Big-name investors, including Expedia Inc and Alibaba Group Holding Ltd (阿里巴巴), are pumping billions of US dollars into Indonesian tech start-ups in a bid to capitalize on the country’s burgeoning digital economy and potential as Southeast Asia’s largest online market.
Indonesia has seen a surge of cash into its technology sector over the past two years, helping support dozens of homegrown start-ups ranging from ride-hailing apps to e-commerce firms.
With a population of more than 250 million, a swelling middle class and growing availability of cheap mobile devices, firms from across the world are piling in.
“We believe that Indonesia is poised for a huge leap forward for its digital economy, following China’s growth and becoming the leading tech destination in the Southeast Asia region,” said Adrian Li (李家銘), a partner in Jakarta-based Convergence Ventures.
Last year, US$631 million in disclosed venture capital was ploughed into the country, according to research firm CB Insights, up from US$31 million in 2015.
However, that figure has already been shattered this year, with US$3 billion worth of deals clinched as of last month, said Meghna Rao, a tech industry analyst at the firm.
Tokopedia — a marketplace that allows users to set up online shops and handles transactions — in August won US$1.1 billion in capital from Alibaba, while motorbike on-demand service Go-Jek in May secured US$1.2 billion from JD.com Inc (京東) and Tencent Holdings Ltd (騰訊), according to data from Crunchbase.
In another sign of confidence, Koison this month became Indonesia’s first e-commerce service to go public.
“While it’s too soon to say that this investment is indicative of a larger pattern of Indonesian start-ups pulling in many big-ticket investors, it is part of a growing clutch of mega-rounds,” Rao said.
Internet use is growing faster in Southeast Asia than any other region in the world, with 124,000 users coming online every day over the next five years, according to a report last year from Google and Temasek Holdings Pte.
By 2020, about 480 million people in the region are expected to be connected to the Internet, up from 260 million last year.
Indonesia’s mobile-first market will comprise more than half of Southeast Asia’s e-commerce market by 2025, with an estimated value of US$46 billion, the report said.
“When you do start-up business in Malaysia, Singapore, Thailand and Indonesia, the cost, effort and time that you spend is almost even, but when you go to Indonesia [growth] is unlimited — the market is so big,” said Willson Cuaca, whose venture capital firm, East Ventures, specializes in early-stage investments.
As a result, big names like US venture capitalist Sequoia Capital, Japan’s Rakuten Ventures and travel company Expedia — as well as Chinese tech giants — have all made investments in the country.
Indonesian President Joko Widodo has been a vocal supporter of digital innovation, most notably in his plan to create 1,000 local tech start-ups worth US$10 billion by 2020.
However, the sector still faces a number of challenges.
A limited pool of engineering talent to draw from, low rates of Internet penetration outside densely populated Java, bureaucratic delays and poor-quality infrastructure are all obstacles to growth.
For e-commerce companies, the large number of “unbanked” Indonesians limits the scope of online transactions and logistics problems make it hard to move goods.
While young entrepreneurs and small businesses are flocking to coworking spaces springing up in major centers, it is a decidedly different scene in most parts of the country.
Farid Naufal Aslam, the chief executive of Aruna, an e-commerce company that links fishermen to buyers, said navigating Indonesia’s disparate communities is a challenge too.
“One of the biggest challenges faced is on social approach,” Aslam, 23, said. “Indonesia is a unique country with diverse communities and different customs in each region.”
However, many venture capitalists and entrepreneurs remain optimistic.
“The window of opportunity is there,” Cuaca said. “As long as you can innovate and solve real problems using technology, you can be successful.”
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six