JAKARTA, 13 November, 2024 – According to the latest e-Conomy SEA 2024 report by Google, Temasek, and Bain & Company, Indonesia’s digital economy is poised to reach $90 billion in Gross Merchandise Value (GMV) in 2024, an increase of 13% since 2023, the largest GMV in Southeast Asia.

The e-commerce sector, which remains the largest contributor to Indonesia’s digital economy, grew by 11% to $65 billion (USD) GMV in 2024, as major e-commerce platforms continued to innovate and offered new features – such as video commerce – to enhance the user shopping experience.  Indonesia is the second fastest growing market when it comes to video uploads from creators, increasing 16% CAGR from 2022 to 2024.

Artificial Intelligence (AI) is also transforming Indonesia’s digital landscape. Marketing, gaming, and education are driving AI search interest, with businesses using AI for targeted advertising, personalized customer engagement, and immersive user experiences. AI has become an important tool to improve efficiency, customer experience, and innovation. 

To meet this demand, planned data centre capacity is expected to grow 268% from the current 202MW capacity to empower accelerated computing, AI services, and data growth. 

“As the digital landscape evolves, we’re seeing the rise of video commerce and the creator economy. Indonesia’s booming community of video creators, the second fastest-growing in the region after Singapore, highlights the country’s immense potential in this space,” said Veronica Utami, Country Director, Google Indonesia. “AI adoption is set to accelerate digital transformation across industries and geographically. Interestingly, the greatest interest in AI is coming from East Kalimantan, Jakarta and the Riau Islands.” 

Digital sectors exhibit positive growth trends

Digital financial services (DFS) and online travel are undergoing strategic adjustments to ensure business sustainability, from optimizing operating costs and expanding into new markets, to leveraging AI technology adoption.  Indonesia’s tech giants are strategically expanding into smaller cities, where they can tap into new talent pools and boost regional economies.

• • Online travel, with the fastest GMV growth compared to other sectors at 24%, is expected to reach $9 billion GMV in 2024. Spending on overseas travel has jumped 400% since 2020 as Indonesians take advantage of opportunities to travel abroad, though primarily in Southeast Asia, which accounted for 51% of outbound expenditures.
  • Digital financial services have experienced strong growth. Digital payments grew 19% in 2024 and are expected to record a Gross Transaction Value (GTV) of $404 billion, making it the largest digital payment market in Southeast Asia. Meanwhile, in 2024, digital lending services are poised to hit $9 billion in GMV. 
  • Online transport grew from $2 billion in 2023 to $3 billion GMV in 2024. This is driven by the recovery of commuter demand and international travel, higher adoption and penetration to smaller cities, aggressive promotions by new entrants looking to drive user growth.
  • Food delivery has grown from $5 billion GMV in 2023 and to reach $6 billion in 2024, driven by increasing consumer demand and delivery players’ expansion to second-tier cities and rural areas.
  • Online media in Indonesia has shown consistent growth, although its overall market share within the digital economy is still relatively small. GMV is expected to grow 12% from $7 billion in 2023 to $8 billion in 2024, driven by the increasing popularity of digital content, games and streaming services. 

“Southeast Asia’s digital economy continues to do well, with continued double-digit GMV and revenue growth and a surge in profitability across sectors led by key players. Indonesia plays a significant role in driving this growth as the largest digital economy in the region and we expect GMV to double by 2030, primarily driven by e–commerce and online travel, particularly as intra-regional travel increases. At the same time, digital financial services continue to thrive in spite of tightened regulatory measures. The growing middle class and the need for improved financial management, especially in the post-pandemic period, will further increase demand for products and services in these sectors,” said Aadarsh Baijal, Partner at Bain & Company.

Private funding in Indonesia

While investor sentiment remains subdued, with $300 million from 51 deals in the first half of 2024, most investors expect deal volume to pick up again, particularly in software as a service (SaaS), fintech, healthcare, and AI. According to the report, 65% of investors in Indonesia expect in-country funding to increase between 2025 and 2030.

“Investors are confident of the long-term potential of Indonesia’s digital economy because of its strong fundamentals such as favourable demographic trends and a large base of highly engaged users,” said Cassie Wu, Director, Southeast Asia, Temasek. “Temasek remains committed to deploying catalytic capital to Indonesia’s digital economy to achieve sustainable and inclusive growth so that every generation prospers.”

Digital trust: a key pillar for Indonesia’s economy

As Indonesia’s digital economy grows, maintaining digital trust is crucial for sustained success. Consumers are looking for trusted security features like encryption and two-factor authentication, with platforms increasingly adopting AI-powered fraud detection and compliance measures to bolster trust. As digital payments in Indonesia grow in popularity, fostering a secure and transparent environment will be critical for driving adoption and ensuring long-term growth of the digital economy.

“Improvements in digital security must be made to keep up with the rapid pace of digital adoption in Indonesia. It has become essential to deploy AI to bulk up defenses against the threat of cyberattacks and online scams. Collaboration with government and industry players will be key to ensuring a secure, inclusive, and resilient digital environment. By doing so, we believe Indonesia can unlock the potential of its digital economy and lead the region in digital innovation,” adds Veronica.

***END***

Media contacts:

Syifa Fauziah (+6285710298673) email: syifa@evlogiaadvisory.com 

Bianda Kori (+6281222402530) email: bianda@evlogiaadvisory.com

About Google 

Google’s mission is to organize the world’s information and make it universally accessible and useful. Through products and platforms like Search, Maps, Gmail, Android, Google Play, Google Cloud, Chrome and YouTube, Google plays a meaningful role in the daily lives of billions of people. Google is a subsidiary of Alphabet Inc.

About Temasek 

Temasek is a global investment company headquartered in Singapore, with a net portfolio value of S$389 billion (US$288b, €267b, £228b, RMB2.08t) as at 31 March 2024. Marking its unlisted assets to market would provide S$31 billion (US$23b, €21b, £18b, RMB166b) of value uplift and bring its mark to market net portfolio value to S$420 billion (US$311b, €289b, £247b, RMB2.25t). 

Temasek’s Purpose “So Every Generation Prospers” guides it to make a difference for today’s and future generations.  Operating on commercial principles, Temasek seeks to deliver sustainable returns over the long term.  It has 13 offices in 9 countries around the world: Beijing, Hanoi, Mumbai, Shanghai, Shenzhen, and Singapore in Asia; and Brussels, London, Mexico City, New York, Paris, San Francisco, and Washington, DC outside Asia.   

About Bain & Company
Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.