Diyanto Imam

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Sustainable Private Equity and Venture
Capital The Indonesian Landscape
Diyanto Imam New Ventures Indonesia
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Overview

• Financial Resources for Sustainable SMEs
• Public Policy and Regulatory Framework
• Status of PE/VC
• Investment in Sustainable SMEs
• Concluding Thoughts

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Financial Resources for Sustainable SMEs
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Financial Resources for Sustainable SMEs
Why PE/VC?

• PE/VC provide means and methods to improve
  Sustainable SMEs skill level and management
  capacity
• PE/VC enable Sustainable SMEs to nurture and
  expand business network
• Increase Sustainable SMEs credibility and
  business environment through reputable PE/VC
  partnerships

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Public Policy and Regulatory Framework

• 1988/1989 Decrees lay the foundation for finance
  companies and market behavior
• Legal guidance in 1995/1999 provides for
  establishment and supervision of Venture Capital
  Companies (VCCs)
• Licensing and capital requirements are standard
  practice with minimum capitalization between USD
  300,000 - 1 million
• Foreign ownership in joint venture VCCs capped at
  85 in limited liability structure with
  registered operational agreement

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Public Policy and Regulatory Framework

• Semi-annual operations and financial reports
  filed with the Ministry of Finance
• VCCs in outlying provinces supervised by
  Directorate General of Financial Institutions and
  government VCC branches
• VCC funds not allowed to be drawn from promissory
  notes or current, deposit or savings accounts

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Status of PE and VC
in billions of Rupiah (Exchange rate USD
1.00 Rp 9000) Ministry of Finance
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Status of PE and VC
Note in billions of Rupiah (Exchange rate
USD 1.00 Rp 9000) Ministry of
Finance
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Status of PE and VC
Venture Capital Financial Instruments
Note in billions of Rupiah (Exchange rate
USD 1.00 Rp 9000) Ministry of
Finance
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Status of PE and VC
Investee Companies (ICs) Sector Focus
Note in billions of Rupiah (Exchange rate
USD 1.00 Rp 9000) Ministry of Finance
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Status of PE and VC
Investee Companies (ICs) Investment Profile
Note in billions of Rupiah (Exchange rate
USD 1.00 Rp 9000) Ministry of
Finance
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Investment in Sustainable SMEs
Key Drivers

• Natural resource depletion, poverty alleviation
  and climate change impacts create need for change
• Growing interest in profitable investments and
  business transactions in developing countries
  that meet social and environmental criteria
• Significant G-to-G and major NGO/non-profit
  program focus on transparency and SME economic
  growth
• Alternative development paradigm that
  incorporates environmental and social
  considerations for sound economic growth

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Investment in Sustainable SMEs
Challenges
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Investment in Sustainable SMEs
Challenges

• Limited number of new, rapidly growing
  sustainable SMEs
• Finite list of exit mechanisms - undeveloped IPO
  appetite, few strategic sales
• Outdated regulations, legal uncertainly, corrupt
  bureaucracy, tax structure, lack of incentives
• More attractive sustainable investment options in
  other Asia Pacific markets

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Concluding Thoughts

• Growing pipeline of quality Sustainable SMEs from
  business groups, NGOs/non-profits, multilateral
  donor programs
• Pending macro policy initiatives bode well for
  political stability with more competitive
  investment, taxation, infrastructure

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• Thank You

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• For further info
• Diyanto Imam
• New Ventures Indonesia
• E-mail imam_at_ybul.or.id

www.new-ventures.or.id www.new-ventures.org