AC Ventures and BCG Release Report on Potential Green Growth in Indonesia

One of the most promising opportunities for greengrowth in Indonesia is renewable energy. Indonesia has resources renewable energy resources, including solar, wind, hydro and geothermal energy. By investing in infrastructure and technology renewable energy, Indonesia can reduce its dependence on fossil fuels and shift to a cleaner and more sustainable energy system. This not only helps mitigate climate change, but also creates new job opportunities and stimulates economic growth.

In a report released by AC Ventures and the Boston Consulting Group on the Potential for Green Economic Growth and Decabonization in Indonesia, it was revealed that there are great opportunities for Indonesia in terms of strategy, reduction of greenhouse gases, and balancing emissions, by requesting broad participation from companies, government stakeholders, and investors in critical economic transitions.

Three categories determine the success of the Green Growth solution

Green growth is the term used to describe an environmentally sustainable path of economic growth. To achieve Indonesia's ambitions in fulfilling net zero emissions by 2060, it is estimated that public and private spending in the country will reach $350 billion per year by 2030.

The report revealed that there are three keys to success so that decarbonization can run successfully in Indonesia. Among them are energy solutions, waste management solutions and the last one is agricultural solutions.

Especially for energy solutions other than electric vehicles (EV), platforms such as Xurya considered capable of helping Indonesia launch the decarbonization movement.

Even though there are still many challenges in waste management in Indonesia, the current efforts demonstrate the commitment of the government and various parties to create a cleaner, healthier and more sustainable environment. Several startups that have presented waste management solutions include: Waste4Change and Surplus.

Meanwhile, agricultural solutions in Indonesia are still considered difficult to handle as a whole. Nevertheless, its function is important because it supports the economy to adopt and encourage sustainable agricultural practices. The complexity of the agricultural technique itself to changes in crops and food systems is a fundamental of agriculture that must be resolved further. Companies that are trying to present solutions for agriculture in Indonesia include, iGrow (acquired by LinkAja in 2021), Aruna and Neurafarm.

In addition to startups targeting the environment and renewable energy, platforms like Ecoxyztem which is venture builder specifically for climatetech and impactful startups in Indonesia, are also considered to be able to help the government launch an environmental care campaign. Even though not many investors are interested in providing fresh funds to impactful startups, currently many platforms such as Ecoxyztem and other institutions are interested in investing in impactful startups in Indonesia.

"However, Indonesia also has great potential to transition to a green economy. This change is an opportunity for startups, Micro, Small and Medium Enterprises (MSMEs), and investors to play a leading role in driving sustainable economic development and tackling climate change," said Principal – Head of ESG AC Ventures Lauren Blasco.

Lack of digital talent

Even though at this time many companies have started to present solutions with different targets and services to support them greengrowth, most of them are still having trouble finding relevant talents. The report revealed that Indonesia faces significant challenges related to access to available and appropriate talent.

The 2019 RGF report notes that around 50% of Indonesian entrepreneurs in 10 sectors face a significant talent shortage. This talent shortage is especially felt in the startup space, with the Indonesian government estimating that Indonesia will need nine million talent in technology by 2030 to support Indonesia's rapidly growing digital economy. This represents a 10x increase from around 900 thousand digital talent workers in Indonesia in 2020.

According to the report, Indonesia can take several steps to address this problem by better attracting talented foreign workers, but there are still significant barriers including language barriers, complex and restrictive application processes, and efforts to upgrade existing talent. or withdrawing Indonesian talents that are spread abroad. In the short term, stakeholders in the public and private sectors must work together to understand how to attract, train and retain today's best talent.

EV Development in Indonesia

As the largest economy in Southeast Asia and projected to become the fourth largest economy in the world by 2050, Indonesia has a strong interest in transforming it into a green growth economy. This transformation is not only important for environmental sustainability, but also a very significant business opportunity. The report estimates the value of the green growth opportunity in Indonesia at $400 billion which includes industry revenue and potential carbon offsets.

According to BCG Singapore Managing Director and Partner Marc Schmidt, especially for Indonesia, energy solutions, from waste management to agriculture play an important role, however, if the Indonesian government can prioritize the solutions it wants to present first, energy solutions are the ideal option.

"Focusing on energy solutions provides opportunities for EVs that have low emissions zero emissions to evolve into systemic to resolve. Which will not only focus on energy generation but also transmission who need infrastructure for all."

At present, there are already many local and foreign companies presenting electric motorbikes and their supporting products in Indonesia. Among them ION Mobility based in Singapore, China and Indonesia. As for local products, they include Viar, Elvindo Rama, Selis E-Max, Honda PCX, as well as local manufacturers whose motorbikes were tried by the president, namely Gesits.

One local company that is pioneering solutions in the EV sector is MAKA Motors. In an alternative approach to most Indonesian automotive players which focus on assembly and sales/after sales services, Maka Motors adopts a vertically integrated value chain through R&D, product design, assembly, and sales/after sales services.

This vertically integrated model is claimed to enable them to design and manufacture electric vehicle products that are tailored to the needs of the Indonesian market and allows the company to have a more affordable price compared to other products. white label with similar specifications (battery size, motor power) due to a more efficient cost structure.

"We believe that electric vehicles are key to Indonesia's decarbonization journey, paving the way for a cleaner and more sustainable future. To persuade Indonesian consumers to switch away from their gasoline vehicles, electric vehicle players must provide a lower total cost of ownership without compromising what they already have. what consumers get from gasoline vehicles today, namely, mileage, power, usability, durability, and affordability," said Maka Motors Founder & CEO Raditya Wibowo.