`Why Indonesia is important market ?

Indonesia has one of the largest economies in Southeast Asia and Indonesia is one of the emerging market economies of the world. The country is also a member of G-20 major economies and classified as a newly industrialised country. It is the sixteenth largest economy in the world by nominal GDP and is the eighth largest in terms of GDP (PPP).

Indonesia was often mentioned as an appropriate candidate to be included in the BRIC countries (Brazil, Russia, India and China). Another set of emerging economies – grouped under the acronym CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) – also gained attention as its members have reasonably sophisticated financial systems and fast-growing populations. Several years ago the combined gross domestic product (GDP) of the CIVETS was predicted to account for half the global economy by 2020. However, since the prolonged global economic slowdown after 2011 we rarely hear the terms BRIC and CIVETS anymore.

In recent years, Indonesia has been a thing to talk about when it comes to the economic growth and potential business opportunities. The word’s fourth biggest country in world has been experiencing strong economic growth and has been undergoing reforms to ensure the pace of its ascent. Indonesian government has set ambitious goals for itself and by the year of 2030 it wants Indonesia to be in the top 6 of the largest economies in the world (as for today, with total GDP amounting to $3 trillion it sits on 8th place…not too bad).

Unlike other developing countries which has been using manufacturing and export to foster the economic growth, many specialist say that Indonesian growth will be mainly based on domestic consumption and increasing consuming class. This fact makes it a promising market place for the start-ups companies, and we can see the huge potential of the market by observing the success of the companies like Go-Jek, Kaskus or Tokopedia. The start-up environment is still young, but it is maturing. The first Indonesian VC was established back in 2010 and ever since the number of incubators and VC has been steadily growing. Usually the start-up growth may take 4 different forms:

  1. Independent Incubators such as Batavia, Ideosource or InvestIdea.
  2. Corporate incubators : Grupara/Medco, MerahPutih/GDP Ventures and Mega Media/Indosat
  3. Bootstrapping : self-sufficient founders.
  4. Well-founded start-ups.

Furthermore, international investment companies have also realized the investment potential and firms like East Ventures, GDP Ventures, Rocket Internet and GREE Ventures are harvesting the financial fruits of their Investments. In the country.  Even though the start-up environment has its challenges – for example too much bureaucracy and propensity to receiving/giving bribes, the stakes are so high that it is still worth the struggle. In the end, nobody said it would be easy, but it will be definitely worth it!

In order to fully understand the tremendous potential of the market, it is crucial to take a closer look into the demographic trends and people’s relationship to the new technologies as it will be the corner stone of the start-up’s business model.

As for the 2017, Indonesian population amounts to around 256 million but it will continue the growth and will reach an estimated 290 million by 2045. Another aspect is the age structure which makes the Indonesia one of the youngest countries in the world. Around 125 million of Indonesians are below the age of 30 , which implies that not only they may serve as an productive engine for Indonesian economy but also it is full of technologically savvy, internet users. The more detailed age structure may be seen in the chart below:

Indonesian young society is the vivid user of social media, in fact, Jakarta was dubbed the “Twitter capital of the words” with millions of daily tweets. The number of internet users is growing and in 2016 it has reached around 100 million with majority of users accessing the internet through mobile devices – 73%.

The internet penetration in Indonesia is still relatively low – around 40%, however the internet users are very active and they spend more time on social networking sites than average (around 2.9 h daily, whereas in USA people spent only 1.7 h daily).

 

The number of active social media users in 2016 amounted to about 79 million and according to the research conducted by We are Social and eMarketer,the most popular social networking site by number of users are as follows1 :

 

References:

https://www.emarketer.com/Article/Indonesia-Facebook-Remains-Most-Popular-Social-Site/1014126

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