In a bid to help the digital transformation of Indonesia’s state-owned enterprises (SOEs), Jakarta-based MDI Ventures on Tuesday announced the launch of a new $500 million tech investment fund.

The fresh capital will be used in tech startups that have the potential to drive digital transformation for SOEs and seek to plug its portfolio into all of Indonesia’s state-owned enterprise

The Indonesian government has appreciated the fund and said it will act as a push for a full-fledged state-owned digital ecosystem.

The venture firm is looking for tech startups that have strong growth promise and are willing to help traditional and offline SOEs to join the nation’s thriving digital economy.

With this investment, MDI Ventures has now become the largest corporate-backed multi-fund venture capital in Indonesia with more than $790 million in assets under management.

Since 2016, MDI Ventures worked with its parent company Telkom Group and created multiple in-house synergies for Telekom Group and has also provided a variety of digitally driven revenue streams.

Impact of SOEs on Indonesia

Till date, SOEs in Indonesia has played a crucial role in building $1 trillion modern economy. Some of the major SOE players in the archipelago even dominate entire sectors. As the country’s consumer market is witnessing a shift toward digital-first and digital-only user experience, SOEs are putting all their efforts towards digital transformation.

In recent years, it has been noted that the country had transitioned some of the major SOEs into a fully digital paradigm. Country’s state-owned banks have released various tech innovations in the last two years and some companies have even launched their own online lending app to help small-medium enterprises (SMEs).

“SOEs and tech companies can establish symbiosis by allowing startups to instantly access large corporate clients and their consolidated networks of consumers. Meanwhile, these startups will furnish state-owned companies with value-added digital services that will help them adapt to a rapidly changing business landscape in Indonesia. This also means startups can potentially have more exit opportunities later on,” said Sandhy Widyasthana, chief operating officer of MDI Ventures.

Telkom Group’s chief strategy officer Budi Setiawan, said, “Over the last several years, Indonesian SOEs have made significant leaps toward the digital shift. However, we still have gaps to fill in many areas.”

“What we are looking for are startups that can expand the boundaries of innovation and bring the right technologies to our state-owned digital ecosystem, for the future prosperity of Indonesia,” Setiawan added.