Home Blog Diving into Indonesia’s E-Commerce Sector & Its Future Uncategorized Diving into Indonesia’s E-Commerce Sector & Its Future InCorp Editorial Team 19 March 2020 4 minutes reading time Table of Contents Motivators of E-commerce Growth in Indonesia Challenges and Opportunities in E-Commerce Sector in Indonesia The Future of E-commerce in Indonesia How Cekindo can Help Over the recent years, President Jokowi and his administration have been relentlessly pushing the growth of the e-commerce market in Indonesia. This can be seen through major developments in the country that include the surging internet penetration. It is undeniable that technology advancement and the emergence of e-commerce have paved the way for convenient transactions, mobility and connection. With the unceasing research and development in the field of e-commerce and technology, the economy, businesses and industries have also transformed and presented themselves with tons of opportunities. As one of the fastest-growing economies in the world, Indonesia is known as the top in the Southeast Asia region, with a massive GDP worth of US$1.02 trillion in 2018. Thanks to the rapid development of infrastructure, the internet penetration in Indonesia has grown almost 50% in just mere 4 years. Especially for the e-commerce sector, this sector contributes to 50% of the digital industry’s value in 2019; and it will continue to take the lead towards 2025, dominating 60% of the digital industry. We will dive further into Indonesia’s e-commerce sector in this article. Motivators of E-commerce Growth in Indonesia Indonesia has been the main force of the whopping e-commerce and digital industry growth for Southeast Asia. The motivators of the growth are mainly the huge population, younger demographic, increasing purchasing power, governmental support and large investment value pouring into the country. Huge and Growing Population Indonesia has a gigantic population and is known as the most populated country in Southeast Asia and the world’s fourth most populated country. The country’s population is growing at a rate of 1.1% annually, with the current population of over 260 million. It is estimated that Indonesia’s population will grow to 296 million by 2030. Improving Digital Infrastructure Approximately US$29 billion were allocated in 2018 by the Indonesian government to develop the infrastructure including the IT infrastructure in the country. This budget allocation aims to bridge the gap between Indonesia and the modern world. Expanding Digital and E-commerce Penetration Improving IT infrastructure also means the growing internet penetration particularly in the e-commerce sector. The internet users in Indonesia grew from 143 million to 171 million between 2017 and 2018. Supportive Government Apart from the generous budget allocation for the development of infrastructure in Indonesia, the Indonesian government also carries out beneficial initiatives for the digital economy development. For example, 100% foreign ownership is allowed for e-commerce companies with more US$ 7.1 million of investment size. Challenges and Opportunities in E-Commerce Sector in Indonesia Of course, an accelerating digital economy does not come without its own challenges and opportunities. Here are some of them: Poor Logistics Inadequate logistics still remain a hindrance in the e-commerce sector. The poor logistics in Indonesia is mainly due to the lack of competencies of logistic service providers and the mediocre infrastructure in certain parts of the country. A Competitive Market Both new and existing e-commerce players have to face the high competition in the market. Large and established e-commerce giants such as Bukalapak and Tokopedia have already had strong footholds, making the customer acquisition costs higher for new and smaller e-commerce businesses. Unbanked Population The unbanked population in Indonesia contributes to the challenges for e-commerce players as well. Payment issues arise in e-commerce businesses when they have to offer other payment solutions for this unbanked crowd. The Future of E-commerce in Indonesia Though many challenges exist, it is undeniable that the future of e-commerce in Indonesia is bright and profitable. E-commerce players and enablers have now come up with omnichannel strategy, improve customer experience and differentiate their offerings to drive e-commerce growth. How Cekindo can Help Are you thinking of starting a business in the booming e-commerce industry in Indonesia, but do not know how to go about doing it? In other words, you have a product or a service that is suitable for the e-commerce market and you want to promote it, but you are not sure what are the most effective and strategic tools to execute your ideas. This is why Cekindo exists. Cekindo offers professional business and e-commerce consultancy to help you seize profits from this flourishing e-commerce scene. We also provide business setup and business license services, among others. In addition, we assist you in effectively differentiating your business from competitors and conquering the challenges that await you. Check us out to see how we can help you succeed. Fill in the form below. Read Full Bio Verified by Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships. Frequently Asked Questions Is it safe to register a product under a local distributor? Yes and no. It is vital to choose a reliable distributor as they will register the product under their company and become the product license holder and the import license holder. Changing the local distributor is easier if you are satisfied with the cooperation. Is halal registration required for all products in Indonesia? Under the latest regulations on Halal Product Assurance, the mandatory requirement for halal certification has been expanded to encompass a wide range of consumer products in Indonesia. This change, which was previously voluntary, now dictates that various items must obtain halal certification. Initially, the certification focus has been on food and beverage products, with the deadline for compliance set for October 17, 2024 How do foreigners decide on the proper entity in Indonesia? It all depends on your business’s purpose and nature. Our consultants will help you to clear out the matters. If investors intend to conduct business in Indonesia, what kind of organization must they establish? Within the scope of foreign direct investment in Indonesia, foreign investors can typically do business in two ways: Set up a PMA (Perusahaan Modal Asing) PMA is a local subsidiary in the form of a limited liability corporation for foreign investment reasons Set up a RO (Representative Office) According to Law No. 25/2007 on Investment, foreign investors are required to establish a PMA company in order to make direct investments and conduct commercial and business activities in Indonesia. A PMA firm in Indonesia is a legally recognized business entity that can engage in various commercial and business operations as long as it complies with the current laws and regulations. As for RO, its purposes include conducting market feasibility studies and liaison activities. Get in touch with us. Lead Form Updates Full NameEmailPlease provide corporate email where possiblePhone NumberOffice SetupWhich city are you planning to expand into?JakartaSemarang/Central JavaBali/LombokBatam/SumateraSurabaya/East JavaOther ProvincesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Package (20% OFF)[SPECIAL PACKAGE] Product Registration + License Holder (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (25% OFF) + Office Space (Private Office 30% OFF)[SPECIAL PACKAGE] Company Registration + Investor KITAS (25% OFF)[SPECIAL PACKAGE] Accounting + Tax Services+ Annual Fintax Report (20% OFF)[SPECIAL PACKAGE] Payroll Services for Executive Role (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (20% OFF) + Office Service (25% OFF)[SPECIAL PACKAGE] Company Registration + Micro Finance Services (25% OFF)[SPECIAL PACKAGE] Property Assistance: Due Diligence + AJB Purchase/Lease Agreement (25% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesServices Company Registration Renting Virtual and Serviced Office Business and Import Licenses Corporate Recovery and Insolvency Closing of Company (Dissolution) Land and Property Ownership Shelf Company Local NomineeServices Accounting and Tax Reporting Audit and Review Transfer Pricing Compliance Tax RefundHuman Resource Sub Services Payroll Outsourcing Employer of Record Recruitment and HR Establishment Employment ServiceServices Business Visa Work Permit and KITAS Dependent Visa (Spouse and Family) OtherBusiness Visa Subservices Business Visa Visit Visa Visa ExtensionServices Medical Device Beauty (Skincare and Cosmetic) Food and Beverage Health Supplement Household Product Halal Certification TrademarkServices Legal Consultation Legal Agreement Service Due Diligence and Background Check Company Documents RevisionBusiness Advisory Business Advisory Services ESG Reporting & Advisory Internal Audit Risk ManagementMore Services Market Research and Analysis Local Distributor and Partner Bank AccountMessageSubmit What you’ll get A prompt response to your inquiry Knowledge for doing business from local experts Ongoing support for your business Disclaimer The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website. More on Uncategorized Why Do You Need A Mystery Shopper for Your Business in Indonesia? Read more Is Employee Transfer within One Company Group Allowed in Indonesia? Read more Franchise Business Regulations in Indonesia are Now More Relaxed Read more