Interview: Nadiem Makarim

What is the main challenge for local IT start-ups, and what can be done to boost the segment?

NADIEM MAKARIM: The main challenge is access to engineering talent. Although Indonesia has great creative, problem-solving, design-oriented engineers and mobile developers, they are not enough, and they don’t have enough experience. It is hard to get top senior engineering, and you cannot learn this in school. It needs to be learned like in any other kind of apprenticeship model; you need senior to junior coaching, and a lot of training inside start-ups.

The one thing that the government can do is to completely open up for foreign engineers to work in Indonesia, and provide incentives for them to come so that we can have knowledge transfer and sharing with local engineers. For example, these foreign engineers could be able to come to Indonesia without paying taxes, but they would have to teach computer engineering in Indonesian universities. Coding should be mandatory in high school as it will be the language of the future; we will build less in the physical world and more in the virtual world. We need to have a radical shift in education to face that, with incentives directed towards engineering talent and courses.

Competition is heating up, as there is a lot of money being invested in Indonesian start-ups, but it is harder for small players to get funds as investors are looking for less-risky deals. The Indonesian market’s openness to foreign investment is a problem for local start-ups, which have a huge technological disadvantage in competing against large international companies. Matching multinationals that have stronger talent pools and more capital is hard. Indonesia will have to be creative, as there is no protection for local players.

What effect will technology have on the economy?

MAKARIM: Nothing can change the country economically, socially and politically more than technology. It is becoming more and more evident that leapfrogging developing countries comes with internet and mobile. This opens new economies, new jobs, new access to information and new political movements. Very soon it will not be the government that is making the biggest changes in society, it will be technology, as is happening in China and India. No matter what the macro policies are, technology is so big that it will affect people’s lives more than most policies.

In the case of GO-JEK, technology is already having a huge impact. First, it is having an effect on drivers’ lives, with online transport reducing unemployment and underemployment in Jakarta and other cities. This is bringing labour mobility and flexibility. People can now earn a good living with only a motorcycle as an asset. You can work full-time, half-time or any time your situation allows. In Indonesia the problem is more underemployment than unemployment. People are not able to work as much as they would like.

The second impact is on users, as people’s everyday lives are being transformed. This type of service is a net saver of cost and time, increasing productivity, reducing the pressure of congestion and changing mindsets about owning private vehicles.

How do you assess the regulatory framework?

MAKARIM: This is brought up because there is disruption of traditional transport systems, it would not be an issue otherwise. The government has been supportive, but governments support whatever brings economic growth. There are many more online transport drivers than traditional ones in Indonesia, and this is only the beginning. Technology players will maximise returns and help regulators protect consumers. The government’s priority should be to protect the majority of the people’s interests, which are represented by technology firms. Deregulation is key, and is the government’s top objective. Competition is the best regulation. Deregulation is essential if local players are to compete on the global stage.