A Look at Indonesia’s Startup Landscape
In April 2019, Gojek was a company worth $10 billion. The unicorn provides more than 20 services and its application is used by 170 million users across Southeast Asia. However, just 11 years ago, it was a tiny call center with only 20 “ojek” or motorbike taxi drivers.
Gojek, alongside Tokopedia and Traveloka, is proof of Indonesia’s booming startup culture. Since 2011, startups in Indonesia have been growing at an enormous pace. Not only have they been gaining popularity domestically, they are also gaining traction abroad as well.
For instance, in 2017, Tokopedia received investments from the Chinese e-commerce giant, Alibaba. In addition, Traveloka, an online travel company providing flight tickets, booking services, and hotel reservation services, has users not just from Indonesia, but also from Thailand, Singapore, Malaysia, the Philippines, and even Australia.
So, why are Indonesia’s startups growing tremendously and, moving forward, what will the landscape for startups in Indonesia look like?
More Support for Startups
According to a 2016 article written by the Ministry of Communication and Informatics (Menkominfo), at least 62 Indonesian startups have received investments from investors, both local and foreign. With the growth of startups being a great potential contributor to Indonesia’s GDP, the Indonesian government is pushing to further develop startups and technopreneurship.
The government is aiming to get the number of technopreneurs in Indonesia to increase greatly by 2020. This expansion will be supported not only by the government but also by venture capitals, other investors, as well as the Indonesian local market. With support showing no signs of drying up, this bodes well for aspiring Indonesian startups.
Startups in Indonesia are also enjoying increasing support from local consumers. As long as they are able to satisfy Indonesians’ needs and pain points, Indonesians are showing that they are increasingly willing to support them.
Nadiem Makarim, the founder of Gojek, observed that many “ojek” in Indonesia and their potential customers waste a lot of time searching for each other. This led to the development of the Gojek application, originally meant to help match drivers and customers more quickly, in 2015. As of 2019, this application has 29.2 million monthly active users in Indonesia, and Gojek has since expanded to become a one-stop app for users.
Another success story can be found in Ruangguru, one of the biggest online learning platforms in Indonesia. Co-founder Iman Usman, and his partner, Adamas Belva Syah Devara, had the vision to build a platform that provides additional tuition classes for students to help prepare them for examinations, and help those who want to learn more beyond what is taught in the classroom.
Ruangguru helps to connect the students with prospective tutors that will help them in the learning process. With affordable prices and more efficient online learning methods, Ruangguru has more than 15 million users across Indonesia.
What these stories show is that if startups can effectively solve local issues, Indonesians are more than keen to support their growth and development.
Opportunities in Untapped Markets
However, the rapid advancement of startups in Indonesia is mostly centered in metropolitan cities, and not in its rural areas. Research by Google, Temasek, and Bain & Company reveals that Indonesia has the fastest-growing Internet economy in Southeast Asia and is one of the fastest-growing markets in the world.
Unfortunately, this does not paint the whole picture, as not all Indonesians have equal access to the internet, especially for those who live in rural areas. This problem, coupled with inconsistencies in the quality of education in Indonesia, can result in the formation of more conservative communities. These communities might not be as receptive in embracing modern brands and technological advancements such as online transactions.
This may represent a hurdle for some startups, especially those in e-commerce. An additional challenge for startups looking to reach out to rural areas is the difficulty to set up shop there. They face a lack of high-skilled talent as well as unequal access to infrastructure, capital, and logistics.
On the other hand, these rural areas represent brilliant opportunities for aspiring entrepreneurs: they are huge, untapped markets for them to develop their startups in. There are plenty of opportunities to build startups that specifically serve the needs of those living in more rural areas.
Some smaller regions in Indonesia are already showing their potential as sites for startup development; Malang and Banjarmasin are examples of smaller cities that provide communities for entrepreneurs that are looking into establishing their startups. There is plenty of space yet for startup growth in Indonesia.
Reaching Outwards
What this all means is, for any aspiring Singaporean startups, Indonesia can be a prospective location for expansion. Indonesia is well known for its huge market size and fast-growing Internet use — which make Indonesia an attractive site for Singaporeans who wish to broaden their area of business.
There is already considerable progress in efforts to bridge the Singaporean and the Indonesian startup scene. The Global Innovation Alliance (GIA), an initiative by Enterprise Singapore and Singapore Economic Development Board, has established its network in Indonesia and made the partnership between Singapore-Indonesia startups stronger.
Additionally, Block71 Jakarta, a startup hub by NUS Enterprise in partnership with Indonesian conglomerate Salim Group, provides a platform for Singapore startups to explore business opportunities in Indonesia.
There are some promising fields in Indonesia for aspiring entrepreneurs, one being fintech. According to The Global Findex 2017, 95 million Indonesians remain without a financial account. This represents an opportunity for startups that specialize in providing financial services to the unbanked. Other areas worth exploring include e-healthcare and logistics.
However, one thing that entrepreneurs might need to consider before settling their business down in Indonesia is its complex bureaucracy. As a comparison, Indonesia ranks 73rd in the World Bank’s Ease of Doing Business Index 2020, while Singapore ranks 2 globally. Having said that, the Indonesian market still represents an immense potential for Singaporean startups wanting to expand abroad.
Indonesia’s startup scene has, for some time, been very dynamic, and will only continue to grow. And it still has room for more local and overseas startups, as long as aspiring entrepreneurs remain creative, and are sensitive to societal needs.
