To quote Hugh Harsono’s post on Tech Crunch, “Indonesia presents many opportunities for e-commerce amongst other emerging Asian economies, and current forecasts estimate that the archipelago country’s e-market can be value $130 billion by 2020 [coming third behind China and India]”
There is little question that Indonesia offers loads of investment opportunities, especially in technology. But why does Indonesia, especially Jakarta, have the potential to develop into a regional tech hub?
Jakarta is the most important metropolitan area in Southeast Asia, with roughly 10 million people living in the town and 30 million in Greater Jakarta.
Greater Jakarta itself is as large as Malaysia, which is five times the scale of Singapore and 4 times the scale of New York by way of population. Jakarta is the epicenter of business, politics and education in Indonesia.
The city can also be the local base for global technology firms corresponding to Facebook, Google, Uber and Microsoft operating in Indonesia.
There is little question that Jakarta is a gorgeous location for technology-enabled businesses as it’s the capital of Southeast Asia’s largest economy and the fourth most populous country on this planet, but can Jakarta develop into the subsequent technology hub?
Below are some key aspects that would make Indonesia the subsequent tech hub.
Attractive market opportunities
Indonesia’s market opportunity is undeniable, and for early-stage ventures, quick access to large pools of untapped growth is critical to early success in confirming user and revenue metrics.
In recent years, now we have seen several firms grow rapidly because their products were an ideal fit for the market. Good execution also helped.
Companies like Go-Jek, Traveloka, and Tokopedia have likely reached greater than $1 billion in gross merchandise value faster than another Indonesian company in history.
Regional firms, observing this market potential, rushed to Indonesia to capture a share of the market.
Increasing the provision of capital
Where there may be opportunity, there may be money. From 2011 to 2015, the financing landscape in Indonesia showed regular growth yearly.
Venture capital firms are also very lively on this area. Venturra, backed by Lippo Group, announced it would invest $150 million in Southeast Asia, including Indonesia.
Convergence Ventures recently announced that it would invest $30 million in exceptional entrepreneurs operating within the Indonesian market.
Corporate enterprise capital firms in addition to business angels also flocked to Indonesia to speculate in latest opportunities.
Tokopedia’s $100 million funding and one other $147 million, in addition to Go-Jek’s $550 million, MatahariMall’s $500 million and the newest $100 million, showed that Indonesia is the subsequent place to speculate.
The government has also played its role in helping startups grow through the ‘1000 Startups Movement’. The program’s goal is to develop 1,000 startups by 2020 with the hope that they may reach a complete value of $10 billion.
World-renowned enterprise capital firms have also began investing directly in Indonesia. These include Sequoia Capital, KKR, Rocket Internet, which have invested lots of of hundreds of thousands of dollars in Indonesian web firms.
Increasingly, regional enterprise capital firms are also establishing a everlasting presence in Jakarta.
Increasing the provision of talent
Finding talent is inevitably one in all the important thing aspects in being an efficient technology hub, in addition to strengthening the ecosystem.
Jakarta annually educates hundreds of graduates from renowned local universities with IT programs corresponding to the University of Indonesia, Bandung Institute of Technology and Binus University.
However, despite the growing demand for talented engineers, the demand is excessive, with some technology firms going so far as acquiring foreign technology outsourcing firms to fill the gap.
As an emerging technology ecosystem, Jakarta also faces a shortage of web executives experienced in key skills including digital marketing, business intelligence and data analytics, amongst others.
However, as more people see a possibility available in the market, it is probably going that the Indonesian diaspora studying abroad will determine to return to Indonesia, and more expatriates will come to Indonesia to assist fill this talent gap.
Also, as international technology firms hire experienced experts, there can be a transfer of talent to local staff, which is able to help fill the gap in the long term.
A converging ecosystem of technology and business
Jakarta is the epicenter of business and government activities in Indonesia.
The largest international firms, largest banks, local firms and international technology firms make Jakarta their central base. If startups need partnerships to grow and scale, there isn’t a higher place than Jakarta to function an address for purchasers, find talent and capital.
Jakarta has at all times served as a business center, with most large traditional firms having their headquarters in the town.
It also serves as Indonesia’s political center with the president and administration based in Jakarta.
As the federal government focuses on initiatives corresponding to launching the 1000 startups movement, Jakarta can be the primary city to learn from such programs.
Having critical mass for the ecosystem is essential because concentrated networks of entrepreneurs, investors and talent create greater opportunities for all stakeholders to interact, address challenges and seize opportunities.
As each regional and native firms converge on Jakarta, this may increase the town’s importance as each a national technology center and a future regional hub for digital enterprises.
Jakarta is definitely not a straightforward city to live in, but the scale and attractiveness of Indonesia’s market potential is undeniable.
Indonesia will proceed to draw people from around the globe to unravel big and pressing problems with revolutionary technological solutions, and Jakarta will strengthen its importance as a national and regional center.
We consider that inside a decade, Jakarta will develop into a number one technology hub across Southeast Asia, with numerous local and regional web firms conducting their core operations in the town.
Adrian Li is the founder and managing partner of Convergence Ventures, a technology enterprise capital fund that invests in and accelerates early-stage technology firms in Indonesia, and Faiz Rahman is a senior investment analyst at Convergence Ventures.
This article was published in Jakarta Post Office
