Indonesia’s population of 265.4 million people, makes it the 4th most populous country in the world. Despite its lower internet penetration rates when compared to other Southeast Asian countries such as Malaysia, Singapore, Thailand and the Philippines – Indonesia’s sheer size combined with an emerging middle class and digitally savvy population, puts this country of islands in a league of its own.
Ecommerceiq sites the annual global digital ecosystem report by We Are Social which shows Indonesia’s internet users at 132.7 million, constituting 50% of the population. Of this number, 130 million people access some social media platform. In fact, this key internet market in Southeast Asia is ranked 3rd highest globally in terms of the amount of daily hours spent on social media. Some 120 million users equaling 455 of the population spend a daily average of almost 9 hours online. Approximately 5 hours of this is dedicated to social media and streaming music(1). Unique mobile users number 177.9 million, penetrating 67% of the population with mobile phones taking precedence over desktops and PCs. According to Ecommerceiq this results in mobile access accounting for most of the web traffic in Indonesia, supported by the cost-effective options for members of the country coming on line for the first time.
Source: We Are Social
With these figures there is much potential opportunity in the tech and ecommerce space to access these users. With 64% of Indonesians not included in the formal banking system, and only 3% having credit cards, the possibilitites for fintech are huge. As Ecommerceiq says, “if e-Wallet platforms get it right, there are 125 million mobile internet users waiting for easy banking.
Additionally, half of Indonesian’s population are offline, opening up further opportunity for mobile based companies – suppliers of smartphones, service providers and other brands and services who can include the offline population in the country’s digital ecosystem.
Venture capitalists have started taking notice of this potential, illustrated by a study by Google and AT Kearney showing venture capital activity in Indonesia growing 68X in the past 5 years, with interests centering on ecommerce and ridesharing. This totaled US$3 billion of venture capital investments in 2017, over 50% of the previous year’s figure of US$1.4 billion.
Given the fact that VC investment as a percentage of Indonesia’s GDP is lower than that of the archipelago country’s Southeast Asian neighbours, the study predicts that this investment volume will expand(1). Based on these current trends, Indonesia is predicted to become a G6 or G7 country by 2030.
Source: Google / AT Kearney
According to HoganLovells, Indonesia’s current baseline is still relatively low. With an average per capita GDP of US$3,570, Indonesia ranks in the 3rd quartile worldwide of the IMF’s latest purchasing power parity per capita global rankings. The country’s anticipated rapid rise from such a low base is reflected in the industries and investments that are thriving in the country today, together with its sizeable population.
Due to these elements of large population, high rate of economic growth and untapped market potential, Goldman Sachs recently identified Indonesia as the site of the next key battle for technology companies(2). With investment figures in tech startups more than doubling in 2017, Indonesia is set to leverage the potential of its 125 million unbanked population and the 177.9 million mobile users already in the digital ecosystem as a worthwhile contender for investment in the Southeast Asian region.