Currently, venture capital investments in Taiwan are notably active as compared to those in other emerging markets. Moreover, Taiwan has the most active VC investments in Asia in terms of the number According to the 2005 Yearbook of Taiwan Venture Capital Association, Taiwan's VC market has raised over NT$ 180 billion in two decades. Over 400 VC-backed firms have gone public on the Taiwan Stock Exchange (TSE) or Over the Counter (OTC) markets, while nearly 50 percent of the firms listed on the TSE and OTC were VC-backed and 80 percent of these firms belong to the technology industry. Although VC funds have invested only NT$ 170 billion in the technology industry,the investments have created a NT$ 1.9 trillion industry. These led Taiwan's VC industry to become one of the most active VC markets in the world. In fact, due to the government's strategic investment policies, Taiwan technology-based firms have been well-known for their smooth operations and high level of adaptablility to changes in usiness and economic climates. To date, many Taiwanese firms are world-renowned for their excellence in manufacturing technology, making them the world's second largest produucers of information and communication hardware. Consequently, the share of global market held by Taiwanese manufactureres exceeds 70 percents for several key technology products, such as notebook PC's, wireless local area network (WLAN) equipement, liquid crystal display (LCD) products, and optical disk drive (ODD) products. According to the report on "Global Competitiveness in 2006 -2007" issued by the World Economic Forum (WEF), Taiwan ranks sixth in the world in terms of Growth Competitiveness Index. In Addition, Taiwan ranks second in the world after the US in terms of international patents per capita. In fact, Taiwan is the only country in East Asia that has closed the innovation gap with leading Western industrial nations and Japan.[9]
The History of Indonesia's Venture Capital Regulation Development
Initially, Indonesia began to recognize this alternative financing model through equity participation since 1988 which was introduced in the form of Indonesian presidential decree number 61 / 1988. Furthermore in 2009, the previous regulation was updated by a presidential decree number 9 / 2009, whereby in this new regulation financing to a business partner can be done, other than equity participation, financing may be made in the form of investments through the purchase of convertible bonds and / or financing based on the share of the results of operations. Therefore , with the intention to develop corporate venture capital industries and a contribute to national economy, OJK issues the regulation of financial services authority number 35 / POJK.05 / 2015 ,thus, although it was quite late, the major issues which already been revised is the re-definition for the business partner that receive venture capital financing assistant because the previous regulation only allows legal entitity as the recipient, in article number 1 point 12, this regulation redefines the definition of business partner, which now allows individual or corporate including micro, small, medium enterprises.
The notion of venture capital financing in Indonesia is quite different from the actual intent and purpose on it. In addition to what has been mentioned previously, such as Indonesia's regulation only allows legal entities to receive venture capital financing assistance, which has been revised in 2015. The next difference is about the collateral, venture capital is known because it includes high risk investments, financing is provided in the form of capital investment, purchase of convertible bonds and profit sharing principles, are said to be at high risk because venture capital are distinguished from other forms of financing model such as bank. Regarding a bank loan procedure, it is generally limited to only provide capital and the bank also demands loans on credit, loans and payment interests. As with venture capital that provides equity to a business partner, which provides financing in the form of capital instead of credit loan, venture capital financing is not subject to interest and does not require any collateral but profit sharing in proportion of each, particularly this business capital is not supported by collateral [10] . This financing model aimed to potential start-ups / firms that require financing sources, venture capitalists invest in ideas from start-ups / firms, where profit-sharing occurs only when there is profit after a certain time, the same principle as sharia / islamic financial law. However, according to prior research which found the deviations of true meaning and purpose of venture capital financing, as found in the preliminary study of one of the venture capital firms in the city of Denpasar that has been done,the study found that there is a equity participation based with a collateral ,by venture capital firms in their business partner , whether movable or immovable. In addition, in its development, venture capital funding assistance in the form of equity participation tends to have shifted into a capital loan as well as a loan capital in the form of credit to a bank financial institution [11]. However, current regulations allows the existence of collateral in a business activity agreement as set forth in article 27 of the Financial Services Authority Regulation No. 35 / POJK.05 / 2015, enabling the existence of collateral objects and collateral bonding costs in a venture capital agreement.
Further Advancement of Indonesia VC Investment
In addition to venture capital firms (VCs) that fund various technology-based startups, actually in Indonesia there are also VCs that provide funding to conventional Small and Medium Enterprises (SMEs) . They even once formed a association for this group, called Indonesian Venture Capital Association (AMVI). However, on May 13, 2016, along with technology-based VC company and startups, several conventional VCs took part in the establishment of a new association called the Venture Capital Association and Startup Indonesia (AMVESINDO). With this establishment, they expect that , government should be able to hear their desire even more.
Some conventional VCs which already associated with AMVESINDO are ; Astra Mitra Ventura, Ventura Giant Asia, Celebes Artha Ventura, Mandiri Capital Indonesia, and Pertamina Dana Ventura. While technology-based VC company that have ensured their support and membership in AMVESINDO are Alpha JWC Ventures, Convergence Ventures, CyberAgent Ventures, East Ventures, Fenox Venture Capital, Ideosource, Kejora Ventures, MDI Ventures, Skystar Capital, SMDV, Sovereign's Capital, and Venturra, thus with this deveopment, in addition to act as a bridge to communicate associated VC, it is also expected to help the government and the Financial Services Authority (OJK) in the development of a fair venture capital industry in Indonesia [12].
Conclusion
Finally the answers for the main concerns of this study, which is, why there rarely a potential inventor / start-up succeed in cultivating, marketing and establishing their business in Indonesia. Related to the previous discussion, whereby from 1988 to 2015, the Regulations in Indonesia did not provide a solution and necessary support that could help a start-up / firms to find sources of financing for their potential ideas. When compared with the Taiwanese Government in 1980, that made a serious regulation related to venture capital financing aims to assist firms and companies in the development of technology-based industry, so that at the time both investors and the government itself vigorously doing venture capital financing on business development related to technology. In fact, the requirements, procedures and costs to establish a Limited Liability Company (LLC) such as ; minimum 2 shareholders, 1 director and 1 Commisioner, issued capital, submission of shares after 6 month(s) and public notary's fee, is not well suited to a embryonic phase start-up business. Establishing a limited liability company in Indonesia are complex and burdensome for start-ups, companies and SMEs. Therefore, the policy of Indonesian regulation from 1988 to 2015 has prevented the start-ups,firms and potential companies to develop as a result of the venture capital financing, thus can only be given to the business partner in the form of LLC.
Author : Radityo Dewandaru Basoeki
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