23 Sep Digitally savvy country
Indonesia is a country of over 17000 islands, so connecting these islands with e-commerce is key to the economic future of the country.
Recent statistics in January 2021 show that there were 345.3 million mobile connections in Indonesia in January 2021 ( equivalent to 125.6% of the total population), 74% have internet access and 69% actively use social media.
Indonesia’s digitalization has been uneven, developing fast in big cities in Java, moderately in Bali and Northern Sumatra, and relatively slowly in other areas. But going forward, in a post-pandemic world, digital economy and digital infrastructure will play a far more crucial role for the country with working from home, online teaching and learning and shopping online becoming the new normal.
The Government sees large potential in e-commerce industry to connect multiple industries with local and international markets, especially across Indonesia’s own expansive geography. Indonesia’s large population is one of the most active on social media globally, and Jakarta is known as the Facebook and Twitter capital of the world. This very large and active digital community, and the growing penetration of mobile devices, is presenting a huge market for fintech and other start-ups.
Before the Covid19 pandemic, Indonesia’s digital economy accounted for just 3.6% of gross domestic product (GDP), but the e-Conomy SEA 2019 report from Google, Temasek and Bain shows that it grew 49% per annum from 2015 to 2019, the largest growth in ASEAN.
Growth is projected at 32% per annum until 2025, which means that in the next 10 years, the internet economy will comprise half of the Indonesian economy with even faster growth post-pandemic. Digitalization is expected to extend to the post-pandemic economic recovery era.
PT AplikasiKarya Anak Bangsa, or Gojek, is a decacorn that was born in Indonesia in 2009 as a call centre to connect consumers to courier delivery and two-wheeled ride-hailing services. In 2015 it scaled up as an app with four services: GoRide, GoSend, GoShop, and GoFood. Valued at US$10 billion today, Gojek has transformed into a Super App, providing more than 20 services including digital payment technology. The company operates across Southeast Asia in Indonesia, Vietnam, Singapore, Thailand, and Philippines. It has received financial backing from investors including Astra International, Google, Facebook, PayPal, Sequoia, Northstar, Temasek Holdings, KKR, Warburg Pincus, Visa, Tencent, JD.com, Capital Group, among others. Gojek and Indonesia have been success stories for them all. In April 2021, news report emerged that Gojek and Tokopedia are in the final phases for a USD 18 billion merger. The two companies will form a combined entity called GoTo, and the deal is expected to close this month. Nadiem Makarim, 35, Gojek’s founder and a Harvard graduate, is now Minister of Education & Culture in the Jokowi’s cabinet.