Why I Remain Bullish on Indonesia’s Tech and Fintech Ecosystem
I recently returned from a business trip to Jakarta, where I had the opportunity to engage with entrepreneurs, investors, and industry experts shaping Indonesia’s tech landscape. The ecosystem is currently experiencing turbulence following the downfall of several high-profile startups, coupled with increased regulatory scrutiny, particularly in consumer lending and payment transactions. However, as a venture investor, I remain firmly convinced that Indonesia continues to offer a compelling opportunity for tech entrepreneurs and investors alike. Here is why.
1) A Large and Dynamic Market
Indonesia’s fundamental strengths remain intact:
A sizable and growing economy: With a population of 280 million and projected GDP growth of 5% in 2024, Indonesia remains one of the largest and most dynamic markets in South-East Asia.
High digital adoption: Internet penetration has reached 74%, and 70% of the population owns a smartphone, providing a strong foundation for digital services.
Expanding digital payments: Digital payments continue to grow at a robust 15% year-over-year, with gross transaction value projected to reach $760 billion by 2030.
Regulatory support for innovation: The introduction of digital banking licenses and the QRIS interoperable payment system are paving the way for a more seamless and inclusive financial ecosystem.
2) Market Gaps? The Opportunity for Fintechs.
Despite significant progress, Indonesia’s financial sector remains underdeveloped in key areas—each representing a long-term market opportunity for well-positioned fintech startups:
Financial inclusion remains a challenge: 48% of Indonesians remain unbanked, limiting their access to essential financial services.
SMEs are underserved: Although SMEs contribute 60% of GDP and employ 97% of the workforce, only 25% have access to formal credit.
Low consumer leverage creates room for responsible credit growth: Indonesia’s consumer debt-to-GDP ratio is only 18%, far below regional peers (Malaysia: 55%, Thailand: 90%, emerging market average: 50%).
A Contrarian Yet Confident View
As with any emerging market tech investment opportunity, the risks of investing in the tech sector in Indonesia must be carefully navigated. But the country’s strong fundamentals remain in place. The ongoing evolution of the regulatory landscape is in my opinion not a deterrent, but rather a sign of a maturing market, one that will reward sustainable and scalable business models. In this context, I am happy to call myself a contrarian investor. Indonesia remains one of the most exciting and high-potential markets in the global tech landscape, and I look forward to further exploring the opportunities it has to offer.