Author: Izhar MD

Indonesia is known for its tropicality, with year-round golden sunshine. Certain researches say on about how Indonesia can generate electricity entirely from renewable energy has calculated the country has the potential to come up with about 640,000 Terra Watt-hours (TWh) per annum from alternative energy. That’s resembling 2,300 times last year’s electricity production.

Can alternative energy help Indonesia to realize 100% green electricity by 2050? Let’s find out! Despite this huge energy potential, investment within the renewable energy sector continues to be low. Hence, solar power contributed only 7% to the country’s total electricity production in last year.

Last year, Southeast Asia’s shook the economy by producing 275 TWh of electricity through different power plants with the holding capacity of 69.1 gigawatt (GW). Gas, Coal and Diesel power plants supply most of the 90% of electricity. The remainder comes from power plants using renewable energy – hydro, wind, geothermal, solar and biofuel. The domination of non-renewable energy power is anticipated to last until 2050.



Even though Indonesia has abundant solar power, state power firm PLN, currently the sole electricity supplier, can’t tap into it immediately because it is bound by contracts it’s signed with various powerhouse operators. These contracts hold the validity for a minimum of good twenty years.

The government predicts the employment of solar power in electricity production will only account for fewer than 10% of the overall energy mix by 2050. Many experts argue that with its abundant sunshine and unique topography, Indonesia should be ready to generate 100% green electricity from its alternative energy by 2050. the govt has to set attractive policies for both customers and power providers to create this happen.

Here are four reasons why Indonesia has the greater potential to get its electricity entirely from solar energy:

Available of Plenty of Sunlight Indonesia’s electricity consumption was 1 megawatt-hours (MWh) per capita in 2019, only 11% of Singaporean consumption. National Electricity General Plan of Indonesia voice that the nation’s electricity stipulation will climb upto 1,000 TWh, equivalent to 3.3 MWh per capita, within 2038. If this agenda continues, the estimated electricity will reach 7.7 MWh per capita or 2600 TWh by 2050.



To fulfil the 2050 demand of green electricity, Indonesia needs to reach the ultimate capacity of 1,500-gigawatt (GW) of solar photovoltaic (PV) power plants. Solar PV holds the capacity to convert solar rays into electricity with the help of photovoltaic modules. It’s expected 230 MW solar PV are going to be installed this year. According to my research, providing 2,600 TWh electricity won’t be a problem thanks to the large alternative energy that Indonesia has.

2. Decreasing costs to line up solar PV farms

The global average cost of the total investment in industrial scale solar PV is falling low very quickly. For instance, it fell by 78% between 2010 and 2018. In Australia, the price of large-scale solar projects has fallen dramatically from US$85 per MWh in 2015 to an expected US$28-39 per MWh in 2020. These prices are well below the value that Indonesia’s state power firm, PLN, has to generate electricity, at around US$79 per MWh.

To meet the 2050 figure, the govt. must generate 50 GW from alternative energy every year, starting 2021, and connect it to power grids. This is likely achievable, considering that building solar PV projects is far faster than for fossil power plants. A solar PV farm needs a maximum of two years of construction, while coal-fired power plants need a minimum of three years to finish.

To supply electricity at the hours of darkness, the PV system will need battery storage. Battery prices have also fallen by 87% since 2010, to $156/kWh in 2019. Prices are expected to still decrease to $61/kWh by 2030. Complementing batteries, pumped hydro energy storage is additionally ready to store electricity during sunny days and quickly distribute it when electricity generation is interrupted during cloudy weather. Indonesia holds around 26,000 best hydro pumped sites and a combined storage of 820 TWh. This number is 100 times over required to support a 100% renewable electricity system from solar panels in Indonesia.

3. Have large areas to put in PVs

To install enough PVs to fulfil the 2050 target, Indonesia needs a minimum of 8,000 square kilometres, or about 0.4% of the country’s area. Should problems with land acquisitions arise, the govt. could also install the solar panels on water. an oversized fraction of those panels is placed on floats on lakes and sheltered seas. Indonesia has huge water territory because the world’s largest archipelago. it’s lakes with a section of about 119,000km² and territorial sea of about 290,000km². Like cherry on the top of the cake, most of the buildings can hoist the solar panels on the roof. With these plans, the installation of solar panels would force only 0.1% of Indonesia’s land.

4. Green Travel Dating

Indonesia has pledged to cut back greenhouse emission emissions by 29-41% by 2030. It has also set an ambitious target that its renewable energy portion will double to 23% of the country’s total energy mix to come up with electricity by 2025. it’s expected to achieve 31% by 2030.

However, last year, Climate Action Tracker (CAT), an independent research organisation tracking climate action, reported that Indonesia has did not reduce carbon emissions. CAT’s final veridiction was that no concrete steps are taken into consideration and rate Indonesia as “highly insufficient action”.

Fossil fuel power plants and transportation still contributed 34% of Indonesia’s emissions in 2017. this might become much larger as energy consumption increases unless Indonesia shifts electricity generation to renewables as other countries do. For example, Australia reached a 25% renewable energy target in 2019 and is not off course to succeed in 50% renewable energy in 2025 by installing wind generation and PV. Vietnam has secured 135 solar PV projects with a complete capacity of 9 GW. 32 GW of solar PV was installed in India. And the target is to take the numbers up to 100 GW within 2022. Singapore isn’t lacking behind as it is also building 60 MW of floating solar PV plant. Cool, isn’t it?

The Last Words The vast and consistent abundance of sunshine in Indonesia, together with the low and falling price of solar PV, means 100% renewable electricity with zero emissions is eminently feasible for Indonesia to attain in 2050. If you hold the power to enjoy eco-friendly green electricity without free of heavy bill, wouldn’t it be dream come true? Won’t you be happy? Yes, that’s the green electricity from solar energy!

Nevertheless, Indonesia’s coal industry is way from over yet. After being highly sought-after and becoming a number one interchange earner through the first 2000s, Indonesia’s coal sector has been hit hard in recent years following the autumn in commodity prices. There are many factors contributing to the decline of the national coal industry; from over dependence on export markets and therefore the lack of market diversification, to concerns over temperature change that have prompted some countries to chop back their coal consumption.

Many expect to determine the revival of this commodity within the near future. The Indonesian government’s 35 gigawatts (GW) electricity project, as an example, will still depend on coal to extend the nation’s electrification ratio. This megaproject is anticipated to sustain demand for coal for many years to return and will play a key role in supporting demand for domestic coal.

Number One to Struggling

Indonesia’s coal industry undergoes quick extension from the 1990s. Why? Mostly due to the government seek alternative sources of energy as their oil resources started falling down. To encourage investment in coal mining and coal-fired power plants, the Indonesian government reformed the arena to ask both local and international investors through the issuance of coal contract of labor (CCOC) and mining business permits. This departs a coal rush as companies quickly took up the chance for quick returns given Indonesia’s advantages as a coal producer, proximity to China, and simply accessible coal in coastal areas thus leading to lower operational and transportation costs. Indonesian coal’s high calorific content similarly as low sulphur content also made it a highly attractive option.

Indonesia swiftly became the fourth largest coal producing country and among the biggest coal exporters within the world. Indika Energy, Bumi Resouces, Bukit Asam and other coal companies’s stock prices roared high in the sky. Coal became a number one commodity and a top exchange earner. Within the span of 23 years, Indonesian coal production climb from 10.7 million to 474 million, that is, from 1990 to 2013. The country’s coal exports also rose significantly from 4.3 million tonnes or 42.5% in 1990 to 402 million tonnes or 85% in 2013. the bulk of Indonesian coal was exported to China, India, Japan, and Republic of Korea. In the time of heyday, nearly 85% of state revenue came out from the mining sector, especially from the coal. This reached 24.4 trillion IDR in 2014.

The coal rush came to an abrupt halt; in 2012, after the value of coal peaked at $118.4 USD per tone within the previous year, the coal price quickly descended. Speaking of the year 2015, coal was sold at $60.1 USD per tone and shrank nearly up to 50% in comparison to 2011. This downward trend continued into the primary quarter of 2016 when the worth of coal dropped to below $50 USD per tone. This has led to a decline in production from 96.77 million tones within the half-moon of 2015 to 86.63 million tones within the same period in 2016. From 79.44 million tones to 68.09 million tones or to say 14.29%, this is the ratio of weakened coal exports in Indonesia.

The slump in coal price has been attributed to the slowdown of China’s economy which forced the country to chop back its energy consumption, particularly coal. Furthermore, the global campaign for environment conservation and climate change focused on coal as the key culprit. It causes pollution, environmental degradation and global warming promoted the country to shift into renewal energy source like gas, solar, wind and geothermal. Another reason for dropping the coal price is shale gas and oil revolution. As cheap oil made from the underutilized coal from the US market, flood into the world market attracting people with its cheap price. The Joko Widodo administration is currently working hard to enhance the investment climate within the coal mining sector by facilitating permits, postponing the rise in royalties, limiting exports and increasing domestic market demand.

Mismanagement and Poor Governance

The crisis experienced by the industry in Indonesia in recent years may be a result of a decade-long mismanagement and poor corporate governance. This cheap and abundant energy resource which was originally founded to substitute oil in meeting domestic energy needs was intentionally changed into a commodity charged with high royalties and taxes to spice up state revenue and economic process.

Consequently, many private companies opened mines and extracted coal without taking into consideration the environmental impact. They focused on short-term revenue and didn’t develop downstream industries and conduct exploration activities to get new reserves furthermore as create new demand; especially within the domestic Indonesian market. Moreover, the industry relied an excessive amount of on export markets which are limited to some countries only, namely China, India, Japan, and Asian nation. This has made Indonesia more liable to the worldwide economic slowdown in coal demand.

As a result, supported estimates from the Indonesian Coal Mining Association (APBI), Indonesia only has 7.3 – 8.3 billion tones of coal reserves left as of 2015. These reserves are expended by 2033 – 2036.

Light in Dark clouds

Despite all the declination inside the Indonesian Industry, there has been huge interest for investment from the world. The Joko Widodo administration is currently working hard to boost the investment climate within the coal mining sector by facilitating permits, postponing the rise in royalties, limiting exports and increasing domestic market demand through the 35 GW powerhouse project; among others.

Indonesia continues to present several challenges for companies involved in power generation; not least the necessity for better coordination and cooperation across the various sectors that play a job within the successful completion of an influence plant project.

The 35 GW power project should breathe new life into the struggling industry. because the state-owned electricity firm (PLN) allocates 60% or 20 GW to coal-fired power plants, this can successively create demand for a few 166 million tonnes of coal annually starting in 2019. Comprehensively, the Indonesian government still bend over the coal for its energy source. The ‘black gold’ or the coal still account 30% of the country’s energy source by 2025.

Many large-scale coal companies have already taken advantage of this chance by constructing mine-mouth steam power plants and becoming Independent Power Producers (IPPs). further as gaining profits from the sale of electricity, the move will sustain the demand for his or her coal products for the following 30 years around.

Renewable energy in Indonesia is moving sort of snail in producing renewable source of energy but can underestimate the strength and potential of the country can provide. In line with the forecast consumption of electricity is quite double in coming 2025, because the raise in demand of energy within the geographical area.

A lot of Indonesians currently do not have any access to electricity, the depend upon the costly oil resources for power from generators. Which results in raise in fuel consumption. As the country aims to diversify their energy resources, Indonesia has to finally end up lots of things as only a little percent of the country has natural energy.

Government depending upon coal in its primary stage, and it turns the view for renewable energy to push up to the national power output. Government has raised the worth on fuel and power to decrease the value of importing oil and bolster energy security, and therefore, the financial incentives for increase in development of a different energy sources.



For a secure renewable energy investment and technology partnerships for the higher environment in Indonesia they need to simplify the tender rules, takes risks for early investors, small loans from multi-national assets like clean technology fund and development banks and commenced making project in remote areas which improves infrastructure.

On January 14, The House of Representatives adopted the National Energy Policy and expecting supply of minimum 23% of renewable energy source needed by Indonesia in 2025 and up to 35% in 2050 which is around 6%. In these thousands of islands within the country with 240 million people on them.

The IPPs (independent power producers) have the potential to grab a powerful section in the power generation, as private capital seemed not dependable to produce energy that country needed urgently. To attract investments into the renewable energy projects in recent years there have been numbered theft measures and legal changes.

As ups and downs are controlled and controlled by companies owned by state, it was needed for PLN (Perusahaan Listrik Negara) to buy electricity from the renewable energy producers at imaginable prices (differing the value counting on the areas). For creating plans easier for investors aiming in multiple projects, it’s possible to barter on agreements to buy power.

“The financial risks for developers and IPP’s are further reduced”, claims and guarantee by the government because the IIGF (Indonesia Infrastructure Guarantee Fund) provides guaranty to construct and operate power plants in PPPs (public private partnerships). To draw in long run bank funding the electricity is being sold to PLN to assist producers as per BVGL (The Business Viability Guarantees Letter). To justify and manage the heavy visible cost of the energy the GFF (Geothermal Fund Facility) gives a hand in exploration activities, and for data acquisitions.

Tax holidays and tax reductions are available for renewable projects, and that they are being criticized for not conforming to the implemented policy across the country. Some exemptions are available for VAT and duties imposed on the capital good’s import for renewable energy projects.

Bio fuel blending require mixing a little portion of biodiesel and ethanol form local source into diesel and petrol. Per Ministry of Energy and natural resources Regulation No. 32 of 2008 it mandates that a gradual increase within the bio ratio of fuel for transportation purpose, employed in industries, and in generating power. A minimum of 15% of ethanol for petrol and 20% for biodiesel in diesel is required. Sources of Potential The renewable energy potential of Indonesia is especially spread in heat energy, solar energy, hydro power and bio fuels.

Geothermal  The geothermal power is a one amongst the foremost interesting opportunity within the country. As in most of the electricity generating field Geothermal energy is also dominated by IPPs. As we all have heard about the famous volcanic activities, it is believable that Indonesia can harbour something around 40% of the planet’s geothermal potential which is around 28,000 MW (megawatts) with uncalculated resources and reserves, Sumatra hold most of these followed by Java.

By 2025 the current Government is planning to amplify its installed capacity to 6500 MW which is around some 1340 MW in early 2014, were on stream and another 1500 MW project is in development. Several new projects were to be tendered in 2014 but if the country is to walk towards its planned destination, then they have to speed up exploration and development. There are some problems like permits and local opposition which are blamed for holding up the projects in some areas.

Hydroelectric Power have greater capacity than that of geothermal energy, with such great potential it is estimated around 75,000 MW. At present it is the mostly used energy with total stored capacity around 6,000 MW. Hydropower sites are spread around and across the country, with visible potential for large scale projects like such in the eastern regions of the country for example Maluku and Papua. Hydropower developers mostly get a challenge in their sites geographically, most of their large-scale projects lie in isolated areas which are usually forest regions with little or no infrastructure.

Hydropower projects with small scale gathers less than 10 MW and on the other hand, face their own technical issues like bringing equipment from across the country or from abroad and challenges with less storage capacity, which is really an over burden for some units of megawatts. Here micro hydropower and mini hydropower projects enjoy support from the government, development agencies and from microfinance credit in some cases. Hydropower gives chances for suppliers and consultants for working with stakeholders.

Photovoltaic solar energy

PV (Photovoltaic solar energy) is one of the renewable energies which are mostly neglected in Indonesia, while it has the power to clear the problem of low electricity in Indonesia. Indonesia is blessed with strong solar radiation as it is based on the equator, solar power is compatible for providing electricity to rural regions specially including East Java and southern regions. The off-grid rural projects are absurd on purely commercial basis, and appropriate government program take over where PV installations are lacking.

Grid connected projects are still largely untested in Indonesia and because of the growing interest they are to sell PV electricity to PLN. A tender for 80 sites of total 140 MW was launched in November 2013 where the foreign companies can participate in jointly with local operations. The government is using nearly 40% equipment that are built by the neighbours and trying to boost the local production of PV systems and is fulfilling with higher feed-in tariffs.

Biofuel and Biomass Biofuels are gaining the grip as Indonesia is trying to secure the country’s future transportation requirements while reducing oil imports and improving its ecological recommendations.

Biomass is a further unused area of Indonesia’s renewable energy portfolio with the capacity to generate 49,500 MW of power with a current installed capacity of only 1,600 MW.

In recent decades technological innovation has been a major driver of global growth, as the economic opportunity is interconnected with digital and technological capabilities more and more. Despite the world’s opportunity, technological value is largely concentrated in two major regions – the eastern coast of China and the west coast of the United States.

At the beginning of May 2020, these ‘gold coasts’ had seven of the top 10 companies worldwide by market limit. These areas have built up massive wealth and power and an impressive reputation for technological success.

As the US and China compete for the crown as technology leader, worldwide, trust grows quietly. In the Africa, Israel, Latin America, Russia, the UAE, India, Turkey and Southeast Asia, technological companies bring exciting new products and services to the market. This trend offers Indonesia’s rapidly expanding technology sector a valuable opportunity.

The country now offers a number of information technology opportunities, in particular e-commerce and Fintech, in addition to emerging economy in the regions of Asia, by developing its infrastructure in Indonesia. Google Temasek’s research has demonstrated that the sales of first-hand goods in Indonesia in 2017 peaked with a gross merchandising value of IDR 151.4 trillion (US$10.9 billion), rising by 41% from 2015.

Information Technology in Indonesia: The Highlights

• In Southeast Asia, Indonesia has been the world’s largest spender on IT.
• The internet contributed 2.5% of domestic GDP in Indonesia in 2016.
• By 2025 Indonesia’s internet users will benefit 125 million.
• With a total of 266 million mobile subscribers, Indonesia is the 4th largest mobile market in the world with 112 percent mobile penetration.
• Indonesia has 81.8 billion IDR (USD 8591 million) in 2018 as revenue from the Indonesian electronic trading industry.
• A 17.7 per cent annual growth trend in e-commerce (CAGR 2018-2022) would result in a market value of 228.9 trillion IDR in 2022 (16.5 billion USD).
• The user penetration in e-commerce is expected to be 11.8% in 2018 and 15.7% in 2022.

Indonesia and Information Technology

Indonesians are also extremely social: fourth world on Facebook, third on Twitter and home to 5 million blogs. Indonesians are also highly social in nature. More Jakarta tweets are published than any city in the world. In the coming couple of years, the use of social media like Facebook, a revolutionary advertising business, will move dramatically to non-Western markets.

Companies which have carried out market research in Indonesia know that while it is necessary for social media to introduce brands, consumers in the country continue to value personal advice. TNS Digital Life states actually that nothing can be more effective than a personal suggestion to guide a customer decision.

TNS states that the very reason why brands must have an equally powerful physical and digital presence in the country is the nature of Indonesian society. Moreover, Indonesians are also more worried by the inherent mistrust of Indonesian e-commerce.

Consumers in this country can link to social media but also tend to do so off-line. This is the reverse of western cultures, where “showrooming” hurts certain consumer goods shops. Clients just go to the shop to sample the goods to return home and buy the same items from an online seller.

In a collectivist society like Indonesia, the question of trust is also important for communicating with customers. Marketers know that developing relationships with individuals through off-line interactions is an essential step towards building the confidence they need for a good online connection. Maicih’s domestic cracker is a fitting illustration of how technology-based marketing and conventional direct sells can be effectively combined with very small businesses.

Although it operates in stores and markets throughout the world, a great deal of its marketing work is spent on social media. By using Twitter to take customers to places of mobile cars, it creates a social media buzz which rapidly increases and drives them to mobile places.

Indonesia Outpaces Growth

In the 2020 BCG Tech Challengers report of the Boston Consulting Group, digital and technological opportunities are explored in markets around the world. It reveals a fascinating picture of players that revolve industries, grow rapidly, and threaten incumbent technology giants.

These technology challenges represent 14 countries and are active in several sectors, from all major regions. Although two-thirds of the challenge cuts to consumer apps or services, a third is active in the corporate segments (B2B).

Since 2014, over 10,000 technology companies, almost half (47%) of them outside China, have been founded in the emerging markets. Indonesia has a small but rapidly growing technological sector that accounts for 2 percent of that number. Positively situated behind famous world tech hubs, including Singapore and Israel, are emerging challenges like Indonesia and Brazil.



There has been an increase in the number of companies founded in Indonesia over India, Singapore, Japan and China by 30 per cent year on year. Initiatives like the 1,000 Digital Startup Movement in Indonesia, now the 1.001 Digital Startup Movement, are a useful way to accelerate that growth.

In terms of innovation and geographical location, the technology ecosystem is evolving and diversifying. Emerging markets outside of China account for just 12 percent of the first generation of technology companies. Outside China there are one third (33 percent) of new technology unicorns in emerging markets. Today, 47% of the largest emerging market technology companies are outside the borders of China.

Speedy Technological growth in Indonesia offers great Business Opportunities

In Indonesia more business opportunities were created by the ease of information technology (IT). Indonesia’s growth of IT, particularly mobile, is booming, presenting businesses with profitable opportunities to expand the market in Indonesia.

IT News Today reports the launching of the largest mobile growth in the short term in Brazil, Russia, Indonesia and China.

Moreover, Indonesia is attractive as companies move from elsewhere in Asia because it is:

• The 4th most important mobile market in the world.
• Home to a consumer economy and a 74 million growing middle class (projected to double by 2020).
• Improve its technology and mobile growth infrastructure.
• A very technologically hungry, young country.

Indonesians are also extremely social: fourth world on Facebook, third on Twitter and home to 5 million blogs. Indonesians are also highly social in nature. More Jakarta tweets are published than any city in the world. In the coming couple of years, the use of social media like Facebook, a revolutionary advertising business, will move dramatically to non-Western markets.

Emerging Tech Challengers in 2021

These challenges include hardware, software, cloud computing and services, social media, gaming, IA, advanced analytics and cybersecurity. They offer innovative solutions that penetrate non-traditional industries like health care, logistics and energy. By expanding into new markets and adding new products and services by developing both in-house and M&A partnerships, Gojek has stimulated its significant growth. It increased its initial focus on hailing by connecting its rider platform to other Jakarta transportation systems and expanding to related companies such as food supply, payments and logistics. BCG analysed 100 major emerging market technology challengers, which reflect the new wave of ambitious and growing companies, from the emerging technology businesses. They are selected to use their technology, position in industry, business models and proven traction in the market.

This global innovator group comprises 14 countries in each of the world’s major regions. Eight of them in Southeast Asia are home-grown. All of the headquarters in Indonesia are Gojek, Tokopedia, and Visionet Internasional (OVO).

The selected companies reflect a market value of more than $500 million and are a major technological challenger. Their operating models range from the ride-hailing origins of Gojek and Grab to the e-commerce achievements of Lazada and Tokopedia. Over half of the 100 technology leaders have expanded beyond their domestic markets, and 40% are in developed markets.

The challenges in Southeast Asia are committed to the regional gaming field. This is a fast-growing market for nearly 700 million citizens, with significant growth in income, which gives tech companies fertile ground on a scale. The region is identified as a prime market over its initial home market by half of Southeast Asia’s tech champions. This kind of play is already ongoing, the ambitious regional expansion of Gojek shows.

Explore Business Opportunities in Indonesia with Cekindo’s Assistance

Companies wishing to import goods must first follow the registration or registration of companies or of trademarks and register their products in Indonesia. While rules are stringent, with the right company partner in Indonesia the process will be much smoother. Providers like Cekindo help companies in Indonesia, which is a fundamental requirement, to find their own distributor. A trusted business partner in Indonesia is required for the successful introduction of your product and the growth of the physical and virtual brand reputation.

Economic Growth through Information Technology

In conjunction with driver groups like commodity mass consumption, urbanisation, smartphone use and a technologically hungry young population, the rapid development of information technology is having a positive effect on Indonesia’s economic growth.

The nation’s electronic economy is expected to cross Idro 151.4 trillion by 2020 (USD 130 billion), third behind China and India, with current estimates. With an annual growth of 55%, retailers are now exclusive from Indonesia to build mobile platforms for boosting e-market growth, especially in packaged consumer goods. This strategy will facilitate smartphones, tablets and tasks.



Indonesia is the largest IT spending in Southeast Asia, according to the International Data Corporation. In order to achieve a competitive edge in the industry, the public sector spends significantly in improving the internal infrastructure, and the private sector improves customer service.

It is important for both types of industries, as there will be 125 million Internet users in Indonesia in 2025. In addition, a Deloitte report found that Internet contributed 2.0% of the country’s GDP in 2016 in Indonesia, up from just 1.6% in 2011. The increase in Internet use has encouraging Indonesians to buy smartphones, subscribe and make online transactions on a monthly basis. Taking advantage of these developments in Indonesia, information technology in the following decades would be disruptive.

Major Markets in IT in Indonesia

Many businesses worldwide are undergoing digital transformation. Three developments in information technology (IT) are currently increasing in Indonesia, according to NetApp Indonesia. The data are becoming the new currency. Second is that the conventional networks are being taken over by increasingly new network models; and finally, the business growth now depends on cloud computing significantly. E-commerce and fintech are currently Indonesia’s two major and thriving markets.

E-commerce

The e-commerce industry in Indonesia is close to the online market in China at its infancy and offers a huge number of different sellers with social media recommendations. Similarly, E-commerce in Indonesia also marks the original U.S. e-market in the midst of cautious customers and online payments. As a consequence, Indonesia is now catapulting to the global on-line marketplace with the ability to create a combination of the greatest opportunities centred on the American and Chinese e-market economies. The e-commerce market has risen to IDR 81.8 trillion (US$ 8.591 billion) in 2018, research carried out by the Indonesian e-commerce Association and Google.

Easy access to home information and convenient digital payment are two key reasons for the enormous growth in e-commerce, as e-commerce markets in Indonesia exploit. Lazada and Tokopedia are, according to iPrice.com, the first and second highest-revenue e-commerce websites in 2017.

Fintech

Fin technology investments began in Indonesia by storm in 2016. Indonesian start-ups’ investments reached record levels in 2017 – over IDR 5.85 billion (USD 421 million). Until 2018, this pattern continues. Thanks to the enormous boom in e-commerce in Indonesia, a digital payment start-up gold mine was established at Fintech. In Indonesia, there are now over 150 fintech start-ups – almost 78% more than in 2015. An AT Kearney and Google survey have found that Fintech is one of the most appealing industries for IT start-up investors.

More Tech-based Challenges in Indonesia

These tech challenges to the emerging markets are averaged at $6.3 billion, far beyond unicorn. South-east Asian-based companies have the highest average ratings in any other region outside China. The combined value of eight challenger companies in South East Asia amounts to 50 billion dollars, 34 billion dollars over India and 17 challenger companies in South Asia.

Similarly, impressive is the revenue growth of these companies. The average revenue is $2 billion, which is up 70% annually. Six times that in developed markets, technology firms are. This growth is eight times higher in South-East Asia than developed markets. In some cases, the growth of Covid-19 was not limited and provided advantages for technology firms as social and economic transitions drive technology involvement.

Technology companies in the emerging market take different growth routes. Many of them are supported by conglomerates, international technology companies and government funds. In addition to its expertise and resources, this provides valuable finance. The myth of growth driven by robbery and low labour cost is gone. These companies are ambitious and innovative and lead to success on a number of paths.

They take early approaches to ecosystems, thus helping to speed up the path to growth. Many cross the boundaries of industry. Often, they focus on their capacity to solve specific challenges on emerging markets such as increasing financial integration in under-banked or unbanked populations.

OVO has developed its strategy based on an open approach to ecosystems and integrated model creating one of the marketers and partners’ integrated financial ecosystems. OVO has been downloaded to 115 million devices with more than 700,000 participating retailers, with clients able to use it anywhere for payment access, transfers, upgrades and withdrawals, and asset management. More than 373 towns and administrative regenerations throughout Indonesia are accepted for OVO.

Indonesia Tech Challenges – Solution or more Problem?

The ambitious scope of these ecosystem approaches will benefit technology challengers. Research from BCG reveals that the better an ecosystem can afford the more partners in an ecosystem. It’s going to fare the ecosystem.

Tech companies have to recognise the growth of these challenges, but competition is not allegedly necessary.

The challenges of market share, battles for emerging pools of values and the possible confrontations for a global presence are where competition might emerge. For instance, South-East Asian players such as Grab and Gojek are reinforcing their ‘super app’ status, with the increasing proportion of digital consumers. Partnerships among incumbents and opponents are mutually beneficial. Their ecosystem-based approach makes collaborative challenges receptive.

They can increase the potential by opening up shared value chains to new and existing players alike. In many cases, a choice is collaboration or competition. What can be said for sure is that Indonesia’s vibrant technology industry offers significant and rapid growth potential.

IT industry is the main driver of growth

In order to build on existing numerical projects and amplify its digital transformation, the information technology industry will be a pillar of the Indonesian Government. During a virtual meeting, Ahmad M. Ramli, Director of the Ministry of Communications and Information’s Post and Information Administration (PPI), said administration will contribute to building a range of e-commerce platforms for micro-sized, small and medium-sized enterprises and microenterprises, which could in turn help boost employment. To achieve these objectives, he clarified that the PPI would closely track the “quality of service in the postal and logistical sectors.”

“It is a vital part, and this is the flagship programme of PPI this year, during which a major part of the ministry’s future will be the Telecommunications Monitoring Centre, the Post and Logistics & Broadcasting Monitoring Center.”

The Department has also announced that industrial regulations will be developed to allow digital transformation and collaboration between different government sectors. He anticipated that, once government integration is enhanced, the domestic sector will expand. It aims to develop new domestic development policies. According to the Director General of PPI, these arrangements are based on best practises demonstrated by a number of other countries including the US, the UK and the Southeast Asian Nations’ Association Member States (ASEAN).

Ramli also noted that the “follow-up” rule to the Job Creation Law is one of the policies that she plans to set down. This law was approved last year to create more jobs and attract international and domestic investment by relaxing regulatory conditions to obtain business licences and also to handle land acquisitions. This legislation was adopted last year.

In addition to streamlining operations, the Department has noted that its emphasis is on promoting a safe industrial environment. They recognised the “work” of maintaining the health and development of the industry because, in the end, a stable industry will be able to offer the community excellent service, contribute to the government and benefit all telecommunications services.”

Launching new health applications 

The PPI also listed the ultimate scale of healthcare services in the launch of new mobile apps. To reinforce this stance, he referred to the application for care and protection that has enhanced public patronage. The applications for COVID-19 vaccines are currently growing by 26 million users. 180 million users are expected to use the app in the future. This is one of the government’s highest accomplishments and played an important role in growing the pandemic’s effects.

In the midst of the pandemic, the Indonesian Government has done great progress in digitising the health sector. As OpenGov Asia reports, the Ministry of Health is considering the integration of vaccine storage and distribution Internet of Things (IoT) technology. The ministry has stated that it is interested in using a framework for the management of the distribution of vaccines established by Bio Farma. This new system ensures that vaccine temperature, storage and shipping are monitored in real time. The method is first used for the delivery of vaccines once applied.

The Rise of Indonesia’s Tech Scene

At this moment, it’s an exciting time for Asia. Due to higher smartphone, tablet ownership and infrastructure penetration in the Asian region, Asia faces the fastest Internet growth in recent years. This rise would also impact the high growth in the area of digital Internet users and digital players. The digital enterprise that offers content and e-commerce is confronted with the challenge of meeting the explosive demand.

The region has become the most important area in Southeast Asia in particular, where Indonesia is the largest market, because of its steadily positive economic growth, and the rest of the world has taken an interest in its slowness.

The critical mass

In the world as the fifth-largest nation to have a population of close to 260 million, Indonesia has a young population of 50% below the age of 27, which, particularly in the positive growth market, has a productive age and is ready to be a consumer market. The digital company of Indonesia, like other companies, has undergone the transition and is now maturing. Indonesian digital enterprise was revitalised from 1997 to 2001 and the Internet situation in the USA shared the same enthusiasm. This was the period when start-up companies had their IPOs and had international companies invest in them.

In the United States, the dotcom crash caused Indonesian start-ups the same problem with the start-up situation in America where they had not had enough users; the infrastructure had just begun; the connections had not been fast enough; founders and investors were insidious and the environment was the base for the digital economy as a whole. The most powerful players survived and the weak had to shut down.

The second rise of start-ups

The second change started in 2007 and continues today. Some local companies that survived the 2001 dotcom crash started to show leadership as top digital companies such as Detik.com and Kaskus.us in Indonesia. New players join the room and exchange success stories like their predecessors. Any of these start-ups have changed their names to Kompas.com, Kapanlagi.com, Okezone.com and Lintasberita.com.

In addition, start-up companies grew substantially. Several success stories have inspired young businesspeople and entrepreneurs to join forces in creating their dream start-up companies. Yahoo acquired a local business in 2009, which gained worldwide attention. GDP Ventures with MCM Group created Merah Putih Incubator to invest in many hot local players such as Mindtalk.com, Dailysocial.net, infokost.net, Krazymarket.com, Lintas.me and Kincir.com.

Kaskus.us has partnered on their brand revamping with the MCM Party, the local community Number One and the classified board in Indonesia. In early 2011 they were also invested by GDP Projects. In the e-commerce region of Indonesia, GDP Ventures has developed a new website named Blibli.com, which has become one of the strong players.

GDP Ventures has encouraged other local actors to join the digital internet enterprise scene. Para Group, a group of local entrepreneurs focusing on the media, invested Detik.com. In order to help carry their media to the digital space, Kompas Grameria, the largest publishing and print media group, formed an investment division. In addition, the scene with the ‘old money or international funds’ has seen more venture capital companies, incubators and accelerators to take part in the digital start-up scene in Indonesia.

The Key Takeaways

Investors are still concerned about a second dotcom crash. The digital market in Indonesia will face a few obstacles in the future. A market full of many entrepreneurs will do both good and bad stuff.

There are several start-ups that have novice founders who don’t know the business game. They cannot stand until the market matures, they cannot separate themselves from rivals and satisfy the needs of customers. Many start-ups will close because they will not be able to thrive in the next few years. But since they started up, some starter companies in Indonesia, such as Tiet.com, Tokopedia and Lintas.me, have demonstrated their potential to shine.

Indonesian players now concentrate on developing an e-commerce, travel, news and niche content ecosystem, payment systems and community networks.

Like e-commerce in different countries, because of their knowledge of business behaviours, customer interest, expenditure and purchasing patterns, the local player is doing better than international players. But the e-commerce ecosystem has not yet matured in Indonesia. For many consumers and a well-capitalised industry, it will take about four more years. The explanation is that the market does not have complete consumer faith when it purchases online and still uses the old purchasing system. The market is still dominated by the most important players in local e-commerce fields, such as Kaskus.us and Tokobagus.com.

Several international players, such like SK Telecom, GREE, Hire, eBay, Tencent, Google, Yahoo!, and Net price have invested in the e-commerce industry by forming a local office or joint venture to get their products and technology to the local market. Services like Zalora, Tokobagus, Multiply, Rakuten, Tokopedia, Bukalapak etc. have been developed.