With the improving infrastructure in Indonesia, the country now offers many opportunities for information technology, especially e-commerce and fintech, among developing countries in the Asian region. Research conducted by Google Temasek shows that in 2017, e-commerce sales for new goods in Indonesia increased to IDR 151.4 trillion (USD 10.9 billion) in gross merchandise, up 41% CAGR from 2015.
- Indonesia has become the largest buyer of Information Technology in Southeast Asia.
- The internet in Indonesia contributed 2.5% of the national GDP in 2016.
- Indonesia will have 125 million internet users by 2025.
- Indonesia has a mobile phone penetration of 112% with a total of 226 million users and is the fourth-largest mobile market in the world.
- The revenue of the e-commerce market in Indonesia was IDR 81.8 trillion (USD 8,591 million) in 2018.
- An annual revenue growth rate (CAGR 2018-2022) of 17.7% for e-commerce will result in a market volume of IDR 228.9 trillion (USD 16.5 billion) by 2022.
- E-commerce user penetration was 11.8% in 2018 and is expected to reach 15.7% by 2022.
Economic Growth through Information Technology
The rapid development of the information technology sector, combined with drivers such as mass consumption of products, urbanization, the boom in mobile use, and a young, technology-hungry population, has had a positive impact on economic growth in Indonesia. Positioning third behind China and India, recent projections suggest that Indonesia’s e-market will reach IDR 151.4 trillion (USD 130 million) by 2020.
With a predicted annual growth of 50% and strong mobile usage initiatives – strategies that help smartphones, tablets and task-specific apps help get the job done – retailers now have an exclusive opportunity in Indonesia to develop mobile platforms to boost e-market growth, especially for packaged goods for consumers.
According to the International Data Corporation, Indonesia has become the largest IT buyer in Southeast Asia. The public sector invests heavily in updating its internal infrastructure and the private sector is also doing it to improve the quality of customer service in order to compete in the market. This is very important for both sectors because in 2025 Indonesia will have a very large internet user, amounting to 125 million.
In addition, a study conducted by Deloitte claims that the internet in Indonesia in 2016 contributed 2.5% to Indonesia’s GDP, a rapid increase from only 1.6% in 2011. The growth in internet use has increasingly encouraged Indonesians to buy smartphones, subscribe to monthly data packages, and make an online purchase. Based on these trends in Indonesia, there will be a transformation of information technology in the next few decades.
Big IT Market in Indonesia
Many companies in various parts of the world are currently undergoing digital transformation. According to NetApp Indonesia, there are three IT trends that are currently popular in Indonesia. First, data becomes the new currency; second; more and more new platform models will take over traditional channels; and lastly, corporate growth is currently heavily dependent on cloud computing. Currently, e-commerce and fintech are two fast-growing markets in Indonesia.
Indonesia’s e-commerce market is currently similar to China’s online marketplace in its early stages, with a number of sellers providing items that can be purchased via social media recommendations. Also, Indonesian e-commerce represents an early US market, flooded with buyers wary of retailers and online payments. As a result, the potential to create the largest hybrid opportunity based on the American and Chinese economies, Indonesia is now throwing itself into the global online market.
Research conducted by Indonesia’s E-Commerce Association and Google shows that the e-commerce market has grown to IDR 81.8 trillion (USD 8,591 billion) in 2018. Ease of finding information from home and the convenience of making electronic payments, as offered by the e-market. commerce in Indonesia, to be two of the main reasons for the huge growth in e-commerce. According to iPrice.com, Lazada and Tokopedia were the first and second most searched e-commerce sites with the highest revenue in 2017.
In 2016, fintech investment in Indonesia began to viciously take over e-commerce. Investment in fintech startups hit a record high in 2017 – more than IDR 5.85 trillion (USD 421 million). This trend continues to grow until now in 2018, thanks to the explosion of e-commerce in Indonesia, which has become a gold mine for digital payment startups in fintech.
There are currently more than 150 fintech startups in Indonesia — almost 78% more than in 2015. A survey conducted by AT Kearney and Google also shows that fintech is one of the most attractive sectors for investors in the information technology startup ecosystem.