Lessons about Indonesia from Startup Asia Jakarta 2012

Indonesia is starting to steal the limelight away from traditional Asian tech superstars like India and China.

According to the Jakarta Globe, the country’s US$813 billion economy expanded by 6.5 percent last year and has been getting more attention with talks of its large market size, growing middle class and early adoption of technology.

Like every market, Indonesia has its own distinct quirks and issues that entrepreneurs need to pay attention to when starting a business there.

Here are five key trends that every startup founder should look out for based on the talks and interactions at the recent Startup Asia Jakarta.

1. Indonesians are still slow to adopt e-commerce.

While Indonesians are some of the fastest adopters of social media and other key elements of the information age, one area in which they noticeably lag behind is online shopping.

Indonesians prefer cash transactions over credit cards, a big barrier to creating an e-commerce payment ecosystem.

The country has a population of 240 million people but only 15 million of them have credit cards. With just 6.25 percent of the population with access to more developed e-payment systems, founders need to think about how to integrate e-payment gateways into their e-commerce platforms.

Even more so, they need to understand that it is not just a problem with the tools available, but the fear of online frauds that deter online transactions.

Andrew Darwis, Co-founder and CTO of Indonesia’s largest online community Kaskus.com, said, ” When Indonesians do transactions online, they typically do bank transfers or opt for cash on delivery by meeting the sellers at malls or coffee shops. This is still a primitive way of doing transactions online, which is why Kaskus had to develop it’s own e-payment system, KasPay.”

If all goes well, KasPay might just become Indonesia’s answer to a viable third-party online payment solution, like how AliPay is for the China. Andrew mentioned that they are working together with the big banks like BCA and Mindiri to ensure tighter integration. These two are what consumers prefer to use when buying goods on Multiply.

Video interview with Andrew

2. Think about your mobile strategy.

Indonesia is big on mobile. Andy Zain, Jakarta Founder Institute Director and the go-to-guy for all things mobile-related in Indonesia, said, “We have a 240 million population with 200 million mobile phones. In Indonesia, most of the computers are in offices and schools, and most connect to internet using their mobile device. Facebook got big here because most people were using it on mobile. If you do a web [only] service, it’s hard to get 5 million users.”

With that in mind though, remember that Indonesia is still a big feature phone market.

Steven Goh, founder of mobile social network Mig33, which has a million daily active users in Indonesia said, “we have a great Android and Blackberry client, and are about to do an iPhone version. But all these markets still have large feature phone footprints in South East Asia with the exception of maybe Singapore.”

3. Relationships matter, so get your butt out there and network.

No man is an island. That definitely rings true for anyone planning to do business in Indonesia. Along the way, you will find yourself challenged with problems, which can be solved if you know the right people and seek help.

#StartupLokal initiator Aulia Halimatussadiah, otherwise known as “Ollie,” is definitely who Malcolm Gladwell would describe as a ‘connector’ in the Indonesian startup community.

Ollie says, “sometimes there are problems, like raising capital, finding technical co-founders, or with infrastructure. But there is always someone you can talk to and find a solution to the problem.”

Video interview with Ollie

4. Be patient and learn how to make your business sustainable.

If it’s one trait you got to have to survive in Indonesia, I’d say it’s to have patience with what you do. This applies to most things, from the maniacal traffic jams to building a business.

Remco Lupker and Arnold Sebastian Egg are two Dutch co-founders of Tokobagus.com. Their success in Indonesia came with some faith and patience. Having learnt Bahasa Indonesia and having some difficulty at first navigating the market, they had some advice for audiences, “don’t try to find the quick way to do it. You have to be patient and not be afraid to do it.”

5. Indonesia is becoming more attractive to big technology players.

Indonesia still has many macro issues to solve before it can devote additional time and resources to the startup eco-system. In the meantime though, others big boys are paying more attention to it.

Things are especially looking up for Google’s Android mobile operating system, especially with smartphone usage exploding in Jakarta and it’s growing middle class.

According to Google’s new country head for Indonesia, Rudy Ramawy, “Android is growing in leaps and bounds … and it’s obvious on the streets,” he says. “I’m certainly seeing a hell of a lot of ads for Samsung’s new Galaxy S III around here”. Android’s stats for Indonesia are “two-and-a-half times of last year.”

Suyang Zhang, Tencent’s regional director of global mobile jokingly answered the question of “Why are you in Indonesia?” with “Can I say: Money?” He revealed later that Tencent has been in Indonesia for six months because of the massive market size for mobile.

The presence of these big companies can only mean that they see opportunity in the booming Indonesian market.

Startup Asia Jakarta 2012 was a jam-packed conference from 8th to 9th June, organized by Tech in Asia, with discussion topics ranging from Indonesia’s  mobile landscape to venture capital funding, as well as events like a hackathon and Startup Arena.

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