The Future of Indonesia’s Digital Economy Isn’t As Bright as Before Tech – 10 hours ago

Jakarta, CNBC Indonesia – The annual reports published by Google, Temasek, and Bain & Company reflect the hard blow felt by technology industry players in Indonesia. Projections for digital economic growth in Indonesia are shrinking, investment flows to startups are falling.

Every year, research entitled e-Conomy Sea becomes a reference for investors, business actors and the government in measuring the development of the digital economy in Southeast Asia, including Indonesia. In fact, you could say that this annual report is one of the keys that makes foreign investors and companies flock to pour billions of US dollars into Indonesian startups.

Even when the world is hit by a pandemic, the potential for the digital economy in Indonesia is still being seen as bright by Google, Temasek, and Bain & Company.

Restrictions on activities by governments around the world to prevent the spread of Covid-19 are actually being called a catalyst for digital economic growth. Indonesian citizens, who previously found it difficult to switch to digital services and platforms, were forced to shift from shopping for daily necessities to going to school and working online.

But apparently, the shift to digital platforms and services is not permanent. Once restrictions lifted, many consumers returned to their pre-pandemic habits. The development of the digital economy has actually stagnated along with tightening in global financial markets, which has made investors less generous in pouring capital into startups.

In the e-Conomy Sea 2023 report, this change is stated in the revised figures for the projected value of the digital economy in Indonesia. The growth in gross product value (GMV) transacted through Indonesia’s digital economic activities is not as impressive as before.

According to the 2023 report, the value of Indonesia’s digital economy in 2022 will only be US$ 76 billion (Rp. 1,206 trillion) in 2022. In the 2022 report, the GMV of Indonesia’s digital economy in 2022 is estimated to reach US$ 77 billion (Rp. 1,222 trillion).

The impact of the slowdown in 2022 will be felt into the future. In the 2022 report, the value of Indonesia’s digital economy is predicted to reach US$ 130 billion (Rp. 2,063 trillion) in 2025. In the 2023 report, it is estimated that the GMV achieved in 2025 will only be US$ 109 billion (Rp. 1,730 trillion).

This year, Indonesia’s digital economy is projected to exceed US$ 82 billion (Rp. 1,301 trillion).

Transportation – online courier is down

Increasingly pessimistic projections occur in all sectors. However, the transportation and delivery sector led by online motorcycle taxis or ojol is the industry whose bright future is considered to have changed the most drastically.

Google, Temasek, Bain & Company in 2022 predict that the value of the online transportation and delivery business in Indonesia will reach US$ 15 billion (Rp. 238 trillion in 2025. In the 2023 report, the 2025 projection was cut by more than 40 percent to US$ 9 billion (Rp. 142 trillion). .8 trillion).

Passengers use online motorcycle taxi services at Palmerah Station, Jakarta, Thursday (8/9/2022). (CNBC Indonesia/ Tri Susilo)

The future is not as bright as before, which is also reflected in the flow of investment entering technology companies in the country.

In 2021, investment into Indonesian startups will peak. The investment value at that time reached US$ 9.1 billion (Rp. 144 trillion) in 649 funding agreements. In 2022 the investment value will still be high, namely US$ 5.1 billion (Rp. 80.9 trillion).

Throughout the first 6 months of this year, capital entering Indonesian startups fell. The value doesn’t even reach billions of dollars, only around US$ 400 million (Rp. 6.35 trillion) in 100 funding deals. For comparison, in the same period the previous year, there were 302 deals with a total value of US$ 3.3 billion (Rp. 52.37 trillion).

However, the tone of the e-Conomy Sea 2023 report is still optimistic. Inflation and the “increasingly normal” rate of economic growth are bright spots. The loss of revenue from consumers who leave digital platforms because prices and costs are not as cheap as before, according to the report, will also be compensated by loyal customers or the English term “sticky.

[Gambas:Video CNBC]

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