indonesia, there are also some similar services, such as iflix, Viu, Hooq, Genflix, even local players like Vidio and Go-Play.

Some global platforms like Netflix are starting to penetrate the market, such as HBO Go and Amazon Prime, even the specific content services such as beIN Sports and NBA League Pass in the sports category.

List of Indonesia's most popular video streaming service rate / DailySocial — List of Indonesia’s most popular video streaming service rate / DailySocial

Quoted from Tirto‘s, Telkom’s Consumer Director, Dian Rachmawan said, “OTT players are considered a latent danger for operators because without spending large investments, they make profits on operators’ networks.”

In fact, other foreign on-demand video services, such as Hooq, Iflix and Viu, has established B2B collaboration with local operators to provide business benefits to each other. Some are also coping with media owners, for example iflix with MNC Group.

However, Telkom has another argument related to this ban, it’s related to pornographic content, especially the Law on Pornography and the ITE Law.

Potential advantages from taxes

In recent years, the Ministry of Finance has been actively pursuing tax from foreign OTTs operating in Indonesia. Not only video streaming services, but they began to “hunt” big companies like Google, Facebook and others.

The lack of regulations concerning OTT corporation tax makes the mechanism is yet to be detailed. At the Omnibus Law, there will be a regulation draft by the Indonesian Parliament that should accommodate these conditions.

Quoted from Kompas, DPR RI’s Commission I member Bobby Rizaldi exemplifies that regulations in Singapore can be applied here. Digital companies are not required to make an office, but they are still subject to tax from subscription fees from Indonesian consumers.

Similar thought comes from Hestu Yoga Saksama as the Director of Information, Services and Public Relations of the Directorate General of Taxes, “Therefore, at the Omnibus Law, the regulation will be no need for physical presence, but a substantial or significant economic presence.”

Generally, for companies domiciled in Indonesia, the government requires to pay tax, either in the form of Value Added Tax (PPn) of products sold, or Income Tax (PPh) from labor.

Potential disadvantages from the creative sector

The Night Comes for Us became Indonesia’s first original content published by Netflix in 2018. In order to increase the number of local films, in mid-2019, the company began to collaborate with Indonesian content creators and film activists to create local content specifically aired on Netflix.

Netflix’s Director of Product Innovation, Ajay Arora said the investment become Netflix’s focus in Indonesia to present content that can be appreciated in this country.

Netflix collaboration with Indonesia's ministry of Education and Culture / Kemendikbud — Netflix collaboration with Indonesia’s ministry of Education and Culture / Kemendikbud

On January 9, 2020, Netflix launched a strategic partnership with the Ministry of Education and Culture to support the Indonesian film industry.

Specifically, it is to focus on developing creative writing skills, post-production training, and short film competitions. In addition, there will be training in online security and governance to deal with the dynamic growth of creative industries. In this partnership, Netflix pours up to $1 million funds or equivalent to 14 billion Rupiah.

In fact, this kind of synergy should be excellent channel for Indonesia’s creative industries to develop as rapidly. In addition to global knowledge – in this case, insights from Hollywood films – the role of OTT can also be used as a channel for creative actors to embrace the international market. Moreover, Netflix has become a standard for movies. In addition to movies, a platform like Spotify, even TikTok has allowed digital creativity to be widely marketed.

Therefore, the partnership with OTT is ideally not only viewed in terms of financial regulation but should be able to discuss with other ministries, in this case, the Ministry of Tourism and Creative Economy.

Aim to have freedom of access

Head of the Indonesian Consumers Foundation Daily, Sudaryatmo, said that the public could question the ban of certain OTT services when it’s considered detrimental. People basically have the right to access information and the right to vote.

“First, the right to access information, the right to know. Whether the ban is preventing consumers to access information, it should be open to question,” he said as quoted on CNN Indonesia.

The thing is, this kind of ban has been running for generations. In fact, to encourage the process, Kominfo has allocated 211 billion Rupiah in 2017 to buy an internet censor machine. Although, it’s no longer a secret that the banned websites still accessible through certain mechanisms.

We aim for the internet to provide high-quality content, both for entertainment and education. Aside from ban, one thing we always highlight to the government, for the public’s digital literation. Some of the real activities to do, such as:

Actively socialize to use the government institution’s network (reach the villages) to assist them with digital literacy. The taught materials should encourage them to understand the boundaries of relevant content accessible.

Provide access and support to the digital creative industry players to stuff the nation’s internet ecosystem with high-quality content, in various formats.

With the global reach, it’s possible to have the internet free from negative content. By sharing insights on the negative content, it can be a visioner act to build a better personality. Without prohibition, the public will be aware of the negative content that should not be accessed.

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Original article is in Indonesian, translated by Kristin Siagian

The Potential of On-Demand Platform for Caretaker Service in Indonesia

Last Monday (1/13), a venture capital EV Growth announced to invest series B funding in the on-demand platform for caretaker service Homage. Based in Singapore, the startup provides personalized caretaker curation services, for individuals, families or organizations.

After the investment, Homage’s Co-founder & CEO, Gillian Tee said his intention for expansion to Indonesia. He saw the large market potential.

Based on BPS data, the total elderly (people in their 60s and older) increased from 18 million in 2010 (7.56%) to 25.9 million in 2019. In 2019, Indonesia sent 300 caretakers for the elderly to work in Japan.

Digital health services enthusiasm

Last year, DSResearch has released “Wellness Report 2019“, one of the highlighted points is the use of healthcare apps. There are 438 people among the total 600 respondents in Jakarta who have used the websites or apps for healthcare or wellness.

Consultation-based and doctor’s appointment apps are the most widely used. Halodoc (45.3%), Alodokter (32.3%) and KlikDokter (18.8%) are the apps with the highest percentage. The healthtech industry trend is due to the presence of consumer trust in the health solutions through digital media.

It is also questioned in the report on the factor that makes the respondent loyal to the healthtech apps. The easy access, complete features, and total users are top of the list. Followed by costs, product innovation, and brands.

DSResearch findings on heathtech consumers

The on-demand platform for caretaker in Indonesia

In Indonesia, there are some players using a platform to connect caretaker provider with the communities. First, there is MHomecare, which is currently available in Jabodetabek.

MHomecare’s Angga Pramana Jaya said, based on the National Agency for Placement and Protection of Indonesian Workers (BNP2TKI) data, the growth of nurse graduates in Indonesia has reached more than 26 thousand people each year, the employment growth on the other hand (in terms of health service facilities) was far below that.

Health workers (nurses, midwives, and caretakers) who are members of this service can receive training provided by MHomecare Provider Academy to develop their soft skills and hard skills, including service standardization.

In addition, there is a Homecare24 portal. This startup founded by Theresia Monica has embraced markets in Greater Jakarta, Medan, Surabaya and Makassar. The lack of appreciation and salary rate for nurses in Indonesia is currently one of the reasons for this service development.

There are other startups tried to explore a similar segment, such as Insan Medika, RuangRawat, and MyNurz.

Business opportunities

In the interview with DailySocial in the midst of 2019, Homecare24 has acquired 1300 caretakers. While MHomecare has 672 caretakers who already passed the selection process and the internal education program. Each application has been used by thousands of users.

MHomecare caretakers who graduated competention test

As seen from the survey on the public enthusiasm with the digital-based health services, about the easy access and others, on-demand service for caretaker also has good potential.

Not to mention the needs of caretakers in the Southeast Asian region. BNP2TKI detected an increase in demand for caretaker services from Indonesia. Sequentially the number starts at 278 people each, 279 people, 324 people and 329 people from 2015 to 2018.

The Director of BNP2TKI Services said, they actually served 550 quotas, but it’s not full yet. Using the access and synchronization with digital platforms, it is believed to deliver more caretakers especially when graduates from the nursing academy keep increasing.

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Original article is in Indonesian, translated by Kristin Siagian

GoFood and GoPay Optimism for Gojek to be a Profitable Company

GoFood and GoPay are known as Gojek’s two main businesses with the most significant growth of all services. Last year, GoFood is said to gain $2 billion revenue, 50 million transactions per month and grow by 2.5 times. While GoPay contributes for $6.3 billion, not to mention the growth rate.

In one of the sessions by PE-VC Summit 2020 last week (1/15), inviting Gojek’s Chief Food Officer, Catherine Hindra and Gopay’s CEO Aldi Haryopratomo to dig more insights on how the two services play role in Gojek’s business.

Aldi said, 2019 is a good year for business growth, also the beginning of efficiency strategy. How to make the most of every penny from investor’s pocket, engineer’s time management has finally paid off. “This is one of the benefits of being a low capitalized player in this industry,” he said.

The urge of efficiency actually comes from the investors and most are private equity, among those are Northstar and Warburg Pincus. Both are encouraging founders to run Gojek’s business as prudent.

Catherine also said, all the initiatives from investors have directed Gojek to the right business model into profitability. By the time, the benchmark of Gofood’s achievement grows in terms of the transaction number, into gross transaction value (GTV), and now revenue.

We’re now on the right track, the progress is in line with our plan. That’s [the information] it,” he said.

Gofood’s significant growth is actually not in comparison to a similar industry in China. Food delivery in China has reached 13%-15% of the total consumption, while Indonesia is still a long way to go. Therefore, some of China’s innovations often become a role model.

He also highlighted the achievement of Gofood and Gopay is not simply due to its features, but also each other’s bound in one ecosystem.

“we’re not working individual, but as a company that gives the holistic solution. This is what makes us different from others.”

In fact, the company’s DNA has given the whole solution to consumers. Therefore, not only about digital payment and food delivery but the whole daily aspect.

To compare with Grab, Gojek’s funding has a big gap. Since it was founded in 2010, Gojek has secured $3 billion funding in 12 rounds. While Grab reached $9 billion in 12 rounds. Therefore, Gojek has enough cash for a tech company in ASEAN.

In order to build the regional existential, Grab performs expansion in an organic and inorganic way. In a way to make Uber an acquisition in the ASEAN market. While Gojek is just begun the expansion in late 2018.

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Original article is in Indonesian, translated by Kristin Siagian

Application Information Will Show Up Here

MDI Ventures to Release Two More Managed Funds in 2020

MDI Ventures is to release two more managed funds to enhance Telkom Group’s startup investment portfolio from early-stage to the later stage.

MDI Ventures’ Head of Investor Relations & Capital Raising, Kenneth Li said to DailySocial that this step was taken due to the first-round fund distribution has run out in four years.

“True, that is the plan. However, I’m not in the position to share the details because the process is just begun,” he added.

In early December 2019, Telkom Group through MDI Ventures with South Korea-based KB Financial Group established a new managed fund named Centauri Fund.

Prior to this, halfway through 2019, Telkomsel, a subsidiary in cellular business, created an investment arm named Telkomsel Mitra Inovasi (TMI) managed by MDI Ventures.

Kenneth affirmed the plan of two new managed funds would create diversity in Telkom Group’s investment portfolio and its subsidiaries.

“Centauri focused on Series A and B. Meanwhile, TMI has a specific requirement from Telkomsel to be a single LP fund and more CVC style with synergy requirement,” he added.

In terms of funding, he said the company is to make another fundraising on every new managed fund.

“[Fundraising] Rp1.4 trillion is only for Centauri Fund. Each fund, [the allocation] is different. Later [there will be] another fundraising,” he said.

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Original article is in Indonesian, translated by Kristin Siagian

Mom-and-Pop Stores Potential for Innovation This Year

In 2019, there are some specific solutions targeting mom-and-pop stores or warung in Indonesia, either food or supply chain segment. Names such as Wahyoo, Warung Pintar, Bukalapak, Tokopedia, and Grab are involved in the development of warung. Not only in terms of digitization, but also to improve the quality of the small businesses.

In the list of names mentioned, Wahyoo and Warung Pintar are quite different. Wahyoo, founded in 2017, aimed specifically at the food stall.

Using technology, Wahyoo delivers a solution for stall owners to have easy access to FMCG brands. Until the end of 2019, they’ve accommodated 13,050 food stalls.

Another one is Warung Pintar that provides solutions for mom-and-pop stores or personal retail. Modified the space with the latest trend, such as power outlets, wifi, TV, and many more.

Aside from Jabodetabek, Warung Pintar is expanding to Banyuwangi. Per 2019, Warung Pintar team is said to acquire 1,500 productive talents to gate the warung.

Meanwhile, Tokopedia, Bukalapak, and Grab are helping warung to grow in a particular way. Tokopedia with Mitra Tokopedia, Bukalapak with Mitra Bukalapak, and Grab with Grab Kios by Kudo. Those three have similar approach in terms of helping the warung business grow.

They provide warung’s owners with a special app, for the owners to have access also provide consumer’s needs through the app, such as balance top-up, data package, PPOB bills, and others.

2019 is the beginning, 2020 is for validation

What the tech-company did with solutions to the warung business is kind of innovative. In fact, it’s very potential to grow big. With tons of investment and 2019’s achievement, this year is going to be the stage for their solutions that is not only innovative but also comes with positive impact.

Wahyoo‘s CEO, Peter Shearer talked to DailySocial that they will be focused on product innovation and developing more features in the app.

“In 2020, we’re to focus on product innovation, developing more in-app features to answer their [warung’s owners] demand, build a strong relationship with strategic partners, such as Telco, financial institution, online transportation, supply chain startups, and many others,” he said.

Warung Pintar’s Co-founder and CEO, Agung Bezajrie Hadinegoro shared a similar response. After two years of listening to and learn from Warung Pintar’s merchant owners, he made a commitment to make a serious improvement in their services.

“This year’s innovation will be focused on providing high-quality services for warung’s owners. These past 2 years we’ve been learning from the owners, we’ve come to the conclusion that the grass-root community has been aware of the technology. It’s a matter of how the industry players create products in line with their needs and behavior. This year, we also aimed to expand to a broader area,” he continued.

For Tokopedia, Bukalapak, and Grab, the chance for warung’s prosperity is huge, considering those three are the giants that do not only create solutions but also grow the ecosystem. There are two things might happen to warung business, become the financial inclusion agent and the last supply chain distribution before it comes to consumers.

The e-money development with other digital payments is very likely to be integrated with warung and its position as the closer ones to the communities. In general, warung’s consumers are those in the neighborhood. The demand for warung that is used to be daily supply, such as rice, soaps, and others, can expand to financial needs, such as money transfer, disbursement, and others.

On the other side, to create a distribution chain with promising offers can make more benefits for warung business. Also, the various scheme of payments is to grow the warung business even bigger.

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Original article is in Indonesian, translated by Kristin Siagian

The Integration of E-money and Apps Marketplace Resulting an Easy Access for Public Purchasing

The total credit card distribution as recorded in June 2019 is at 17.21 million. Debit cards available for online transactions are also limited. These two become the obstructions to all Indonesian users in buying or paying for digital products on the app market platform, such as Google Play and App Store.

The app market integration with local e-money platforms becomes an alternative to increase app purchasing. According to Bank Indonesia, in November 2019, the nominal for transactions using electronic money exceeded 16 trillion Rupiah, it’s 8 times higher from January’s record at less than 2 trillion Rupiahs.

Google Play was prior to collaborating with GoPay, while the App Store officially took a similar step with Dana this week.

GoPay quoted a huge number of transactions. The total expense of Indonesians spending on mobile apps in 2018 is to reach $313.6 million (more than 4.3 trillion Rupiah).

Based on iPrice’s data compilation, GoPay and Dana are on the top three positions for the largest monthly active users in Indonesia. The integration of both platforms with the app marketplace is likely to increase the consumption of digital products in Indonesia because Google Play and iOS App Store are worldwide’s two biggest marketplace(s) for applications.

Asia Pacific, including Indonesia, is a treasure market for Google Play’s app market, in terms of users and developers. App Annie noticed the significant growth in download and consumer spend rate. In 2017, the Asia Pacific Region has contributed over $11 billion of Google Play’s total income of $22 billion, in the games and dominating apps categories.

As quoted in App Annie’s report titled “State of Mobile 2020”, in terms of global gross app revenue, both Google Play and Apple’s App Store are improving. Google Play with 13.2% in the first quarter of 2019 (compared to the previous year), while the App Store made a similar increase by 19.6%.

Worldwide gross app revenue / AppIntentiv

If there is one thing to expect from the e-money integration with the app marketplace is the opportunities for local developers to have acceptance. The easy payment is to encourage the app development ecosystem growth.

With the average rate of $1-$2 per app, there shouldn’t be any obstacles for local consumers to pay for the digital content. This is a key to unlock the door to market education in order to support anti “digital products piracy”. Not only the applications and games, but also movies, music, and books.

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Original article is in Indonesian, translated by Kristin Siagian

Rachmat Kaimuddin and Bukalapak’s Ambition to be a Sustainable Company

Succession becomes a rare thing among startup stories, especially Indonesian unicorns. However, Bukalapak aware that it’s necessary to have new leader in order to level-up.

In the process of becoming a sustainable company, Rachmat Kaimuddin is appointed by the Founders to head the marketplace at the time it’s turning 10 years.

He has a professional background with expertise as a leader across industries. Recently, he was the Director of Financial and Planning in Bukopin.

Kaimuddin debuted as a Senior Associate in one of the management consulting firms, Boston Consulting Group. M Fajrin Rasyid had his time at the place before starting Bukalapak with Achmad Zaky and Nugroho Herucahyono.

During a short interview with DailySocial, Rachmat said that leading a tech business hasn’t been his career objective. He aims for something that allows him a chance to create a direct social impact.

” There is an opportunity that happens to be in line with my goals, I don’t think it’ll come twice. This is not a matter of Bukalapak [because of a technology company] is cool or a unicorn, but as a company that can create a lot of impacts and I see that myself can contribute and the opportunity [to do that] is there,” he said, on Fri (1/10).

The bigger picture is, Rachmat was appointed to run three things. It’s to make sure Bukalapak becomes a sustainable organization, made of strong resources, and benefit all the stakeholders, also to expand SMEs in domestic and global coverage, online and offline, through technology and innovation.

Also, creating a place for the nation’s talents to learn, work, and benefit the country. Thus, Bukalapak can continue its journey as a company that can last more than a century, the chance is only 0.0045% in global.

“I came to a well-made organization, more mature for governance, risk compliance, company infrastructure that should’ve built as well. These implicit things are what they [founders and shareholders] expect from me.

Under Kaimuddin’s leadership, he ensures to preserve the company’s vision and mission. Also, Bukalapak’s founders still actively maintain their responsibility.

Along with Fajrin as Bukalapak’s President, they’ve divided some tasks. Rachmat will be in charge of the company’s overall. Fajrin, on the other hand, has responsibility for external relations, governance, compliance, and legal stuff.

Transferring experience into Bukalapak

A symbolic act of Achmad Zaky handover to Rachmat Kaimuddin / Bukalapak

Bukalapak is no longer a startup. Entering its 10th anniversary, the company has reached a milestone with over 70 million users and 420 million in-app visits per month. There are five million merchants and three million Mitra Bukalapak have joined the platform.

In terms of financial records, it is well-maintained with valuation reaching up to $2.5 billion. Per 12 December 2019, the company noted an increasing year-on-year transaction of 30%, it also marks the highest transaction of all time.

The overall performance should’ve appreciated, it shows more people are making a living off of Bukalapak. By all means, to survive the next stage, Bukalapak must build up the infrastructure and aim for a sustainable business, without denying the core of startups as the company’s DNA.

Besides, unicorn doesn’t happen to all startups, it’s indeed a national asset. There’s a moral obligation to be succeeded and make your country proud.

Kaimuddin himself has a background in engineering and finance. Lots of things have been taught and able to escort him as the company leader. Engineers taught logic, to simplify the complexity.

In fact, he learned to analyze the problem first before judging something’s difficult to avoid early insecurity. Meanwhile, the science of finance is not just a matter of calculating numbers, the common thread is to make effective business decisions for companies.

“As basic insights, I can [lead] whatever the business is, I have moved between industries so far with kinds of job roles, thank God I can survive and always be able to support.”

The basic knowledge also helps him, particularly when running the banking business. It helps his comprehension of risk and compliance well enough to transfer the knowledge into Bukalapak.

“The risk was meant for brakes, a sign that when you decided to run fast, make sure the brakes didn’t fail. This company wants to speed up, with experience in governance risk and compliance, I can help it.”

It also comes with his experience while in charge of the real sector, service & manufacture, he has deep thought on the supply chain and production side.

“I will transfer these experiences to Bukalapak. Basic logic and leadership too, through this white and thinning hair I wish I can be of more help [in Bukalapak].”

The leadership style he offers in the previous company and in Bukalapak has its similarities. He stands for an open egalitarian concept, not to place himself as a high-positioned leader but as a peer instead, and through open communication.

“Fortunately, the communication here is very fluid, I have applied this to the team in my previous company, freedom of expression, assuming it has good intentions for the organization, I just continue what has been formed.”

The next strategy

Bukalapak's C-Suite level in the 10th year anniversary / Bukalapak — Bukalapak’s C-Suite level in the 10th year anniversary / Bukalapak

He believes that Bukalapak, under his leadership, is to become a sustainable company and be able to make a significant profit and business growth until we no longer need fundraising. It’s contrary to what is happening right now, with the concept of sustainability.

In his opinion, it is likely to happen whether we can create the right business model. Growth of revenue and income can be higher than the growth in costs and expenses. When the curve passed it, Bukalapak’s dream to become a sustainable company will do come true.

“We’ll find which one can produce and to-be-pushed. Many companies can grow the business and become profitable, what I see is not something that is impossible [for technology companies].”

However, becoming a sustainable company doesn’t mean we have to perform layoff. He ensured what happen last year won’t be repeated. Previously, there was an internal arrangement resulting in the must-taken decision. Currently, Bukalapak employs around 2,100 people.

“I think we’re done. 2019 has its ups and downs, this year we are being more optimistic, it’s just the beginning of this year and it’s still a long way.”

He continued, the e-commerce competitive map doesn’t scare him. Each has its own market share, including Bukalapak. In terms of statistics, only five percent of micro and small businesses have digital access.

As the number increases, there will be new values, markets, and products to sell. Everything we have in mind is not to happen all at once. “We pray. What we’ve seen and right in mind, we’re on it, through the right calculation and mature planning.”

“I always say that we have to be the best version of ourselves. We can’t be other people. Bukalapak was born 10 years ago for a purpose, we must continue to grow in a better direction every day in order to serve our users,” he said.

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Original article is in Indonesian, translated by Kristin Siagian

Ovo Confirms Series B Investment to Bareksa Last Year

Bareksa mutual fund startup confirmed, Ovo becomes the sole investor in its Series B funding with an undisclosed amount. The round is said to be closed by the end of last year.

“Ovo is the sole investor for Bareksa in the Series B funding. The round was closed at the end of last year. We’re now focusing on synergy,” Bareksa’s Co-founder & CEO Karaniya Dharmasaputra told Dailysocial amidst the event of Ovo & Pegadaian collaboration announcement. (Wed 1/8)

On the same occasion, he emphasized on Ovo is yet to own Bareksa’s major shares. Post the corporate action, Dharmasaputra has elected as Ovo’s President Director through an announcement last September.

Since its debut five years ago, Bareksa only held external fundraising twice with only local players involved.

One of the to-do-list synergies with Ovo is to implant mutual fund products on Ovo’s platform, also to have it as a payment option on Bareksa. Dharmasaputra ensured the product development will soon to be announced.

Aside from that, Bareksa is to add up new innovation outside mutual funds, including online gold purchasing with some partners and entering the secondary market for ORI products. The ORI agents are to support the government with easy access for investment in stock market.

“We’re also developing robo advisor and re-framing the app. It is to be announced altogether around March or April 2020.”

Regarding the sale of corporate obligation, he explained that it’s yet to roll because they have to be registered first as a non-stock corporation. Previously, Bareksa has announced a collaboration with FIF to acquire retail investors.

“We can’t do it right now due to regulations are still in discussion with IFA and also not possible, therefore it’s still on progress. We have to apply for a new license as the non-stock corporation.”

Bareksa has claimed to record up to 400% managed funds growth last year. The total public’s fund invested in Bareksa since 2016 has reached Rp5 trillion. Meanwhile, as seen from the AUM per December 2019, it’s almost Rp2 billion. There are hundreds of mutual fund products provided by some investment managers sold through Bareksa.

Performance and partnership with Ovo and Pegadaian

Ovo becomes Pegadaian's new partner, being announced along with other companies / Ovo — Ovo becomes Pegadaian’s new partner, being announced along with other companies / Ovo

Karaniya, who is also the President Director of Ovo, disclosed that the company has been processing a million transactions in real-time last year, with transaction growth at over 70%.

The transaction value increased by 55% and monthly active users increased by over 40% at 11-12 million. From the total Ovo users, 28% of those are underbanked or having limited access to financial products.

In order to increase penetration to the rural area, the company partnered up with Pegadaian. In the early stage, there will be agents in the Pegadaian outlets to help with submission, registration, and Ovo upgrade. Later, it’ll be needed for disbursement from pledge assets, cash in, and cash out.

The soon-to-be product will be the Online Multi payment (MPO). This is a payment service for various kinds of bills, monthly subscriptions, balance top-up, ticket, health insurance, through Pegadaian outlets. The company has 4,148 outlets and 13.4 million customers throughout Indonesia.

“The partnership with Ovo is to increase Pegadaian customers’ access into the growing digital economy ecosystem. Pegadaian needs to make sure equal access to the integrated, safe, comfortable and accountable modern payment system,” Pegadaian’s President Director, Kuswiyoto said.

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Original article is in Indonesian, translated by Kristin Siagian

The Unspoken Truth Behind OJK’s Public Appeal on Illegal Fintech Lending

Fintech, peer to peer lending (FP2PL) in particular, is still an on-demand sector in Indonesia. However, the industry exists with the presence of illegal fintech lending. Although law enforcement and authorities have been hunting it down, these illegal FP2PL keep surviving and multiplying.

The act against illegal practices took place on December 21th, 2019. An operation by Polres Metro Jakarta Utara uncover the fraudulent practice of online lending (fintech lending) office under the name PT Vega Data and PT Barracuda Fintech in Penjaringan, North Jakarta, specifically pinned at Mal Pluit Village. The police named 5 suspects of the total of 76 employees at that time.

The impact of the massive raid on illegal fintech lending is OJK’s appeal letter. It is to appeal registered fintech to avoid the Pluit and Central Park area, West Java, for an office space.

OJK said some of that illegal fintech players were running as syndicates, therefore, they are most likely to move in one area. Appeals to not have offices in the two places mentioned, according to the FSA, are part of prevention efforts.

“Considering that illegal fintech can be very tricky for intimidating users, and in terms of protection for the public community, prevention steps are required, as well as to maintain the quality and reputation of registered and/or fintech lending licenses,” OJK’s Director for Fintech Managing, Licensing and Supervision, Hendrikus Passagi told DailySocial,

In fact, the illegal fintech termination wasn’t just a one-time thing. Similar operations have been carried out before. There are some factors that allow those illegal firms to keep appearing and capture new customers.

Large market

Lending businesses grow big every year. In 2017, lending has contributed 15% of the total fintech transaction in Indonesia. Another indicator is the number of cash distributed to customers that keeps increasing.

Based on OJK’s data during 2019, fintech lending has distributed up to Rp68 trillion. The number grew from Rp22.66 trillion last year. This is considered a rapid growth.

It is obvious that the business players are also increasing, both legal and illegal. OJK said, there are a total of 25 fintech lending players by December 2019, while the illegal ones are getting thousands.

Regarding the illegal fintech lending, they’ve been using various kinds of platforms. There’s an app-based operation, websites, or through SMS blast that’ll lead into instant messages platforms, such as WhatsApp. The Ministry of Communication and Information, as part of the OJK-formed Investment Alert Task Force, claims that there are 4,020 illegal fintech players have been blocked during the last two years.

The existing gap

Observing the government’s effort in terminating illegal fintech is like trying to dodge a bullet. The acts are unstoppable because there’s still a gap to be leveraged by the law gangsters.

The biggest one is, there’s no exact law to avoid the rise of these illegal businesses. Passagi admitted the absence of regulations can be the main reason for the mushrooming illegal fintech lending.

Another hole that may be missed by the supervisory authority, especially by the Ministry of Communication and Information, is the SMS feature to outsmart the government systems supervision and operating system provider. Quoted from Kompas, the Pluit based office search by the police used random SMS chains. Start from the SMS, potential victims will be escorted to a site through the sent link. They will be asked for some data to process loans such as National Identity Cards, Family Cards, also the Tax ID.

On the other hand, prohibiting an area for fintech lending operation is a kind of unreasonable act. Seeing how dynamic the movement of illegal syndicates is, a place is just a place. With the existing passionate market and multiple gaps, they can be anywhere.

Room for Improvements

Aside from hoping the regulations for illegal fintech lending issued, the government has an “optimistic” plan coming.

The Kominfo, The Indonesian Telecommunications Regulatory Agency (BRTI), and the Directorate General of Population and Civil Registration are currently working on renewing the registration terms of prepaid cellular. This plan will later enable cellular operators to use the ‘know your customer’ mechanism as in banking.

It will involve biometric technology to make sure the prepaid cellular owner has a valid number. In reverse, when the data doesn’t match in the Dukcapil’s system, there will be sanctions.

“For example, with face recognition technology, fingerprint, or iris recognition. On the records, operators are fully responsible for the validity of their customers. In this way, hopefully there will be no misuse of other people’s data to register prepaid customers,” BRTI’s member, I Ketut Prihadi said.

Basically, the new draft regulation will patch up the failure of the prepaid registration policy which was previously said to overcome SMS / telephone spam. The rest is yet to know whether the new policy is applicable. No doubt, as long as there is no policy intends to protect the industry from unlicensed organizers, the stories of illegal fintech lending with tens of billions of revenue like the one in Pluit will keep repeating.

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Original article is in Indonesian, translated by Kristin Siagian