Jakarta – Indonesia's digital economy size could swell by more than seven times in this decade, retaining its place as the largest market in Southeast Asia as the country emphasizes developing its digital infrastructures, regulatory frameworks, and talents to tap its economic potential, officials say.
President Joko "Jokowi" Widodo said Monday that the country's digital economy would rise to Rp 4.531 trillion ($300 billion) in 2030 from Rp 632 trillion in 2020. Digitalizing Indonesia's agricultural sector, in particular, holds enormous growth potential, the president said.
"In the future, the food crisis will become a big problem that technology must solve. This is an opportunity because startups in the agricultural sector account for only 4 percent of Indonesian startups," said Jokowi.
He said that portion is still far behind the financial technology, which makes up 23 percent of the country's startup landscape, or retails that comprise 14 percent of the market.
The president expected more startups would be keen to develop solutions for problems in producing, distributing, and marketing agricultural products, like rice, cassava, and sago, to various fruits and vegetables.
"This is a huge opportunity, a captive market, to link farmers in the fields or fishermen in the oceans with the housewives' kitchen," Jokowi said.
A growing number of digital consumers and a shift in purchase behavior should also support the optimistic projection.
According to a recent report from Meta and Bain & Company, Indonesia is home to about 168 million digital consumers, or 46 percent of the country's total population aged 15 or over in 2022, increasing by 14 million from 2021.
Edy Wijaya, a partner at Bain & Company, said the number of digital consumers in Indonesia would continue to grow in the coming years, driving the size of the digital economy in the country. Edy said more than 80 percent of consumers in Indonesia today went online during the pre- and post-purchase stages, on top of visiting offline stores.
Minister of State Owned Enterprises Erick Thohir said his ministry stands ready to realize the president's vision by connecting the state-owned enterprises (SOEs) – which currently account for a third of Indonesia's annual economic output – with digital startups.
"God willing, the synergy between SOEs and startups could become the stepping stones for Indonesia achieving its aspiration in 2030," Erick said.
The minister said Indonesian SOEs, including Bank Mandiri, Telkom Indonesia, and Bank Rakyat Indonesia, are currently funding more than 336 startups through various venture capital companies they control.
The government has also launched the Merah Putih Fund, a funding program for startups that have entered the growth stage. The startup must operate in Indonesia, be founded by an Indonesian, pay taxes in Indonesia, and seek to go public in Indonesia to be eligible for the funding program.