How Indonesia aims to be a leading digital economy

E-commerce is burgeoning with the popularity of mobile phones

In March last year, Noni Purnomo’s Bluebird taxis ground to a halt in Jakarta as drivers protested against Uber and another online ride-hailing service, Grabtaxi.

But less than two months later, Bluebird had signed up with the home-grown alternative, GoJek, which started life as a ride-hailing app for motorcycles.

Purnomo, the CEO of the country’s largest transport operator, saw the GoJek partnership as an opportunity, not a threat.

“We don’t see [companies such as GoJek] as disruptors. I think that’s the difference. I think everybody’s going towards a new technology, and we are here to also adapt to the technology.

“But we realise that we may have different talents, and we may not be able to make changes as quickly as the start-ups can. So that’s why we are engaging with them,” says Purnomo, speaking at the recent BusinessThink Indonesia forum in Jakarta – a UNSW Business School event that brought together local business leaders and new players in the digital technology sector.

Indonesia’s economy is being shaped by mobile phones and digital technology – and companies such as Gojek are riding the crest of the wave.

And while Uber, eBay and Airbnb are achieving global dominance, it doesn’t mean they can replicate their success in markets such as Indonesia.

'I think you see the difference from years before; the government is much more active right now in helping the tech ecosystem'


Mobile services

Gojek has succeeded over Uber because it understood local conditions. The scooter-based transport app got scooter owners on to its platform early, before Uber had a chance to penetrate.

“Unlike Uber, which tends to enter its markets and follow with an army of publicists and lawyers to bash its way through local regulatory conditions, GoJek has skilfully navigated its way into the market by avoiding a head on conflict with the entrenched taxi industry,” says Nick Wailes, a professor and associate dean (digital and innovation) at UNSW Business School.

GoJek is now expanding the platform into other services. With the present version of its app, you can organise to be picked up by scooter or car, book a truck to move boxes, book movie tickets, have groceries delivered from the local market, and even have a masseur and beauty therapist waiting for you when you get home.

“Armed with more than US$550 million from its latest fund raise, GoJek is now valued at US$4 billion,” says Wailes.

“With the funds it has, GoJek has the opportunity to dominate mobility and mobile personal services across the ASEAN region, a market of more than 650 million people with high rates of mobile penetration.”

Internet penetration in Indonesia is only 17% (compared with 85% in Australia), but in a country of 250 million people that’s still a big market.

Many Indonesians only access the internet on a smartphone, with mobile internet use among the highest in Asia. According to Tech in Asia figures, SIM subscriptions in Indonesia stood at 326.3 million in January 2016, far more than one per person.

E-commerce roadmap

President Joko Widodo believes Indonesia can become the largest digital economy in Southeast Asia.

And 2016 research by Google and Singaporean investment fund Tamasek estimated that 3.8 million new users would come online each month in Southeast Asia. This would make it the fastest growing internet region in the world between 2015 and 2020.

The Indonesian Communications and Information Ministry – along with KIBAR, a tech start-up ecosystem builder that produces, mentors and nurtures start-ups – is spearheading a national movement of 1000 digital start-ups.

The government’s Financial Services Authority held the first-ever fintech festival and conference in August last year and is setting up a fintech innovation hub – a ‘sandbox’ where companies can help fashion the rules to govern fintech.

“The government has done several things to help the ecosystem of the digital economy itself in Indonesia,” says Shinta Dhanuwardoyo, founder and CEO of digital agency She notes the government has a plan to execute its “e-commerce roadmap” through to 2019.

“I think you see the difference from years before; the government is much more active right now in helping the tech ecosystem,” Dhanuwardoyo says.

'Getting great or good engineers is one of the most challenging things that I face on a daily basis'


Supporting a clean economy

Finding talented software engineers is a big challenge for start-ups in Indonesia – and the teaching of coding skills is not keeping pace with rapidly evolving digital technology.

“In [Silicon] Valley, kids that code all the time are also working at start-ups and institutions; they learn leading-edge tech, and they apply it straightaway the next day in real code,” says Moses Lo, founder of digital payment platform Xendit.

“In our case ... in 24 hours, we built an app that sent money from the US to Indonesia using Bitcoin. That kind of challenge is very different from most university assignments.”

According to Norman Sasono, chief innovation officer and co-founder at B2B e-commerce company Bizzy Indonesia: “Getting great or good engineers is one of the most challenging things that I face on a daily basis.

“So I [have] tried several things; I outsource some work to Vietnam; I outsource some work to Thailand. But still this is not as good as I want,” Sasono says. His company now takes fresh graduates and trains them to code and work with the latest technology.

Dhanuwardoyo believes it’s the scalability of start-ups in Indonesia – and the spill-over benefits to the economy – that is most exciting.

“[E-commerce] is creating SMEs and we know 90% of Indonesia’s economy is coming from SMEs,” she says. They are also creating new types of jobs. “Companies like GoJek can have about 200,000 drivers.”

For Bizzy Indonesia, its business – supporting procurement of corporate supplies – also helps to circumvent corruption and maverick spending, thereby supporting a “clean economy”.

Google has chosen Indonesia as one of a handful of countries to take part in its Launchpad Accelerator program, to empower start-up founders through mentorship and equity-free support.

Karina Akib, Google’s Jakarta-based manager of strategic partners, says Indonesia’s start-up scene is growing rapidly – but investors want to see sustainable business models that won’t “fall over”, leaving people out of work.

“I think one of the things that [Google is] doing is really investing in building the ecosystem instead [of] trying to focus too much on one particular industry,” Akib says.


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