Non-metro and rural areas are set to drive digital economy's growth in Indonesia in the next six years. (Antara Photo/Aprillio Akbar)

Indonesia On Track for $133b Digital Economy by 2025: Google


OCTOBER 08, 2019

Jakarta. Tech giant Google and Singaporean wealth fund Temasek have updated their projection for Indonesia's internet economy to reach $133 billion in total value by 2025, 33 percent higher than previously estimated.

Expansion of e-commerce to smaller cities and rural areas and growing adoption of digital payment services will drive most of the growth. 

The figure was mentioned in a report titled "e-Conomy SEA 2019: Swipe Up and to The Right, Southeast Asia's $100 Billion Internet Economy," prepared in collaboration with consulting firm Bain & Company. 

It also shows that Indonesian e-commerce will be worth a total of $82 billion by 2025, making up almost two-thirds of the country's digital economy. 

E-commerce is on track to reach $21 billion in total value this year, or 52 percent of Indonesia's current $40-billion digital economy. 

The report also projected that the ride-hailing industry will be worth a total of $18 billion in 2025. Today it is worth $6 billion.

The online travel industry is expected to grow from $10 billion currently to $25 billion in 2025 and online media from $4 billion to $9 billion. 

Randy Jusuf, the managing director of Google Indonesia, has noted that local e-commerce companies are beginning to expand by selling wholesale products and groceries in Indonesia, home to 152 million internet users.

"E-commerce continues to move forward, opportunities are getting bigger. Companies no longer think just about growth but also about monetization and new business models," Randy said. 

Non-metropolitan cities also provide great opportunities for e-commerce according to the report, which estimates that the population of these smaller cities spend only a fifth of their income on e-commerce transactions compared to their peers living in large cities.

"If e-commerce logistics in non-metro cities can improve, the whole industry will grow even faster," Randy said.

According to the study, people in Greater Jakarta spend $555 per person annually on online transactions, mostly on e-commerce, travel, ride-hailing and media subscriptions.

In comparison, the corresponding figure for non-metro areas is only $103.

But that figure from non-metro areas is expected to grow twice as fast in the next six years, benefitting from faster expansion in internet economy and digital payment.

Google and Temasek predicted that digital payment will make up almost half of every dollar spent in Southeast Asia by 2025. 

"With the increasing adoption of digital payment services and telecom carrier billing options, more subscribers from outside the metros are paying for premium online media services such as gaming, music and video on demand.... In Indonesia, for example, 46 percent of all searches for internet packages come from non-metro areas," Google and Temasek wrote in the report.