Indonesia Fifth Largest Producer of Startups in the World

JAKARTA – Indonesia's information technology sector is a significant contributor to the country's gross domestic product (GDP), making up 4.51%, or Rp 726.1 billion, of the total GDP. Despite being the sixth largest contributor, the sector is also one of the most rapidly developing due to the ongoing technological changes happening throughout the ages.

According to data by Delta Partners, the digital revolution has rapidly taken over the world since 2000 through the advent of the internet and the growing abundance of content, shifting the public's entertainment consumption and communication habits online. As the internet grew in stature by 2010, internet services became more common, and the public became aware of web 2.0 services such as social media, search and e-commerce. In only 5 years, in 2015, it transformed into the internet of people, with the introduction of cloud and P2P services. Delta Partners predicts that by 2025, it will evolve into the internet of everything, where all sectors will completely utilize the internet for everything.

Drawing from the same data, the potential of Indonesia's digital economy lies within the fact that most of its population are already online. The public are already very socially connected online, with the average person spending around 3 hours and 14 minutes using social media every day, and many of them consuming their entertainment online. Online shopping in Indonesia has also increased, also because online services provide the public with easier means of comparing prices and communication between the merchants.

Indonesia's digital economy gross merchandise value (GMV) rose drastically to Rp 112 trillion in 2015, Rp 616 trillion in 2020 and is predicted to reach Rp 1736 trillion in 2025.

"This means that the revenues of other industries, such as retail and tourism, is enabled by the growth of the digital economy. This is why the digital industry is crucial in recovering our economy in this pandemic era," PT Telkom Indonesia operational vice president for group digital strategy Riza Agung Nugraha Rukmana said during the Road to IDF 2021 Inspiring Session webinar on Tuesday, 29/6.
 

Riza added that such opportunities are what is driving the potential for digitalizing various sectors such as the agriculture and the logistics sectors. "For the agriculture sector, we have the opportunity to provide better market access to up to 40 million farmers through e-commerce platforms and can also provide them with better financial access, and many other things," he said.

"There is ample opportunity to digitalize other sectors such as logistics and also healthcare, through approaches such as big data, AI, cloud services, Internet of Things (IoT), etc. Everything from the B2B side," Riza added.

Even though investment in the digital sector declined in 2020, Riza said that the value of the sector kept increasing. This is due to the fact that more investors are becoming less apprehensive in investing in startups. Currently, Indonesia has 1 decacorn, 4 unicorns and 2,244 startups that are active in various sectors such as media, agriculture, food & beverage, e-commerce, education, healthcare, travel and technology.

Indonesia is currently the fifth largest producer of startups in the world, behind only the United States, India, the UK and Canada and ahead of countries such as Germany, Australia, France, Spain and Brazil.