Indonesia's Resilient Digital Economy Up 11% to $44b in 2020: Google

Jakarta. Indonesia’s digital economy sets to expand by 11 percent to $44 billion in 2020 from $40 billion last year, showing resilience amid the Covid-19 pandemic that wreaks havoc on online transportation, food, and travel services, the latest report from tech giant Google showed on Tuesday.

The pandemic also trowing that the largest digital economy in Southeast Asia’s growth off the track. Indonesia is now projected to churn out a total of $124 billion in gross merchandise value in 2025, down 6.7 percent from Goggle’s earlier projection of $133 billion. 

On the bright side, more new customers use online services in droves, and health and education tech emerged as new exiting frontiers for the country’s digital economy. 

“In Indonesia, with its various stages of lockdowns, users turned to the Internet for solutions to their sudden challenges,” Google said in the report. 

Such behavior is reflected in e-commerce and media, which outgrew the slump in transport, food, and travel. 

The report, prepared in collaboration with Singapore’s sovereign wealth fund Temasek and multinational consultancy firm Bain and Company, projected e-commerce would increase 52 percent to $32 billion this year from $21 billion last year. The online media, including games, music, and movie subscription services, would increase to $4.4 billion, up from $3.5 billion last year. 

On the other hand, online transportation dropped 68 percent to just $3 billion from $10 billion last year, as cities across Indonesia impose restrictions on gathering and travels. Online travel was also down 18 percent to $5 billion from $6 billion last year. 

Still, Google noted a significant trend among Indonesian internet users. More than a third, or 37 percent, 37 percent of all digital service consumers in the country joined just recently, higher than the Southeast Asia average.  

More importantly, “93 percent of these new consumers intending to continue their behavior post-pandemic,” Google said. Indonesians used the Internet 4.7 hours a day on average during the pandemic lockdowns, up from 3.5 hours before, and continue to be online up to 4.2 hours a day after, the report showed. 

“HealthTech and EdTech have played a critical role during the pandemic, with impressive adoption rates to match,” Google said in the report. 

Indonesian Healthtech and Edtech were in a good position to boost adoption and attract funding, which likely to encourage more innovation in the sectors. 

Still, they would face the enduring challenges in Indonesia's digital economy. 

"In our 2019 report, we identified six key barriers to growth - internet access, funding, consumer trust, payments, logistics and talent - and this year had seen significant progress on most (payments and consumer trust, especially)," Google said

"Talent, however, remains a key blocker that all parties will need to keep working on to ensure the momentum gained this year is sustained," the tech giant said. 

In terms of funding, Indonesians digital startups managed to attract $2.8 billion worth of investments across 202 deals in the first half of this year, up from $1.8 billion across 123 deals in the same period last year. 

"Since peaking in 2018, funding for unicorns in mature sectors... has slowed. Platforms are now refocusing on their core business to prioritize a path to profitability, and are addressing consumers’ broad range of needs through partnerships," Google said in the report.