Indonesia is home to a vibrant and rapidly growing digital ecosystem that includes innovation upstarts, homegrown firms and international platforms. It is predicted that by 2025, the digital economy in Indonesia will have reached $124 billion, up from $44 billion in 2020.
Such growth is built on strong fundamentals. 61% of the population are mobile internet subscribers and 81% of that segment have mobile wallets. 7 out of 10 in the total population have made an online purchase in the last 12 months. Digital services have provided a strong path to financial inclusion with 74% of digital lending users previously unable to get loans from banks or lenders.
Against this backdrop, the Covid-19 pandemic has been a watershed moment in Indonesia’s digital economy journey. The pandemic showed how digital platforms have become a key enabler for the economy, particularly for small businesses to continue delivering services and reaching customers. 78% of surveyed micro, small and medium enterprises (MSMEs) agree that they can reach more customers and sell more to each customer through digital platforms, as compared to offline avenues.
As Indonesia’s economy reopens and turns its attention to the critical work of recovery and rebuilding, digital platforms will play an important role. Platforms can help MSMEs thrive in a new digital-first environment, while facilitating the flow of digital financial services to underbanked consumers. With only 13% of all food and retail sales currently done through online platforms, there remains tremendous headroom to tap into the positive impact of platforms.
With great potential there is also the responsibility to mitigate risks. To harness the digital platforms, Indonesia will need to ensure that the transition is inclusive and sustainable. There are immediate specific implications such as the welfare of platform workers, along with more broader areas to address such as the role of digital in enabling financial inclusion. With MSMEs making up 99% of Indonesian businesses, greater emphasis needs to be placed on their recovery.
At this dialogue by the Tech for Good Institute, we explored the value of digital platforms in Indonesia and its potential to contribute to the economy’s recovery from the pandemic. The session brought together key players from the public and private sectors to understand the impact and role of digital platforms in Indonesia, and how we can fully harness the potential of the country’s digital ecosystem.
