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Indonesia’s digital economy 'well on track' to dominate Southeast Asia
E-commerce and ride-hailing sectors recorded an annual growth rate of 88 percent from 2015 to 2019 with a gross merchandise value of US$21 billion.
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Gojek drivers pose for pictures during the Red and White Festival of Gojek Partners held in Surabaya, East Java on Aug 17 to celebrate Indonesia's 74th Independence Day. The ride hailing service in Indonesia contributes significantly to the growth of the country's e-commerce. (Courtesy of Gojek)
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ndonesia’s digital economy is well on track to dominate Southeast Asia as its market value triples to US$130 billion by 2025 from $40 billion in 2019, with e-commerce and ride-hailing sectors spearheading the growth.
According to the annual “e-Conomy Southeast Asia” study, conducted by American tech giant Google, Singaporean holding company Temasek and management consulting firm Bain & Company, the e-commerce and ride-hailing sectors are firing on all cylinders with the former growing at a compound annual growth rate (CAGR) of 88 percent from 2015 to 2019 with a gross merchandise value (GMV) of $21 billion and the latter grew at a CAGR of 57 percent with a GMV of $6 billion.
“The e-commerce and ride-hailing sectors are growing rapidly [in Indonesia] due to large funding and tight competition from local and regional players,” said Google Indonesia managing director Randy Jusuf during a press conference about the study on Monday. He added that the sectors have also enjoyed the fruits of adopting digital payments.
Other than that, online travel and online media including gaming are also enjoying double-digit growth with the former growing at a CAGR of 19 percent with a GMV of $10 billion and the latter growing at a CAGR of 56 percent with a GMV of $4 billion.
Randy said that the growth in the e-commerce sector occurred thanks to online shopping festivals, in-app entertainment and seller development, while growth in the ride-hailing sector occurred because of promotions and food delivery services.
“There is a lot of innovation to encourage people to use e-commerce, such as in-app entertainment through ‘gamification’ and seller development by multiplying well-known brands […] ride-hailing is divided into transportation and food delivery services in which the latter grows significantly,” he said, citing the study that Southeast Asian countries are experiencing active user growth with total e-commerce users rising to 150 million in 2019 from 49 million individuals in 2015 and ride-hailing users rising to 40 million from 8 million.
