Unicorn marketplace start-up, Tokopedia, is aiming to expand its business to rural areas rather than going global, as the great potential of villages in the country is seen as crucial in supporting Indonesia’s burgeoning digital economy.

"In the future, we want to [enter] villages, here in Sukanegara village for example,” said Tokopedia CEO William Tanuwijaya after signing a partnership memorandum of understanding (MoU) with the West Java provincial administration on digital villages development. “It will be more important than an expansion to, for instance, Singapore.”

Part of Tokopedia’s “digital village” initiative agreed upon in the MoU is promotional and marketing efforts for village products, strengthening village-owned enterprises (BUMDes) and empowering villagers through wider access to the Tokopedia Center.

“Every village has a featured product. How can these village entrepreneurs become national entrepreneurs without urbanization? This Tokopedia Center will serve as an educational room starting with e-mailing, creating an online shop, taking pictures, etc,” William said.

Tokopedia Center, which has a presence in 20 regions across Indonesia, is expected to connect micro, small and medium enterprises (MSMEs) in different spots around the country with the national market, MSMEs contribute 60 percent to the national economy.

“If we think about it, the potential is huge, because Tokopedia’s mission is to cut the urbanization chain. People say the capital city is crueler than a stepmother, but once they go to the capital city, they don’t go back to their home villages. If this continues to happen Indonesia will face severe problems,” William added.

Apart from “digital village” development, Tokopedia’s partnership with the West Java administration also encompasses the Jabar Digital Province for e-public services such as licensing processes and extensions of driving licenses, as well as the empowerment of fruit and vegetable farmers in West Java in partnership with Sayurbox, a local start-up that connects organic fruit and vegetable farmers with buyers.

Tokopedia, which achieved unicorn status in 2017 after a US$1.2 billion investment from global e-commerce giant Alibaba, partners with around 6.2 million merchants in Indonesia and has around 90 million visitors per month.

“[Tokopedia] has some Rp 18 trillion [$1.2 billion] of monthly transactions,” William said, adding that the transactions covered around 97 percent of all district areas in the country. With some 70 percent of transactions coming from new merchants, the company was targeting around $15 billion of transactions this year, he added.

West Java Governor Ridwan Kamil said the partnership between the West Java administration and Tokopedia on digital villages development was part of the province’s digital villages development masterplan in developing facilities that could be used by villagers. In the future, he added, the villagers could be more aware of the internet or start their own online business.

Ridwan said the province planned eight more digital centers, in order to complete its targeted 16 digital centers this year. In the future, similar facilities will be available in 600 districts.

“With this partnership we expect MSME players and BUMDes to be more technologically literate because we have enormous potential, more so if touched by technology. The people of West Java can achieve economic independence and contribute more actively in advancing the country’s economy,” Ridwan added.

Tokopedia’s effort is in line with similar digital economy players’ initiatives that are aimed at reaching out to the untapped market potential across Southeast Asia’s largest economy, in an “ecosystem” mindset that is expected to eventually turn to more transactions on the platforms.

Internet service provider PT Telekomunikasi Desa Indonesia (TDI) and technology start-up Rainforest Connection are other examples of tech companies going rural.

The newly established TDI is cooperating with village-owned enterprises in West Sumatra to provide local enterprises with new business, enabling locals to provide internet services for their communities, with the expectation of expanding partnerships to Lampung, West Nusa Tenggara and North Kalimantan.

Meanwhile, in a bid to empower local communities in protecting West Sumatra’s rainforests, a nonprofit technology start-up, Rainforest Connection, is utilizing Google artificial intelligence technology called TensorFlow to help monitor the rainforests. (asp)

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