The fate of Indonesian startups is bleak, this is how a tech economist explains it – 1 hour ago

Jakarta, CNBC Indonesia – Investment in the digital sector has declined sharply since 2022. According to records from the Director of the Digital Economy at the Center of Economic and Law Studies (Celios), Nailul Huda, there were IDR 140 trillion of investment funds entering the digital sector in 2021. The following year, the funds entering were only around IDR 60 trillion.

Nailul said this was the trigger for the digital sector in Indonesia to remain sluggish in the first semester of 2023.

“Because at the end of last year we experienced a tech winter. This is what I have said from the beginning of last year, and perhaps we are facing projections that are no less exciting, namely projections for the digital economy in Indonesia,” said Nailul during Profit on CNBC Indonesia.

He said that a sharp decline had occurred in the digital economy in the last 2 years. In the 2021 report, the GMV (Gross Merchandise Value) of the digital economy in Indonesia is projected to reach US$146 billion in 2025.

Then in 2022, the projection was corrected to US$130 billion. Meanwhile, this year the projection was again corrected by US$109 billion. This means that future projections for the digital economy in Indonesia are increasingly gloomy.

What he means by gloomy is a return to normal figures, that the projected GMV is not as high as imagined 2 years ago.

“So there is a process of normalizing digital projections. This is one of the reasons why investment is decreasing,” he explained.

Not only that, he said the cause of declining investment also came from slowing household consumption. This shows that there is a slowdown in public consumption which could be an indicator for investors whether they will invest in digital startups in Indonesia.

Not to mention the many startups closing and layoffs which will also be a consideration for investors whether to place funds in the right startup.

“Those are the factors that I noted, the BI rate rose 3 percent, Singapore, which invests quite a lot in our digital startups, the cost of funds rose 3.1%,” said Nailul.

“This means that there is indeed a tightening in terms of investment costs, which will be a factor too.” he concluded.

[Gambas:Video CNBC]