The Covid-19 pandemic has opened up the door for new and expanded business opportunities as consumers adapt to post-Covid life. From e-commerce to healthcare sector, investors are leaving no stone unturned to capitalize on untapped opportunities and business ideas in Indonesia during the pandemic.
This article talks about how starting a business in Indonesia during the outbreak could be still profitable for foreign investors.
Business Ideas in Indonesia: Improving Indonesia’s Consumer Confidence
As reflected in the Consumer Confidence Index (IKK), the consumer optimism about economic conditions has improved from 101.5 to 104.4 in May 2021. The reason for customers’ strengthening confidence is their positive perception of economic conditions as a result of improving job availability, income, and the timeliness of purchasing durable goods.
The consumer expectations for future economic conditions seem to be stable, however, the job expectations have risen greatly and the business sector is anticipated to meet those expectations.
The assertive consumer confidence in economic conditions, presents investors with a lucrative opportunity to start a business in Indonesia.
Understanding Indonesia’s Consumer Behavior during Covid-19 Pandemic
In this new normal of living with the coronavirus, consumer behavior has been affected in various ways. The Deloitte Consumer Insights survey revealed that there are four key characteristics of the Indonesian consumer that can be observed in the pandemic:
Stable Consumer Sentiment
Despite the economic impact of COVID-19, consumer sentiment has remained stable. The Indonesian customer’s resiliency creates generally favorable conditions for consumer companies to succeed in the medium to long term.
Prioritizing Necessary Spending
Consumer spending patterns in Indonesia have shifted away from discretionary spending towards necessity. This also shows that price sensitivity is increasing, which consumer companies will have to adjust to in order to attract and maintain customers.
Accelerating Digital Behavior
Due to the accelerated consumption of online content and digital adoption, companies will need to strengthen their digital presence and gain a foothold in the online market.
The Desire For Online-Offline Integration
Aside from a more extensive preference for e-commerce, Indonesian consumers have voiced a need for improved offline-online experience integration, such as through the usage of next-generation technologies like augmented reality (AR) and virtual reality (VR).
Business Ideas in Indonesia during the Covid-19 pandemic
As previously stated, consumer behavior, impacted due to the Covid-19, drives an extensive demand for investment in the business sector in Indonesia. Following are some of the business domains that look very promising to invest in during the pandemic:
E-Commerce and Digital Payment
According to the Indonesia Consumption Basket survey, the number of e-commerce consumers in Indonesia increased to 66% following the Covid-19, making Indonesia the Southeast Asian country with the highest rate of e-commerce use. The survey shows that online purchasing has increased by around 14% since the pandemic, while traditional buying has decreased by 24%.
According to the Bank Indonesia (BI), Indonesia will record double-digit growth in digital transactions this year, as the pandemic drives high the e-commerce consumer base. Digital banking transactions are projected to grow by 19.1% YoY in 2021, much faster than the 1.5% growth of last year.
Hence, the optimistic outlook of the e-commerce and digital payment segment adequately presents a promising investment scenario for foreign investors.
In 2021, Indonesia’s revenue in the Vitamins & Minerals sector is expected to reach US$ 325.66 million, with an annual growth rate of 2.80% (CAGR 2021-2025). Furthermore, health spending per capita is recorded to increase at an annual pace of 11.52%.
This spike is likely to be caused due to the following factors
- Increased demand from the younger population
- Rising middle-class population
- Improvement in standard-of-living, and
- Covid-induced health awareness among the elderly
This rising demand for food supplements puts forth a bankable opportunity for investors to start a business in Indonesia.
With a Compound Annual Growth Rate (CAGR) of 60%, digital healthcare revenue in Indonesia is predicted to reach US$ 973 million by 2023. Given Indonesia’s high internet penetration rate of 64.8%, which is anticipated to reach 89.3% by 2025, the rapid rise of digital healthcare platforms appears plausible.
By March 2020, digital healthcare providers had seen over 61 million patients visit their website for virtual medical assistance, and this number is recorded to be rising ever since, indicating a potential future for investment in this area.
Food delivery services and Cloud Kitchen
Food Delivery Services:
Due to the fear of contracting COVID-19 at restaurants, the meal delivery service sector saw a surge in demand. In 2020, Indonesia had the largest food/meal delivery service market in Southeast Asia, with a total GMV (Gross Merchandise Value) of US$ 11.9 billion.
For the same reason, more people are starting food and beverage businesses that do not offer dine-in services and sell only through food delivery platforms. Last year, 750,000 small companies joined Gojek’s GoFood delivery service, up by 50% from the year before.
Cloud kitchens are commercial kitchens designed exclusively to produce food for delivery and takeaway. Restaurant operators are flocking to cloud kitchens because of the numerous advantages they provide, ranging from minimal startup and administrative expenses to hassle-free logistics.
This has piqued Indonesia’s curiosity, and the odds of it being scaled up to the national level appear to be highly optimistic. Such initiatives give new possibilities for food entrepreneurs interested in opening a virtual restaurant or a cloud kitchen.
How Can Cekindo Help?
Prior to incorporation, our consultants assist foreign investors in obtaining business licenses and make sure that the company complies with all legal obligations. When the business becomes operational, we can help with HR activities, tax and accounting, and various other business ancillary services.