5 AMVESINDO's Proposal to Regulators, Make the Venture Capital Industry Revive
As of June 2023, the assets of the venture capital industry reached IDR 27,35 trillion with a total of 55 companies operating in Indonesia
Venture Capital Association for Indonesian Startups (AMVESINDO) proposed 5 things to the regulator (in this case the OJK) to encourage a more vibrant venture capital industry and make a significant contribution in Indonesia. The five proposals include:
- Company separation venture capital (PMV) in the categorization of finance companies in OJK industry data. This is motivated by the relatively small role of PMV in the non-bank financial industry. It is hoped that this separation will enable PMV to improve and increase its role for a better contribution. In OJK data as of June 2023, the total assets of finance companies reached IDR 524,4 trillion, infrastructure financing companies IDR 131,59 trillion, and PMV IDR 27,35 trillion.
- Separation of PMVs that focus on financing and those that focus on equity participation, as well as different regulations for both. This proposal arose because it was driven by the equalization of rules between financing companies and share investment-based venture capital. Meanwhile, both of them have very different businesses, so that it has an impact in the form of a decrease in the number of PMV which continues to erode.
- The need for incentives for investors, including strengthening regulations regarding Joint Investment Contracts (KIB), a more efficient licensing process, as well as joint education between associations and related stakeholders. The goal is for Venture Funds (DV) to be in demand by many local investors. This proposal emerged driven by PMV funding practices which were still dominated by the banking sector, even though there were Venture Fund facilities (Joint Investment Contract/KIB-based funds).
- PMV, especially Regional Venture Capital Companies (PMVD) are encouraged to carry out business activities based on share participation, so that the percentage of share investment financing products increases and is massively carried out by all PMVD. Not only that, PMVD is also expected to invest in DV and is considered a share investment. This proposal was driven by PMV's mandate, which is actually equity participation. As a result, statistics on IKNB financing as of June 2023 are not ideal because they show venture capital financing/participation based on business activities dominated by productive business financing (59,99%), equity investment (35,88%), convertible bonds (4,13%) ), and purchases of debt securities (0%), of the total financing from this industry amounting to IDR 18,22 trillion.
- Support for collaboration with related parties to strengthen the venture capital industry, through competency improvement and certification. The association formed the Amvesindo Institute which was inaugurated some time ago to improve competency and certification, and plans to obtain a permit from the National Professional Certification Agency (BNSP).
For the record, the Amvesindo Institute was founded in the entity PT Lembaga Karya Amvesindo (LKA) which acts as a revenue and profit-oriented business so that as an association, Amvesindo can operate better. Amvesindo Institute is open to working with companies in the B2B model and invites non-venture capital companies to join, so that innovation through technology can get better.
On this occasion, the association also explained that the performance of the venture capital industry during the first half of 2023 rose to IDR 27,35 trillion from the previous IDR 25,94 trillion in December 2022. This increase gave a positive signal to startups in Indonesia. In the same period, the number of recorded PMV was consistently at 55 companies.
"The venture capital industry is moving better, one of the indications is the growth of venture capital industry assets throughout the first half of 2023. However, pentahelix collaboration is still needed from various related parties, including the government and PMV, to achieve better or exponential growth. ," said the chairman of AMVESINDO Eddie Danusaputro quoted from the official statement.
These five proposals were submitted at the same time as Agusman was just appointed as the OJK board of commissioners in the first week of August 2023. Agusman holds the chair of Chief Executive for Supervision of Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions.