Indonesia is a country that's on every investor’s radar. The reason is simple, it's the most populated market in Southeast Asia. Big market, big opportunities. You see investors flock to the archipelago, hoping to invest in the next Gojek, Tokopedia or Traveloka. It’s safe to say that there’s very little funding gap in Indonesia when it comes to startups.
This is why it was so strange when the Indonesian government decided to launch a US$300 million Merah Putih fund (MPF) to invest in later-stage startups. And interestingly, the capital is pooled from five state-owned enterprises (SOEs)––state telco operator Telkom Indonesia and its mobile subsidiary Telkomsel as well as three state-owned banks: Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI).
A “for Indonesia, by Indonesia” initiative, MPF sounds very similar to Malaysia's US$380 million fund-of-funds programme Penjana Kapital. Deja vu. But the more peculiar thing about MPF is, these enterprises that are roped in for the fund are already active startup investors. All five of them either have or are setting up their own corporate venture capital funds.
Weird, right? But our reports in today’s article of The MMS, MPF has a bigger and tougher goal to reform the SOEs, which have been in decline for years. Embracing innovation is no longer good to have, it’s a must. MPF is one of the many starting points for such innovation to take place, where SOEs will have the opportunity to work closer with startups that are funded by this initiative. But it’s always easier said than done.