"You cant win Southeast Asia without winning Indonesia" says Go-Jek founder
The founders of two of Indonesia's most successful companies talk growth strategies and international competition in their country's highly attractive market environment.
L-R: William Tanuwijaya of Tokopedia, Nadiem Makarim of GO-JEK and The Wall Street Journal's global techology editor, Jason Dean. (Credit: The Wall Street Journal's D.Live Asia Conference)
The beauty of building business in Indonesia today is that enterprising companies can learn from the mistakes made by their more developed neighbours, such as China and India. That insight comes from the CEOs of two of Indonesia’s most successful homegrown companies, online marketplace Tokopedia and cross-sector startup Go-Jek, speaking at The Wall Street Journal’s D.Live conference in Hong Kong today.
While Indonesia’s GDP per capita last year was around the same as China’s in 2008, according to William Tanuwijaya, CEO of Tokopedia, Indonesia today has various advantages that he thinks will lead to relatively faster growth for the ecommerce sector. “In Indonesia in 2016, if you compare, we have a $100 smartphone Android, which wasn’t available in China in 2008. We also have 4G now, which wasn’t available in China in 2008.”
“The opportunity in Indonesia is really massive,” agreed fellow panelist Nadiem Makarim, CEO and founder of Go-Jek Indonesia, which offers local transport, logistics, food and payment services and was the first startup in the country to be classified a “unicorn”, last year. “We totally skipped the desktop experience and went straight to smartphones,” he said.
Both companies have seen massive growth in recent times as a result. Tokopedia is 16 times larger today than it was in 2014, explained Tanuwijaya, while Go-Jek now has 10 million weekly active users and accounts for half of the transportations business and 98 percent of the food delivery market in Indonesia.
Both have ambitious plans for the next few years, too. “Our goal is to kill this,” said Makarim, holding up a wallet. “We target the highest-frequency middle class transactions that a person does in their daily life and move it to the smartphones. Transport, food, moving stuff, buying airtime...and then utilities, bills etcetera—our goal is to cover the gamut of transactions so you won’t be required to transact outside your smartphone.” In a country where 70 percent of the population is unbanked, he continued, it’s "practically an open market" for this kind of innovation.
This means, of course, said interviewer Jason Dean, The WSJ's global technology editor, that plenty of other companies besides Go-Jek and Tokopedia are eyeing up Indonesia a highly attractive market too. With big international players such as Grab, Uber, Alibaba, Amazon and Tencent making noise in the region, what makes the local firms think they can win, asked Dean.
Starting up as early as 2009 means Tokopedia has won a few wars already, said Tanuwijaya, mentioning eBay as one competitor his company has seen off. “We always see competition as a good thing. If you survive long enough you really win the market against all the odds,” he said.
Makarim added that the local companies retain the advantages of agility and depth over the multinationals. “As William said, there are huge hidden costs of trying to do business in multiple countries at the same time. You can do one thing really well and replicate it across countries, or you can pick one market and go deep, as Go-Jek did. In this open market we decided ‘what can we defend?’. We will defend the consumer, we decided.”
The audience appeared to share their optimism. Polled on the question “Who will ultimately dominate Southeast Asia’s consumer internet?”, many more answered 'local companies' over those from China or the US.
Both Tanuwijaya and Makarim refused to comment on rumours of investment from big names such as JD or Tencent, but both admitted that international expansion is something they would consider—when the time is right.
"You can't win Southeast Asia without winning Indonesia," said Makarim. "We have to be comfortable across all verticles and we also dont believe in expanding just for the sake of expanding."
Source:
Campaign Asia-Pacific
http://www.campaignasia.com/article...-winning-indonesia-says-go-jek-founder/437116
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June 9, 2017 5:07 am JST
Indonesia may hike infrastructure spending 17%
Southeast Asian nation looks to attract manufacturers
JUN SUZUKI, Nikkei staff writer
Indonesia will develop its infrastructure with support from a boost in tax revenue.
JAKARTA -- Indonesia is set to expand its budget for infrastructure outlays in fiscal 2018, with government proposals outlining a jump of as much as 17%, as part of a plan to attract more businesses to the Southeast Asian nation.
The government aims to eliminate obstacles such as a lack of roads and electricity that have kept companies from entering the Indonesian market.
According to local media outlets, up to 455 trillion rupiah ($34.2 billion) in infrastructure investments are being considered for fiscal 2018. The government hopes that these efforts will help it achieve gross domestic product growth of 5.4% to 6.1% that year, a significant jump from the 5% logged last year.
Indonesia has grown steadily, underpinned by a population of about 250 million. But slow progress in the country's manufacturing sector, which is the key to increasing incomes and consumer spending, has prevented it from accelerating its economic growth.
An expected increase in tax revenue will support the country's efforts to step up infrastructure development. The government's tax amnesty scheme conducted from July through March led 960,000 people, mostly affluent citizens, to declare their hidden assets. As a result of the scheme, the country's tax base is expected to broaden significantly. Currently just 4% of the population pays taxes annually.
Some officials say the government should aim for about 6% GDP growth in fiscal 2018 to shore up support for the Joko Widodo administration ahead of presidential elections in 2019. The plan to boost infrastructure spending is set to be included in the fiscal 2018 budget proposal due in August.
(Nikkei)
http://asia.nikkei.com/Politics-Economy/Economy/Indonesia-may-hike-infrastructure-spending-17
