Digital Tech in Indonesia

27 April 2022: Asialink Business in partnership with Investment NSW delivered an event on digital business opportunities in Indonesia. Our expert panel provided key insights and perspectives on regulations and tariffs, key environmental challenges, growth opportunities beyond the cities, and how to navigate through the local start-up eco-system.

Indonesia ranks fourth globally when it comes to average time gaming per day. This provides a window not only into the opportunities for e-gaming, NFTs and cryptocurrency, as areas for investment, but also reflects the rapid digitalisation of Indonesia.

Yonathan Wijaya, NSW Trade and Investment Director, Jakarta contextualised Indonesia’s fast paced growth with some key statistics:

  • The fourth most populous country in the world with 270 million people and 200 million internet users.
  • Smartphones are the key platform, with 96% of internet users accessing internet via their handheld device.
  • The “digital economy” is set to grow to US$133 billion by 2025 and has grown 49% per annum since 2015.
  • Sectors with rapidly growing potential in Indonesia for Australia companies include SaaS, cybersecurity, AI and data analytics, healthcare services and smart city/cleantech.

Robert Law, Director of Research and Advisory, Asialink Business moderated the panel discussion which featured a diverse and dynamic panel:

  • Emma Lo Russo, Co-Founder Digivizer
  • Francisco Widjojo, Managing Partner, Arkblu Capital
  • Nadine Freischland, Deputy Editor, The Ken Southeast Asia
  • Yonathan Wijaya, NSW Trade & Investment Director, Jakarta

Things to consider around capital investment

According to Francisco Widjojo, with the rapidly growing mid-market in Indonesia, start-ups are well positioned to weather the global trend of valuation downgrades and the impact of inflation if there is a direct path to profitability. Businesses seeking to attract venture capital investment should also note that many investors are interested in direct profitability within the next 3-4 years as opposed to 7-8 years.

Advice on market entry

  • In Indonesia, relationships are key. Reach out to Australia’s state and federal government representatives on the ground to get connected into the local ecosystem.
  • Conduct thorough research to identify areas of opportunity.
  • Engage with experienced business partners with local knowledge and consider hiring local teams.
  • Do not be afraid to personalise your product offering to better suit Indonesian consumers.

Consumer Behaviour

Emma Lo Russo encouraged Australian businesses to invest time understanding their customer profile in Indonesia and utilise data metrics to drive their marketing strategy. She emphasised that this approach often reduces or streamlines costs by directing capital to platforms with the highest ROI, improves engagement with the target audience and increases conversions. Rather than trying to engage customers across multiple platforms, focus your energy on one or two and work with a local partner to develop a successful and targeted campaign.

Challenges

Connectivity remains one of the greatest challenges to the growth of the digital economy in Indonesia. Outside the major cities, connectivity is restrained by the lack of IT infrastructure across the country, as well as the geographic challenge of being an archipelago. Like many countries, Indonesia also faces skill shortages in areas such as software engineering and data analytics which presents a challenge for Australian businesses looking to onboard staff in region. This does present an opportunity for Australian EdTech providers.

Watch the full video here to hear perspectives across venture capital, media, government and from an Australian business succeeding in Indonesia.

Resources: