E-commerce to be new driver of growth

JAKARTA. E-commerce has a huge potential in Indonesia with vast room for growth and is likely to be a new source of economic growth, said Asian Bank Development (ADB) country director for Indonesia Stevan Tabor.

E-commerce contributed 9 to 10 percent to China’s growth domestic product (GDP), while in Indonesia it contributed less than one percent, Tabor explained at the Mandiri Investment Forum 2016 held at Fairmont Hotel in Jakarta on Wednesday.

According to ADB research, most countries with heavily congested cities see rapid growth of e-commerce, since people spend a lot of time with their mobile devices, including for shopping, while stuck in traffic. Indonesia, indisputably, is one of them.

"The worse urban traffic is, the greater opportunity for e-commerce transactions. With more foreign direct investment, we hope to see tremendous growth of e-commerce in Indonesia," Tabor said.

Referring to World Economic Outlook data compiled by the Internet Service Providers Association, Indonesia's e-commerce market was estimated at Rp 18 trillion (US$ 1.3 billion) in 2015, with 37 million consumers from a total population of 255 million.

The figures are up from Rp 12 trillion and 27 million consumers recorded in 2014. As for 2016, the association predicted that the e-commerce market would reach Rp 25 trillion with 49 million consumers.

Bank Mandiri president director Budi Gunadi Sadikin added that the lender was glad to attract more investors to Indonesia's start-up companies in digital technology and believed that the e-commerce sector had the potential to drive economic growth.

"E-commerce transactions that Bank Mandiri helped to facilitate reached Rp 45 trillion and could grow two to three-fold," Budi said.

Furthermore, he continued, several regions in Indonesia recorded particularly high growth, including Bandung. "Indonesia is the country with the seventh-highest growth [rate] in the world and has the opportunity to increase its investment rating," he said.

The Mandiri Investment Forum attended 600 investors and businesspeople. Held by Bank Mandiri and Mandiri Sekuritas, the forum aimed at luring domestic and foreign investors to the country. (Ayomi Amindoni)