As news of the union between two of Indonesia’s tech unicorns, Gojek and Tokopedia, spark discussion between investors and the public at large, researchers at the University of Indonesia’s Institute for Economic and Social Research (LPEM UI) predict the move could potentially benefit the Indonesian economy, both on a national and regional scale.
GoTo Group, estimated to be a $40 billion entity as reported by Bloomberg, is expected to make an initial public offering (IPO) later this year. While Tokopedia and Gojek remain separate brands, both companies’ ecosystem of consumers and partners bring a substantial implication for the economy.
Prior to the union, LPEM UI evaluated the coexistence between Tokopedia and Gojek at a city and regency level. The research used the Two-Way Fixed Effects (TWFE) with Group-Time method.
LPEM UI researcher Prani Sastiono said in a statement that from 2010 to 2019, poverty levels have significantly decreased in areas where Tokopedia and Gojek are present. The phenomenon was especially apparent at the regency level, decreasing by 0.3 to 0.4 basis points (bps), taking into account variable controls like gross regional domestic product, unemployment rate, and demographic variables.
The presence of Tokopedia and Gojek also led to the rise of entrepreneurs by 2.3 percent, internet entrepreneurs by 0.22 bps, and marketplace entrepreneurs by 0.03 bps.
“Tokopedia and Gojek lowered barriers to entry in starting businesses, which encourages even more people to become entrepreneurs,” she said.
Prani also noted that a significant impact was also observed in savings account and home insurance ownership, rising by 0.9 bps and 3.45 bps respectively. This phenomenon is especially pronounced in cities.
“Macroeconomic impact, such as gross domestic product and expenditure, is on average rather limited and more pronounced in cities, which indicates a need for better access to the digital economy so that its benefits can be widely enjoyed. Even so, the research found that the impact created grows over time.”
LPEM UI also conducted a national survey using the stratified random sampling method with 936 respondents to gauge the union’s impact in the future. Researcher Chaikal Nuryakin said that based on a simulation using data from the survey, the union will increase the value in nearly every GoTo groups’ line of businesses.
The Gojek and Tokopedia union could potentially increase the number of transactions and new users.
Through cost savings and increased productivity, the simulation found that there will be an additional 20.4 million new same-day delivery service users through Tokopedia, an additional 1.3 million transactions from existing Tokopedia users, and another 2 million transactions from existing Gojek users.
The large increase of same-day courier service users is mainly attributed to the huge interest from regular courier service users to switch if same-day service fees can be lowered after the union.
“The number of new users will also increase, with approximately 3.9 million new Gojek users, 9.1 million new Tokopedia users, 15.2 million new e-wallet users, and 589,000 new sellers on Tokopedia,” Chaikal explained.
The research also found that the union can create an economic value ranging from Rp 17 to 34 trillion, benefiting the trade sector, information technology and communications, food and beverage industries, as well as household income.
Chaikal further noted that based on the simulation, the union of the two Indonesian unicorns can bring a post-union contribution of 0.1 to 0.3 percent of the national GDP. Taking into account the contributions of Tokopedia (1.1 percent - 2019 LPEM UI research) and Gojek (0.7 percent - 2019 University of Indonesia Institute of Demographics research), the union can bring about an additional 1.9 to 2.1 percent of the national GDP, or approximately Rp 300 trillion.
Moreover, Atma Jaya Catholic University rector Agustinus Prasetyantoko said during a webinar that the dynamic impact of Gojek and Tokopedia’s contributions to the economy has a large potential to continue growing.
“Even though the COVID-19 pandemic is a serious challenge for the Indonesian economy. It turns out that IT-based industries found a good momentum for growth and expansion to help the national economic recovery. The IPO from [GoTo Group] can also encourage the public to take an active role in the financial sector, which in turn can contribute to financial deepening,” he said.
Academic and LPEM UI deputy head of research Kiki Verico emphasized Gojek and Tokopedia’s role in building public resilience in the national economic recovery, noting that the union can benefit trade by lowering the cost of information, search, and logistics. He expressed hope that the union can open opportunities for Indonesian MSMEs to enter the global market through various innovations.
