Indonesia to promote e-commerce in future

Indonesia will focus on promoting e-commerce as a way to boost economic growth.
A mobile phone store in Jakarta, Indonesia (Photo: AFP/VNA)
A mobile phone store in Jakarta, Indonesia (Photo: AFP/VNA)

According to Jakarta Post, President Joko Widodo will continue to focus significant attention on infrastructure development, with more focus on digital infrastructure, so as to bolster e-commerce opportunities as a way to stimulate economic growth.

E-commerce is seen as a good way that Indonesia could reach its 2025 target of 7 percent annual gross domestic production (GDP) growth.

This target is not necessary a pipe dream as some estimates predict Indonesia could account for 46 percent of Southeast Asia’s e-commerce in value by the middle of next decade.

The growing viability and importance of this sector is reflected by the large investments in Indonesian e-commerce businesses by the big Chinese tech companies such as Alibaba, Tencent and Both Tencent and are investing heavily in the Indonesian ride-sharing start-up and Indonesian e-commerce darling Go-Jek. Go-Jek has also attracted investment from Google, the first direct investment from an American tech company in Indonesia.

Both Go-Jek and Singaporean rival Grab are in a race to become the biggest consumer technology groups in Southeast Asia by expanding first in Indonesia.

These landmark investments clearly indicate Indonesia’s growing importance as an emerging e-commerce market.

The voracious appetite for this service meant that in 2014 Indonesian’s were the world’s most addicted smartphone users - based on a daily average of 181 minutes of screen time. Even though average screen time has increased to 206 minutes a day, Indonesia has now retreated to having only the fourth highest rate of social media use in the world.

Not all Indonesians have equal opportunity in accessing the Internet. In urban areas 72 percent of people have access compared with just 48 percent of those in rural areas. An incoming Jokowi government will need to focus on further development of digital infrastructure to help lift rural connectivity rates. Indonesia lags behind its neighbors on this front, only investing 1.3 percent of its GDP compared to Thailand’s 2.4 percent, Malaysia’s 4.5 percent and Singapore’s 6.6 percent.

Catering to the needs of Indonesia’s young population will also be a major challenge. Twenty-four percent of Indonesia’s population are millennials of which 88 percent want to start their own businesses.  

Indonesia’s government needs to develop the digital infrastructure and create opportunities for them also - not only to stimulate economic growth but also to satisfy them politically.

To deal with the issue, Indonesia needs a national digital roadmap, which will be a focus in the second working term of President Widodo.

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