Appendix 4C – Quarterly
Indonesia’s start-up financial technology (fintech) industry is a hotbed of innovation. In 2016, the Indonesia Fintech Report 2016 reported that there were more than 150 fintech startups in Indonesia, and that this number had increased by 78% from 2015. 
By September 2017, the fintech industry was assessed in a CNN Indonesia report as having the greatest potential for growth in Indonesia, which is itself the largest country in South East Asia with a population of over 261 million – twice the size of the Philippines.
Analysts in the CNN report projected that every digital business in Indonesia will eventually need fintech services. Fintech is especially considered a high-growth sector in Indonesia because:
1. Indonesia is a country of Small and Medium Enterprises (SMEs)
Indonesian SMEs contributed 60.6% of Indonesia’s GDP in 2015. Deloitte (2015) highlights that Indonesian’s SMEs have created a total of 107.6 million jobs in Southeast Asia.
In light of this, the Indonesia Government under current President Joko Widodo has in recent years rolled out a slew of packages and measures aimed at supporting the growth of its SMEs, including digital startups, to boost the country’s status as a startup destination.
2. Indonesia has fewer banks (and branches) compared to other economies
According to Data World Bank (2015), banks with fewer branches are unable to maximise customers’ usage of their services, particularly in rural areas. 
Financial technology can help these banks improve their delivery of services to existing customers in rural areas. Additionally, fintech is expected to provide Indonesian SMEs with wider and cheaper access to loan facilities, money transfers and other financial services, hence galvanising the growth of the economy in tandem with local fintech.
3. Cash is still King in Indonesia
Both traditional and online purchases in Indonesia are still dominated by cash payments. According to Emarketer, Indonesian online shoppers are not familiar with digital payments, and 65.3% of them are more comfortable with cash on delivery (COD).
In fact, only 36 percent of Indonesian adults have bank accounts, according to the World Bank’s 2014 Global Findex database. This presents multiple opportunities for fintech startups to bring banking services to those who are not currently being served – the unbanked and unbankable – which together make up over 60% of Indonesia’s adult population.
4. However, The Future of Indonesia Is Cashless
Even while over 60% of online shoppers in Indonesia prefer cash on delivery, fintech is creating more ways for Indonesian citizens to go cashless.
The rising popularity of various local online marketplaces such as Tokopedia, Bukalapak, Blibli, Mataharimall and Elevania, is leading to ever more online shoppers using e-payments services or virtual wallets to pay for their purchases.
Customers are encouraged to use these e-payment services via cashbacks and marketplace discounts.
5. The Indonesia Government Is Long On Digital Startups
In Indonesia Fintech Report 2016, Bank Indonesia defines Fintech as a transformative business model that combines financial services and technology, allowing both unregulated start-ups and regulated financial institutions to provide banking services.
In 2014, Bank Indonesia announced the launch of a national cashless movement called the National Non-Cash Movement, which aims to build public awareness of non-cash payment instruments, thereby gradually fostering a less-cash society.
In 2016, the Indonesian government launched a 1000 Digital Startups National Movement program (Gerakan Nasional 1,000 Startups Digital) https://1000startupdigital.id/i/. This program aims to turn Indonesia into ‘The Digital Energy of Asia’ by developing 1000 digital startups by the end of 2020, with an expected total valuation of around $10Bn.
The government has also announced plans to establish a dedicated section within its main stock exchange to host initial public offerings by startups. This would lead to the set up of a new trading market at the Indonesia Stock Exchange called the ‘technology board”, to make it easier for founders and investors to take their startups public, thus enabling even easier access to capital.
By November 2016, the Indonesian government had also, through its Central Bank, launched new regulations on Payments Transaction Processing to provide legal assurance for new and existing payments business activities.
In addition, the Indonesian government has created a Fintech Office (through Bank Indonesia) to facilitate discussions, share ideas, provide market intelligence, and assess the benefits, risks and potential of fintech startups. The Fintech Office will also provide assistance to fintech startups with regards to government policies.
Under the framework of the Fintech Office, a regulatory sandbox has also been established which allows fintech startups to test and develop their business models in a safe space before roll-out to customers (Jakarta Globe, 2016).
Conclusion: Indonesia’s Fintech Industry Is Set For Explosive Growth
With the government’s support, and digital payments set to grow along with e-commerce in one of the world’s biggest markets by population, Indonesian’s fintech space is now one of the most potentially rewarding places in the world for fintech investment.
And with a wide footprint in Australia and Asia, R3D Global Limited is well positioned to provide pertinent information and research on Indonesian fintech companies. Contact us at +61 2 8880 3688 or email us at email@example.com to discover more about this sector.
 Indonesia’s Fintech Report 2016
https://dailysocial.id/report/post/indonesias-fintech-report-2016, extracted 8 Jan 2018
 Fintech Diprediksi jadi Bisnis Paling Potensial di Indonesia
 Indonesian Economy: Micro, Small & Medium Sized Enterprises
 Indonesia’s Tech Sector: A Look At Government Policies, Promises To Buoy The Emerging Economy
https://inc42.com/indonesia/indonesia-government-policies-tech/, extracted 8 Jan 2018
 World Development Indicators 2015
https://blogs.worldbank.org/opendata/release-world-development-indicators015, extracted 8 Jan 2018
 Cash On Delivery Still Wins Among Digital Shoppers In Indonesia
 Indonesia Reaches Out To Unbanked
http://www.thejakartapost.com/news/2016/10/29/indonesia-reaches-out-to–unbanked.html, extracted 8 Jan 2018
 Bank Indonesia Launches National Non-Cash Movement
http://www.bi.go.id/en/ruang-media/siaran-pers/Pages/sp_165814.aspx, extracted 8 Jan 2018
 Aksi Perdana Gerakan Nasional 1000 Startup Digital Di Kota Surabaya
https://1000startupdigital.id/i/guide/press-release-ignition-surabaya, extracted 8 Jan 2018
 Indonesia plans to create startup IPO market to draw investors
 Bank Indonesia Issues Rules for Payment System Service Providers
Doing business in China can be a very risky venture for companies who do not have the knowledge, connections and experience working with the Chinese.
In the past decade, China’s economy has been transformed through manufacturing and exporting. China has been produced 80 percent of the world’s air conditioners, 70 percent of the world’s mobile phones and 50 percent of the world’s shoe production. (Source: BCG 2017, The Guardian 2017). The main appeal factors that China economy has been growing rapidly are:
1. Lower Cost Labour
Workforce is one of the vital resources in companies. The essential attractions of doing business in China is the availability of lower cost labour. According to Bay Source Global 2017, labour cost can be reduced by as much as 80 percent by shifting operations to China.
2. Raw Material Cost
China offers a cost-effective option for access to lower raw materials. These, in turn, translates to lower manufacturing cost and production cost.
Apart from those factors, there are several aspects that shape the growth and new opportunities in China including:
1. Rising middle-class population
Currently, more than 50% people in China has been moving from rural areas to big cities. It will affect their spending lifestyle. According to research by PwC, middle-class households in urban cities will increase by 50 percent within the next five years.
2. Government policies
The government is actively planning and creating ‘smart cities’, as well as investing in infrastructure to support the growth of business operations in China.
3. Explosive e-commerce activities
Consumer behaviour in China is rapidly evolving. According to the Economist 2016 and Business Insider 2017, online businesses in China have grown to over $100 billion within a short period of time. E-commerce in China has shaped new and unique shopping experiences for consumers and created new opportunities to many businesses.
Understanding the above factors are crucial if you are considering expanding your business to China. There are also other factors that need to be observed and explored like the language and culture in China. Learning how to speak with Chinese business partners in Mandarin is essential. The Chinese prefer to deal with people who can speak Mandarin. Trust must be built first with partners and clients before engaging in business deals.
As with any new endeavour, R3D Global encourages you to always do your research first before expanding to new territories. It will be useful also to reach out to people who are already connected in China or who understand their cultures and business policies.
For more information, please contact us at +612 8880 3688 or email firstname.lastname@example.org.
Millennials is a unique generation that will reshape our economy. Marketers who are targeting Millennials will have to rethink their strategy and outreach to capture their behaviours. Here are some of their top traits:
1. Millennials are highly connected
Millennials grew up in the age when mobile technologies are part of their everyday life. Nowadays, every millennial has their own mobile device, giving them the ability to stay connected with each other 24/7. Unlike the other generations, the most important thing in most Millennials’ lives is their mobile device. They are confident with the information they find through the mobile device.
2. Buying decisions
Millennials browse and shop on their mobile phones. According to Forbes 2017, 66% of Millennials like a brand or company on Instagram and Facebook as well as follow a business or brand on Twitter or do subscription with the purpose of getting the discount or other benefits that they cannot get in store.
3. Social media is key
There are several popular social media platforms among the Millennials such as Facebook, Instagram, Twitter, Pinterest, Snapchat, etc. Younger Millennials choose to access information via their laptops over mobile devices, whilst older Millennials prefer to use mobile devices to access information.
4. Peer influence
Before buying the products, 75% Millennials read online reviews and blogs. They want to know how good the product is before they trust the brand. Once they trust the brand, they will be loyal towards the brand. They also influence their friends’ purchase decisions through sharing and exchanges.
Want to know more? Contact us now at +61 2 8880 3688 or email email@example.com.
For the first time in history, Asian companies overtook US counterparts in term of receiving VC investment. According to PwC and CB Insight MoneytreeTM report Asian companies received $19.3b VC funding, whereas $18.4b was recorded in US companies in the second quarter of 2017. Also, VC funding by amount in Asia doubled from the first quarter of 2017.
Asia’s VC investment leader board this quarter was propelled by Didi Chuxing receiving $5.5b and a series of over $1 billion deals, namely: One97 Communication $1.4b, Go-Jek $1.2b, Bytedance $1.0b and Ele.me $1.0b. These deals are also the top five largest deals by amount globally recorded in the quarter. Compared to last year, Asia VC deals were driven by two mega deals of Alibaba acquiring Southeast Asia’s e-commerce platform Lazada for $1b, and investment round funding by Softbank in ride-sharing application Grab for $750m.
R3D Global’s Chairman, Alberto Migliucci, said “Technology remains the driver of VC growth in the region, especially, China, India, Singapore, and Indonesia. We are seeing growing interests from Asian investors into Asia and Australia for selected deals, especially Fintech and increasingly in the natural resources space.”
Billion-dollar deals are very rare, even very unusual in Asia except China. The growth of such huge deals is an indication of rising influence of the continent in the consumer internet and technology start-up sector in India, Singapore, and Indonesia. Globally, as much as $42.9b VC deals were recorded in Q2 2017- meaning that for every dollar invested globally, 45 cents went to Asia.
Asia’s mega round deals worth $100m or more rose roughly 42% by deal counts compared to the quarter from 19 deals in Q1 2017 to 27 deals in Q2 2017. Meanwhile, mega deal in the US rose from 18 deals in Q1 2017 to 32 deals in Q2 2017, or 78% increase.
Over the past eight quarters, Asia has seen robust fundraisings and healthy deal flows from domestic and international investors targeting start-ups. This has set the region as a key player in the global industry. With Trump administration focusing to look inward, Chinese investors are looking for a new region to pour their monies into. South East Asia is expected to the be next growth region, which is seen to become a home for $290b e-commerce, online travel and online media industry. Many experts agree that Singapore has become start-up hub of venture capital. Compared to the Silicon Valley, Singapore is still relatively young and there is a positive trajectory that the landscape continues to mature over the next few years.
In Australia, $300m VC investments were recorded in the second quarter of 2017, a notable rise from $117m in the previous quarter, according to KPMG’s Venture Pulse report. Based on deal counts, Q2 2017 marginally rose to 36 from 25 in Q1 2017. Whist this figure is not significant, Australia is still working to become a global player.
Australia’s Minister for Industry, Innovation and Science, Arthur Sinodinos, understands the importance of VC to foster growth of productive and competitive businesses as Australia transitions to be a more-diversified, knowledge-based economy. A range of measures under the National Innovation and Science Agenda has been introduced to attract greater interests to early-stage equity finance in Australia.
R3D is well-positioned to assist companies to access the Australia- Asia market. Headquartered in Sydney and supported by affiliates in Asia, we act as a bridging platform between companies and investors by leveraging the right market knowledge, capital connections, and publicity channels.
If you wish to find out more, do contact us at firstname.lastname@example.org, and let’s start a conversation.