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Startups Reduce Promotions, Indonesia's Digital Economy Growth Predicted to Slow in 2023

Cindy Mutia Annur 03/11/2023 14:42 WIB

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According to the e-Conomy SEA 2023 report, Indonesia's digital economy is projected to be worth US$82 billion this year, experiencing slower growth of 8% (year-on-year). The report attributes this to

Indonesia's Digital Economy Gross Merchandise Value (GMV) Projection (2021-2030)

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Indonesia's Digital Economy Gross Merchandise Value (GMV) Projection (2021-2030)

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According to the latest report by Google, Temasek, and Bain & Company, titled *e-Conomy SEA 2023*, Indonesia's gross merchandise value (GMV) of the digital economy is projected to reach US$82 billion, or approximately Rp1,292 trillion (using an exchange rate of Rp15,757/US$), this year. This represents a slower growth of 8% year-on-year (YoY).

Transactions in Indonesia's digital economy across e-commerce, online travel, and media increased in 2023, while online taxis and motorcycle taxis (ojol) decreased. The e-commerce sector remains the largest contributor to Indonesia's digital economy this year.

Here's a breakdown of the projected GMV of Indonesia's digital economy by sector this year:

* E-commerce: US$62 billion, up 7% (YoY)
* Food delivery/transportation: US$7 billion, down 8% (YoY)
* Online media: US$7 billion, up 5% (YoY)
* Online travel: US$6 billion, up 68% (YoY)

Google, Bain & Company, and Temasek stated that startups in the e-commerce, food delivery, and ride-hailing sectors have reduced promotional spending or "burning money."

"This is to balance growth and profitability," said Google, Bain & Company, and Temasek, as quoted from their report. As a result, the GMV growth of these startups slowed down after price-sensitive consumers opted for alternatives.

"However, the number of loyal users remains substantial, offsetting the decline in market growth with an increase in net revenue growth," said Google, Bain & Company, and Temasek.

Nevertheless, Google, Bain & Company, and Temasek predict that Indonesia's digital economy GMV will surge again, reaching US$109 billion in 2025 and US$360 billion in 2030. "This is largely driven by e-commerce," they stated.

Overall, the GMV of the Southeast Asian digital economy is projected to reach US$218 billion this year. Indonesia has the highest digital economy value, but its growth is the second lowest after Malaysia.

Here's a breakdown of the size and growth of the digital economy GMV in Southeast Asian countries in 2023:

* Indonesia: US$82 billion, up 8% (YoY)
* Thailand: US$36 billion, up 16% (YoY)
* Vietnam: US$30 billion, up 19% (YoY)
* Philippines: US$24 billion, up 13% (YoY)
* Malaysia: US$23 billion, up 7% (YoY)
* Singapore: US$22 billion, up 12% (YoY)

Editor : Padjar Iswara

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Startups Reduce Promotions, Indonesia's Digital Economy Growth Predicted to Slow in 2023

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