Last Friday in Le Meridien Hotel Jakarta, Indonesia Ecommerce Association held an event called 5 minutes for Ecommerce 2016. It was an open public seminar where stake holders in Indonesia e-commerce presents their views, concerns, and ideas on the state of this emerging industry going forward. ICT Minister Rudiantara was one of the speaker along with several other e-commerce scene pundits. One interesting point about this event was each speaker can only present in 5 minutes time with maximum 5 slides, a bit like pecha kucha.

IMG_20160122_083834_HDR

Below are three main interesting points ive noted by attending this event : Rudiantara’s 1000 startup plan, E-commerce Tax and the regulations for venture capital in Indonesia.

Chief Rudiantara’s 1000 Startups Plan

To further kickstart Indonesia rising startup and digital ecosystem, Rudiantara announced his goal to get 1000 Indonesian startups funded by 2020. To achieve this goal, MOCIT has established the framework to kickstart this process.

Since the presentation materials was not shared, below is my re-creation of the framework

As seen from the framework, MOCIT aimed to build continuous process for startup development in Indonesia from sparking youth interest in startup worlds  up to funding process for later stage startups. To fund this project, Chief RA urged private sector to help him realizing this goal by committing CSR funds to complement the already allocated state budget He also promised to give full support to any organization which want to held startup events, conventions or development programs.

Call  for more flexibility on E-commerce Tax

Another interesting session comes after this. Unfortunately i forgot who was talking at this time, someone from Price Area if im not mistaken. He used his 5 minutes to raise points about E-commerce tax which currently regulated under tax regulations SE-06/PJ/2015 (in Bahasa). The problem with that regulations, the tax was fixedly deducted from transaction amount. This is an inhibitor for newly founded startups without a lot of capital. Also not every e-commerce players gain proft from transaction (e.g C2C marketplace) hence the tax can posed quite a burden to online marketplace.

The speaker suggested that e-commerce tax need tobe more flexible and can be varied based on different business model of e-commerce. Government will be able to get revenue from the industry without inhibiting its growth.

VC concerns on startup regulations

Next in my highlight for this event was Donald Wihardja from Convergence ventures. In his talk, he described several concerns that venture capital faced when they invest in Indonesian startups and companies.

Legal Certainty :  One of the reasons many VC was incorporated in Singapore was less about tax evasion but more to the certainty of law especially in arbitrage law. The Indonesian law have not yet give enough certainty for VC to be incorporated in Indonesia. This is a big homework for the government and the legal system if they want to attract more VC / Investor to be incorporated in Indonesia.

Legal Template : Other governmenmt support which are currently needed by VCs are legal templates. This will fasten the investment process and hopefully Indonesian startups could get the benefits on this as well. Several required legal template are :

  1. PT with 2 class of shareholders
  2. Investment Agreement
  3. Shareholders agreement that enforce preferred shares
  4. Convertible note

Lowering the barrier of entry : With current OJK regulations, VC who wants to invest in Indonesian market must have minimum IDR 50 billion (USD3.6 Million) paid up capital. According to Donald, the requirement is too high. By lowering this entry barrier, more VCs can enter Indonesian market and startups will have more options to fund their business.

Local Public Exit: Apart from entering the market, VC also need certainty when they plan to exit their investment. Hence Donald proposed  to have more versatile stock market requlations such as support for dual listing, less requirement in public listing seconday board and the options for VC’s to do trade sales (selling their invested share to other parties).

 

Posted by Kiki Ahmadi

Professional in Telco and Digital industry in Indonesia | Currently pursuing master's degree in Innovation Management and Entrepreneurship in University of Manchester

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s