OJK to Regulate Venture Capital Industry

TEMPO.CO, Jakarta – The Financial Services Authority (OJK) pledges to regulate and restructure the venture capital industry to push venture capital (VC) firms  to contribute more to the national economy, particularly to the SME sector.

"This whole time, the venture capital industry's role has fallen below expectation," OJK board of commissioners' chair Muliaman D. Hadad said here yesterday.

Mr. Hadad said that around 70 percent of VC firms have shifted from their main role of providing financial capital to start-up companies. Instead, they give loans and adopt profit-sharing schemes, in the fashion of financial institutions and banks.

OJK director for non-bank financial industry supervision Firdaus Djaelani said the regulator will seek ways to revitalize VC firms' roles, especially in terms of funding.

He said that most VC firms have Rp10 billion to Rp30 billion in equities. In the future, new VC firms must have a minimum capital of Rp50 billion to Rp100 billion depending of the company sizes.

In 2014, the VC industry has an asset total of Rp8.99 trillion, growing 9.1 percent from the year before. The industry has a share of just 0.67 percent of Indonesia's total non-bank financial industry's market value of Rp1.35 quadrillion.

ADITYA BUDIMAN