This Is Why Indonesia Is Tech Investors’ Gold Mine
Hesti Pratiwi - 25 March 2015
Invest invest invest!
It’s not a secret that Indonesia is a gold mine to tech investors, and this argument is supported by a collection of mouth-watering facts. The fact that Indonesia has become one of the largest markets for mobile is indicated by the consistent growth of Facebook, Twitter, and Path users as well as the middle class, which contribute to the vast growth of the digital industry.
Vast Growth with Solid Basis
e-Marketer predicted that the number of internet users in Indonesia will reach 112 million by 2017, beating Japan that has relatively slow growth. This will, in parallel, triggers the growth of other segments, namely e-commerce, online media, apps, digital ads, and other industries.
Large and Unique Market
The fact shows that the number of middle class society in Indonesia will grow to 135 million members in 2030. This may make Indonesian economic rise to the seventh position in the world rank.
Moreover, Indonesian youngsters are tech-savvy and highly enthusiastic in consuming the latest gadget and technologies. The main barrier to this is the price, not desire. This is unique, while the growth in developed countries is affected by the adoption of mass market, Indonesian consumers tend to have hidden desire which is suddenly fulfilled once technology becomes more affordable.
The first graphic shows that the volume of internet subscription rocketed when the operators had the 3G price war back in 2009. The second one shows how the growth of smartphone purchase went up when the price went down.
This is mainly because Indonesia is unlike any other Asian manufacture countries. 60% of Indonesian economics come from domestic consumption, hence Indonesia becomes a large consumption market.
Unique development of internet industry
Hundreds of startups have emerged now. Some of them get funded by foreign players. Rakuten, the world’s third largest e-commerce player, after Amazon and Taobao, and Germany-based Rocket Internet go hand in hand in building e-commerce website in Indonesia.
Most of startups in Indonesia focus in mobile, since Indonesia was firstly introduced to internet through mobile. However, there are startups that focus on other segments like social media, e-commerce, payment platform, online ads, and B2B market.
Tech investors have plenty of strategic options when it comes to targetting Indonesia, from establishing a business by their own to build a joint venture with Indonesian local companies or invest in the tech business in Indonesia.
The point that is missed all this time is how internet can shift Indonesians’ lifestyle. Most of the startups still focus on implementing online concept that exists abroad, like mobile messaging, daily deals, social network, online payment, e-commerce, and many others, in Indonesia.
However, the true potential of technology is to provide services that meet the specific needs of Indonesian consumers, like improving their children’s quality of education, facilitating the payment of their bills, allowing them to have better health options, giving online shopping experience that serves Indonesian social culture, and assissting them to do both local and international trip.
So, the most promising opportunity in Indonesian technology is to develop unique local solution. However, the local solution might need capital and skills from overseas to build a giant online company.
Therefore, there are three points that indonesia need from the investors:
- Investors who are ready to invest, not only in advertising and facilitating, but also in developing the basic skills in Indonesia.
- Investors who are ready to plant their money and benefit from it in the long run.
- Investors who are ready to partner with local entrepreneurs in order to understand local needs, as well as to fund the development of solution which are relevant to this broad market.