Indonesian President Joko Widodo shakes hands with Chinese President Xi Jinping during a visit. (Photo : Getty Images)
President Widodo wants to strengthen support to Indonesia's e-commerce industry by getting advice from Alibaba's CEO, Jack Ma.
Widodo stopped by to buy an iPad that he ordered online from Bhinneka.com located at the country's shopping area, Mangga Dua. Indonesia's online marketplace is now valued at $2 billion.
McKinsey & Co. reported that Indonesia has one of the fastest growing e-commerce markets that is seen to grow to $150 billion by 2025. The growth of e-commerce prompted the President to get advice from Jack Ma on how the government can support the industry's growth.
Adrian Li, a managing partner of Convergence Ventures, observed, "It does have that potential and I think that part of it boils down to also Indonesia, as a culture, being incredibly consumptive."
Li added, "By some estimates, for example, you've seen Indonesia and the adoption of e-commerce grow even faster than some of the peers in China."
The Indonesian middle class is enjoying an income growth and is seen to further increase until 2020. At present, there are already 5 million Indonesians with a salary of more than $10 a day.
The increase in spending capacity of many Indonesians is making companies like Go-Jek, a car-booking company, to expand to services like tickets deliveries and booking for pedicures and cream baths.
Li said "If you look at where Go-Jek is today--bear in mind this is a company that's less than three-years-old--the number of deliveries and transactions it's able to do per month, that's also significant. Again, it's on par with some of the fastest-growing startups you've seen in China."
Similar to China, more consumers outside metropolitan areas like Jakarta and Surabaya now have access to goods that were not available before.
With the penetration of e-commerce they now are able to buy those things," Li said. "Increasingly we see with large branded retailers coming online--Alibaba purchasing Lazada, Matahari Mall, JD.com--people become more and more comfortable with transacting online. There is less and less of a trust issue."
