The new company will serve as a platform to help the SMEs export, through methods such as consultation, marketing and access to potential buyers around the world. It will not function as Alibaba’s logistics partner.

Welcoming the initiative, the production and promotion director at the Cooperatives and SMEs Ministry, I Wayan Dipta, said that the potential for Indonesian products to be exported overseas is massive, only that there is a lack of promotion or even awareness of these opportunities.

“Indonesia has a high internet penetration rate and a high mobile internet usage rate as well. Our products are attractive for foreign consumers, as shown through a recent SME exhibition in Malaysia where Rp 33 billion (US$2.48 million) was made in just four days. It shows that Indonesian products can perform well in other markets,” Wayan said on Tuesday during the official launch of the cooperation.

According to Wayan, up to 62 percent of all Indonesian internet users tend to visit e-commerce shopping sites daily. Indonesia’s internet penetration is currently at 34 percent, with more than 84 million people connected.

Adding to that, Alibaba Group’s overseas business to business (B2B) director Jack Zhang noted that the main purpose of the partnership is to “let the world believe in Indonesian products”.

“What I observed is that Indonesian products frequently seem to have trouble being marketed to outside markets,” he said.

“That’s where we come in not just as an educator but also as a platform to ease that process. Alibaba is partnering with J&T because it has a vast network throughout the country, which can expand the scope of our partnership.”

The conditions for prospective Indonesian SMEs wishing to be connected to the platform include the legality and presence of a locally established company. Whether the said products are suitable for exports is also a factor.

J&T Indonesia currently has 1,200 logistical hubs across Indonesia and 26 representative offices. By the end of the year, the company hopes to expand that number to 50 offices, with a particular focus on smaller cities.

There is already a hub for Indonesian products on the Alibaba.com platform, by the name of Inamall, on Alibaba’s global Tmall platform, which itself is an Alibaba subsidiary operation.

Launched in 2016, Inamall enables Indonesian producers to sell their products directly to consumers in China without the need of going through importers or distributors.

Indonesia has the highest number of active SMEs in the region, with more than 56 million. According to data by Deloitte Access Economics, the use of digital platforms by Indonesian SMEs are able to contribute up to 2 percent to the economy.

However, only 9 percent of the 56 million have taken advantage of the digital platform, or have their own websites. The data also showed that SME exports have so far only contributed 15.8 percent to Indonesia’s total export figure, which is considered a relatively low amount.

Last year Alibaba made its largest overseas investment with a $1 billion deal for control of Lazada Group SA, taking the e-commerce giant to Southeast Asia. Lazada, founded in 2012 by Germany’s Rocket Internet SE, operates in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

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