Foreign Investment in Indonesian Online Retail Sector

August 29, 2013 by | 0 comments

online retailThere is this whole thing about Internet investment in Indonesia that seems to be generating a lot of confusion. Most recently, TechInAsia picks up on the subject and went on with an extensive post. Allow me to stir the water a little bit…

[disclaimer] First off, it should be said that anyone who plan to invest 250k USD in the Internet Industry in Indonesia should not rely on bloggers and wanderers.  Checking with a proper law firm won’t cost you much and generally should get you some reliable answer.

(I’m curious how a legal consultant work both for the ministry as well as for the’ foreign companies to work their way around the new regulation‘, maybe that’ll work, but I’d recommend you to work with a real law firm).

Regulation… What Regulation?

The TechInAsia post, like the DailySocial post before that, was not clear on what regulation are they talking about. I’m assuming that TechInAsia is referring to the DNI – Daftar Negatif Investasi/Negative Investment List – which is a Presidential Regulation and maintained by the BKPM (Foreign Investment Board), the gov’t agency in charge of approving each individual applicant.

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Ecommerce In Indonesia Still Open For Foreign Investments…. No Wait…

August 29, 2013 by remco | 0 comments

ConfusedQuite a surprise this morning, renowned tech blog TechInAsia apparently did some solid research that you might expect from a journalist, thumbs up! Well, at least for the effort. The headline is clear (and long): “Hold your horses: Indonesian government hasn’t approved any new regulation to halt foreign investments“. Raise the flags, we’re all saved! Honey, here’s my credit card, go shop whatever you want! Justice is done, we’re all gonna be rich.

Well, to quote TechInAsia: “HOLD YOUR HORSES”!! So, the source for this conclusion is Vichi Lestari, a lawyer working for Trias Consultant, who has handled numerous tech companies as her clients as well as being a legal consultant of Indonesia’s ministry of industry.

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Online Retail In Indonesia Now Closed For Foreign Investments

August 15, 2013 by | 11 Comments

noentryUPDATE: Anyone doubting what I write below please read this post and stop asking me for “proof” or quoting me as an unconfirmed souce! Much appreciated.

Wow, this is kind of a shock indeed. Coming home from summer holiday to find out that e-commerce, or online retail as you will, is now completely excluded from ANY foreign investment/ownership in Indonesia. This was already so for offline retail (unless the shop size is larger than 400m2, 1200m2 or 2000m2 depending on the kind of retail), but until now the online industry was excused for this regulation.

But this all changed on June 28th 2013 with a letter from the Secretary General of the Ministry of Trade with reference 689/SJ-DAG/SD/6/2013. Google it. You won’t find it. But basically all the rules that already applied to offline retail now apply to online retail as well. Check page 61 of Perpres 36 2010 where you find the DNI (list of negative investments) for retail businesses. Now if you think your company type is actually not listed there then don’t get your hopes up. Apparently, any company selling directly to consumers (as in private persons) is only allowed in case of 100% local ownership.

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Telkomsel And XL Pop Ads And How To Opt-out

August 1, 2013 by | 4 Comments

screenshot-pop-adIt’s a pretty new phenomenon in Indonesia. I have two paid sim cards from Telkomsel and XL. For both I pay a monthly subscription fee and obviously I pay for the usage. So far no problem. However, both Telkomsel and XL decided to monetize their paying customers just a tad bit more. When you now access the Internet using 3G changes are you will get to see a Pop ad which is basically a complete page take over. Something similar as in this screenshot.

Annoying to say the least. Also pretty much illegal in most of the rest of the world. And for good reasons I think. Why? Well, first of all, I pay for this service.

It’s not like I use a website like Tokobagus for free and Tokobagus in return shows me some ads to pay for the bills. No, I actually pay for this service and at the time when I subscribed their service did not include any pop ads. Next, I never did an opt-in for this service, which in my understanding is required by law. But even when not required by law, it would be the proper netiquette. Right? Also, as far as I know and can remember I never got any instructions on how to opt-out.

I will share the opt-out methods in the end of this post.

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On Digital Startup, Founders, Governance and Happy Dreams

July 20, 2013 by | 1 Comment

happyRemco kindly invited me to post, and here I am. The subjected he suggested was Startups Founders, Angel Investors & Dilution. Which is a mouthful to pronounce and even more complicated to elaborate in details, but maybe I’ll add a few items to the post.

To take a different angle on the same issues, I think most startups in Indonesia simply fails on Governance level. In fact, in the majority of ‘failures’ that I’ve witnessed, I would say that this is very often the case. Firstly tho, let’s be clear that I specifically refer to Startups as Digital/Tech/Media related Startup.

First, a Digital Startup differs by definition to traditional business in a sense that it relies on digital technology to deliver and produce the return. The underlying value will be with the people who create and make stuff happen and the Intellectual Property it produced. The Startup is a for profit business entity that will create value with Digital Technology. Not to buy a Coal Mine or Plantation Concession or a Chocolate Factory. A Digital Startup must have a clear grasp of this before they venture any further.

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Investing In Indonesian Startups – Myths, Rules, Regulations And Solutions

July 20, 2013 by | 4 Comments

bkpmI could probably compile 20 pages with just links to “horror stories” about foreign investments in Indonesia going awfully wrong and resulting in a total-loss of money. For instance the German entrepreneur who twice opened a restaurant in Bali and twice got squeezed out of his restaurant by landlords who all of a sudden decide to increase the rent with 500%. Or a little bit bigger, the case in which Churchill Mining lost their license on what’s probably the worlds 7th largest coal mine.

Also we’ve seen sudden changes in Indonesian laws introducing a cap of 40 percent on the single ownership of domestic banks. This followed a mining law put in place in March limiting foreign ownership in the industry to 49 percent from 80 percent previously. And in the digital world the government is also imposing new regulations which are less than motivating for foreign companies to enter Indonesia. And then there’s also still the everlasting corruption, which despite all the efforts and successes of the KPK (Corruption Eradication Commitee) doesn’t seem to be beaten at all. According to Daily Social, an Indonesian tech-blog, also startup entrepreneurs seem to suffer under the strict rules for foreign investments.

So, how bad is it anyway? Is Indonesia indeed a mine field for foreign investors?

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Startups, Founders, Angel Investors & Dilution

July 14, 2013 by | 0 comments

boardroomI see it happen a lot lately in Jakarta. Startups with 4-5 founders, who are pretty much equal shareholders. Then a lot of those startups will look for very early Angel funding which, if they get it, brings another shareholder on board.

Now you’ve got a situation where there are 5-6 shareholders in a company that still has to land its first serious funding. Now this is in my opinion a situation far from desirable, for some obvious and some less obvious reasons.

In general, when a startup approaches an (angel) investor for a pitch and shares that the company has 4 or 5 shareholders with pretty much similar voting rights, my first question would be “Who wants to give up his or her shares?”. It’s just too early to have such an amount of shareholders. Startups succeed for a large part because they can make decisions instantly, react faster than competitors who are more corporate. Having 4 or 5 voting shareholders on board chances are your company won’t be that flexible and dynamic anymore. Also, any investor would prefer to just talk to 1 or 2 persons, which is clear and manageable.

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Invasion Of The Mind Peelers

July 13, 2013 by | 0 comments

mind-peelingThough it would be a great movie title, this is not the title of a badly produced low budget Hollywood movie. Mind peelers, they come in all forms and shapes. Usually they try to avoid showing their stiff corporate background with quasi nonchalant clothes and try to make you feel they’re one of you. But on average they do a really bad job at that.

Mind peelers are mostly attracted by emerging markets which they, by definition, don’t understand. It starts with an email in which a mind peeler will mostly use the strategy of elevating your achievements, experience and personal skills to divine levels. This followed by a list of they’re personal achievements and a statement on how serious they are about the Indonesian market.

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Ambient Digital Indonesia – Yet Another Light Bulb

July 13, 2013 by | 0 comments

AmbientDigital_logoAfter 8 months of extreme extravagance, partying and many holidays it was time to get back to real life. Even though I could be sipping a Mojito in Bali right now I found that I just NEED to do something. Without a goal I tend to spiral out of control, probably out of sheer boredom.

In my defence, in the 8 months of indulgence, besides doing two investments, I just didn’t see any opportunity where I wanted to invest my money and energy in. Up until I met the guys from the Ambient Digital Group in Vietnam, who are a great bunch of guys. So straight after I saw there product I had the classical light-bulb-moment, thinking YEAH, THIS I GOTTA DO.

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Is Bitcoin A Ponzi Scheme?

April 6, 2013 by | 0 comments

Is Bitcoin a Ponzi Scheme?Sometimes I’m too hasty with my conclusions. This morning I tweeted: “so bitcoin is a (slow) ponzi scheme, well surprise surprise!”. This based on the article BitCoin, Pyramid Schemes and Alternate Currencies on The Refined Geek. After my tweet I immediately got comments from claiming my conclusion is wrong.

Truth being told, I think I know quite a lot about Ponzi Schemes and can spot a scam from quite far but I’m no expert on Bitcoin so I guess had to do some research to  learn more to see if I would stick to my initial conclusion.
For those of you who don’t know what a Bitcoin is, in short it’s a digital (crypto-)currency created by Satoshi Nakamoto, which is actually not his real name. Some say it’s not even one person, others say it’s these guys based on a patent registration: Continue Reading →