Digital economy has emerged as a critical driver of global economic growth, especially for Indonesia.

The Economic Research Institute for ASEAN and East Asia (ERIA) anticipates that by 2030, the global digital market will soar to USD 10 trillion, with a significant portion attributed to artificial intelligence.

This article explores five compelling reasons why Indonesia can be part of this economic shift, taking the lead among other ASEAN countries during a total digital economy revolution.

1. The Blueprint of DEFA

The Digital Economic Framework Agreement (DEFA) is the linchpin of ASEAN’s economic transformation.

The DEFA study engaged with ASEAN stakeholders through workshops and consultations, gathered input from over 2,000 MSMEs and 60 corporate leaders, and used literature reviews to formulate digital economy best-practice suggestions.

This collaborative framework will provide a comprehensive blueprint, pushing businesses and stakeholders across the ASEAN region towards accelerated trade growth, enhanced interoperability, fortified digital safety, and increased participation from micro, small, and medium-sized enterprises (MSMEs).

With DEFA as the ultimate guide, ASEAN’s digital economy alone is set to double to USD 2 trillion by 2030, with Indonesia contributing 40% of the region's digital economy value.

2. Expansive Market Potential

Coordinating Minister Airlangga revealed that Indonesia's Gross Merchandise Value (GMV) has already reached USD 70 billion, a figure projected to soar to approximately USD 150 billion by 2025.

This surge is supported by a thriving startup ecosystem, with over 2,000 startups in Indonesia alone.

Indonesia's vast population of over 270 million people also presents an immense market for digital services and products.

This large customer base, upheld by an increasing middle class and a growing disposable income, provides an opportunity for businesses to scale and innovate, creating a thriving ecosystem of digital entrepreneurship.

3. Youthful and Tech-Savvy Population

As of 2022, ASEAN's internet user base has reached 460 million, revealing a growth of 100 million in just three years. A big part of this number comes from Indonesia.

With over half of its citizens under the age of 30, Indonesia boasts an inherently tech-savvy demographic. In fact, 77% of people in Indonesia have access to the internet, with 60.4% active on social media.

The younger generation's affinity for technology, coupled with a growing level of digital literacy, positions them not only as consumers but also as creators of digital solutions.

4. Government Support and Initiatives

The Indonesian government has displayed an unwavering commitment to fostering digital economy transformation in this nation.

A set of policies and initiatives have been implemented to facilitate the growth of digital startups and businesses.

The result is that Indonesia currently leads as the largest home for startup businesses in ASEAN and the sixth largest in the world. The recent collaboration of five Corporate Venture Capitals (CVCs) from State-Owned Enterprises (BUMN) to form the Red and White Fund (MPF) also underscores a united effort to support late-stage startups with substantial funding.

By virtue of this agreement, they managed to secure a total of USD 300 million, or the equivalent of IDR 4.3 trillion, geared towards supporting soonicorns (companies poised to become unicorns) in Indonesia.

5. Booming E-Commerce Sector and Fintech Innovation

Indonesia's e-commerce sector has witnessed an unprecedented surge in recent years. Currently, platforms like Tokopedia are hosting over 14 million sellers, a majority of which are MSMEs.

Tokopedia's Hyperlocal initiative also drives the growth further with certain regions experiencing an increase in transactions and sellers.

With an average increase of nearly 3.5 times, these regions include Dogiyai (Central Papua), Southwest Maluku (Maluku), Banggai Laut (Central Sulawesi), North Kolaka (Southeast Sulawesi), and the Sula Islands (North Maluku).

Additionally, the fintech sector is innovating at a rapid pace, with digital payments playing a pivotal role in this country’s future economic transactions.

One practical example is the Indonesian Quick Response Code Standard (QRIS) for cross-border payments within Southeast Asia countries.

Perry Warjiyo, the Governor of Bank Indonesia (BI), even emphasized that transaction digitization has extended beyond urban centers. He anticipates that the circulation of electronic money for this year could reach IDR 495 trillion. Meanwhile, the aggregate value of e-commerce transactions may reach IDR 533 trillion.

Indonesia's Digital Economy Journey

Indonesia's digital economy is on an upward trajectory. The combination of a vibrant startup ecosystem, government support, a tech-savvy population, and a thriving e-commerce and fintech sector make Indonesia a formidable player in the global digital economy.

As the nation continues to nurture its digital ecosystem, now reaching not only fintech but also technology such as data centers and cloud computing, we can expect to witness even more impressive growth in the years to come.

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