Interview: Muhamad Fajrin Rasyid
What are your projections for changes in Indonesian consumer behaviour patterns?
MUHAMAD FAJRIN RASYID: E-commerce in Indonesia witnessed 300% growth since 2017 and is projected to expand seven-fold through to 2023. The segment’s potential far exceeds most other industries, particularly in fashion, food and electronics. Interestingly, small and medium-sized enterprises (SMEs) are leading partners of e-commerce platforms, acting as suppliers and enabling them to reach an extended consumer base. However, e-commerce must stay on top of consumer trends as technology evolves, and regulations must also keep up. Our industry must be agile and at the same time aware of socio-economic changes.
A major challenge is the fact that over half of Indonesians are unbanked. Moreover, many micro-enterprises operate off the radar. Tech companies can provide these enterprise solutions. Offline-to-online (O2O) platforms, for example, can connect unbanked micro-businesses with banks. O2O programmes allow businesses to generate higher levels of income by selling virtual products, as well as connecting them directly to suppliers. This not only increases revenue but also empowers SMEs and strengthens overall digital literacy.
We are already seeing an increasing number of micro-enterprises being brought into the formal economy, but there remains significant room for improvement. Widening inclusion would go a long way towards addressing inequalities in Indonesia.
How can the authorities focus their digital development efforts to better serve the tech community?
FAJRIN: The Ministry of Communication and Information Technology (Kominfo) must connect all technical aspects of Indonesia’s digital ecosystem. This is not a simple task: Indonesia is an archipelago, consisting of thousands of islands. President Joko Widodo is focused on the country’s infrastructure and has been able to attract major international tech companies to assist in developing data warehouses, broadband connections and 5G connectivity. In the future these technologies will be considered national resources that are critical in our push forward into the digital era.
Which steps can the workforce take to be better prepared for opportunities in the digital economy?
FAJRIN: Indonesia is the leading digital economy in ASEAN, having generated $40bn in 2019, with an expected market of $133bn in 2025. In order to continue to be a major player, we need to pay attention to two things. First, we must have the infrastructure in place to support the digital ecosystem. Second, we must empower our ICT talent.
Tech companies are cooperating with government agencies and other stakeholders to have a positive impact on society. We are working with Kominfo to increase digital literacy, especially in remote and rural areas. We also established programmes that build entrepreneurial capacity in Islamic boarding schools with the Ministry of Cooperatives and SMEs, the Ministry of Trade and the Ministry of Religious Affairs.
In what ways can e-commerce and financial technology regulations be improved to create an ecosystem in which start-ups can flourish?
FAJRIN: We need to have proper regulations in place that will allow start-ups to thrive and expand their capacity, which will lead to economic growth. The best method to ensure that Indonesia can weather future global economic storms is to look after SMEs, and more needs to be done to educate and financially empower new entrepreneurs. We have to ensure that new companies are sustainable and that they have viable financing options. When the financial crisis hit Indonesia in 1998, SMEs were generally able to survive better than large companies because the majority were less dependent on large capital or loans in foreign currency. As such, the government should empower SMEs.
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