After increasing tensions on the border between India and China, India has made it more difficult for Chinese investors to invest in its companies. As India closed its doors to Chinese venture capital companies, they have now shifted their focus to Indonesia.
A report added that funds like Sunway Capital, the founder of Xiaomi, and BAce Capital, backed by Ant Group, are now moving from India to Indonesia. Shunwei Capital, which has US$3 billion in funds, plans to complete more transactions in Indonesia and said it has not made new investments in India at this time.
The fund said that instead of making new investments in India, it should focus on managing its existing company portfolio. On the other hand, the British “Financial Times” report added that BAce Capital is also taking action, but because the market is underdeveloped, it will not be very active.
Chinese investors have promoted India’s technological boom and have made huge investments in leading start-ups, including fintech platform Paytm, food delivery service provider Zomato and education technology giant Byju’s.
However, earlier this year, the Indian government disclosed new rules for Chinese investors that involved concerns about opportunistic acquisitions, which now leads investors to cut funds.
In addition, the Indian government has banned China from applying in the country for several months on the grounds of national security issues, but has not provided any evidence of such claims. So far, India has banned more than 170 Chinese applications, including Aliexpres, PUBG Mobile, CamScanner, etc.
As investors face several issues with Indian regulations, other start-ups in Southeast Asia will benefit. Indonesia ranks fourth in the world in terms of population, and the country already has billions of dollars in companies.
While new startups are trying to raise millions of dollars to achieve growth, some well-known companies and investors are now shifting their focus to Indonesia, including Google and Facebook. To illustrate this point, a report showed that investment in Southeast Asia in the first half of 2020 increased by 55% compared to last year.