Friendliest country in Asia for entrepreneurs? Try Indonesia.

Nadiem Makarim, the young founder of Go-Jek, a motorcycle taxi company in Jakarta, represents the new face of business in Indonesia.

More comfortable in a T-shirt and sandals than a suit, the recent Harvard Business School graduate conceived the idea for his company while zooming through Jakarta’s gridlock on an ojek, one of Indonesia's ubiquitous motorcycle taxis.

“I figured that there was this huge idle capacity within Jakarta that needed to be taken advantage of,” says Mr. Makarim, referring to demand for efficient transportation coupled with the need for more jobs among Indonesia’s low-skilled workers.

Makarim is one of the winners of a business plan competition sponsored by the State Department’s Global Entrepreneurship Program, USAID and private partners in Indonesia.

His ambition to create a social enterprise that takes advantage of a market gap shows where Indonesia is headed as tech-savvy, often Western-educated youths build businesses catered toward improving their country.

“Their business plans are well thought out, they are frequently very creative, in many cases they are addressing problems that need to be solved and identifying situations where they believe they can make a difference,” says Loretta McCarthy, the founder of angel investor group Golden Seeds and part of an 11-member delegation of top US investors that visited Indonesia over the weekend as part of an entrepreneurship program.

'New Beginnings'

First outlined by US President Obama during his “New Beginnings” speech in Egypt in 2009, the program supports entrepreneurs in Muslim majority emerging economies by linking them with mentors and access to financing.

Indonesia is the second country after Egypt to implement the pilot, which officials say supports stable democracy by creating jobs and growing local economies.

“It makes for a more prosperous, peaceful, stabler more secure world,” said US Secretary of State Hillary Clinton at an Asia-Pacific regional entrepreneurship summit in Bali over the weekend.

In Cairo the program hosted a “boot camp.” In Jakarta, hundreds of budding entrepreneurs participated in “speed dating” sessions where they pitched their business idea to potential investors.

The 500 participants in the business competition included Rinny, the creator of an integrated waste management system that produces organic fertilizer and Donald Wijardja from Indomog, an online payment system that lets people buy digital goods and services using gaming vouchers.

A few have already received investment offers.

High-tech, low tech

With a large population of youths who are social, tech enthusiasts eager to spend newfound disposable incomes, Indonesia has what it takes to support innovative start-ups, delegates said.

That is one reason a BBC World Service poll released in May ranked Indonesia among the countries most friendly to entrepreneurship, along with the US and Canada. The poll, based on ease of starting a business and respect for creativity, ranked Egypt and Turkey at the bottom.

Entrepreneurs here say they agree with the assessment.

“But the challenges come later on as you’re trying to grow and scale the company,” notes Makarim.

A lack of infrastructure and access to finance, unfriendly regulations, and weighty bureaucracy pose some of the biggest hurdles to entrepreneurs. Companies, such as Go-Jek, exist to deal with those obstacles, while others are building their businesses online to taking advantage of low startups costs, increasing connectivity, and the popularity of social media.

Indonesia is Facebook’s number two market outside the US and its third-largest Twitter base. The growth of affordable Internet-enabled mobile phones has only sped up the tech boom in a country whose 40 million Web users still account for less than 20 percent of the population.

Rama Mamuaya, the founder of tech blog DailySocial.com, estimates that the country currently counts more than 700 tech startups and adds a new one each week.

Many of the most successful are spin-offs of established US companies, but that hasn’t stopped them from drawing investor enthusiasm. Yahoo recently acquired location-based platform Koprol for a fraction of the $100 million cost of its US version Foursquare.

Pioneering companies have more to gain, since they can essentially create the market, said Leonard Theosabrata, the co-founder of Whiteboard Journal, an online space that incubates small businesses by helping them promote their products.

“That’s the beauty of being in a country like this. It’s almost like the Wild West, it’s a frontier,” says Mr. Theosabrata.

Effecting change

Indonesia still has a long way to go if its small businesses are to create the growth officials hope to achieve. Entrepreneurs account for less than 0.2 percent of the country’s workforce, hardly enough to create the jobs that will generate widespread prosperity.

But Indonesian Trade Minister Mari Pangestu says social enterprise will allow Indonesia to “leapfrog” development, and growing interest from investors who don’t want to get left out may prove her right.

“I think the horizon for Indonesia is a 10 to 20 year window for huge success,” says US entrepreneur Arthur Benjamin, a recent investor in Go-Jek.