The Nadiem effect on investors, talent, and Indonesia

With additional reporting by Elyssa Lopez

As his corruption trial drags on, Nadiem Makarim has settled into a routine.

At the end of nearly every hearing, he turns briefly toward the swarm of reporters waiting outside the courtroom and makes a public case for his innocence.

In one of those instances, however, he spoke on more than his legal defense. Makarim issued a warning about what the case could mean for Indonesia’s reputation as a destination for business and investment.

“If I am found guilty… I think it would be devastating for the perception of Indonesia in becoming an economic powerhouse,” he told Tech in Asia outside the courthouse on April 15.

Earlier this week, the Gojek founder harped on that sentiment during his last chance to plead for his case: “Business communities see a bad precedent from this case because they don’t understand why the case was put on trial.”

Prosecutors allege that Makarim caused state losses through the Education Ministry’s procurement of 1.2 million Chromebook laptops between 2019 and 2022, during his tenure as minister. If convicted, he could face an 18-year prison sentence.

As his verdict draws near, people beyond the courtroom, particularly those in Indonesia’s business and technology sectors, are tracking the high-profile trial closely.

Yet Makarim, once one of Indonesia’s biggest tech stars, is not alone.

A series of other, less high-profile cases involving technology executives and venture capital investors has intensified debate over where Indonesia draws the line between failed bets and criminal conduct.

Fear of incurring state losses

Four former executives from state-backed venture capital firms are also on trial over investments that prosecutors say caused substantial losses to the state.

Former MDI Ventures executives Donald Wihardja and Aldi Adrian Hartanto, as well as former BRI Ventures executives Nicko Widjaja and William Gozali, are alleged to have improperly approved investments in agritech startup TaniHub.

Prosecutors are seeking prison sentences of between nine and 12 years for the executives for their alleged investment mismanagement that resulted in more than 360 billion rupiah (US$22 million) in state losses.

A chilling effect on startups?

Striking a deeper nerve