Outlook for the E-conomy 2018
    Category: Column By : Will Ongkowidjaja Read : 515 Date : Friday, February 09, 2018 - 09:40:27

    Two years ago, I shared my 2017 e-conomy outlook column with Forbes Indonesia readers, highlighting that Indonesia is experiencing a chapter of technology transformative growth. I asserted that Indonesia has long-term potential in the global tech sector as long as we continue to couple big vision with execution.

    Last year has proven to be a breakthrough year for Indonesia’s tech sector. The total value of tech investments in Indonesia more than doubled from $1.4 billion in 2016 to $3 billion in September 2017. In terms of value, 40% of 2017’s investment was allocated to later-stage series C deals and beyond, led by companies in e-commerce marketplace and platform (Tokopedia and Traveloka) and ride-hailing (Go-Jek).

    These larger deals demonstrate that Indonesia’s tech ecosystem is maturing. Furthermore, in 2017 we have seen global strategic investors from the U.S., China, and Japan entering the Indonesian market by partnering with leading local tech companies. For example, WeWork, a $20 billion global co-working space company from New York, acquired Spacemob, Southeast Asia’s leading co-working space company. Spacemob locations in Jakarta and Singapore have been transformed into WeWork Southeast Asia. An interesting aspect of this acquisition is WeWork’s equi-hire strategy whereby the founder of Spacemob, Turochas Fuad, becomes the head of WeWork Southeast Asia and is spearheading WeWork’s expansion into Southeast Asia with a budget of $500 million. So what can we expect in 2018?  I believe there are three key trends that will define Indonesia’s tech sector this year:

    1.  Increased Investment

    There will be more entry of international strategic investors into Indonesia’s tech sector through equity partnerships and acquisitions. In 2018, we expect more international strategic investors to enter the Indonesian market, particularly from China. China’s big three Internet companies: Baidu, Alibaba, and Tencent, also known as “BAT,” have already entered the Indonesian market. Alibaba is leading Tokopedia’s $1.1 billion funding round, and Tencent is leading Go-Jek’s $1.2 billion funding round. China currently has 98 tech unicorns, comprising 39% of the world’s 252 unicorns.

    Many of these unicorns are expanding overseas, and Southeast Asia is a natural choice for expansion. Within Southeast Asia, Indonesia would be the focus as we are the largest market in the region. Apart from BAT, other leading China unicorns, such as PPDAI, a Chinese Fintech consumer lending company recently listed on the New York Stock Exchange, have started to enter the Indonesian market, forming partnerships with leading Indonesian tech companies. These Chinese companies bring not only capital, but also their technology and a growth strategy playbook.