Let’s face it: with a diverse population, large footprint, and growing economy that includes a rising middle class, there are plenty of inefficiencies present in Indonesia. The government is attempting to tackle many of them, but social entrepreneurs are also taking matters into their own hands by setting up businesses that also do good.
According to a report by the British Council and United Nations on the matter, titled Developing an Inclusive and Creative Economy: The state of social enterprise in Indonesia, there has been significant growth in this sector in the past five years, especially in the creative industry, agriculture and fisheries, as well as education.
In order to foster social entrepreneurship in Southeast Asia, Chinese mobile payment platform Alipay has teamed up with the National University of Singapore (NUS) to organise the Alipay-NUS Enterprise Social Innovation Challenge. “This is the first partnership between Alipay and NUS and also a pilot year for this initiative. We have received great responses so far, which I think shows the strength of two brands coming together,” said Jonathan Chang, NUS Enterprise executive director and a judge at the event’s Jakarta leg, to KrASIA.
Chang said that this challenge aims to draw out startup ideas that utilise digital tech to improve the lives of many in Indonesia. “The good news is social entrepreneurship is thriving, I’ve traveled to a lot of places in Southeast Asia, and there are many entrepreneurs who think beyond the financial return for themselves, and care about how to utilise their innovative ideas and business model to make an impact on society,” Chang added.
At the event’s stop in Jakarta, ten startup finalists that were selected from hundreds of applicants delivered their pitches before a judging panel consisting of Jonathan Chang, Adrian Lim (CEO & co-founder of PopBox Asia Services and advisor of Block71 Jakarta), Dian Wulandari (co-founder and COO of Instellar Indonesia), Dondi Hananto (partner at Patamar Capital), and Veronica Colondam (founder & COO of YCAB Foundation). The judges will choose three winners, who will each receive a cash prize of S$10,000 (US$7,400) and have the opportunity to compete for a grand prize of S$50,000 (US$36,800) in Singapore in April.
Eyes on agriculture
There’s plenty of space to improve how food is grown, shipped, and put in the hands of consumers in Indonesia. In particular, Chang has observed socially driven startups in the country set out to revamp aspects of financial management and agriculture.
That was reflected at the Social Innovation Challenge too, with half of the ten contestants rooted in the agriculture sector. In Indonesia, agricultural supports the livelihoods of millions of people and accounted for 15% share of the country’s GDP in 2018. Despite its importance, the sector faces many serious problems, especially when it comes to farmers’ welfare and productivity gains.
It is no secret that most farmers in Indonesia have limited access to information, education, and technology. With that in mind, agriculture is perhaps one of the few sectors that have remained relatively unchanged for decades, if not longer. “Digital innovation in agriculture is needed so we can bring and increase productivity to the farmers by providing better access to data and information,” Chang said.
The long and complex supply chain for agricultural commodities suppresses income for farmers, makes food more expensive for consumers, and generally embeds many inefficiencies within itself. Two finalists came up with solutions to address this problem. One contestant pitched to offer an e-commerce platform for fishermen to sell their catch directly to customers, giving them better access to the market as well as the ability to set a fair price for everyone involved. Another one offered project management and product traceability software to integrate global supply chains and business processes into cloud-based collaboration platforms.
Barely profitable small-scale production and low-quality yields are also common problems for smallholder farmers. Two contestants looked into ways to assist food-growers of that scope, and create systems that facilitate digital maintenance and management through real-time analytics, with data fed by sensors in the surrounding environment, weather, and soil.
Another contestant noticed that plant diseases can significantly reduce yields, so they offered an AI-based chatbot that identifies plant diseases and provides treatment suggestions and product recommendations.
Although the spirit of improving agriculture through technology is showing a positive trend, experts believe that startups must work hard to find the scalable business model so these advancements can be sustained. “Agriculture is a tough nut to crack. The market is big, but it is not easy to build a sustainable business considering that agriculture is a complex sector with many stakeholders,” Patamar Capital partner Dondi Hananto told KrASIA.
Fintech remains the favourite, while healthcare and edtech are on the rise
Fintech is one of the fastest growing industries. With approximately 60 million unbanked adults in Indonesia, the presence of fintech platforms is important to give financial access to an excluded and underserved population. At the Social Innovation Challenge, two contestants offered new solutions. One startup aims to help people who can no longer afford to make monthly payments to their banks, while another provides services to digitise schools’ finance operations to improve their cash flow and minimise the risk of cash-related fraud.
Innovations for other industries are seeing top-down support too. Indonesian IT Minister Rudiantara once expressed his hope to see more local startups grow and predicted that the country may have another unicorn this year. Healthcare and education are viewed as the most promising sectors, and the government is showing its support by allocating 5% and 20% of the state budget to develop health care and education, respectively.
At the Challenge, one contestant offered a health mask product bundled with a mobile app to protect consumers from airborne diseases. Another proposed learning platform that offers educational content, personalised practice sessions, and tutor matching services for students.
Waste management, an overlooked problem
Waste management has long been a problem in Indonesia. According to a study by the Indonesian Ministry of Environment and Forestry, people in Jakarta generate 175,000 tons of waste every day, or 64 million tons per year. Only 7.5% of that waste is recycled, 5% is burned, 8.5% is unmanaged, 10% is buried, and the remaining 69% is dropped into the landfill.
Growing household consumption and business activity contribute to the higher volumes of organic food waste, plastic packaging, and industrial byproducts. However, compared to fintech or agriculture, waste management doesn’t seem to be very popular in the startup industry, even though the danger of allowing this problem to remain unchecked is clear and present.
Garbage is easy to find nearly everywhere in Indonesia, and will undoubtedly cause environmental damage—if it hasn’t already. The government has been issued various regulations to tackle this problem and has set the targets of reducing waste by up to 30% and increasing waste management by 70% by 2025. One contestant highlighted this issue by offering an integrated app that connects all parties involved in waste management in Indonesia, allowing them to keep track of the process online.
Challenges in social entrepreneurship
Social entrepreneurs seek to implement innovative ideas to solve large-scale problems in society, but they also face unique challenges in realising their mission, especially when it comes to delivering social returns in addition to commercial value.
According to Jonathan Chang, social enterprises need to have a scalable business idea to get off the ground and move from the prototype stage to a sustainable business. Entrepreneurs have to make sure that their products can go beyond their initial user base, and that their cost structure and revenue make sense.
“There are two common mistakes that founders make in their financial projection,” said Jonathan Chang. “They are too optimistic with the numbers and leave out important details like their own salaries. Founders need to really think about the business side of social enterprises, as good heart and passion alone are not enough to increase their business values.”
Limited access to funding and a small pool of human resources are among the top problems that social entrepreneurs face today. Finding the right investors is not easy. Sometimes, the social impact takes time and requires patience, so founders need investors who really believe in their mission and see the added value in their investment.
Finally, Chang added that support from other entities around social enterprises is needed to help these companies grow. With that in mind, Alipay and NUS Enterprise’s programme also provides additional assistance to the Social Innovation Challenge’s winners, providing them with opportunities to become part of the NUS enterprise ecosystem.
KrASIA is the media partner for the Alipay-NUS Enterprise Social Innovation Challenge. Contestants have already made their pitches in Singapore, Jakarta, and Malaysia. A final round will take place in April in Singapore.
Editor: Brady Ng