Policymakers and entrepreneurs seek to capitalise on Indonesia's growing reputation for ICT start-ups


Indonesia’s start-ups have generated great excitement among international media and investors in recent years. The archipelago is home to four of South-east Asia’s seven unicorns, or start-ups valued at over $1bn, and the country’s top-10 start-ups raised $2bn in 2018. “Indonesia’s start-up ecosystem is becoming a reference point for other countries,” Roman Nedielka, adviser of customer and digital strategy at PwC Indonesia, told OBG. “Our start-ups are coming up with innovative solutions for strategic sectors of the economy.”

The size of the domestic market simplifies the business model for many start-ups by providing space for them to scale up without expanding internationally. As a mobile-first nation – in 2017 mobile and fixed broadband uptake stood, respectively, at 98.3 and 2.3 subscriptions per 100 residents – local tech companies have also been able to go straight to mobile in service delivery, rather than converting from older systems.

Government Support

As of late 2018, 42,000 people had participated in the Widodo administration’s 1000 Start-Ups Digital initiative, which aims to provide mentoring and capacity-building support to digital start-ups. The programme is run by KIBAR, a start-up ecosystem builder, with support from the Ministry of Communications and IT, and is designed to guide entrepreneurs through a six-month process of ignition, incubation and commercialisation.

While the initiative’s launch was limited to 10 cities selected for infrastructure and digital-readiness, it will reach 50 cities in 2019, in an effort to tap overlooked entrepreneurial potential. For example, Nongsa Digital Park, which sits on the Singapore Strait and is touted as a “digital bridge” between the two countries, was not included in the initial phase of programme, but has been cited as a key location for supporting its objectives.

E-commerce and financial technology are likely to drive the programme’s success in Indonesia’s large consumer market. While only 15% of the population made a purchase online in 2018, the value of online sales has doubled annually since 2015 to reach some $12bn in 2018. Indonesia leads the market’s growth in South-east Asia, accounting for more than $1 of every $2 spent on regional e-commerce.


In 2017 Chinese tech giant Alibaba paid $1.1bn to acquire a majority stake in Tokopedia, an eBay-like marketplace for both individuals and small businesses, and Tokopedia closed a further $1.1bn round of investment funding in late 2018. Meanwhile, in early 2019 Bukalapak, another unicorn and one of Indonesia’s largest e-marketplaces, raised $50m from the Korean joint venture Mirae Asset-Naver Asia Growth.

The motorcycle ride-hailing app GOJEK became the first Indonesian start-up to be classified as a unicorn in August 2016, when the company closed on $550m in new funding, bringing its total value to $1.3bn. The company contributed Rp9.9trn ($702m) to the domestic economy in 2017 and has expanded its operations to also cover Singapore and Thailand.

The flight and accommodation booking website Traveloka, which has moved aggressively since its founding in 2012 to launch operations across ASEAN, was recently valued at more than $4.1bn. Its rise has been a central driver of the development of Indonesia’s online travel market, which is projected to grow to $25bn by 2025, up from $8.6bn in 2018 and $5bn in 2015.

On a smaller scale, Warung Pintar, a start-up aimed at digitising the warung (a small, neighbourhood shop), garnered $27.5m in a fundraising round in January 2019. It already operates some 1150 kiosks in Jakarta and aims to have 5000 across Indonesia by the end of 2019.

Challenges persist amid success, as improvements to regulation and infrastructure, such as that associated with the Palapa Ring, have not been matched in other aspects of the digital economy. The labour force remains inadequately skilled to meet employer needs, while cybersecurity remains a serious concern: the Economist Intelligence Unit ranked Jakarta last out of 60 cities on digital security in its Safe Cities Index 2017.

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The Report: Indonesia 2019

ICT chapter from The Report: Indonesia 2019

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