Indonesia’s Startup Fundamentals are Strong, Not Affected by the Bubble Burst Phenomenon

The existence of the bubble burst phenomenon in a number of startups in the United States is considered not to have a significant effect in Indonesia. This is because startup fundamentals in Indonesia are still quite good. In addition, the digital ecosystem in Indonesia is also not too big.

This came to light in the discussion on the Bubble Burst Phenomenon: The Steep Path of Indonesian Startups, which was held by Katadata Indonesia with, which was held virtually on Friday (19/8).

Bubble burst is a phenomenon of economic growth or market value rising very quickly, especially asset prices but followed by a rapid decline in value or contraction. In general, bubbles caused by rising asset prices are driven by high market behavior.

This phenomenon has made a number of startup companies in Indonesia stop operating and lay off employees.

Managing Partners of East Ventures Roderick Purwana said the conditions experienced by startups in Indonesia were due to many factors, including the geopolitical crisis, namely the war in Ukraine and the recovery process from the Covid-19 pandemic.

“Why do people say that winter is coming now, maybe because it is parallel to the geopolitical crisis in Ukraine, the recovery from the pandemic. The implications are not too big for Indonesia because the digital ecosystem is still at an early stage. The biggest impact is only on the company’s valuation expectations,” explained Roderick.

Roderick added that the startup journey is indeed steep and not only at this time. He said, startups need time to make products and be accepted by the market. Therefore, startups with strong fundamentals will not be affected by the bubble burst phenomenon.

Katadata Indonesia CEO Metta Dharmasaputra said the bubble burst phenomenon that befell startup companies in Indonesia today is part of the fourth industrial revolution.

Also read: The Importance of Startup Legality and Data Compression

According to Metta, digital transformation actually happened when Covid-19 hit the world. Based on data from Google Temasek, during 2015-2019 the population connected to the internet increased by 100 million. Meanwhile, during the two years the pandemic increased by 80 million.

Metta said, internet users will continue to grow. 9 out of 10 new digital consumers will continue and interestingly the outlook for the future Southeast Asia region will enter the digital decade stage.

The value of the internet economy in 2021 will reach 170 billion US dollars and increase to 360 billion US dollars four years later and to 1 trillion US dollars in 2030.

“Then where is Indonesia’s position, Indonesia is estimated to be the largest digital player in Southeast Asia, the figure in 2020 is 47 billion US dollars, in 2021 it will be 70 billion US dollars and it is estimated that in 2025 it will be 146 billion US dollars. These numbers bring a new point of optimism that the digital economy will continue to color the Indonesian economy and the bubble burst is not a scary ghost phenomenon,” explained Metta. Managing Partners Italo Gani said startups with good fundamentals would be able to survive the bubble burst phenomenon. He said, this is not the first time the term winter is coming because in 2016 this sentence also appeared.

“Good companies will survive because basically a startup is looking for a solution to a problem. And, each startup takes a different amount of time to be able to offer their products to the market and be accepted. For example, Aruna, a startup in the fisheries sector. It will take them a long time before they can finally export fish abroad,” said Italo.

Digital Startup Coordinator of the Ministry of Communication and Information Sonny Sudaryana said the situation faced by startups in Indonesia in the last 6 months was still at a normal level. According to him, the Ministry of Communication and Information will continue to focus on preparing internet infrastructure so that startup companies can expand their market to all regions in Indonesia.

“Kominfo will build 500 BTS, fiber optic along 490 thousand kilometers that connects the eastern, central and western regions as well as maximizing 5 national telecommunications satellites and 4 additional ones that we lease as well as procuring Satria 1 which will operate in Q3 2023 and Satria 2 in 2024 and Satria 3 by 2030, the main goal is internet distribution throughout Indonesia,” said Sonny. (RO/OL-7)

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