Is Indonesia the Next Brazil?

Jonathan Ortmans, President, Public Forum Institute

It has been a big week for entrepreneurship in Indonesia. U.S. Secretary of State Hillary Clinton arrived in Bali on July 21 to take part in an ASEAN Regional Entrepreneurship Summit (RES) held by the Ministry of Trade of the Republic of Indonesia and the Global Entrepreneurship Program Indonesia (GEPI). The theme of the 3-day RES was: “Emerging Entrepreneurs: The Next Big Chapter.”

The Summit was part of GEPI’s efforts to catalyze Indonesia’s entrepreneurship strategies. Formally started in January 2011 by a group of 13 prominent business leaders in Indonesia, GEPI is also part of wider global initiative called the Nadiem Makarim, the young founder of Go-Jek, a motorcycle taxi company in Jakarta, is part of the first generation of the GEPI program participants. This recent Harvard Business School graduate conceived the idea for his company, which seeks to meet the demand for efficient transportation and the need for more jobs among Indonesia’s low-skilled workers. Go-Jek recently secured investment by US entrepreneur Arthur Benjamin. Indonesian Trade Minister Mari Pangestu hopes entrepreneurs and their investors will allow Indonesia to “leapfrog” development.

At last week’s summit, Clinton said about Indonesia: “Almost 75 million Indonesians are under the age of 18. …. [T]he jobs and opportunities that they need and deserve cannot and will not be created by governments alone no matter how large a public sector grows. And while traditional corporations and established industries are very important, the fact is they too are unlikely to create all the jobs needed for the future.” Clinton called for government action to unleash entrepreneurship: “It’s not enough just to bring together in one place experienced entrepreneurs and business leaders with young people with good ideas even who have already started their businesses. We need to tackle the obstacles that entrepreneurs face – cumbersome government regulations, corrupt officials who demand a bribe before issuing a business permit, and … cultural norms that might prevent her from handling money or owning land.” And while Clinton encouraged “small businesses” in general, she paid special attention to young businesses that have growth potential, announcing that Indonesia is one of the five countries around the world in which the U.S. will actively work to foster angel investor groups and connect them with startups and entrepreneurs.

Eric Schmidt of Google, Jim Turley of Ernst & Young, Tony Fernandes of Air Asia, and Ir. Ciputra of Indonesia’s Ciputra Group were also among the prominent local and international speakers. In his keynote, Google’s Schmidt stated that he thinks that Indonesia can be the next Brazil. He is not alone. Many economists are predicting the same. Schmidt pointed out that the country only has 18 percent Internet penetration. In discussions with government officials, he expressed Google’s interest in opening an office in Indonesia and in expanding the platform that connects small and medium enterprises (SMEs) to buyers in foreign countries.

A remarkable number of technology-based start-ups have emerged in Indonesia, fueling the country’s recent rapid development in digital entrepreneurship. According to StartupLokal, a local organization that organizes monthly events for Indonesia’s entrepreneurs, there are training teachers to teach a module called “How to Start and Improve Your Business” to students across the country. The Ministry of National Education has also replicated the International Labor Organization’s “Know About Business” curriculum and has trained 10,800 teachers in more than 4,500 schools since 2008. The government hopes to address the low rate of formal entrepreneurship in Indonesia.

Private companies have also been investing in Indonesia’s development through entrepreneurship. Microsoft, for example, has committed to help in assisting with Indonesia’s Economic Masterplan and by stimulating innovative thinking through entrepreneurship activities within the country, such as training and funding for budding entrepreneurs.

The private “Universitas Ciputra,” a $10 million dollar investment, has in turn incorporated courses on how to start high-growth, innovative companies into the curriculum. With recent help from the Kauffman Foundation´s Global Faculty Visitors Program, this local university was able to augment its teacher-training program. Five lecturers from Indonesia participated in the inaugural 2009 program and another fifteen lecturers in joined in 2010. One of the program's graduates is now deputy rector of academic affairs at Tarumanagara University, which is home to a new undergraduate entrepreneurship program and the first graduate course on entrepreneurship in Indonesia.

The seeds of entrepreneurship education and policy strategy have been planted. We will be keeping an eye to see whether Indonesia’s next chapter is indeed a page from Brazil’s playbook.

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