INSUBCONTINENT EXCLUSIVE:
Hugh Harsono
Contributor
Hugh Harsono is a former financial analyst currently serving as a U.S
Army officer.
More posts by this contributor
Why the world first smart highway will most likely be in China
Why the future
of Chinese e-commerce is in its rural areas
Recently reelected, Indonesian President Joko Widodoannounced a desire to move the
nation capital from Jakarta to the East Kalimantan region, citing environmental concerns, the most exigent of these being the fact that
Jakarta is literally sinking due to the uncontrolled extraction of groundwater
Widodo said he wished to separate Indonesia government from its business and economic hub in Jakarta
However, what would a move from Jakarta do to Indonesia burgeoning startup economy?
Shifting administrative governmental hubs
According to
Widodo, studies have determined that the best site for the proposed new capital is between North Penajam Paser and Kutai Kertanegara, both
located in East Kalimantan
The basis of this selection is due to studies highlighting the region relative protection from natural disasters, especially when compared
This would definitely be a benefit for the governmental heart of Indonesia, ensuring continuous administrative functions in a disaster-prone
Other governments have separated administrative centers from their economic hubs with varying degrees of success, with some examples being
Brazil creation of Brasília, as well as Korea projected move from Seoul to Sejong.
What is most interesting to note from prior examples is
that these newer branched-out cities are non-surprisingly, heavily government-centric
In Brasília, roles tied to the government make up nearly 40% of all jobs, while in Sejong, a lack of facilities like public transit and
commercial mall space cause many to commute into Sejong for government work, instead of permanently settling in the area
Given the semi-undeveloped nature of East Kalimantan, these anecdotes are quite troubling if the government is actually moving to North
Penajam Paser or Kutai Kertanegara.
These facts raise the question of economic impacts of such governmental moves
In fact, one may even opine that while these moves do allow for governmental growth, ultimately, they may hurt the country economically due
to a divestment between both government and economic hubs
In this specific instance, it is most important to analyze the impact of such a move on Indonesia startup economy, as the nation is one the
world leaders in startup growth.
Indonesia startup economy
Indonesia has emerged as a startup hub within Southeast Asia in recent years,
with its population of over 260 million marking it as the world fourth-most populous country
Additionally, Indonesia mobile-first population has enabled the full embrace of the internet era, with 95% of all internet users in
Indonesia connected to the web via a mobile device.
Similarly, startup growth has boomed in the island archipelago, with several
Indonesian-based unicorns disrupting local, regional, and global economies
Softbank-backed ecommerce giant Tokopedia is currently in talksfor a pre-IPO funding round, while emerging super-app Gojek controls
significant portions of the ride-sharing industry in Asia, simultaneously expanding intoseparate industriesto include digital payments, food
delivery, and evenvideo-streaming
Additionally, online travel portal Traveloka (in which Expedia has a minority stake) has recentlyentered the financial services space,
furthering its impact within Asia
These specific examples of high-growth startups demonstrate a population hungry for innovation, further driving the developing startup
