Cultivating the Seeds of E-Commerce in Indonesia

Indonesia has been acknowledged for its large population and its desire for market widening strategy, aiming for the capability of the consumers as part of the economic lubricant. Recently, Indonesia’s president Joko Widodo announced his ambition to boost up the economy by turning Indonesia into the biggest digital economy in the region by 2020.[1] According to TechCrunch, Indonesia had undergone a promising start similar to the development occurring in China with a large pool of entrepreneurial sellers providing goods purchased largely based on social media recommendations.[2] Yet, uniquely, the growth of e-commerce in Indonesia fits the condition similar to the early U.S. e-market with customers’ hesitation and distrust on online payments and retailers. Through this pattern of e-commerce industry development, there are certain steps already taken by the government in order to inject more incentives to the industry, particularly with the release of the E-Commerce Roadmap by the Ministry of Communication and Informatics. Are these incentive packages, designed by the government enough to capture the outmost benefit from this auspicious field?

The Roadmap as the ‘fertilizer’ of development

The seed has been planted, paired with the new roadmap which hopefully will be the correct fertilizer to create a sustainable growth for the country. The government initiated a roadmap which covers several sectors,[3] including funding, tax, consumer protection, education, logistics, communication infrastructure, and cyber security. Along with the initiatives taken by the government, as a good start, Indonesia is a country with 32.7 million people exposed to the internet according to Indonesian Internet Service Providers Association (APJII).[4] This had represented at least the half of the whole Southeast Asia’s population penetrated by the internet.

Indonesia vowed to be more accepting towards investor. However, this opportunity to open up oneself towards investors must be paired with a precautious measure to protect growing local enterprises. According to the current Minister of Communication and Informatics, Rudiantara, this openness means that Indonesia will be competitive,[5] but at the same time, the government aims to protect the interest of the country. In this case, the government must be able to nurture the seed through initial funding and supervision, yet it also needs to let the seed grows without getting dependence on government’s aid. Nonetheless, the e-commerce sector welcomes the roadmap with open hands.

Seizing the opportunity

As market saturation is adhering itself on China’s current e-commerce sector,[6] Indonesia must be able to seize the moment while the global prospects currently shifts towards Southeast Asia. A sector which touches upon the middle class could be taken into advantage whilst the Internet penetration spreading. E-commerce had shown up as a convenience alternative which could easily be learnt by everyone. The enthusiasm showed by Indonesians with their obsessions with the internet even became one of the reasons why Singapore’s Foreign Minister, Vivian Balakrishnan, took part in the negotiation of future partnership in developing this sector between the two countries.[7]

The e-commerce sector has given the chance for Indonesia for diversification purposes, a transition which could be one of the remedy for extractive sectors which currently prop the nation’s economy. Not only that, within a year, unemployment rate recedes with 1.53 million new employment opportunities created in the country’s trade and services sectors between August 2015 and August 2016.[8] The roadmap introduced by the Minister of Communication and Informatics shall be a steep departure point for the country to embark on an even more strategic e-commerce development agenda.

Evenly distributed development projects across the country is urgently needed, as the country’s current strong potentials are only concentrated in Java. More promising potentials need to be further explored and nurtured, both in terms of infrastructure and skills capacities. This strategy would require the government to bridge the market and present it towards the stakeholders regarding the possibilities of further technology transfer as part of national development to regions outside Java.

Alike to planting a tree, Indonesia must be able to treat this one with care in order to preserve it before it grows on its own. The roots which represented the strength of Indonesia’s information and communication technology must not elude the needs of the society. While the branches need to be strong and extensive as it will face changes while they’re supporting the economy. With cautious approach, the country will undoubtedly reap they sow; prolific e-commerce sector.

[1] Fedina Sundaryani and Stefani Ribka, ‘Indonesia wants to lead the region in e-commerce’, The Jakarta Post, 11 November 2016, accessed from <http://www.thejakartapost.com/news/2016/11/11/indonesia-wants-to-lead-the-region-in-e-commerce.html>

[2] Hugh Harsono, ‘Indonesia will Asia’s biggest e-commerce market’, Tech Crunch, 29 July 2016, accessed from <https://techcrunch.com/2016/07/29/indonesia-will-be-asias-next-biggest-e-commerce-market/>

[3] Tabita Diela, ‘Government Rolls Out 14^th Policy Package with focus on e-commerce’, The Jakarta Globe, 10 November 2016, accessed from <http://jakartaglobe.id/business/govt-rolls-14th-policy-package-focus-e-commerce/>

[4] Anonymous, ‘Avid internet users fuel Indonesia’s e-commerce’, The Jakarta Post, 26 Oktober 2016, accessed from <http://www.thejakartapost.com/news/2016/10/26/avid-internet-users-fuel-indonesia-e-commerce.html>

[5] Ardi Wirdana, ‘Indonesia opens up its e-commerce sector’, ASEAN Today, 23 March 2016, accessed from < https://www.aseantoday.com/2016/03/indonesia-opens-e-commerce-sector/ >

[6] Kim Jae-Kyoung, ‘ASEAN e-commerce markets keep booming’, Korea Times, 18 October 2016, accessed from < http://www.koreatimes.co.kr/www/news/biz/2016/10/123_216282.html >

[7] Arlina Arshad, ‘All eyes on Indonesia’s e-commerce pie’, Straits Times, 27 March 2016, accessed from < http://www.straitstimes.com/asia/se-asia/all-eyes-on-indonesias-e-commerce-pie >

[8] Anonymous, ‘Unemployment in Indonesia eases to 5.61% in August 2016’, Indonesia-Investment, 8 November 2016, accessed from < http://www.indonesia-investments.com/id/news/todays-headlines/unemployment-in-indonesia-eases-to-5.61-in-august-2016/item7345 >