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Indonesia’s AI startups ecosystem is growing up

  • Southeast Asia’s largest economy, Indonesia, is seeing its AI startup ecosystem hit the maturity curve in the aftermath of the pandemic

Over the last two decades, Indonesia’s startup economy has really come into its own, but its artificial intelligence (AI) startups have only started gaining wider attention this year.

This was emblematic of other technologies that were thrown into the limelight during the pandemic, as consumer behavior shifted rapidly and workforces became increasingly distributed. Suddenly, transformational technologies began seeing increased adoption, and the likes of cloud computing, endpoint cybersecurity solutions, e-commerce, and artificial intelligence all became much more diligently applied, both by consumers and in business.

As the largest economy in Southeast Asia, Indonesia has a diverse startup ecosystem: financial technology (fintech) and health tech companies have been setting up shop for years, but it wasn’t until this pandemic that the potential of homegrown AI startups started to be noticed.

For one thing, Indonesia is presently a fertile ground for burgeoning startups, with a young, internet-savvy population increasingly relying on digital services to fill their needs. Even the lockdown restrictions offered new opportunities to enterprising firms, such as education technology (edtech) platforms began to attract more students seeking to complete their course or pick up additional skills.

Edtech platforms like Ruangguru can now have over 7 million users, and the rise of virtual learning startups like that could foreshadow how ready the Indonesian market is for AI startups that address issues as the country ramps up towards its Industry 4.0 ambitions.

The SCMP pointed out that of the 74 AI-focused startups in the country, Nodeflux has shown a lot of potential, working closely with the federal government on expanding the capital Jakarta’s Smart City vision. Nodeflux developed an AI-based number plate recognition software for identifying (and tracking) vehicles with unpaid taxes, which eventually helped to recover nearly US$10 million on behalf of the Indonesian government.

AI is also a fixture in many fintech-oriented services, such as KoinWorks, a P2P lending platform for small businesses. KoinWorks utilizes AI-enabled machine learning to match up creditors and borrowers, ensuring better rates of return for lenders and lower interest rates for borrowers.

Another Indonesian AI startup is Kata.ai developed a B2B conversational platform, that can integrate with a variety of chat services including Facebook, Line, and Twitter. Kata.ai raised US$3.5 million in its last round of funding, and its AI-based platform is used by major corporations like Indonesia carrier Telkomsel, Unilever, nationwide convenience store chain Alfamart, and Toyota.

AI is currently being harnessed by researchers globally in bids to hasten the development of a COVID-19 vaccine, highlighting just what a vital role AI can play not just in business or in education, but in healthcare.

To capitalize on this momentum, Indonesia last month outlined its national AI development strategy, with the head of the National Research and Innovation Agency saying the country’s AI focus would be on education and research, health services, bureaucratic reform, and food security, along with mobility and smart cities.

And the country’s Vice President believes, like many other national leaders, that artificial intelligence could be vital to making Indonesia a major force in Industry 4.0, rather than a bit player. “Artificial intelligence is a solution for the country. Hence, it would not only be a market but also a player in the Industrial Revolution 4.0,” remarked Vice President Ma’ruf Amin last month.

“The increased use of AI, big data, and information and communication technology will propel the industry to grow not in a linear manner but exponentially,” he concluded.