Why the new cabinet has made Indonesian digital, creative economy ecosystem anxious

On Wednesday, October 23, Indonesia’s President Joko Widodo announced the list of ministers and heads of institutions for his new cabinet. Despite the continuous mention of the “digital ” jargon throughout his campaign, the new cabinet came out as a shock for the national startup ecosystem one of the leading players in the country’s creative economy sector.

There are two major questions that remain. First is the merging of Economy Agency (Bekraf) into the ministry of tourism, transforming it into ministry tourism and creative economy. “Merging” is the terminology that they prefer to use instead of elimination. While the ministry itself will be led by a young, leading name in the creative industry, the merger may indicate a changing level of priority for the creative industry which also included the startup ecosystem. This is especially crucial considering Bekraf’s significant role in the industry.

The agency’s programmes specifically target the needs of creative professionals, considering the list of deputy that was in charge of the different sectors in the agency, from research, funding, infrastructure, marketing, intellectual property rights, and inter-agency relationship. Ideally, with its own potential and complexity, tourism should be handled by its own agency.

Never look down on creative economy

According to research by central statistics agency and Bekraf in 2016, Indonesia’s creative economy sector contributed 7.35 per cent of the nation’s GDP or the equal of IDR922 trillion (US$65 billion). The figure has continued to rise that it is projected to grow by 4.13 per cent by the end of the year. Creative economy employs up to 17 million workers from various fields including tech.

According to other sources such as the Google, Temasek, and Bain & Company e-Conomy SEA 2019 report, this year, Indonesia’s digital economy sector is expected to reach US$40 billion and is predicted to grow up to US$133 billion by 2025. The e-commerce, travel, and media sector will play a key role in driving the figure and pushing Indonesia to become a top player in the Southeast Asian region.

Some concerns

In addition to Bekraf, the other institution that works closely with the digital industry is the Ministry of Communications and Informatics. In the past years, former minister Rudiantara played an active role in advocating startup industry players with his ambitious target of giving birth to new unicorns. To support the mission, the minister had taken several steps including the issuance of new regulations.

Johnny Gerald Plate has been named as the new minister to replace Rudiantara. While the new minister has been a familiar face in the political sector, he is a relative newcomer in the creative and digital industry.

This is basically the second point of our concerns.

The creative and digital ecosystem is growing rapidly and it requires the government to run just as fast with it if not more. Disruptions, as provided by players in these industries, have been proven from time to time to drive changes in society. Our tech ecosystem has gone beyond its early-stage; we have even entered the scale-up stage at the moment. This development requires an individual with a relevant, strong track record to lead the policy-making institutions. Especially since Plate was given the mandate to handle the matters of cybersecurity, data autonomy, and protection of local ICT industry. A rather serious and daunting task.

On Monday, October 22, the presence of Nadiem Makarim at the Merdeka Palace gave a fresh, new hope for the industry. Many were expecting to see the set up of a new ministry that specifically handles digital and creative economy, but he was being appointed as minister of education and culture instead. There is no denying that human resource development is a crucial matter  But given his track record in running a disruptive business model, it feels like a waste to not maximise his potentials.

It is hard not to be pessimistic

The Indonesian digital industry had facilitated access to financial services for the underserved community, with the connectivity provided through their tech innovation. The ride-hailing vertical has opened up new job opportunities and transformed SMEs through the use of digital tech. We have not even talked about the New Retail, healthtech, edutech, and other verticals that have created significant impact in Indonesia.

It is hard to accept the political calculation that the President had to make. We sincerely hope this is not an effort to sacrifice the creative and digital industries for a so-called greater good.


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