The Indonesian government has rolled out the red carpet for foreign investors eyeing local digital start-up firms. The Coordinating Minister for Economy Darmin Nasution said that major investment will boost digital businesses. “There will be resources to do new things that otherwise could not be done due to financial issues,” he said yesterday in Jakarta.
The recently issued presidential regulation No. 74/2017 contains a road map for digital economy, particularly e-commerce. The road map include financing schemes, consumer protection, and infrastructure development, among others.
Aside from financing, the government will provide infrastructure, such as Palapa Ring broadband that will be completed by 2019. Fast internet connection will become the backbone of the national digital economy and stimulate the growth of new tech start-ups.
Following the issuance of regulation and road map for digital industry and e-commerce, the government is targeting an increase in transactions to US$130 billion (Rp1,739 trillion) by 2020. “It could become the largest in Southeast Asia,” Communication and Informatics Minister Rudiantara said. The national e-commerce industry saw US$30 billion transactions (Rp394 trillion) last year, an increase of Rp46.5 trillion compared with 2015.
Chief Financial Officer of PriceArena.com, Bima Laga, expects the government to slash down current value-added tax rate of 10 percent. According to him, investors have complained that the tax rate is too high compared to other countries.
Blanja.com CEO Aulia Marinto said that the government ought to relax the portion of foreign shareholding. A lot of foreign investors had intended to inject Rp10-15 billion in seed funding before canceling it. “The regulation on foreign ownership for companies with turnover under Rp100 billion is only 49 percent. The figure is way below the amount of investment,” said Aulia, who is also the chairman of the Indonesian E-Commerce Association (idEA).