The rise of the Asian Tigers is the economic success story of the late 20th / early 21st century. Hong Kong, South Korea, Singapore, and Taiwan have seen exponential economic growth and corresponding improvements in their standard of living.
Fifty years ago, South Korea was still recovering from the effects of a devastating war. Fast forward to today, and it’s the most connected country on Earth.
Indonesia shares many of the qualities that have made the Asian Tigers roar. But even so, its extraordinary potential has yet to be unleashed. In this article we’ll explore why that might be, and reveal how Indonesia could soon be rivalling the world’s biggest innovation powerhouses.
Why Has Indonesia has Been Left Behind in the Asian Economic Revolution?
Various studies, from both the OECD and the Indonesian government itself, have identified one overarching cause. It’s Indonesia’s continued over-reliance on exports of natural resources – rather than nurturing and developing high-value tech industries and products, like their Asian Tiger counterparts.
Indonesia’s GDP per capita remains relatively low and poverty is a persistent problem. It has only attracted modest levels of foreign investment, it hasn’t developed a technology-intensive industry structure, and imports of high-technology products outweigh exports.
It’s clear that Indonesia would benefit immensely from refocusing on technology-based industry. Yet still today, Indonesia falls under the ASEAN average in terms of R&D expenditure, business innovation, patent applications, and scientific publications.
Indonesia is the Perfect Place for Innovation to Flourish
Indonesia’s population is young, its educational standards are improving quickly, and the middle class is growing. Importantly, Indonesia is developing a critical mass of STEM (Science, Technology, Engineering, Maths) graduates. In fact, the country is projected to be the fourth largest producer of STEM graduates in the G20 by 2030.
Indonesia’s innovation potential is high, and the country’s government has recognised that, too. In recent years the government has taken important steps to strengthen Indonesia’s national innovation system – including the ‘Making Indonesia 4.0’ initiative.
‘Making Indonesia 4.0’: Indonesia’s Digital Start-Up Ecosystem
With government support, Indonesia’s start-up ecosystem has slowly been developing. The ‘Making Indonesia 4.0’ initiative recognizes the critical importance of technology for the future of the country. It brings entrepreneurs (and their ideas and skills) together with mentoring support, infrastructure, and other resources. All with the aim to encourage the creation and development of new companies.
If look at the top-level results, the initiative seems to be work. ‘Making Indonesia 4.0’ has already produced three unicorns (start-ups valued at more than $1billion) and one decacorn (valued at over $10 billion).
However, when you look beyond the headline heroes, Indonesia still faces challenges that hinder the development of an active entrepreneurial sector. One of the largest is the lack of financial support for new ventures.
Indonesia’s central government allocates and distributes funds for R&D, which is conducted primarily by national research centers and universities. This centralized support mainly goes to Government institutions, meaning there is an urgent need for innovation funding for private businesses and entrepreneurs. Small-scale tech entrepreneurs were the catalysts of the Asian Tiger economic miracle, and they still find it very difficult to get the funding they need to survive and thrive.
Indonesia’s Competitiveness Ranking Must Improve
Indonesia’s competitiveness has increased significantly in recent years. In the IMD World Competitiveness ranking of 63 economies, Indonesia rose from 43 in 2018 to 32 in 2019. However, the country’s continued growth is hampered by lower investment in R&D than its competitors. In terms of the number of patent applications per million population, Indonesia ranks 83rd out of 100 countries, with just 37 patent applications in 2017.
In 2018, according to the World Bank’s Doing Business index, Indonesia scored 81.2 out of 100 in the metric for ‘starting a business,’ ranking it 134th out of 190 countries.
Indonesia Needs a Technological Transformation
Technological innovation was the key driver of the Asian Tigers’ success. It clearly has a critical role to play in unlocking Indonesia’s growth potential, too. Indonesia’s ability to boost its competitiveness and productivity will rely on the ability of firms to take advantage of the opportunity new technology brings. It’s also vital to unleash the entrepreneurial ambition needed to turn innovative ideas into successful businesses.
If we look at the approach taken by the Asian Tigers, we can identify three key steps:
- Build new capabilities in tech-based industries
- Shift focus from import towards export
- Promote domestic competition
The above three steps were made possible by venture funding from each country’s enthusiastic entrepreneurs. And while Indonesia has just as much (if not more) entrepreneurial flair, there’s one key difference; the money its entrepreneurs need isn’t there at the scale it’s needed. Yet.
The Dacxi Chain Could Help to Change That
The Dacxi Chain is the world’s first global tokenized equity crowdfunding platform. It uses blockchain technology to create digitized versions of company shares, that anyone, anywhere in the world can purchase. It will deliver a level of innovation funding unlike anything seen before – enabling it to be distributed fairly and equally, everywhere in the world.
Innovation is blind to race, religion, gender and culture. There are countless fantastic ideas and entrepreneurs in every country – and Indonesia is no exception. With the right funding ability, Indonesia’s entrepreneurs and innovators can and will change the country for the better. They just need the system, support and the confidence in funding to do it.
That’s where the Dacxi Chain comes in. The Dacxi Chain will provide Indonesia with a viable source of investor funding and investment opportunities, far beyond the scope of the Government’s venture funding schemes. It will help connect entrepreneurs and investors simply and easily, in a regulated and well-managed environment that gives success its very best chance.
Founding Local Business Ecosystems
Overseas examples have shown us that a single successful business can form the building blocks of an entire local business ecosystem. Ancillary businesses develop to serve the needs of the core business, its staff, and their families. This multiplier effect quickly improves the quality of life of the whole community.
Take Nokia, for instance. Originally a rubber-boot manufacturer, Nokia evolved into a world-leader in the telecommunications sector. Not only did it make fortunes for its shareholders, the company seeded literally thousands of other, smaller tech companies – who turned Finland into one of the most vibrant tech countries in the world.
Dacxi believes that the same thing can happen in Indonesia. By introducing Indonesia to an efficient world-wide equity crowdfunding system, based on the unique capabilities of tokenization, the Dacxi Chain can help entrepreneurs realise their dreams. It can help them raise the capital they need to build a vibrant new tech economy, and release another Asian Tiger.
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