Indonesia’s coming digital disruption

Business Times:¬†Indonesia’s digital economy is set to boom, helping its overall economy expand from US$1 trillion in 2017 to US$2.7 trillion by 2027.

Over the next 10 years, we expect online retail in Indonesia to increase 14-fold from just US$4.4 billion in 2017 to US$63.2 billion, or 19 per cent of total retail sales versus 3 per cent currently.

To support this growth, as well as the rise in e-services such as ride hailing, travel bookings and food delivery, we expect an equally rapid adoption of e-money from just 2 per cent of nation-wide transactions in 2017 to 24 per cent by 2027.

Demographics are supportive, with half the population below the age of 30 and a rapidly growing middle class. And the people are tech savvy – Indonesia is home to the fourth largest number of Facebook users in the world, at 130 million; it has the third highest number of Twitter accounts at more than 24 million. Smartphones, a key access tool, are already in the hands of half the population; by 2027, we think, penetration rates will be close to 95 per cent. Connectivity is also improving with the rollout of the government’s 36,000 km intra-island fibre network, the Palapa Ring Project.

The government’s infrastructure push, including transportation links, is helping to address bottlenecks around logistics, complementing a move by ride-hailing companies into last-mile delivery services.

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