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Digitization is accelerating the growth of MSMEs in Indonesia

Indonesia is making rapid progress towards digitization as the country’s e-commerce sector depends heavily on the mobile-first approach. By the end of the year, the country will have 83 percent internet users with an average yearly spend of USD 620. This creates a massive opportunity for investors to invest in Indonesia because of this unique customer behavior.

Indonesians are among the world’s most active social media users, with a rapidly growing digital ecosystem that includes online commerce, ride-sharing services, and financial technology services. The Indonesian e-commerce sector depends heavily on the mobile-first trend, which will enable it to develop eight times faster (compared to 2021) by the end of 2022 to reach USD 65 billion in online sales. By the end of the year, the country will have 83 percent internet users with an average yearly spend of USD 620.

This unique consumer behavior is creating business opportunities for investors. Companies that can take the most advantage of this include:

  • E-commerce Companies

  • Quick Commerce Companies

  • Ride Hailing App companies

  • Online Marketplaces

  • Digital Publications and Classifieds

  • Fintech Companies

  • Digital Marketing and Web Development Companies

  • Esports Organisations and Game Development Companies

  • Online Media Streaming and distribution companies

Indonesia is also the most popular digital investment destination in Southeast Asia. The country represents 40% of digitalization in Southeast Asia.

Strengthening the digital ecosystem with the QRIS system

One of the key pillars of a booming digital economy is a low-cost and inclusive payment infrastructure. Indonesia has adopted this path and made rapid progress in implementing an interoperable payment system based on QR codes, which is now being expanded to neighboring countries. These systems will allow contactless payment methods where payments are performed using QR codes from a mobile app, linking banks and payment gateways across borders.

Indonesia’s integrated QR code payment system, QRIS (Quick Response Code Indonesian Standard), is now functional in Thailand. This will aid financial transactions between the two countries, including in the tourism, trade, and micro, small, and medium enterprises (MSMEs) sectors.

In August 2022, Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS) agreed to start cooperation on cross-border Quick Response (QR) code-based payment linkage between Indonesia and Singapore. This will further encourage payment connectivity in the ASEAN region. The collaboration between the two countries will be launched in the second half of 2023. Once deployed, it will enable users to make retail payments safely, and efficiently by scanning the Indonesian QRIS or Singapore’s NETS QR.

However, Indonesia’s digital platform implementation is still at a budding stage. Digitally engaged Indonesians are only now experiencing how technologies reshape their lives and commercial activities contributing to a better consumer experience. This makes Indonesia ripe for tech-based business to introduce solutions to the market. Similar to how first-movers in other markets have enjoyed large returns, movers in Indonesia’s tech ecosystem today stand to gain favorable results in the near future.


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