Indonesian bio-startups forge an alternative industrial vision

Indonesia’s industrial development has skyrocketed in the past decade, with more to come. By 2030, it should become one of the five biggest economies globally.

Yet its economic success has been a double edged sword. Deforestation, pollution, and inequality have come as part of its fossil-fuelled growth.

As the country reckons with the costs of high-throttle development, an alternative path is emerging in the bioeconomy. 

Biobased entrepreneurs in the country are now building domestic supply chains that emphasise social impact.

We profile Indonesian bio-startups working with seaweed, cassava, and microbiology that could inspire a more inclusive national development model. 

Biopac advances Indonesia’s seaweed supply chain

Heavy industry, fossil fuels, foreign investments, and synthetic chemicals have driven Indonesia’s dizzying GDP growth, as well as its rise to middle-power status on the international stage. 

The results for ordinary citizens have been mixed. Many have been lifted out of poverty. Yet the country remains the sixth most unequal society in the world. It is also the world’s sixth-largest greenhouse emitter, despite being only the 16th largest economy.  

Rapid fossil-fuelled development is nothing new. Back in the 19th and 20th centuries, Western countries did the same. 

Yet a different economic path is possible. One reason is Indonesia’s geography: as a tropical nation, it is not short on biomass or agriculture. Its plantations and shorelines offer a vast pool of potential feedstock that could generate value in a cleaner way.

One of Indonesia’s most promising crops is seaweed. This biomanufacturing all-rounder can be processed into bioplastics, agricultural biostimulants, and a host of other biochemicals used across food, feed, and cosmetics.

Spearheading Indonesia’s seaweed chemicals sector is Biopac. Founded in 2020, this women-led Indonesian startup is a national leader in seaweed packaging.

Feedstock abundance

Biopac offers 100% plastic free, compostable products that can seamlessly replace single-use oil plastics in hospitality and packaging. Its range has steadily expanded since its founding, from basic packaging bags to cutlery, edible food wrapping and even biodegradable inks. 

In the West, algae entrepreneurs have been held back by a lack of feedstock. This stems from a relative absence of large-scale seaweed farms where the crop can be grown at volumes that could support a biomanufacturing ecosystem.

Things couldn’t be more different in Indonesia. Thanks to the third longest coastline in the world, as well as low operating and capital costs, Indonesia is the second largest seaweed producer in the world. Here, seaweed startups have the luxury of choice when it comes to supply. 

Sustainable partnerships

Despite the abundance of feedstock, Biopac is selective about its raw materials. Its sourcing strategy simultaneously strives for social impact, environmental benefits, and cost efficiency.

First, Biopac buys direct from a seaweed farmers cooperative. This cuts out middlemen, maximising revenue for the producers while keeping raw material costs for the company down. 

Second, Biopac trains the seaweed cooperative to farm using plastic-free techniques. This minimises pollution at the very upstream of the supply chain. It also means the crop qualifies for a sustainable certification, which raises its value as a commodity – as well as farmer revenues. 

According to the company, implementing the green certification scheme increased the seaweed farmers’ incomes to $300 a month. This was up from a previous income range of between $100 and $300. $100 is about an average monthly income for Indonesian seaweed farmers.  

Green hopes for cassava resin

Greenhope is another Indonesian biobased startup tackling the plastic pollution problem. Here, the root vegetable cassava offers another abundant local feedstock. 

Biodegradability lies at the heart of Greenhope’s value proposal.  The company’s cassava-based bioplastic resin is meant to break down within a matter of months in natural environments, as opposed to decades or even centuries for ordinary plastics. 

These biodegradability claims rests on rigorous testing.. One of them involves placing the bioplastics inside terrariums and aquariums that replicate tropical environments, monitoring how they behave over the weeks and months. 

Greenhope has also tested their products in accordance with national and international standards for biodegradability. This alignment with widely-recognised standards gives Greenhope products the credibility they need to compete in international markets. Already, the company sells in almost ten different countries to more than 150 customers. 

Neutralising microplastics

In addition to bioplastics, the company makes a biobased additive that makes ordinary plastics more biodegradable. The additive, called OXIUM, not only speeds up the degradation of conventional  oil-based plastic, it cuts their microplastics release by chemically intervening on the molecular structure of the material. 

Usually, oil plastics pose an ecological problem because they break down into ever-smaller particles without their molecular structure ever changing. OXIUM transforms them into a substance that naturally occurring microorganisms can break down. It does so by snipping the carbon chains within petroleum plastics, changing their particles so they can be metabolised by microbes and fungi in the environment.

Investing in suppliers

As with many emerging Indonesian bio-startups, this one engages meaningfully with their feedstock suppliers.  The company sources their cassava directly from a group of 20 smallholder farmers in Chikarawang, known as the Setia Farmer Group. 

This direct purchase relationship is meant to benefit farmers, while providing a reliable supply of predominantly organic-grown feedstock Greenhope.  The company says it pays  25 percent higher than market price for the crop, whilst also guaranteeing minimum monthly purchases during harvests. 

Previously, these farmers  sold their cassava directly to middle-men. Now, thanks to Greenhope training, they can process cassava on-site into higher-value products. Apart from the tapioca flour that Greenhope buys, the farmers can now make all kinds of cassava derivatives, such as mocaf flour and noodles. They can sell these products to other markets.

For rural communities, diversifying into processed commodities affords economic resilience. The added revenue streams helps to hedge against harvest failures and fluctuating prices for agricultural commodities. 

Democratising biotech

Biomanufacturing at scale depends on scientific know-how: the latest tools of microbiology and synbio are often prerequisites for building a competitive biobased business. 

Yet biomanufacturing technologies can be capital-intensive and hard to access, especially for rural communities or entrepreneurs in developing countries. 

Archi Biotech aims to change this. This Indonesian startup is on a mission to put basic biotech kit into the hands of more people. By widening access, it hopes to amplify the social impacts of biotech and biomanufacturing.

Beginning with low-tech COVID-19 detectors during the pandemic, the company has branched out into producing microbial fermentation starters, plant-growth-promoting biofertilisers, coral probiotics for reef restoration, microbial cellulose (a component in making vegan leather, as well as other biomaterials), and microbial seeds for biogas production.

This is a complete  biotech workshop, offering all the kit any biobased entrepreneur would need to found a biomanufacturing enterprise. Training in biotech and biomanufacturing is another product on offer. 

Teaching people how to deploy biomanufacturing tools like this has a vital social impact. It strengthens the technological and economic capacities of ordinary people, enabling them to get value out of local renewable feedstock.

With access to tools and the knowledge on how to use them, ordinary groups can produce commodities for market. They can also choose to build resilience by opting out of certain markets: able to produce the tools, energy, and basic necessities they need to sustain themselves without the need to rely on markets or outside investors.

This ability of ordinary communities to exploit biobased resources independently is no small feat. The ability to feed, clothe, and manufacture on a decentralised basis  becomes vital in emergencies where state capacity is strained and infrastructure is down. It can also insulate against the strains of climate change and even geopolitical conflict – all risks that can bring sudden material deprivation.  

In many ways, this model of biomanufacturing helps realise the highest potential of biotech, with its promise of a sustainable economy that can unlock abundance and security for all. 

A biobased development model?

Can these biobased supply chains offer a more ecological, fairer model of economic development for IndonesiaBiobased industries can indeed offer the foundations for a fairer economy. However, renewable resources are not an automatic eco-fix. 

Inequality, labour exploitation, external dependencies, environmental destruction, and the exclusion of local communities are not exclusive to the fossil industry. A bioeconomy that follows the extractivist path of the fossil industry will be tantamount to business as usual. 

Indonesian bio-businesses have proven that they are willing to work with local workers to keep value inside their country and invest in rural areas. Yet individual bio-businesses can’t build a better economy on their own. 

The Indonesian government must now play a role in maximising the environmental and social benefits of biobased development, with democratic policymaking that limits extraction and prioritises social needs. 

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