Former Chairman of the Indonesia Investment Coordinating Board (BKPM) and Australia-Indonesia Centre board member, Mahendra Siregar, has spoken to Helen Brown of Bisnis Asia about the digital revolution happening in Indonesia and the opportunities for Australian fintech businesses.
“If [fintech entrepreneurs] can get to the 60% of the [Indonesian] population that is still yet to have any bank account, then that’s great,” he says, “If they can get to the 80% of enterprises, especially small and medium ones, which don’t have access to loans or capital from banks, then it’s excellent.”
Even with the current, unprecedented growth in Indonesia, Siregar sees untapped markets and potential new growth engines for the economy.
“Where we are now – Indonesia growing at 5% every year relying on the ‘single engine’ of the economic machinery which are middle-income, medium- to large-size companies – if we can do what I think, the real challenges for fintech to provide so we have the double, third, fourth engines, you can just imagine the potential. Not only for fintech business but for the economy in general to generate and accelerate its growth. That would be the most important objective, I think, and needs to be the aspiration of all tech companies or startups involved in this exciting new economy.”
Siregar encourages Australian fintech entrepreneurs and startups to change their thinking when approaching the Indonesian market.
“In Australia you don’t talk about the ‘unbankable’. Almost everybody already has a bank account, a loan – car loan or mortgage or even credit card. If you want to get into Indonesia and look at the new opportunities outside the established markets, you have to do a little bit of adjustment. I don’t think it’s a big deal, because we’re talking about a very creative, young generation who can do almost anything.”
“For them it might just be a couple of minutes’ adjustment on the technical side. But on the mindset side, on the understanding side, this is something they might want to learn more about and give a chance to get better exposed to what’s happening in Indonesia and then, accordingly, they can make that adjustment.”
Siregar says that the support of the “pro-tech, pro-young people, pro-digital-solutions” President Jokowi will help open up the Indonesian market. But the real challenge is amending regulations.
“Most of the people in the regulatory authority positions, the policy positions, do not have any clue what is required by the tech sector, by the digital solutions world. Because it’s not only new, but they are more accustomed to the physical sectors that are established up to now. The easiest way for these people is to use the template for the offline, physical sectors, and then put that for the digital ecosystem regulatory framework. Of course it’s totally irrelevant and counterproductive to the initial objective of creating the right ecosystem and signal to promote innovation and creativity from the tech sector.”
These regulatory hurdles aren’t just affecting Indonesia. Siregar says that even ‘sandbox’ regulation in Australia would hinder those in both nations who don’t yet have access to the financial marketplace.
By requiring the same documentation for the digital marketplace as the physical one, Siregar says, “you’ll just provide the alternative or new solution to the 35% who already have a bank account, and you keep on excluding the 65%.”
“What is simple, what is standard, what is best practices in the old or existing economy could be so challenging in the new economy because they don’t think the same way as those who are doing these things.”
Watch the entire interview above, where Siregar also discusses post-GFC regulatory reforms, opportunities for digital nomads in Indonesia, the future of cross-border tech, and how Australian business is already entering Indonesian markets.