Indonesia digital economy to reach US$95bn by 2025, digital financial services a hit with investors

Indonesia's digital economy hit US$77 billion in gross merchandise value (GMV) this year, growing 22% year-on-year. This growth was primarily driven by eCommerce, which is expected to hit about US$95 billion by 2025. According to the seventh edition of the e-Conomy SEA report by Google, Temasek and Bain & Company, 32% of digital consumers intend to use eCommerce platforms more in the next 12 months. More than half plan to maintain the same usage across groceries (65%), transport (51%), and food delivery (69%).

Indonesia is one of the two primary investment destinations in the region alongside Singapore and digital financial services claims the lion's share of investor funding, raising US$1.5 billion in the first half of 2022. Investor activity in this area was mainly focused on B2B payments and lending services.

The report found that the digital transformation of SMEs across both front-end channels and back-end processes is one of the key enablers for digital economy growth in Indonesia. Improved nationwide logistics infrastructure, coupled with digitalisation amongst key logistics players, as well as government mandate towards digital inclusion are also among the key enablers for Indonesia's digital economy growth.

While video streaming and online gaming might be popular activities these days, the report found that fewer Indonesians spend more than an hour a day on online gaming and video streaming, compared to the regional average. On the other hand, 38% of Indonesians stream music at least once a week, more than the Southeast Asia average of 28%. At the same time, 48% of Indonesian digital consumers are willing to spend 5% more for a sustainable product or service.

Overall, Southeast Asia's digital economy is on track to hit US$200 billion GMV this year, three years earlier than was anticipated in the first report shared in 2016. Singapore's digital economy is expected to grow by 22% to reach US$18 billion this year, while Malaysia's digital economy grew by 13% year-on-year this year reaching US$21 billion.

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