Indonesia is waking up. And it's embracing all things digital. There has been a lot of reporting recently around how the country is positioning itself to become Southeast Asia's digital leader - a role that will fundamentally change conventional industries, including tourism and real estate, in a very short space of time.

Gapura Bali recently reported on findings from the latest Google and Temasek 2018 e-Conomy SEA Report, which suggested Southeast Asia's Internet economy reached USD 72 billion in 2018 with Indonesia ranking #1 for e-Commerce transactions. The report goes on to suggest the Indonesian “digital archipelago” is firing on all cylinders.

Largest Internet user base in the region

Supported by the largest Internet user base in the region (150 million users in 2018), Indonesia has the largest (USD 27 billion in 2018) and fastest growing (49% CAGR 2015-2018) internet economy in the region. With huge headroom across all sectors, it is poised to grow to USD 100 billion by 2025, accounting for USD 4 of every USD 10 spent in the region.

This is no mean feat and it is certainly not by accident. There have been missions to lure investors, particularly digital investors into Indonesia, two of the most recent being in Singapore and the United States.

Indonesia's Internet economy is poised to grow to USD 100 billion by 2025, accounting for USD 4 of every USD 10 spent in the region.

Singaporean investment

At a recent event at the Indonesian Embassy in Singapore, Indonesian Ambassador, Ngurah Swajaya encouraged Singaporean investors and start-ups to tap into Indonesia's digital economic potential.

Antara News are reporting a total of 59 investors, venture capital firms and startups attended the event, called "Indonesia 101: The State of Indonesia's Digital Ecosystem."

Ambassador Ngurah`s statement was reinforced by Willson Cuaca, Co-Founder and Managing Partner of East Ventures who claim to have provided seed investment to 70 percent of Indonesian start-ups.

Good ecosystem for startups

"Indonesia has a very good ecosystem for startup development, not only because of the many problems that startups can explore and improve with digital applications, but also a promising market followed by good talents, growth and increasingly favorable regulations for startups businesses," he said.

"This makes Indonesia one of the countries in ASEAN that is very attractive at this time, and into the future," he continued. Some Indonesian unicorns have even penetrated into ASEAN countries by utilizing the ASEAN Economic Community's more than 600 million residents.

American venture capital

A similar event in California saw the Indonesian government inviting American investors to invest in the country's digital economy and the development of the "10 New Balis."

The Indonesia-San Francisco Business Forum 2019, brought together 50 American businessmen, venture capital companies, technology companies, trade chambers, as well as the local government of the San Francisco Bay Area to showcase potential sectors where foreign investors could invest in the digital economy and the development of tourism destinations.

According to Antara News, the Indonesia Investment Promotion Center (IIPC) New York stated that in 2018, Indonesia's digital economy was the largest and fastest growing in Southeast Asia. Google and Temasek estimated the value would grow substantially in 10-years.

Digital technology will affect the country’s development as a whole including the real estate industry.

Regional digital hub by 2020

This is a theme continued by InvestVine, who write about Indonesia's plans to become the region's digital hub as early as next year. A tall order indeed, but the idea certainly has government support.

The Jakarta Post quote Rudy Salahuddin, an official from the Coordinating Ministry of Economic Affairs as saying "digital technology will not remain limited to certain sectors but affect the country’s development as a whole,” including real estate, adding “this requires a more comprehensive strategy in preparing Indonesia’s development in the era of digitization.”

The same reporting also suggested the government had vowed to issue or revise at least five regulations related to the sector including e-commerce regulations, personal data protection and e-commerce taxes. There will also be revisions on a regulation on the e-commerce road map and the management of electronic transactions and systems say InvestVine.

Indonesia's digital trade sector could grow by an eye-watering 768 percent.

Impressive growth and opportunities

A recent AlphaBeta report, commissioned by the Hinrich Foundation and the Center for Strategic and International Studies, estimate the digital trade sector could grow by an eye-watering 768 percent, which could create USD 172 billion worth of economic opportunities by 2030, which would be equivalent to nine per cent of the country’s projected GDP at that time.

This is all good news, especially for the country's property industry. Bloomberg are reporting a surge in online property purchases across Southeast Asia as 'new money' finds a home, particularly from Chinese Millennials, suggesting countries such as Indonesia lack the barriers to foreign purchases erected in New Zealand, Canada, Singapore and Australia.

New generation of property investors

Interestingly, among this new generation of property buyers under the age of 40, about half purchase without even visiting the property, while about 22 percent buy sight unseen, according to Bloomberg. As incredible as it may sound, these property purchases are all done online, without phone calls or even a face-to-face meeting with an agent.

This raises some eyebrows among Bali's real estate community, but Terje Nilsen from Harcourts Seven Stones told WILLIAMS MEDIA "this confirms what we have been preaching to the market over the last couple of years and how important it is to change how we do business. It's also interesting that Bloomberg are saying there are actually fewer barriers to property investment in Indonesia than most people believe. For those prepared to embrace this, I think the future looks bright for real estate, not just in Bali but across Indonesia."

At a glance

• Indonesia's digital economy was the largest and fastest growing in Southeast Asia in 2018.
• Indonesia ranks #1 for e-Commerce transactions in 2018.
• Indonesia has the largest Internet user base in the region with 150 million users in 2018.
• Indonesia e-Commerce sector is poised to grow to USD 100 billion by 2025, accounting for USD 4 of every USD 10 spent in the region.
• East Ventures claim to have provided seed investment to 70 percent of Indonesian start-ups.
• ASEAN Economic Community has more than 600 million residents.
• Chinese Millennials investing in property across the region including Indonesia.
• Digital trade in Indonesia could grow by 768 percent, creating USD 172 billion worth of economic opportunities by 2030.

Sources: The Jakarta Post, InvestVine, Gapura Bali, Antara News, Bloomberg, Alpha Beta, Deal Street Asia

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