The digital transformation of Indonesia is undoubtedly underway. For both its people and its government, this provides opportunities to be embraced.

A rich network of users

Roughly 76% of the population, equivalent to 212 million Indonesians use the internet. According to WeAreSocial, internet usage averages more than 8 hours daily. It has almost 200 million social media users, with Facebook and Youtube being the most popular platforms. Online commerce – both e-commerce and social commerce – continue to flourish.

The COVID-19 pandemic has not only encouraged socializing on the internet, but also turbo-charged the shift of other daily activities online. Many Indonesians have had to adapt to working from home, and teaching and learning remotely. They have also developed a taste for online shopping. Tokopedia, which is the country’s largest e-commerce marketplace, boasts over 8 million merchants selling to 90 million active shoppers monthly. The Indonesian e-commerce industry has a gross merchandise value of US$21 billion and is projected to account for half of Southeast Asia’s e-commerce transactions by 2025.

Last year, its millions of internet users was estimated to contribute US$70 billion to the country’s digital economy.   

Support for smaller businesses

Many of the government’s digital transformation policies have focused on micro, small and medium enterprises (MSMEs). There are over 65 million MSMEs in Indonesia. They contribute a critical 60% of the country’s GDP and employ much of the workforce.

Throughout the pandemic, the government has continued to launch initiatives to help MSMEs digitize their business operations and develop their digital literacy. One example was its partnership to develop the GrabMerchant app with tech enterprise giants Grab and Gojek. The mobile app was launched in 2020 and is designed as a one-stop solution for MSMEs, particularly those in the food and beverage industry, to digitally manage their operating hours, customer orders, employees and promotions.

Training opportunities have been equally important to help MSMEs better navigate the changing technological landscape. The Communications and Information Ministry (“Kominfo”) has run several online programs, often in conjunction with tech companies and e-commerce players, on topics such as e-commerce platforms, digital marketing and business financing. Many are aimed at MSMEs in less developed regions and priority tourism destinations. These include Mandalika in West Nusa Tenggara, Borobudur in Central Java and Lake Toba in North Sumatra. Other resources, such as the online learning platform GrabAcademy, provide users with additional materials on Microsoft Office skills and the like.

“By 2024, it is expected that there will be more than 30 million MSMEs out of the total 60 million MSMEs in Indonesia that will go digital,” shared Johnny G. Plate, the current Kominfo Minister, at last year’s ASEAN Digital Ministers’ Meeting. 

Investing in Indonesia

The digital economy in Indonesia has some ways to go but shows no signs of stopping. Our experience in the country can help you navigate the various opportunities this presents.