Applications Made by Global Companies Are Considered More Dominant

The portion of applications made by global companies is believed by the government to dominate the Indonesian market. The government chooses to seek equal policies between local and global applications.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI.

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Indico officials, a subsidiary of Telkomsel, introduced an IoT soil condition sensor used by the Tani Makmur Farmers Group in Selogiri Sub-district on Monday (26/6/2023) in Pule Village, Selogiri Sub-district, Wonogiri, Central Java.

JAKARTA, KOMPAS  —  The government encourages local applications to be competitive, especially in the domestic market. So far, applications made by global companies are considered to still dominate.

"The government aims to make digital economy one of the sectors that contributes to economic growth. This sector has great potential and local applications are expected to compete with those made by global companies," said Deputy Minister of State-Owned Enterprises, Kartika Wirjoatmodjo, while opening the Digiland 2023 event at Istora Senayan, Jakarta, on Saturday (8/7/2023)."

According to Kartika, the biggest challenge is how Indonesia can start creating local applications with sufficient quality and scope. This is because global applications dominate in Indonesia.

Digiland 2023 is a conference and exhibition for micro, small and medium enterprises (MSMEs) products organized by PT Telkom Indonesia (Persero) Tbk or Telkom to commemorate its 58th anniversary .

According to him, in order for domestically made applications to be competitive, the quality of human resources needs to be improved. The government has actually encouraged educational institutions to collaborate with the industrial sector, both private and state-owned enterprises, to improve the competence of talents in the digital economy field.

Several countries facing similar situations as Indonesia, which are dominated by applications from global companies, implement different regulations. In China, for example, the government tends to take extreme measures by closing the global application market. Meanwhile, in Europe, governments tend to impose various taxes.

The Indonesian government, according to Kartika, has chosen to act in a balanced manner. The government will not close the market for applications made by global companies, but rather prefer to create equal regulations.

"We encourage local applications to become the host in the domestic market. We will soon launch the Merah Putih Fund, a corporate venture capital owned by state-owned enterprises, as part of supporting competitive local applications up to the international market level," he said.

The funding round that will be disbursed through the Merah Putih Fund is expected to be able to accelerate start-up businesses to become unicorn.

According to Kartika, several local technology start-ups (start ups) actually have space to quickly become start-ups with a valuation of one billion US dollars or unicorns. He hopes that the round of funding that will be disbursed through the Merah Putih Fund will be able to accelerate them to become unicorn. "At least, Indonesia can have 20-30 unicorn start ups," he said.

He added, internationally, the phenomena tech winter, the condition of rising capital costs which forced investors to tighten investment selection to reduce risk and maximize returns, would still continue in 2023. This phenomenon must be seen as an important moment for start up to change its business direction (pivot) to become more sustainable. It is hoped that the launching of the Merah Putih Fund can help start-ups in that direction.

KOMPAS/FRANSISKUS WISNU WARDHANA DANY

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Also read: Merah Putih Fund is Expected to Meet Further Funding Needs

Main Director of Telkom Ririek Adriansyah said, Telkom already has MDI Ventures with five funds managed from external investors and the Telkom Group. MDI Ventures now supports more than 80 local and global start-ups with various industrial sector backgrounds.

"We aim to strengthen all telecommunication infrastructure business lines that we have in order to support the digital industry ecosystem in the country. The level of accessibility to 4G services is already at 98 percent while 5G is still only available in certain cities. Consolidation of all data centers we have is targeted to be completed by the end of 2023," he said.

In addition, entering the age of 58 operating in Indonesia, Telkom wants to focus more on doing business for the business to business segment. Several digital services solutions have been created, both internally and in collaboration with local start-ups.

Researcher at the Center of Economic and Law Studies (Celios), Yeta Purnama, when contacted separately, was of the opinion that the government needs to encourage BUMN to be involved in the Merah Putih Fund for two reasons. The first reason is saving the weakening of the digital industry, one of which is caused by many start-ups having the wrong strategy and not growing sustainably. The second reason is that it is time for the state to take sides with local start-ups.

"The challenge for the Merah Putih Fund is to screen which local start-ups have a great chance to grow sustainably. In other words, investment funds from each SOE corporate venture capital (CVC) must be realized in accordance with the rules to provide economic added value for Indonesia, especially in the digital economy sector," said Yeta.

Also read: Unicorns Continue to Rise, Competition is Increasingly Fierce