Minister of BUMN Imposes Moratorium on Corporate Venture-Capital Investments by BUMN in Startup Businesses

The development of start-up businesses across Indonesia in recent years has continued to show a positive trend, both in terms of the number of companies and the quality of the startups concerned, which is evidenced in the increasing number of unicorn and decacorn startups whose market valuations dominate the Southeast Asian region.[1]

Recently, in an effort to ensure that State-Owned Enterprises (Badan Usaha Milik Negara – “BUMN”) are adequately focused on the running of their primary businesses and that BUMN do not invest in any fields external to their areas of competence, as well as to encourage the development of a flourishing digital startup ecosystem in Indonesia through measurable investment management and collaborations that are based on the business capabilities of each company, the Minister of BUMN (“Minister”) has issued Circular No. 4/MBU/04/2022 (“Circular 4/2022”), which sets guidelines that should be followed by the boards of directors of BUMN whenever they engage in any investments in startup companies.[2]