Settlement Circumstances in Southeast Asia Explored by Omise Intern Vol.2 Indonesia
Following the last article about settlement circumstances in Thailand, this time, I will explore settlement circumstances in Indonesia.
Indonesia has the world’s fourth largest population of 260 million people and it’s steady economic growth stands out among the major emerging countries in the world.
So What kind of payment methods are being used in Indonesia?
Indonesia e-commerce Market Expanding with Population Increase and Economic Growth
In Indonesia, population expansion has rapidly progressed and at the same time Indonesia’s economy has achieved steady growth.
Analyzing data from 2000 to 2016, the population growth rate was around 23%, and the per capita GDP growth rate has been an astounding 458% (* 1) .
Along with population growth, the Indonesian market has expanded rapidly in recent years. Many foreign countries are watching Indonesia’s market.
Japan is one of them, and Japan investigated the size of the Indonesia’s of international e-commerce market.
In 2014 Japan’s Ministry of Economy, Trade and Industry created a report on South East Asia titled “Survey on ASEAN transboundary e-commerce (* 2)”.
According to the report, the e-commerce market in Indonesia is expected to expand the most rapidly among the ASEAN countries.
Weak Financial Infrastructure as a Barriers
While the EC market rapidly develops, the weakness of the financial infrastructure is hindering its growth. According to the World Bank data (more information in last article), the percentage of adults holding a bank account as of 2014 is less than 40% (* 3).
Even though bank account transfer accounts for 80% of e-commerce settlements in Indonesia the credit card utilization rate has remained very low (* 5).
Transition from a Weak Financial Infrastructure to a Cashless Society
As mentioned above, Indonesia is still developing its financial infrastructure.
However, one aspect of the financial infrastructure that is improving rapidly is smartphone penetration.
According to report of Hakuhodo (a Japanese Company), although the data is limited to the capital Jakarta, smartphone holding rate has increased from about 23% in 2012 to about 72% in 2016. This is close to the smartphone holding rate of 87% in Tokyo (* 6). Due to the rapid adoption of smartphones in Indonesia along with the the inadequacies of the financial infrastructure, there has been a growing move towards a cashless society.
An excellent example is GoPay, provided by Indonesia’s largest startup Go-Jek. There are two ways to pay GoPay: “hand cash to the service provider of Go-Jek” or “send money from an ATM”.
This service provides users with peace of mind and convenience.
Summary
In Indonesia that achieves economic growth against the backdrop of rapid population growth, while existing financial infrastructure is not sufficient, it seems that next-generation payment infrastructure is being formed along with popularization of smartphone by using inconvenient circumstances.
Reference material
Accessed in 2017/12/13
(*1)Total Population, GDP per capita (current US$): https://data.worldbank.org/indicator/SP.POP.TOTL?contextual=default&end=2016&locations=ID&start=2000https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?end=2016&locations=ID&start=2000
(*2)Survey on ASEAN transboundary e-commerce: http%3A%2F%2Fwww.meti.go.jp%2Fpolicy%2Fit_policy%2Fec%2F2013_summary_on_japan_asean_cross_border_ec_survey.pdf
(*3)How to scale up financial inclusion in ASEAN countries:https://blogs.worldbank.org/eastasiapacific/how-to-scale-up-financial-inclusion-in-asean-countries
(*4)A questionnaire for better bank making 2009: https://www.zenginkyo.or.jp/fileadmin/res/news/news211130_4.pdf
(*5)Report: Indonesia now has 74.6 million internet users; this is what they do online: https://www.techinasia.com/indonesia-internet-users-markplus-insight
(*6)Holding smartphones of 14 Asian citizens and using e-commerce: http://www.hakuhodo.co.jp/uploads/2017/03/20170314GH_2.pdf
