Creative economy and impact in Indonesia: investments, business models and beyond

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February 16, 2019

4 min read

Comprising 7.44% of Indonesia’s GDP in 2017[1], and providing employment to approximately 16.4 million workers, the country’s creative economy has been recognized as a major powerhouse in fueling economic growth. However, Indonesia’s creative industry faces a lack of access to financial capital, as most of the players in the sector are small and medium sized businesses. Research shows that 92% of the creative industry is self-funded, and 97% market their products locally.

To harness the creative economy’s potential for economic development, the Indonesian government launched BEKRAF (Badan Kreatif Economi Indonesia). It is an initiative that leverages technology innovations to support entrepreneurs in receiving financing and forming cross-sector partnerships.

Late last year, BEKRAF organized the ‘World Conference on Creative Economy (WCCE)’ in Bali where it engaged stakeholders representing governments, civil society, international organizations, funders and experts from the creative economy arena.

AVPN had the opportunity to host a session along with the British Council on how to cultivate growth opportunities in the creative sector. These were the 3 biggest opportunities the panel was able to identify:

  1. Building a supporting ecosystem through intermediaries like coworking spaces is key to scaling the creative economy towards impactMore than ever, there is a need to build an enabling environment for creative economy enterprises to thrive. Coworking spaces often serve as intermediaries, by helping to build connections across startups and investors. They also provide start-ups with access to networks, mentors and training sessions that can help their business grow. As a result, this system of like-minded people working on their own passion projects effectively create a cohesive community, in which entrepreneurs can exchange skills and advice. Such spaces, such as the Kumpul Coworking, play an immense role in nurturing creativity for budding young entrepreneurs to explore business ideas and develop the creative economy in the long run.
  2. Building capacity through policy initiatives is a catalyst for scaleBEKRAF led a social impact program called IKKON (Innovative and Creative through Nusantara Collaboration) where creative experts including designers, anthropologists, and videographers are collaborating with indigenous communities to build technical capabilities. IKKON is now successfully running in 15 cities, growing regional potential while simultaneously benefiting program participants and local communities.Additionally, BEKRAF is providing designers with capacity building programs through its ORBIT initiative, thereby equipping them with creative thinking skills, and business and marketing strategies. Similarly, BEKUP provides guidance to startups on how to scale up and determine strategies for business growth.
  3. The importance of cross-sector collaboration for impactThe traditional view that development should solely be driven by governments is being replaced. Development must be a collaborative effort between the government, the private sector and civil society.

    Innovative funding structures, such as social impact bonds, are increasingly being considered as financing tools for achieving the SDG’s. According to Raden Siliwanti, BAPPENAS’ (Ministry of National Development Planning) Director of Foreign Multilateral Funding, “Social Impact Bonds are a way to utilise social impact evidence to bring private sector funding, social impact and creative economy organisations and government funders together to achieve greater development outcomes.”

    Multilateral organizations like UNESCO (United Nations Educational, Scientific and Cultural Organization) are also leveraging public-private partnerships to fuel the growth of creative industries. Initiatives like the Creative Cities Network and the Global Alliance for Cultural Diversity are encouraging partnerships between public, private and civil society actors from creative industries of developing countries. Similarly, Creativity & Culture for Development (Crea4Dev) is an initiative by UNITAR (United Nations Institute for Training and Research) that provides trainings for entrepreneurs and the private sector to broaden their understanding of how creativity can contribute to economic development.

Although creative industries have proven to be an effective avenue for economic development in growing and emerging economies, there is a considerable lack of access to financial capital and knowledge of how to harness technology in creative businesses[2]. The private sector can help bridge this gap by providing with the financing and technology needed to help the industry grow. Impact investors also have an incentive to channel funding towards the creative economy as they will diversify their investment portfolio, create impact on issues they are passionate about, and contribute to a sustainable and inclusive economy[3].

AVPN will work with BEKRAF to mobilize the social investment community and foster skills development and opportunities in the creative economy.

Further details for potential collaborations can be viewed on Asia Policy Forum exchange (APFx).


[1] Creative Economy is The Future of Indonesia
[2] International Trade Forum Magazine. Public-Private Partnerships and the Creative Sector. http://www.tradeforum.org/Creative-Economy-A-Dynamic-Sector-in-World-Trade/
[3] A Creativity Lens for Impact Investing. Upstart Co-Lab.