Diana Mariska, Bali – The government remains strongly committed to the agenda for more startups in the country by establishing a new directorate as the breeding ground for hundreds of applicants, Research and Technology Minister Bambang Brodjonegoro said on Friday.
The directorate was set up to help achieve the target of 1,000 startups put forward earlier by the Communication and Information Technology Ministry.
"The Research and Technology Ministry has the technology startup directorate whose task is to bring into existence as many startups as possible," Bambang said on the sidelines of the NextICorn International Summit 2019 in Jimbaran, Bali.
NextICorn, which stands for Next Indonesian Unicorns, is a platform for local startups looking for global investments, founded jointly by the government, the Venture Capital Association for Indonesian Startups (Amvesindo) and consulting firm Ernst & Young.
Bambang said the potential startups were selected carefully based on not only their business feasibility but also individual capabilities.
"After we choose them, we provide [the qualified applicants] with the funding and we expect them to come up with a real-world product development emanating from their original ideas. After a product is delivered, we will filter again to select a startup. At this stage, they will be scouted by several incubators," Bambang said.
"Graduating from this stage means the businesses can be referred to as mature startups, and they will receive further development funding."
The minister added the next Indonesian unicorn startups are expected to be born from this program. The funding to assist development of new business ventures will come from the ministry's budget, Bambang said. He declined to disclose the amount.
"But I can tell you this: we are currently fostering around 700 pre-startups and 500 startups," he said.
A similar program focusing on digital startups is being run by the Communication and Information Technology Ministry, which also acts as regulator, Bambang said.
The next biggest challenge is to gain global investors' confidence on Indonesian startups, which need huge capital to earn the unicorn status, Bambang said.
The creation of new startups is also facing hurdles related to manpower skills and research facilities.
"Research and development are key in building a unicorn startup, but unfortunately Indonesia still lacks that," Bambang said. The government is working on improving labor skills through refined curriculums primarily in vocational schools, he said.
Tech and digital startups have the dual-edged sword that cuts off old-fashioned jobs while providing new jobs, Bambang said. They won't add unemployment, but rather produce a shift in the employment opportunity.
"Job loss is inevitable but it doesn't necessarily mean a higher unemployment rate: old jobs will be replaced with new ones and people will need to upscale their skills to survive," Bambang said.
Former IT minister Rudiantara, initiator of the "1,000 startups" program, said Indonesian startups have big potentials with a spacious room to grow in Southeast Asia's biggest economy.
"Our market is still very big. Also, the characteristic of Indonesia startups is a bit different as they take a more cautious approach in making move, amid demands from investors not to 'burn money'," Rudiantara said.