Heaptalk, Jakarta — The e-Conomy SEA report projected the digital economy in Indonesia would attain a Gross Merchandise Value (GMV) worth USD77 billion by the end of 2022 after scoring a significant growth of 22% during the last year.
A similar report also indicated the digital economy is estimated to touch USD130 billion by 2025, growing with the Compound Annual Growth Rate (CAGR) of 19%. Until 20230, this new economy ecosystem is predicted to enhance more than threefold, ranging from USD220 to USD360 billion.
Heaptalk features the latest business news from various industries and professionals. download and install heaptalk app for the latest information
In Indonesia, the e-commerce industry continues to stimulate the digital economy, with an estimated value worth USD59 billion this year. Despite the return of offline shopping activity, e-commerce has contributed to 77% of the entire digital economy.
In response to this enhancement, the Managing Director of Google Indonesia, Randy Jusuf, conveyed, “Indonesia’s e-commerce sector contains the most fastened growth after Vietnam. Apart from the GMV side, I observed several other improvement dimensions that should be focused on. To incite the short-term enhancement, currently, businesses would focus on gaining profitability by cutting off the company expenses and operating optimization.”
Until 2025, the e-commerce sector in Indonesia is projected to increase with a CAGR of 17%, and the GMV value would attain USD95 billion. As it is known, the e-commerce, transportation, and food delivery sectors are the highest digital service in the archipelago, with a usage coverage level of almost in the urban digital users’ realm.
According to the report, online food delivery and transportation service are estimated to reach a GMV of USD8 billion in 2022 and continue to increase with a CAGR of 22%, becoming a GMV worth USD15 billion by 2025.
The demand for growth has returned to normal as people are returning to restaurants. People gradually returned to work in the office, increased shopping activity in physical stores, and the rise of tourism prompted the transport sector has recovered from its lowest point during the lockdown regulation.
On the other hand, the report also explained the online travel sector has returned with 60% year-on-year (YoY) growth reaching US$3 billion by 2022. The recovery process has performed gradually, and the industry is expected to enhance at a CAGR of 45%, with GMV touching US$10 billion by 2025.
Concurrently, the e-Conomy SEA report also disclosed that online media is projected to reach a GMV worth USD6 billion this year, with a slow YoY growth of 5% since the pandemic’s peak last year. The data indicated streaming music and video had performed a better recovery. Digital advertising has maintained momentum, and online gaming consumption has declined due to people’s return to pre-pandemic routines.
In terms of digital financing services, this industry has increased as shifting of offline-to-offline behavior in the post-pandemic. During 2022, the report noted the Total Gross Value (GTV) of Indonesia’s sagittal payment service is estimated to achieve USD266 billion and continue to climb by 17%, attaining a GTV worth USD421 billion by 2025.
“After several years of experiencing acceleration, the technology users continue to perform normally. The digital-savvy community in urban are considered the most significant digital service users. The majority of digital players are shifting their priorities from acquiring new customers to creating more profound engagement with existing customers,” said Randy.
Indonesia remains an attractive market for technology investment
The e-Conomy SEA study also recorded that Singapore and Indonesia will become Southeast Asia’s top primary countries for investment goals in 2022. Based on the report, Indonesia attracts 25% of private funding’s total value in the region. Indonesia has also remained an attractive market to investors, along with Vietnam and the Philippines.
However, as to the macroeconomic constraints, the transaction value in the early semester of 2022 fell by US$2 billion YoY due to concerns around profitability and valuation. Digital payment services, particularly for B2B payment and loan services, have replaced the e-commerce sector as the sublime investment sector with a value of USD1.5 billion during the initial semester of 2022.
More than 80% of Venture Capitalists in Southeast Asia, including Indonesia, would also focus on the new sectors: health tech, SaaS, and Web 3.0. While the education technology sector, the report revealed the diminishment in the post-pandemic as offline learning returns.
Responding to the report, the Deputy Head, Technology and Consumer of Southeast Asia at Temasek, Fock Wai Hoong, stated, “The digital economy in Indonesia will continue to entice investment interest as the robust fundamental, with a highly active user base and a dynamic tech startup ecosystem. Working closely with businesses, governments, and society, Temasek aims to utilize our catalytic capital to drive sustainable and inclusive growth in Southeast Asia’s digital economy to reach welfare for each generation.”