Indonesia: Indonesia Tech Deals - Vol. 8 | November 2023

Continuing our Tech Deals series (Tech Deals Vol. 1, Vol. 2, Vol. 3, Vol. 4, Vol. 5, Vol. 6, and Vol. 7), we present the latest tech deals completed between 1 May and 31 August 2023, along with our commentary on the same.

In this Indonesia Tech Deals Vol. 8 edition, we highlight the promising investments in e-commerce and the emerging electric vehicle (EV) market, especially in the two-wheeled EV segment. While the continuing "funding winter" has been influenced by corporate efficiency measures, we are optimistic that it may ease, as the macroeconomic crisis reaches its peak in the last quarter of 2023. This suggests that investments in tech sectors will remain active in the coming years.

I. Start Up and Tech Investment Deals in the period between 1 May and 31 August 2023

Please refer to the table below on the list of Tech Deals completed during the period from 1 May to 31 August 2023:

II. NLP Commentary on the Recent Tech Deals and Growing Enthusiasm in the Green Tech Market

Continuing the trend of the first quarter, e-commerce is still attractive despite of the current recent ban on TikTok Shop. Sirclo, a prominent e-commerce enabler in Indonesia, notably secured USD 10.5 million in series C funding from Vertex Ventures SEA. This funding will be strategically utilized to enhance their infrastructure technology across their key services, such as Sirclo Store, Swift, Sirclo Commerce, and ICUBE, thereby accelerate the digitization of retail businesses in Indonesia. It is also important to note that there has been a major development in the regulatory aspect of e-commerce business in Indonesia, namely the issuance of Ministry of Trade Regulation No. 31 of 2023 on Business Licensing, Advertisement, Development, and Supervision of Business Actors in Electronic Systems Trading ("MoTR 31/2023"), replacing the previous MoTR 50/2020. The newly issued regulation prohibits social media platforms from facilitating payments and applying various foreign merchant compliance standards. There are also newly established licensing standards that foreign e-commerce operators have to comply with, such as the requirement to obtain an e-commerce license if their platforms have met certain thresholds of users from Indonesia.

Additionally, we also note a significant interest in the green tech market, particularly in the two-wheeled electric vehicle ("EV") sector. As highlighted in our previous article on "Electric Vehicles (EV) Regulations in Indonesia: A General Overview," the potential EV market is aligned with government initiatives, through the enactment of President Regulation No. 55 of 2019 on the Acceleration of the BEV Program for Road Transportation ("PR 55/2019"). PR 55/2019 has the key provisions to ensure that the growth of EV aligns with the requirements, such as the relevant business licensing, local manufacture, minimum local content (Tingkat Komponen Dalam Negeri or "TKDN"), import procedures, and fiscal and non-fiscal incentives. Consequently, the increasing interest in the green tech market, combined with the government's support through enactment of various new regulations would sustain a continued growth of EV business in Indonesia.

Despite these positive trends in e-commerce and green tech market, we note that the general volume of investment in the second quarter of the year declined compared to that of the first quarter. This is due to the ongoing macroeconomic challenges leading investors to a more conservative approach, a trend that has persisted since last year.

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