Page 50 - The EDIT | Q2 2017

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My take on Indonesia
When you think about 2017 so far, what were the most exciting things that have happened in your market till date?
After 71 years of independence, Indonesia today is the leading economy in Southeast Asia. With a steady economic growth of 5.2% in 2017, growing consumer confidence, the 4th largest population in the world, it is a magnet for global investors.
I would say the most exciting development is the exponential rise in the adoption of internet and mobile. 51% of the country’s population is online now, that’s around 133 million Indonesians and 11 times higher than 5 years ago.
E-commerce and on-demand marketplaces have seen massive growth making marketers re-evaluate and change the way they approach their marketing strategies. Brands are integrating more content and end-to-end solutions than ever before which has led to some great consolidations from marketers with media owners trying to cater to the changing landscape.
What factor is most driving change in your market at the moment?
I think there is a lot of exciting things happening in Indonesia at the moment and it’s such a vibrant place these days!
In terms of political developments, Indonesians are embracing a more progressive mindset without losing their close connection to the traditional roots of their country. This is also due to a rise in trade partnerships and cultural connections with Saudi Arabia, India and China.
The Ministry of Tourism is also launching various projects around ‘Wonderful Indonesia’ together with the largest telco provider Telkomsel for boosting the internet penetration across the country.
From an economical point of view, Indonesia’s middle class and affluent consumers (also called MACs) is expected to increase from 88 million people in 2014 to 141 million by 2020. Most companies now focus on regions outside Java as priority. This results in aggressive competition for market/ volume share across many industries, but businesses are optimistic about their future including initiatives on tax amnesty and building economic growth via transparency.
Indonesia is also fascinating when it comes to technological developments: The Regulated growth of the economy and better FDI (Foreign Direct Investment) laws and taxes have led initiatives like Apple planning to open a R&D center
in Indonesia.
E-commerce and on-demand services (services like ordering a ride, food delivery, moving houses, groceries, spa services, buy tickets, recharge phone credit, etc.) have seen an exponential increase in investment and new players while the digital infrastructure is strengthened by growth coming from Fintech. With Indonesians geting used to shopping online, the new habit propelled one of the most popular on-demand startups, GO-JEK, to reach the seemingly untouched startup realm: the unicorn stage - a valuation of more than USD 1 billion. GO-JEK is a hyperlocal transport, logistics and payments startup founded in 2010. It aims to expand beyond Jakarta into other cities to capitalize on the daily routine of Indonesians.
The e-commerce industry in Indonesia is estimated to be worth USD 9.3 billion – and it has immense potential. This is in line with the development of general and niche e-commerce services in Indonesia as well as the likes of Amazon and Alibaba knocking on the door.
Regarding consumers and their lifestyle, Indonesian cities have seen a major lifestyle shift due to the incredible rise of start- ups. I often hear people referring to Jakarta as the capital of all start-ups. This is mainly because of the high share of young people amongst the Indonesian population, but also due to the growing Internet penetration which doesn’t only drive online consumption, but also opens up new ways of working and sharing information/ideas across young entrepreneurs.
When you look at the statistics, close to 133 million Indonesians are using the Internet now – and the number of smartphone users has reached 63 million. That is almost thrice the population of Australia today!
How is the industry responding to it?
With the massive growth in online penetration and mobile usage, the industry is evolving with increasing investment into digital channels, especially mobile. eMarketer has estimated mobile spends reach USD 2.6 billion in Indonesia by 2019. That is 8 times the mobile spends in 2016.
THE EDIT ISSUE 06 | Q2 2017