Development of Indonesia's Digital Economy in 2020

Google, Temasek, and Bain & Company re-release their annual reports "e-Conomy SEA 2020" which reviews the development of digital or internet businesses in Southeast Asia. This time, the title chosen is "At full velocity: Resilient and racing ahead" -- indicating how digital players' ambitions are to survive and try to maintain growth amidst the global economic downturn.

There are 7 highlighted digital sectors. In addition to the pre-existing namely e-commerce, transport & food, online travel, online media, and financial services; this year the research added two new business landscapes, namely: healthtech and EdTech -- because both experienced significant growth in the midst of the Covid-19 pandemic.

The pandemic has also boosted the penetration of internet users in the region, there were around 40 million new users in 2020. So that in total in Southeast Asia there are around 400 million internet users -- equivalent to 70% of the total population. The existence of social restrictions forms a new culture such as work/school activities from home, has an impact on the consumption of digital services to increase drastically.

One thing that is quite interesting, in Indonesia 56% of the total digital service consumers this year come from outside the metro area, while the remaining 44% are still from around the metro area. So that it can be said, until now digital developments are still Jabodetabek-centric; and it is undeniable because in terms of accessibility to infrastructure, there is indeed a significant level between metro and non-metro areas.

Gross Merchandise Value (GMV) is the matrix used to measure the economic unit in this report; which implies the value of transactions/sales that occur within a certain period of time by the user. The GMV for the internet economy in Southeast Asia (accumulated from the values ​​derived from the 7 highlighted sectors) is projected to exceed $100 billion. Indonesia will contribute $44 billion or equivalent to IDR 621 trillion.

In Indonesia, the majority of GMV is still supported by services E-commerce, which is $32 billion, followed by platforms transportation & food worth $5 billion, online media $4,4 billion, and online travel $3 billion.

Good validation for the direction of digital economy growth

Not long ago, APJII was also new released the latest report related to statistics on internet users in Indonesia. Specifically, in 2020, there are approximately 25 million new internet users in the country (an increase of 8,9% compared to last year). Indonesia's various dominations in many discussions of the Google-Temasek-Bain & Company report also validate that Indonesia is on the right track in building its digital economy.

Although not a few also say that the phase of Indonesia's digital economy is still "early stage", at least the foundation is well formed. Looking back on the past decade, business E-commerce and ride hailing able to become a good industrial locomotive, they expand the scope digitally savvy in Indonesia – both from consumers and SMEs. The implication is that new (digital) business models are accepted more quickly.

Covid-19 also has a very visible impact. Some business sectors were really hit hard, for example online travel, but from there we can also see how digital service providers are able to adapt quickly. Take, for example, fast-moving OTAs to save businesses by vigorously promoting domestic transportation services or vacation models “staycation”. So it is not surprising that in e-Conomy statistics the OTA platform still has a significant position.

On the other hand, the pandemic is actually maturing the level of digital adoption of the community. The advantages for digital players may be seen at a later date. Moment lockdown people are starting to get used to shopping, studying, consulting health online, maybe this will become new habits that are in the future. Moreover, if the platform is able to accommodate these needs properly, so as to bring a more pleasant impression.

In our internal records, throughout this pandemic transactions funding for digital startups also continues to flow without any slowdown. Indicates a positive trend regarding investor confidence in business players in Indonesia – amidst the recession and increasing risk of failure due to the dynamics of the economy. This momentum certainly needs to be maintained to ensure Indonesia's startup ecosystem continues to grow, and realize the nation's vision to lead Asia's digital economy.

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