Sat. Dec 2nd, 2023

Surviving the Pandemic: BUMN and Startup Collaboration

The unprecedented COVID-19 pandemic has created massive impacts toward the Indonesian economy, more precisely the business sector. Large, medium or small, private or state-owned, all enterprises are struggling to deal with the consequences.

Among other industries, the start-up industry is amongst the most vulnerable. During COVID-19, only 33% of startups admitted being in their good or very good conditions. This number plummeted from 74.8% prior to the pandemic. A big portion, 42.5%, is in bad or very bad positions, while 24.5% is in stable condition.

To become one of those listed in the 33% of the startups is not an easy job. The same data revealed that the number of startups with transaction value within the range of Rp1-100 billion decreased from 30.2% to 14.7%. These startups claimed that their income had fallen to below Rp1 billion. On the other hand, a small number of startups with transactions above Rp1 billion increased from 10.9% to 13.2%.

Yet, another important thing to highlight is that the pandemic is a key to test whether these startups can survive and pull out of the crisis regardless of their sizes. If they can, they will come out stronger to lead innovation and improve the country’s economy. Many countries, such as Canada and India, have been aware that they rely on startups for their economies. Unfortunately, in Indonesia, such awareness is still limited.

As an example, Indonesia’s National Economic Recovery programme does not explicitly mention startups as its beneficiary. As far as it goes, this programme only touches state-owned enterprises and small and medium enterprises (SMEs), which are both clearly different from startups. This contradicts the acknowledgement by the Ministry of Communication and Informatics that start-up’s contribution to the Indonesian national economy was expected to continue growing. In 2018, the digital economy contribution alone reached 7.3%.

This gap is where BUMN can play an important role. As the Indonesian state-owned enterprises, BUMN can initiate partnership with startups that are surviving from the pandemic. Their survival must be appreciated, as it is not easy for these companies to continue growing with their limited capacity amid the pandemic. The collaboration will not only benefit the startups, but also the BUMN. Two important reasons are because startups are result driven and continuously innovating. These can help BUMN enact internal changes to become more adaptive toward the fast-paced innovations that are taking place in the world right now.

Currently, there are a few BUMN that have made their starts on partnering with surviving startups. To name a few is BNI that has committed to fund startups focusing on smart-farming. Such collaboration is integral since the pandemic has forced people to eat clean and healthy. Smart-farming carries an important asset for these people. Another example is Telkom that has worked together with Zenius, an online learning platform, and Bio Farma with Nusantics that developed PCR tests for COVID-19.

Broader opportunities are still available for the collaboration between BUMN and the surviving startups. For instance, BUMN focusing on insurance (Jasa Marga and Jiwasraya), those formed into Himbara (Mandiri, BTN, BRI, and BNI) or other financial-related BUMN (Pegadaian) can work with some startups that have been surviving the pandemic due to their digital innovation nature. These BUMN can cooperate with startups working on AI to deal with the BUMN countless data management. This collaboration can help BUMN to solve their big data analytics problems such as inappropriate data, non-conforming data, or poor entries of data.

Another promising cooperation is with startups managing delivery services. During the pandemic, where most people prefer to stay at home, delivery services become highly on demand. Start-ups like Paxel and Ritase are also two of the surviving startups working on delivery services. BUMN focusing on logistics, such as Pos Indonesia and Bhanda Ghara Reksa, can further enhance their business by collaborating with these emerging, highly innovative logistic startups.

Finally, BUMN supporting startups does not only benefit the BUMN and the startups, but also the Indonesian overall economy. The nature of innovation and survival are two essential keys to accelerate Indonesia’s economic transformation following the pandemic. Therefore, it is also necessary for the national government to start playing a role in enhancing such collaboration.

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