Here’s why Indonesia could be the perfect place to set up your AI startup

Sansan’s Rio Inaba (L), McKinsey & Co’s Sachin Chitturu (M), and Kata.ai’s Irzan Raditya (R) speaking on stage at Tech in Asia Jakarta 2017. Photo credit: Tech in Asia.

“Artificial intelligence” (AI). No, we’re not talking about the post-apocalyptic, superiority complex-inflicted, misanthropic machines you’ve seen in the Terminator and Matrix movies (not yet, at least).

AI is the latest favorite buzzword in Southeast Asia’s startup ecosystem. PR folks use it as a catch-all term for technologies as wide-ranging as machine learning, natural language processing, and image recognition, among others.

Nevertheless, these are at the center of a revolution taking place in the region and the wider world, and they are helping businesses to be more efficient, generate revenue from new sources, and improve access to things like transportation, healthcare, and educational resources. And it just so happens that Indonesia has all the right ingredients to be a perfect testing ground for startups looking to break into this revolutionary field.

Data first

The fundamental element to this whole class of technologies is data. Without the collection of masses of data that can be analyzed and understood, the “learning” part of machine learning can’t happen.

In the opinion of Sachin Chitturu, digital core leader for Southeast Asia at McKinsey & Company, this is where Southeast Asian startups face their biggest challenge.

“Data is a big gap for startups,” said Chitturu, speaking on stage at Tech in Asia Jakarta 2017. “They either need to collaborate with big companies, or generate data themselves, which takes time.”

Value increases as scale does.

Only a relatively small handful of Southeast Asian corporates possess the large customer bases that are preferable to test AI algorithms on. According to Chitturu, these typically fall into two groups: telcos, and fast-moving consumer goods (FMCG) businesses.

Partnering with these types of companies is therefore a great starting point for AI startups, he added.

It’s a virtuous circle. If startups have technology that can make the corporates’ lives easier by boosting efficiency or creating new revenue streams, then they become an attractive partner. As a partner, they can get access to the corporate’s large customer base and the masses of precious data it generates. In turn, this allows the startup to hone and improve its AI, making it an even more attractive partner for customer-facing corporates.

Virtuous circle

One such collaboration is that between Indonesian chatbot developer Kata.ai and Telkomsel, the mobile network subsidiary of Telkom, the country’s biggest telco.

Indonesia rocks

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