With smartphone penetration estimated to near 48 percent of the population, Indonesia has become one of the most fertile grounds for e-commerce businesses in the world. Unsurprisingly, the number of start-up companies has grown rapidly in the last five years.
The latest data of Startup Ranking.com shows the number of Indonesian start-ups stood at 2,122, the fifth-largest after Canada, the United Kingdom, India and the United States. According to a study by American consulting firm McKinsey & Company published recently, alongside India, Indonesia has outrun the world in digital adoption amid an investment shift in start-ups to Asia over the past five years.
Indonesia itself boasts three unicorns — start-ups valued over US$1 billion — and one decacorn valued at $10 billion. With such growth, McKinsey maintained its 2016 projection that the digital economy would contribute $150 billion to the country’s economy by 2025.
Such an atmosphere provides not only convenience for business transactions but also creates employment and new sources of income for millions of people. The country’s expanding online market places, such as Bukalapak, Tokopedia, Lazada and Blibli, have allowed millions of small virtual stores to sell their products online. Ride-hailing apps Go-Jek and Grab have generated millions of jobs, as well as business opportunities for small enterprises.
The country’s high internet penetration has also led to the mushrooming of financial technology start-ups, which have also expanded rapidly, offering either peer-to-peer (P2P) lending or payment services.
The speedy growth of the digital industry, however, makes users, both players and consumers, vulnerable to cybercrime, while the law does not adequately protect them. The National Consumer Protection Agency recently advised that the government temporarily suspend the activities of a number of digital businesses because of the lack of regulations to protect consumers.
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