Indonesia to Financially Support Startups Next Year: Minister

The Jakarta Globe – Denpasar. The Communications and Technology is mulling a plan to financially back tech startups from next year using the universal services obligation fund as part of efforts to reduce inequality through job growth in small and medium enterprises, the minister said on Friday (28/10).

“I’m still discussing the matter with players in the industry, including the ecosystems, on how to effectively support startups,” Communications and Technology Minister Rudiantara told reporters.

“This is a willingness from the government to use the USO fund to support startups in the USO-dedicated areas,” he said.

Universal services obligation fund, known as USO, is to provide telecommunication infrastructure in the outermost regions of Indonesia where private investment is scarce.

Only 122 districts and cities are eligible to receive funding, including Aceh Singkil, Nias, Sumbawa, Bima, Alor, Nunukan, Buru and Jayawijaya in Papua. Jakarta, Bandung, Yogyakarta, Bali and other areas deemed accessible to private investors are not included in the list.

The government obtained the funding after charging all telco operators in the country from 2005. At the time, the operators contributed 0.75 percent of gross revenue to the fund but later the amount grew to 1.25 percent of gross revenue.

According to Rudiantara, the fund, which reached Rp 2 trillion ($153 million) annually, has never been fully disbursed to build base transceiver stations (BTS) — equipment that facilitates wireless communication between user equipment (UE) and a network — and so he plans to roll out the program in a modified form in 122 cities.

“The USO fund won’t be dedicated for basic telecommunication but also to the things connected to startups,” Rudiantara said.

Due to obscure management, the Communications and Technology Ministry halted the program in 2015. Only 41 percent of the fund had been used for its core purpose during 2005 to 2014 period.

The ministry will release a Ministerial Regulation — which will connect to the Presidential Regulation on e-commerce roadmap — for this matter, Rudiantara said.

“We are still developing [ways to channel the funds into startups], so I encourage friends from the communities to sit together and discuss,” he said.