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Indonesian tech- to invest or not?

Published

23 April 2019

Author

Sam Olsen

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The continent of Asia has long been known as somewhat of a powerhouse in technology, with countries such as China and Japan being homes to some of the most recognisable technology firms globally i.e. Nintendo, Samsung, etc. Recent years have seen another country in this region emerge as a blossoming economy for technology startups- Indonesia. Our latest white paper explores the potential for investment in Indonesian tech.

 

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Blossoming economy with untapped potential

Indonesia is currently the largest economy in South East Asia and the tenth largest in the world in terms of purchasing power, and predicted to become the fourth largest by 2050. This has resulted in a vast amount of investors honing their focus on Indonesia searching for potential opportunities to cash-in on. Chinese investors, in particular, have been highly active in the country. This is reflected by the fact that of the $3bn invested from foreign counterparts in 2017 (up staggeringly from $631m the previous year), 94% came from Chinese firms.

 Indonesian tech- to invest or not?

The obvious potential of Indonesia’s technology industry is largely down to two factors:

  • The size of Indonesia’s population.With over 264 million residing in the country, tech firms have access to a huge audience. Among these, over 133 million are connected to the internet, making it the fifth largest internet population worldwide.
  • Indonesia is a tech-enabled nation. Internet usage combined with smartphone penetration means that the country is a flourishing market for ecommerce startups such as idamongst others. Several tech start-ups are already reaping the rewards of the potential in Indonesia, with the country being home to four unicorns, comprising approximately half of the unicorns in the South East Asia region.

 

Barriers to progress

Although the potential for investment in Indonesia is vast, there are barriers to investment which must be addressed for the country to thrive to its full potential. Current short-falls in infrastructure could result in hesitancy from investors and access to talent with quality capability may also be seen as a stumbling block. These perceived barriers could be removed to a large extent by investment from the country’s government. Whether this is forthcoming is yet to be seen, however, with the inevitable influx of foreign investment in the coming years, making improvements would be encouraged.

 

Regardless of current challenges inherent in the region today, Indonesia is an exciting burgeoning economy brimming with opportunity, and undoubtedly soon to take its place as one of the world’s leading lights in technology.

 

Download the full report from SI Partners to understand more about the investment opportunity in Indonesia