The tiny island of Singapore has had an outsized influence on Southeast Asia's startup ecosystems, and Indonesia is no exception. Global and regional investors use Singapore, a trusted financial hub, as a launchpad from which to invest in Indonesian companies. Many Indonesian startups have incorporated their businesses in Singapore or used the country as a stepping stone for expansion. Four of Indonesia's five unicorns – ride-hailing firm Gojek, online travel agent Traveloka and e-commerce marketplaces Tokopedia and Bukalapak – have expanded to Singapore or opened R&D outposts there.
Indonesia is not the sole benefactor of the relationship between the two countries. Singaporean entrepreneurs are keen to expand into the biggest market in the region. Gojek's fiercest rival Grab, P2P lending and investment platform Funding Societies and online marketplace Shopee are just a few of the many Singapore-based tech companies that earn significant revenue in Indonesia.
Given how much startups have contributed to the two countries' economies, it makes sense that Indonesia and Singapore are working together to develop and support the growth of the burgeoning digital economy sector. CompassList spoke with Ngurah Swajaya, Indonesia’s ambassador to Singapore since 2016, to learn more about how the two countries have collaborated in the past few years and what Indonesia looks to gain from the partnership.
This interview has been edited for length and clarity.
Throughout your posting as ambassador, I'm sure you've noticed the rise of startups in Indonesia, Singapore and the wider Southeast Asia region. Have you witnessed any collaborative efforts to develop the startup landscape between Indonesia and Singapore?
Since early 2016, the digital economy has been one of the priority sectors for bilateral cooperation between Indonesia and Singapore. We started with a program where Singaporean polytechnics invited Indonesians to undertake "training for trainers" courses, especially in the digital economy sectors.
We've also started developing a digital park in Nongsa, Batam[, Indonesia]. The Nongsa Digital Park was inaugurated in March 2018 but earlier, in 2017 Nongsa Digital Park had organized a hackathon jointly with the Embassy of Indonesia, Singapore's Economic Development Board and Batam Polytechnic.
Nongsa Digital Park will serve as a "digital bridge" between Singapore and Indonesia's many hubs, like Jakarta, Surabaya, and Yogyakarta, as well as Bandung and Bali. [Indonesia's] third Apple Developer Academy in Nongsa Digital Park hopes to start accepting students next year, in February or March.
There's a lot going on in Batam. Why the choice of location, besides its proximity to Singapore?
When we hosted the hackathon, we managed to get 518 participants, and 60% were from the local province. This proves that human resources are available in large numbers in that area. Building the digital park in the Kepulauan Riau province puts it in close proximity with these talents, so we can develop their abilities through various training programs, as well as centers like the Apple Academy.
We know that Singapore is inviting many startups from different countries to come to Singapore, but the problem is that the country has limited land – or perhaps the rent is too expensive – and a limited amount of human resources. We have both of those things, so it's a good opportunity for us to collaborate.
So far, what kind of companies have set up in Nongsa Digital Park?
There are over 50 startups operating out of the co-working space at Nongsa. This is a good start, and I think it will put Batam on the digital world map. It'll not only bring startups from other parts of Indonesia into the picture, but also from other countries. They can further develop their businesses through collaborations and incubators that will be available in Batam.
Do you see a lot of Indonesian startups wanting to expand to Singapore, or set up in Singapore before doing their business in Indonesia? What do they think of Singapore, and what kind of things are they looking for?
A lot of tech talents in Indonesia lack the capacity to monetize their abilities. They also lack the capacity to connect to a broad, worldwide network. Despite strong support at the leadership level, conditions might still not be conducive at the implementation level.
Singapore has all that, and is a financial hub. Every year, we at the embassy organize startup pitching sessions here, in which startups from Indonesia pitch their business to attract investments. We are also approached by universities that want to set up student exchanges between Indonesia and Singapore, during which [the students] can work as interns at startups from Indonesia and Singapore. They need to learn how startups are developed and expanded directly from the startups themselves.
Have there been any concrete moves toward collaboration with other ASEAN countries, such as student exchange programs?
Not yet. If possible, we want to reach out through Nongsa Digital Park, bringing in students from other ASEAN countries to develop their capacities and even build their own startups. Startups like Gojek and Traveloka are expanding to other ASEAN countries, through new offices and even operations. Bukalapak recently launched their [international marketplace channel] BukaGlobal in Singapore and has regional expansion plans as well. We hope we will be able to include the remaining ASEAN states in our collaboration programs, and that eventually these startups can establish access to a bigger regional market.
When you meet Singaporean entrepreneurs and investors, what do they see in Indonesia, and what are they're looking for?
Big potential, definitely. For example, right now the Indonesian government is expediting the development of infrastructure in the education and tourism sectors. We're bringing investments, new innovations and technology into these areas. Indonesia remains the most attractive destination for [members of] the Singapore Business Federation [a business chamber representing more than 26,000 companies and business associations], be it for their first investment or expanding their current investments in Indonesia.
Have you noticed any interest from Singaporean investors in Indonesia's agricultural sector?
Only 4–5% of the fruits and vegetables consumed in Singapore are imported from Indonesia, so there is still a lot of potential there. The same goes for fishery and food processing. Singapore has been organizing festivals to bring Indonesian coffees to Singapore. There is also interest in investing in advanced technology in agriculture.
Singapore has been interested in developing agriculture-related technologies for some time. In their investments, are they looking to develop that technology to be used in Singapore, or...
The tech can be developed in Indonesia or Singapore, but, most importantly, we have land, people and resources, while Singapore has networks, and they are a robust financial and logistics hub. These are things that we need to collaborate and match with Singapore, creating a mutually beneficial relationship. We are looking at developing the [agricultural] industry in the islands throughout the Kepulauan Riau province.
I didn't think of Kepulauan Riau province [where Batam is located] as an agriculture destination. I imagined that farming would need a lot of land, and the islands there are pretty small...
But there is a lot of unused land there. There are over 2,400 small islands in the province, but some of the fruits and vegetables they consume come from Java and North Sumatra. We can develop some of the islands in Kepulauan Riau to become fruit and vegetable suppliers to Singapore. We have a lot of land and people, but, most importantly, we can apply advanced technology to increase the agricultural potential.
Any other plans or visions for the development of Indonesia's startup ecosystem that the embassies and the Ministry of Foreign Affairs want to develop?
Education will be the emphasis, and investment remains a top priority. We want to continue to expand the capacity of our human resources, and that's a priority for the next five years. Infrastructure development will also continue. We now have the Palapa Ring network, with the fiber optic and satellite linkage, and with that we hope to develop the startup industry not only in Java and Batam, but also throughout Sumatra, Sulawesi and the eastern part of Indonesia. Not many people in Singapore, or elsewhere outside Indonesia, understand the capacity [of the human resources] we have in Sumatra, Sulawesi and other places.
I've been wondering about that. Most of Indonesia's startups are from Java, but what about the other islands?
Take, for example, Batam. The digital park was established only last year, but it's growing. If we can build the same kind of digital park in Sulawesi, we should be able to replicate the success we have had in Batam. That's something we can do within the next five years.
Anything that you'd like to say to startups from Indonesia and Singapore looking to cross borders?
As the President mentioned during the inauguration ceremony, innovation should become our culture in Indonesia. We see a lot of talents in Indonesia that are keen and creative in innovating. We hope that the government will continue to facilitate and accelerate this growth potential. We at the Ministry of Foreign Affairs and the embassies are willing to provide support for startups in terms of connecting them with potential investors. I'm glad that Indonesia is one of the leading countries in digital economy development in ASEAN. We have five tech unicorns now, and we hope to increase that number. Perhaps, in five years, we can double the number of unicorns coming out of Indonesia.
