Joining the dots in the Indonesian creative and social enterprise ecosystem

Young, and full of potential. That is a common description for Indonesian creative and social enterprises. 

Now the country’s government is hoping to help the sector realise its potential by strengthening its creative economy ecosystem in preparation for 2021, which the UN has declared as the International Year of Creative Economy for Sustainable Development. Indonesia was the lead sponsor of the proposal to create this focus for the year. 

Two complementary reports published last month by the British Council, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Asian Venture Philanthropy Network (AVPN) provide the necessary background to create a roadmap for how the Indonesian government and other actors in the creative and social enterprise ecosystem will move forward in this significant year.

Creative and Social Enterprise in Indonesia and Investing in Creative and Social Enterprise in Indonesia show that with more than 8 million creative businesses in the country, the sector makes a real and substantial contribution to the national economy.

The two reports explore both the supply and demand sides of the creative and social enterprise ecosystem. 

Indonesia’s country director for the British Council, Hugh Moffatt, notes in one of the reports that the research makes clear that the value of creative and social enterprises is “greater than the sum of their parts”. He adds that they contribute “social impact, creative and cultural value, and financial returns”. 

He adds: “Evidence from emerging economies is beginning to demonstrate the role that social enterprise and the creative industries can play in contributing to sustainable and inclusive growth.”

A focus on the UN Sustainable Development Goals

“Creative and social enterprises are creating more jobs for women and young people as compared to other enterprises in Indonesia or other businesses in Indonesia,” said Ari Sutanti, senior programme manager at the British Council Indonesia, during the virtual launch of the research on 16 September 2020. 

The research shows that creative and social enterprises also tend to more frequently employ elderly people and people with disabilities compared with other businesses.

Sutanti also explained that this perspective helps to engage more women in enterprises and to address the issue of unemployment. 

“I think the government is particularly interested in how creative social enterprises contribute to the achievement of the Sustainable Development Goals,” she said.

The research points out that creative and social enterprises are creating jobs faster than other businesses, for the young and old, women, and disabled workers. They are making strong contributions to inclusive economic development. 

Introducing the impact investors

However, there is a disconnect between the support that creative and social enterprises are giving to their country and the support they are receiving. 

“We know that the major barrier is the lack of access to business support,” said Sutanti.

Indonesia has one of the fastest growing impact investing markets in South East Asia – Roshini Prakash, AVPN

Another key issue is the inability for investors and potential investees to connect with one another, in spite of the fact that there appears to be no shortage of investors.

“Indonesia has one of the fastest growing impact investing markets in South East Asia. Particularly since 2013, we have seen an increasing number of local impact investors join the scene,” said Roshini Prakash, knowledge director at AVPN. 

Yet many creative and social enterprises remain self-funded. 

Prakash continued: “The largest barrier that came out of the research was that this is a sector that is very diverse, and it includes areas such as gaming technology as well as artisan heritage craft, so for any new investor, it is relatively difficult to come in and assess opportunities on the table in a like-for-like manner.”

The importance of the Indonesian government's support 

So, while there are people and organisations that want to support creative and social enterprises, there are still numerous gaps, weaknesses and areas for development. Government support is crucial in order to continue growing the ecosystem. 

“Government support for incubators, accelerators, mentorship programmes and so forth will be crucial in the growth of creative and social enterprises, and also provide the very needed boost to engage the investment capital interest,” explained Patsian Low, AVPN’s chief of staff. 

We need to create a roadmap to build an ecosystem that will develop creative and social enterprises in a more integrated system. We will work across sectors, across needs – Dr Vivi Yulaswati, deputy minister for social affairs and poverty reduction

Government policy also plays a very important role in unlocking and mobilising capital. “Not only is there a need for ministries that involved the financial sector and development sector and creative sector to be engaging with each other and offering different forms of financial schemes, there maybe also a need for government support that looks at the different maturity stages of creative and social enterprises and the kinds of financial needs that they may have,” Low added. 

There needs to be a clear alignment between regulatory support for impact investing or other forms of impact capital alongside the regulatory environment around startup investing and other forms of sustainable financing. 

She commented that government actors need to leverage and coordinate a diverse range of policy interventions to create a more enabling environment for creative economy industries. There will be no one-size-fits-all approach. 

Responding to the report, Dr Vivi Yulaswati, the deputy minister for social affairs and poverty reduction at the Indonesian government’s Ministry of National Development Planning, noted that the report helped make the landscape clearer, especially in terms of the state of supply and demand.

“Indonesian government has many sectors, and creative and social enterprises are included in various different sectors,” she explained, adding that each sector often uses different terminology and that’s where a disconnect happens. 

“We need to create a roadmap to build an ecosystem that will develop creative and social enterprises in a more integrated system. We will work across sectors, across needs,” she said. 

She underscored her ministry’s intention to work with the British Council, AVPN and other organisations and entities that are supporting Indonesia’s creative and social economy. 

The head of the public fund sub-directorate in the Indonesian Agency for Creative Economy (Bekraf), Hanifah Makarim, also responded to the report. She highlighted that all actors in the ecosystem need to do their part.

“I think coaching either from the government or from private or from university is very important,” she said. “Indonesia is very large, so it’s not only focusing on Jakarta and cities in Java, but we also have to focus on other cities besides Java. So that’s what we need to do so all the government needs to work together to build acceleration and incubators and also connecting with the investors.”

With the Covid-19 global pandemic, everything has changed. However, the government, impact investors, researchers, and creative and social enterprises are all ready to move forward with strengthening Indonesia’s creative economy ecosystem. 

The launch of these reports started an important conversation, which is admitting that each area needs help from the other. Where there was a disconnect and miscommunication before, the report has helped to highlight what’s been working and what issues need more attention.

Header photo: women at Pelangi Nusantara, an Indonesian creative social enterprise

Astari Sarosa is a graduate of the Pioneers Post and British Council DICE Young Storymakers programme. She continues to write for our Global Perspectives collection as a freelance journalist.