How Omnibus Law Conditions Affect Venture Capital Businesses

1) The author works at a corporate venture capital firm evaluating startups. Less foreign direct investment in Indonesia means slower digital infrastructure development and fewer jobs, making startups less attractive investments. 2) Foreign direct investment in Indonesia grew in 2019 but fell short of targets. Venture capital investments accounted for 35.8% of foreign direct investment, indicating room for growth. 3) The author believes Indonesia's new Omnibus Law, though controversial, will boost foreign direct investment by removing dividend taxes. This could increase infrastructure and jobs over the long run, benefiting the venture capital industry.

Uploaded by

Max Suyatno Samsir

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as DOCX, PDF, TXT or read online on Scribd

0% found this document useful (0 votes)

58 views2 pages

How Omnibus Law Conditions Affect Venture Capital Businesses

Uploaded by

Max Suyatno Samsir

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as DOCX, PDF, TXT or read online on Scribd

You are on page 1/ 2

Max Suyatno Samsir

29319170
How Omnibus Law May Affects Venture Capital Businesses

Currently, I am working at MDI Ventures, a corporate venture capital (CVC) of Telkom

Indonesia. My responsibility is to evaluate startups and make an investment recommendation
regarding its attractiveness in many ways.

According to the data released by Indonesia Investment Coordinating Board, the amount of
foreign direct investment (FDI) in the 4th quarter of 2019 reached 105.3 trillion IDR, a 0.3%
quarter-over-quarter (QoQ) gain and a 6.4% year-over-year (YoY) gain. This resulted in a total
amount of 423.1 trillion IDR in 2019, a 7.7% gain over 2018. It looks like a tremendous gain.
But actually, the targeted amount of FDI in 2019 is 487.7 trillion IDR, and we only reached 87.5
percent of the target. Even though an investment in a startup does not count as an FDI, it does
affect the venture capital (VC) investment industry. Less FDI means it would take longer to build
the infrastructures needed to digitalize the economy of Indonesia, which means that VC would
not invest to our local startups since the infrastructures is still immature. Also, with less FDI,
there would not be enough jobs created for all, especially the technological talents needed for
tech companies. Indonesia still need 600 thousands tech talents per year to close the supply and
demand gap. This is the main considerations whether VCs would invest in our local startups or
not, and it should be fixed as fast as possible. In 2019, VCs investment accounted for 35.8
percent of our total FDI. This means that there is still a big gap that we need to close.

With Omnibus Law soon to be implemented in the country, I believe that it could boost the
foreign direct investment (FDI). One of the regulations that would really benefit the FDI is the
removal of dividend tax. With the removal of dividend tax, the investors would inject more
investments in form of factories, infrastructures, or anything that could act as their cash cow for
their holding company. Even though the regulations are not that business-friendly as
Luxembourg, but this is a great start.

We know that some of the regulations in the Omnibus Law is really controversial for the local
workforces, since it cut offs their rights in terms of compensation, work hours, etc. What worse
for them is that it enable foreign workforces to work in Indonesia if it is approved by the
ministry, which they would approve without further thinking for the sake of FDI. In my opinion,
this is an opportunity for a transfer of knowledge to our local workforces to upgrade their skills,
Max Suyatno Samsir
29319170
and I really believe that Omnibus Law would benefit our country in a long term, especially for
the VC industry.