Yahoo – AFP,
Harry PEARL, October 8, 2017
 |
| Indonesia has seen a surge of cash into its technology sector over the past two years, helping support dozens of homegrown start-ups ranging from ride hailing apps to e-commerce firms. (AFP Photo/GOH Chai Hin) |
Jakarta
(AFP) - Big-name investors including Expedia and Alibaba are pumping billions
of dollars into Indonesian tech start-ups in a bid to capitalise on the
country’s burgeoning digital economy and potential as Southeast Asia’s largest
online market.
Indonesia
has seen a surge of cash into its technology sector over the past two years,
helping support dozens of homegrown start-ups ranging from ride hailing apps to
e-commerce firms.
And with a
population of more than 250 million, a swelling middle class and growing
availability of cheap mobile devices, firms from across the world are piling
in.
"We
believe that Indonesia is poised for a huge leap forward for its digital
economy, following China's growth and becoming the leading tech destination in
the Southeast Asia region," Adrian Li, a partner in Jakarta-based
Convergence Ventures, told AFP.
Last year
$631 million in disclosed venture capital was ploughed into the country,
according to research firm CB Insights, up from $31 million in 2015.
But that
figure has already been shattered in 2017, with $3 billion worth of deals
clinched as of September 2017, said Meghna Rao, a tech industry analyst at the
firm.
Tokopedia
-- a marketplace that allows users to set up online shops and handles
transactions -- won $1.1 billion in capital from China’s Alibaba in August.
Motorbike
on-demand service Go-Jek secured $1.2 billion from Chinese tech giants JD.com
and Tencent Holdings in May, according to data from Crunchbase.
In another
sign of confidence, Koison became Indonesia's first e-commerce service to go
public in October.
"While
it's too soon to say that this investment is indicative of a larger pattern of
Indonesian startups pulling in many big ticket investors, it is part of a
growing clutch of mega-rounds," Rao said.
 |
Motorbike
on-demand service Go-Jek secured $1.2 billion from Chinese tech
giants JD.com
and Tencent Holdings in May, according to data from Crunchbase.
(AFP
Photo/GOH Chai Hin)
|
A golden
opportunity
Internet
use is growing faster in Southeast Asia than any other region in the world,
with 124,000 users coming online every day over the next five years, according
to a 2016 report from Google and Singapore’s Temasek Holdings.
By 2020 an
estimated 480 million people are expected to be connected to the internet, up
from 260 million in the region last year.
Indonesia's
mobile-first market will comprise more than half of Southeast Asia’s e-commerce
market by 2025, with an estimated value of $46 billion, the Google report said.
"When
you do startup business in Malaysia, Singapore, Thailand and Indonesia, the cost,
effort and time that you spend is almost even. But when you go to Indonesia
(growth) is unlimited -- the market is so big," said Willson Cuaca, whose
venture capital firm East Ventures specialises in early-stage investments.
As a
result, big names like US venture capitalist Sequoia Capital, Japan's Rakuten
Ventures and travel company Expedia -- as well as Chinese tech giants -- have
all made investments in the country.
Navigating challenges
Indonesian
president Joko Widodo has been a vocal supporter of digital innovation, most
notably in his plan to create 1,000 local tech start-ups worth $10 billion by
2020. But the sector still faces a number of challenges.
 |
Internet
use is growing faster in Southeast Asia than any other region in the world,
with 124,000 users coming online everyday over the next five years, according
to a
2016 report from Google and Singapore’s Temasek Holdings. (AFP
Photo/GOH Chai Hin)
|
A limited
pool of engineering talent to draw from, low rates of internet penetration outside
densely populated Java, bureaucratic delays, and poor quality infrastructure
are all obstacles to growth.
For
e-commerce companies, the large number of "unbanked" Indonesians
limits the scope of online transactions, and logistics problems make it hard to
move goods.
While young
entrepreneurs and small businesses are flocking to co-working spaces springing
up in major centres, it is a decidedly different scene in most parts of the
country.
Farid
Naufal Aslam, the chief executive of Aruna, an e-commerce company that links
fishermen to buyers, said navigating Indonesia's disparate communities is a
challenge too.
"One
of the biggest challenges faced is on social approach," Aslam, 23, said.
"Indonesia is a unique country with diverse communities and different
customs in each region."
Yet many
venture capitalists and entrepreneurs remain optimistic.
"The
window of opportunity is there," Cuaca said. "As long as you can
innovate and solve real problems using technology, you can be successful."
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