In this article, we will give you a full picture of this appealing digital economy in Indonesia and why starting a business can no longer wait.
Indonesia is regarded as the largest and fastest-growing digital economy in Southeast Asia. It is estimated that by 2025, Indonesia’s gross merchandise value of its digital economy will grow beyond US$100 billion, compared to the US$240 billion digital economy growth in 2025 of entire Southeast Asia’s regions. Currently, there are more than 2000 technology startups in Indonesia, including 75 fintech payment startups and more than 150 fintech lending startups.
In 2020, Indonesia’s digital economy growth remains strong despite the COVID-19 pandemic and has increased by 11% to US$44 billion compared to the US$40 billion in the previous year.
The reasons behind this rapid and exciting growth are apparent. Indonesia’s population is the largest in Southeast Asia – approximately 273.5 million as of 2020. Thanks to this huge population, the per capita income growth in Indonesia has also been increasing staggeringly along with the country’s mobile phone and internet penetration rate. The growth had already been underway even before the COVID-19 pandemic.
This enables businesses to become innovative and come up with ways to bridge many market inefficiencies in the country by leveraging on this digital economy growth in Indonesia. The elimination of these inefficiencies allows individuals to communicate, purchase, and sell things, and perform financial transactions with the application of digital technology, further driving the already rapidly-growing digital sector.
Fintech and healthtech are two businesses that are flourishing in this digital economy of Indonesia. The fintech sector has a relatively high adoption rate compared to other sectors in the country as this sector gives Indonesia a great alternative to traditional banking in terms of flexibility and convenience.
According to Catch Group’s research, the fintech market size in Indonesia will spike almost double from US$22 billion in 2018 to US$54 billion in 2025. Also, healthtech in Indonesia has the second biggest market share in Southeast Asia regions and was valued at US$20 billion in 2018. The healthtech market size will also grow shockingly – approximately 18 times – to more than US$363 billion in 2025.
Regulations are not fully matured in this dynamic digital economy in Indonesia yet but the Indonesian government is striving to come up with several initiatives to promote the digital economy growth.
These initiatives include creating clear and simplified licensing requirements for digital startups, setting policies for customer protection, and establishing a fintech sandbox, as well as building a code of conduct through the Asosiasi Fintech Indonesia and Asosiasi Fintech Pendanaan Indonesia.
With regard to customer protection and data privacy and customer protection, the Indonesian government issued GR 71/2019 on the implementation of electronic systems and transactions to replace GR 82/2012 on the implementation of electronic systems, electronic transactions, electronic agents, electronic certification, domain name management, and reliability certification institutions.
Indonesia is considered one of the best nations to explore business opportunities and invest. Cekindo can help you realise your entrepreneurial ambition by leveraging the booming digital economy in Indonesia with rewarding business opportunities and a fantastic lifestyle.
Hundreds of foreign entrepreneurs and investors, from solopreneurs to startups, small businesses to large corporations, looking to expand in Indonesia, are already part of Cekindo’s growing business network. Our solutions allow you to connect with thousands of businesses around the world that are also seeking opportunities to expand.
Speak to one of our professional consultants and see why Indonesia is such a unique place to invest and do business. Fill in the form below.