Viewpoint: Sharly Rungkat
Indonesia is currently at a pivotal juncture in terms of the development of both hard and soft infrastructure, which coincides with unprecedented positive consumer sentiment towards digital technologies.
According to PwC’s “Global Entertainment and Media Outlook 2018-22” report, the number of mobile internet subscribers in Indonesia is set to grow from 103m in 2018 to 161m subscribers by 2022, with 77% of the population expected to be owning a smartphone device by 2022.
On the consumer side, only 17% of Indonesians have yet to make payment online, while approximately 47% make at least one monthly online purchase and around 35% carry out their internet shopping and payments on a mobile device. These trends have contributed to the e-commerce market’s significant recent growth in the country. It is expected to continue this expansion, attracting 43.9m online consumers by 2022.
Backed by positive developments in the growth of digital infrastructure in the country, as well as mounting supportive consumer behaviour towards digital technologies, Indonesia is witnessing a gold rush era for digital start-ups. This positive outcome has been seen from the direction of both local and overseas players. By 2018 Indonesia had produced four of the eight unicorns – tech start-ups which are valued at over $1bn – that emerged from South-east Asia. GOJEK, Tokopedia, Traveloka and Bukalapak are also considered to be notable Indonesian success stories. This is in addition to Lazada, Grab and Shopee, which hail from Singapore, and Revolution Precrafted, coming from the Philippines.
According to Rudiantara, the minister of communications and information technology, the three non-Indonesian unicorns are increasingly looking to Indonesia as a key market for future expansion. As the country continues to act as one of the primary battlefields for digital start-ups in the region, Indonesian unicorns have been leading the way in terms of seizing and enabling financial inclusion.
Beginning as a ride-hailing app, GOJEK enables the financial inclusion of its drivers and transforming the market through e-payments. With the rise of the online ordering system, many GOJEK drivers who did not previously have a bank account are currently able to enjoy the benefits of participating in the financial ecosystem. This has enabled them to access credit, in many cases for the first time.
The company’s recent move into insurance has also helped to increase its drivers’ financial literacy, giving them access to life insurance, while at the same time making a foray into insurance tech. The payment solution that is offered by Go-Pay, by contrast, provides easy access for new e-wallet users who do not have bank accounts, by enabling top-ups via GOJEK drivers.
Most recently, the company has begun its foray into the online lending space by launching a new payment system called PayLater. Tokopedia and Bukalapak, meanwhile, are currently enhancing the sharing economy as well as providing access to financial inclusion through their marketplace platforms throughout Indonesia.
Despite the large size of the unbanked population, there is still a significant opportunity for players in the Indonesian online marketplace to tap into, through the use of digital wallets such as OVO and Dana, which are offered within Tokopedia and Bukalapak, respectively. Unlike GOJEK, both players are pursuing their financial technology (fintech) ambitions through partnerships with existing financial players and digital wallet players.
With their ability to access and analyse merchant transaction data and online customer behaviour, these online players are particularly well-positioned to participate in the revolution of fintech offerings that is currently gathering pace across Indonesia.
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