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Rise of blockchain in Indonesia brings promise of greater financial inclusion

 

Around the world, from small startups to big MNCs, many have embraced and integrated this technology in various capacities, in their businesses. In the Asian subcontinent, Indonesia was quick to emerge as a forerunner in the race for blockchain adoption.

In fact, Bank Indonesia (BI) was one of the first institutions in the country to announce the launch of their own digital currency, backed by blockchain technology.

Since then, the country has come a long way and displayed great vigour in the acceptance of blockchain. An Indonesia Blockchain Association was established back in 2018 and it has been a key player in the formation of a strong, local blockchain community. What’s incredible is how blockchain is being used by many startups to empower marginalized sections of society and encourage more economical business practices on their part. 

Blockchain startups facilitating greater financial inclusion

A lot of the credit for the contemporary burgeoning blockchain community in the country goes to startups like Blockchain Zoo, the first company to offer blockchain consultancy services in the country and Blockchain Space Asia, both of which are founders of the blockchain association in Indonesia. With the advent of blockchain in Indonesia, many projects channelized the advantages of this technology to build tools for those who could benefit the most from this.

Financial inclusion or the availability of affordable financial services and products has been difficult to achieve for some sections of Indonesian society. Take the rural farmers, who have traditionally had to borrow money from loan sharks with unbelievably high-interest rates.

To end this financial extortion, blockchain startup Hara came up with a blockchain-powered platform to promote greater transparency in the food and agriculture sector. By digitizing loan administration and disbursement process of several financial institutions, the project has empowered small rural farmers to secure loans. CTO  Imron Zuhri emphasized the need to offer visibility to the invisible by saying,

There are 1.5 billion people who have no proper ID in this world. By making them visible, by giving them an identity that they can use to identify themselves, then we can provide access to a lot within the system.” 

Another often neglected group is of those running small scale enterprises in Indonesia, who are facing severe competition from big businesses. Blockchain has in practice been able to break down the archaic financial systems and facilitate an alternative credit rating and payments system for small businesses.

The steadily growing startup Tokoin, is a prime example of such a business model. Co-founders Reiner Rahardja and Eddy Christian Ng have created a platform which aims to help MSMEs create their business profile and oversee their identity management, which could be used for credit scoring towards financial inclusion. Reiner Rahardja, CEO of Tokoin said,

I started by establishing a small business by selling Cireng (a local fried snack in Indonesia) that I gradually popularized. Over the next 9 months, I was able to open up around 40 branches, a bento styled restaurant with 4 branches and eventually took to selling imported wood parquets.” 

While going over these two projects and looking into the background of their CEOs, a clear pattern emerged. For Regi Wahyu, CEO of HARA, his company is deeply personal to him. Brought up in a farming village in Sumedang, West Java, Wahyu has intimately and closely observed the circumstances of farmers in his country. He leveraged his background and personal experience to build his company from the ground up and experiment in the field of smart agriculture. 

The story for Tokoin’s CEO, Reiner Rahardja, is similar in many ways. He started off by establishing a small business by selling ‘Cireng’ (a local fried snack in Indonesia) that he gradually popularized.

Over the next 9 months, he was able to open up around 40 branches, a bento styled restaurant with 4 branches and eventually took to selling imported wood parquets. Had he not been a small scale entrepreneur managing his enterprise all by himself, he couldn’t have adjudged the ground reality and everyday struggles of MSMEs. His personal experiences pushed him to envision and build a venture like Tokoin. 

Financial inclusion has thus emerged as a major theme in Indonesian society, warranting increased attention from all sections of the society. What is impressive is that entrepreneurs are leveraging their personal experiences and struggles to come up with innovative solutions, making the entire industry a more ground-up industry.

Blockchain has successfully equipped people with the tools to digitize their businesses and expand it and we hope to see more such revolutionary ideas take the world by storm in the future.

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Image Credit: Monsit Jangariyawong

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