The startup ecosystem in Indonesia is closely supervised and supported by the government, perhaps in more obvious ways than in other economies. While there is no central agency or ministry that handles startup-related affairs, one particular agency stands out as a prolific actor in the industry: the Creative Economy Agency (Badan Ekonomi Kreatif), better known as Bekraf.
Bekraf was founded in early 2015, following a decree from President Joko ("Jokowi") Widodo.
“The creative economy will become a pillar of [our] economy. We need a leap to accelerate many different industries, such as agriculture, fishery, IT; they can become something amazing if they are driven by the creative industries,” he said.
As the name suggests, Bekraf was established to create and execute policies that will promote the development of Indonesia’s creative economy. The "creative economy," as Bekraf defines it, includes 16 subsectors, ranging from crafts, the visual and performing arts, to app and games development, advertising and animation.
These creative-economy industries comprised the seventh-largest economic sector in 2016, contributing 7.44% of Indonesia’s total GDP and targeted to rise to 12% in 2019, Bekraf data show.
Bekraf represents the government’s commitment to developing human capital-based industries, as it seeks to move Indonesia's economy higher up the value chain and lessen its dependence on natural resources and manufacturing.
“If we compete in advanced industries, we would lose to Germany, we’d lose to China. But in creative economy, we have a bigger chance of winning,” the president has said.
Grants for startups
Headed by Triawan Munaf, a former musician and advertising businessman, Bekraf has begun to throw its weight behind the startup ecosystem in the past two years. It has brought Indonesian startups and creatives to international events, notably getting Go-Jek, Qlue and Kata.ai to the US-based arts and tech event, South by Southwest (SXSW).
Elsewhere, its support came mainly in the form of networking, helping startups meet with potential investors and providing guidance for legal and administrative affairs. This includes partnering Fenox Venture Capital’s Startup World Cup event and hosting its own pitch day and developer day events. Most recently, Bekraf has begun conducting “Get Funded” workshops, during which it provides practical fundraising advice to startup founders.
Last year, Bekraf said it was allowed to provide funding and monetary assistance to startups or other businesses under the "creative industry" umbrella. Mid-2017, it announced an IDR 10 billion (US$700,000) fund for startups. The fund gives out grants, named “Bantuan Insentif Pemerintah” (Government Incentive Assistance, or BIP), to startups that have not received similar grants or assistance from the government or related institutions.
It is still early days for the initiative. Roughly IDR 6 billion has been disbursed so far, but funding is limited to IDR 200 million per entity. Fadjar Hutomo, Bekraf’s Access to Capital deputy, said the grant program is still at a trial stage, meaning Bekraf can't give large sums to each business.
On a wider scale, Bekraf remains an important player in the ecosystem.
Besides startup-targeted efforts, it hosts a wide variety of local and national-scale programs for youth-centric and information-based economic activities. These include coding workshops, professional certification for creatives, as well as business guidance seminars.
More practically, Bekraf has the ability to connect aspiring entrepreneurs to networks and financial resources that may have been otherwise out of reach, either because of constraints in the banking sector or the limited reach of investors.
For example, startups in the food, arts and crafts industry, which may not have significant tech components, could be passed over by investors focused on the latest tech trends. Bekraf, on the other hand, can provide generous support through mentoring and networking activities, since its reach is not limited to tech.
Now that startups have become a major part of Indonesia’s culture, daily life and economy, the government has extended a hand to the industry, finding ways to nurture and harness the potential of Indonesia’s human capital. In this, stakeholders in the entrepreneurial ecosystem would do well to build stronger relationships with Bekraf.
