Beyond Symbolic Governance: Imperatives, Global Practices, and Local Implementation

Amid the rapid growth of Indonesia’s digital startup landscape, only a limited number of startups have managed to survive, largely due to inadequate governance implementation. There are valuable lessons that can be drawn from governance practices in several countries to strengthen governance implementation within Indonesia.

The rapid expansion of digital startups in Indonesia has created new dynamics in the business environment. With more than 2,400 active startups as of 2023, Indonesia currently ranks fifth globally [1]. This ecosystem is reinforced by eight unicorns, including Tokopedia and Traveloka, as well as one decacorn, GoTo (Katadata, 2024) [2]. However, behind this growth, many startups have yet to develop adequate governance structures. Agile business models are often not balanced by a clear separation between ownership and management roles, regulatory compliance, or internal controls. As a result, a number of startups have failed due to internal conflicts, fraud, or weak oversight.

Reports from Katadata and the Ministry of Communication and Information Technology indicate that only 10% of 1,300 startups are able to survive, primarily due to managerial weaknesses and insufficient business planning [3]. Good Corporate Governance (GCG) practices have therefore come under increasing scrutiny, driven by business scandals and rising demands for transparency from various stakeholders. Companies without a strong governance foundation are highly vulnerable to reputational decline and loss of market trust.

Governance Best Practices and Their Relevance for Indonesia

In an effort to understand and strengthen corporate governance practices that are relevant to Indonesia’s modern business ecosystem, we examine best practices from three countries that demonstrate distinctive strengths in governance implementation: the United Kingdom, Singapore, and New Zealand.

The United Kingdom serves as a key reference as a pioneer of modern governance principles, particularly through the Cadbury Report, which emphasizes transparency and structural accountability [4]. Singapore, meanwhile, offers an efficient governance model that is well integrated within a digital ecosystem, with a balanced approach to risk, compliance, and management integrity [5]. New Zealand, on the other hand, demonstrates strong values-based governance and public trust, making it one of the countries with the lowest corruption perception indexes globally [6].

To provide a contextual and strategic perspective, the following comparison illustrates the key governance characteristics of the United Kingdom, Singapore, and New Zealand, as well as their relevance to Indonesia.

Reflecting on Indonesia’s Governance Practices: Adaptation Potential and Contextual Challenges

Although Indonesia has foundational regulations such as POJK No. 21/2015 and the implementation of GCG principles within state-owned enterprises, governance implementation remains largely normative and has yet to reach a substantive level comparable to benchmark countries. Compared to the United Kingdom, Indonesia remains weak in separating ownership and management roles, particularly among startups and family-owned businesses that lack effective checks and balances. The “comply or explain” principle is also not widely adopted, as many companies implement GCG merely as a formality.

From an efficiency perspective, similar to Singapore, Indonesia still lags behind in integrating Governance, Risk, and Compliance (GRC), due to limitations in digital infrastructure and human resources. Nevertheless, the rapid growth of the startup ecosystem presents opportunities to develop lean governance approaches that are efficient while remaining compliant with regulatory requirements.

Meanwhile, New Zealand emphasizes governance rooted in values and public trust. Indonesia can draw lessons from this approach, although challenges arise from business cultures that remain influenced by informal practices and patronage. Initiatives such as the Electronic-Based Government System (SPBE) and public data transparency may serve as initial steps toward building stronger trust-based governance [7].

As a preliminary step in formulating a national governance strengthening strategy, the following SWOT analysis reflects Indonesia’s position in adopting governance practices from the United Kingdom, Singapore, and New Zealand.

Strategic Recommendations: Shifting Governance from Symbolic to Substantive

Comparative studies of governance practices in the United Kingdom, Singapore, and New Zealand demonstrate that governance is not merely a compliance tool, but a strategic foundation for sustainable growth. The flexibility of the “comply or explain” principle in the United Kingdom, digital efficiency in Singapore, and the values-based approach in New Zealand serve as important references for Indonesia in building governance frameworks that are relevant to contemporary needs.

To ensure that governance practices within Indonesia’s startup sector move beyond formality, strategic actions that are both transformative and contextual are required. First, regulators and industry associations should encourage the development of adaptive GCG guidelines for startups, with a focus on transparency, accountability, and stakeholder protection. Second, investors and venture capital firms can play an active role by embedding governance requirements into funding processes and due diligence. Third, startup founders must internalize governance as an integral part of business strategy, rather than viewing it solely as an administrative obligation. Finally, partnerships between the public and private sectors are essential to build governance education and mentoring ecosystems that are relevant and practical.

By promoting substantive governance practices from the early stages of growth, Indonesia will not only produce more startups that survive, but also those that grow on the basis of healthy and sustainable business foundations.

This article was published in our quarterly newsletter Valoka Vol. 5, 2025.

Referensi:

[1] Wijantini,“Indonesia Masuk 5 Besar Negara dengan Jumlah Startup Terbanyak di Dunia,” Katadata, 2023.

[2]  “Startup Indonesia dan Tantangan Menuju Tahap Kedewasaan Ekosistem Digital,” Katadata, 2024.

[3] CNN Indonesia, “Bangga Potensi Startup Indonesia, Menkominfo Dorong Akselerasi,” 2024.

[4] Solomon, J., “Corporate Governance and Accountability (5th ed.),” Wiley, 2020.

[5] Mak, Y.T., & Li, Y., “Determinants of Corporate Ownership and Board Structure: Evidence from Singapore,” Accounting and Business Research, 2001.

[6] OECD, “OECD Reviews of Regulatory Reform: New Zealand – Towards Better Regulation,” OECD Publishing, 2019.

[7] Peraturan Presiden No. 95 Tahun 2018 tentang Sistem Pemerintahan Berbasis