Former public officials joining tech companies: a rising trend in Indonesia

In Indonesia, it’s common for major companies (like Unilever or local telco Smartfren) to bring on well-connected former public officials into their board of commissioners – a legally required supervisory role for firms in the country.

Now, as Indonesia’s tech industry soars, players in the space have also adopted this practice.

Tokopedia’s president commissioner, for example, is Agus Martowardojo, formerly the governor of Indonesia’s central bank. Badrodin Haiti, the country’s highest-ranking police officer from 2015 to 2016, was offered the same role at Grab before he opted to become a senior advisor to the firm.

Tokopedia’s William Tanuwijaya (left) and Agus Martowardojo / Photo credit: Tokopedia

There are many reasons why such appointments are beneficial for tech companies. Some commissioners may have relevant skills or experience in the business, for instance. But Joel Shen, partner at global law firm Withers, points out a more vital reason: when novel digital businesses emerge, new regulations often follow.

“When a startup operates in a territory that is uncharted, you benefit from having senior leadership,” he tells Tech in Asia. For Shen, that’s “someone who can help guide you through this process of interpreting new regulations and sometimes even in working together with the government to create new regulations.”

While such appointments also happen in countries like Singapore or the US, this trend is particularly prevalent in Indonesia because of what one source calls a “high-friction” environment. In short, the country’s laws can sometimes be vague enough that multiple interpretations may arise.

Though the advantages of hiring ex-public officials are clear, some instances show that there are certain lines not to be crossed. And while Indonesia still provides a friendly environment for the tech industry, the recent news coming out of China also underscores the importance of playing nice with governing bodies.

A “high-friction” environment

This trend among tech companies started in 2017 with Grab’s appointment of former police chief Haiti as a senior advisor. In the same year, rival Gojek followed suit by appointing Ronald Waas (a former deputy governor of Bank Indonesia) and Kusumaningtuti Soetiono (a former commissioner at Indonesia’s financial services authority OJK) to its board of commissioners.

Even venture capital firms echoed this move: East Ventures, for one, appointed Triawan Munaf as venture advisor in February 2020. During Munaf’s time as the head of Bekraf, the statutory board that oversees Indonesia’s creative industry, he was just one level below a minister.

Shen, who is based out of Singapore and Jakarta, points out that most companies in Indonesia have split boards, which consist of a board of directors and a board of commissioners. For instance, setting up a limited company (known as perseroan terbatas or PT in Indonesia) requires at least one person to be appointed as commissioner.

The two boards have different functions. While the board of directors is responsible for day-to-day management, the board of commissioners’ role is to supervise these directors, though they don’t have executive powers like making decisions and controlling the company’s operations.

“So for 365 days in a year, commissioners are really just a figurehead that represents the senior management of the business,” Shen says.

“I shouldn’t be seen only as a politician.”

Keeping some distance is a good thing