Singapore startups tapping new buzz in Indonesia as test bed

Singapore

EVEN as Indonesia churns out its own startups, an increasing number of Singaporean startups are looking to the country as a launchpad to test their business model.

In addition to the sheer size of the market there - Indonesia has the world's fourth largest population - its customer profile, support network, and way of doing business are also big draws for Singapore businesses.

Janio, a logistics startup focused on international eCommerce shipments into and throughout Southeast Asia, is one of the Singapore firms riding the latest wave.

From its launch in April last year, it immediately picked Indonesia to "prove our thesis", according to co-founder and chief operating officer Syed Ali Ridha Madihid.

"Indonesia, being the biggest market, made sense for us," said Mr Syed. "It's not only the biggest but also the most challenging. So we thought, if we can prove that we can manage Indonesia, we can pretty much manage the other markets. So for at least a good six months, we developed our entire solution on just making sure that we can ship to Indonesia well."

Enterprise Singapore, too, has witnessed a significant increase in interest from startups.

Khairul Anwar, the regional group director (Indonesia) at the statutory board noted: "Interest from companies has been growing and we have also ramped up assistance in the past few years. We are now facilitating projects and discussions for about 30 startups, an increase from about 10 startups three years ago."

According to Mr Anwar, e-commerce was a "natural" first wave.

Indeed, digital companies such as Shopback, 99.co and Style Theory have since established themselves in the market and are running successfully, acquiring users for their products and expanding their business beyond the main cities in Indonesia.

"This spun off other related opportunities focused on e-commerce services, such as logistics and fulfilment," he said.

"The current wave is heavily focused on fintech - how to provide financial services to the unbanked, enable more convenient digital payments and digitalise current banking processes. Other emerging areas include e-health services as well as deep tech."

Initiatives such as the Global Innovation Alliance (Jakarta) have also made it easier for Singapore and Indonesia startups to collaborate.

Block71 Jakarta, a launchpad Singapore firms can leverage under the Alliance, is home to over 20 Singapore startups. The incubation space is a joint venture between NUS Enterprise and Indonesia's Salim Group.

Auk Industries is one such startup that has leveraged Block71 Jakarta to kickstart its operations in Indonesia. The company produces edge IoT devices which are easily deployed on most types of machines.

A cloud-based platform then analyses the data and presents it on a dashboard for businesses.

The startup started rolling out its operations in the Indonesian capital within a year of going full steam ahead with its Singapore operations, said its CEO and co-founder Samuel Tan.

The company is working with a number of manufacturers in Indonesia, including a large chocolate manufacturer based in Jakarta which uses Auk's industrial IoT system to improve operations by optimising loading schedule and reduction of performance losses such as minor stoppages and speed loss.

The IoT system also empowered them to closely monitor machine operating conditions, enabling the identification of anomaly to avoid costly product quality issues or equipment failures/downtime.

According to Mr Tan, one aspect of operating out of Indonesia that surprised him was the quality of the talent. "What happens in a lot of Singapore companies is if something happens, they just pick up a phone and call for help. Because we're a global hub, a lot of companies have their tech support here. Whereas in Indonesia... they are very remote so they need to have the in-house core capabilities to deal with problems," he said.

The fact that Indonesia's startup ecosystem has seen the rise of unicorns like Bukalapak, Go-Jek, Tokopedia and Traveloka in the last few years has created a buzz not just around the community, but also resulted in a growing pool of entrepreneurial and tech talent inspired and open to explore new business models, said ESG's Mr Anwar.

Janio is actively leveraging Indonesia's manpower as part of the company's larger strategy.

He said: "When most people think customer service they think Malaysia or Philippines. We chose Indonesia because most of our final destinations are to Indonesia. On top of that, I am of the sincere belief that Indonesian talent is under appreciated. So we have a customer service team in Indonesia and a team that manages local operations accordingly."

It also helps that they are often able to think "out of the box".

"Don't under-estimate the locals and how they can provide solutions," said Mr Syed. "Most of these guys, perhaps because of the nature of the environment, are witty enough that if there's a blocker they know how to find an alternative. Whereas in Singapore, if there's a blocker, we say 'ok lah, cannot'. In Indonesia, when Door A closes, Door B can open. That's the fun part."