Indonesia poised to be region's biggest digital economy by 2025: Study

Indonesia poised to be region's biggest digital economy by 2025: Study

Six Southeast Asian markets - Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines - were studied.

Indonesia internet cafe

JAKARTA: In less than 10 years, half of Southeast Asia’s e-commerce is predicted to take place in Indonesia - up from just a third in 2015 - and that potential is said to be worth about US$46 billion. This is according to the latest research findings undertaken by Google and Temasek which were released in Jakarta on Thursday (Aug 25).

Six Southeast Asian markets were studied - Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines. They were chosen as they were considered more developed than others in the region.

Collectively, the digital economy in the six countries is expected to hit US$200 billion by 2025. Indonesia is expected to account for US$81 billion - fuelled by 119 million online users. - one of Indonesia’s biggest online stores - said it is well-positioned in the market that will see more increased competition.

Said Hadi Wenas, CEO of “We believe that if we focus on the consumers who are Indonesians - how to serve them best ... how to get the right products at the right price, with the right access, at the right speed - we’ll be in the market.”

The next biggest growth from the digital economy is expected to come from online travel. With a projected growth of 17 per cent annually, the market in Southeast Asia is predicted to be worth about US$24 billion, up from just US$5 billion in 2015.

Indonesia is also expected to become the region’s biggest online travel market, with Indonesian customers of ride-sharing services Uber, Grab and its own motorcycle-taxi hailing service Gojek representing 43 per cent of the market and valued at US$5.6 billion.

The research highlighted several key challenges Indonesia needs to overcome in order to unlock the full potential of the digital economy. They include building good Internet and logistics infrastructure, payment mechanism and consumer trust.

But above all, Indonesia needs a workforce with the required skills set.

Tony Kuesgen, CEO of Google Indonesia, said: “If there’s one thing we really need to focus on in Indonesia to unlock this huge potential that we have, this US$81 billion marketplace, it is skills.

“I think what Indonesia really needs to focus on is not just training up our own people to understand the digital opportunities, technical opportunities, engineering requirement on how to build websites, optimise online marketing campaigns and so forth, but also how do we leverage from other countries and bring in skills. “

Indonesia - home to more than 2,000 start-ups - needs up to US$20 billion worth of investment over the next decade to boost its digital economy.

Source: CNA/ec