Rising Tech Tides

Apps like GO-JEK, Cashlez, and Payfazz are not only developing digital technologies across the Asian country, but also using those technologies to increase economic and financial inclusion.

According to 2015 data from Statistics Indonesia (BPS), nearly 45% of employment in cities and roughly 74% in rural areas is informal. By industry, informal employment in the transportation, storage, and communication segment accounts for 50.5% of the labor force. In agriculture, informal employment is over 88%. However, the Ministry of National Development Planning (Bappenas) is looking to change these numbers and increase formal economic inclusion. A large part of these efforts are related to developing both the digital technologies and an environment to foster a knowledge-based, innovative economy.
Talking to TBY, Minister of Bappenas Dr. Bambang Brodjonegoro emphasized the role of technology and innovation to tackle unemployment and informal employment, noting a 5% unemployment rate necessitates the creation of 8 million job opportunities. The minister added, “With a more digital economy, we need to be more creative in finding these opportunities. GO-JEK is a good example of how a technological innovation can increase rather than reduce job opportunities via formalizing the informal sector: the traditional motorcycle taxi.”
Indeed, GO-JEK has improved the positions of motorcycle taxi drivers and expanded the job description through its mobile app. Originally, a motorcycle-taxi-hailing app, GO-JEK now provides many services, from transportation to mobile payments and food delivery, making the lives of its users and drivers better.
Embedded in GO-JEK’s mission and core values is the goal to “spread positive social impact through technology,” and a primary target population is its own drivers, who receive increased incomes, health and accident coverage, and financial services and insurance. And GO-JEK’s green-clad, motorcycle services cadre reaches over 50 cities across Indonesia.
Digital technologies are also broadening economic inclusion through increasing access to new payment methods. Cashlez and Payfazz are two apps working around the issue of low bank account penetration.
Cashlez is working on the merchant side to help SMEs, namely mom-and-pop shops that are underserved by banks, to accept the latest payment methods like e-wallets and advance the economy. President Director of Cashlez Teddy Setiawan Tee explained in an exclusive interview with TBY, “The moment we are connected to a payment method, merchants who use our technology can accept them as well. The concept is aggregating payment methods. We developed the reader, the payment gateway, and the connections to the bank.” Payfazz focuses on the other side of the transaction: the individual consumer. Payfazz is a mobile app and network of agents that allow people without bank accounts to convert cash into a digital balance to make online purchases and other financial transactions, from paying bills to wiring money. The core difference between Payfazz and other mobile finance applications being Payfazz does not require users to have a bank account; instead, Payfazz has developed a system of agents that act as a link people and traditional banks, which offers an added layer of formalization and economic inclusion. Making these digital technologies more impressive is the fact that they were developed within a very young start-up ecosystem. Payfazz, a participant in the renowned Y Combinator, first had to show the idea worked and could be scaled before joining the Silicon Valley-based accelerator program. Hendra Kwik, co-founder and CEO of Payfazz, pointed out to TBY that infrastructure, including internet, access to capital, and general start-up support systems are lacking. But support for start-ups and SMEs is looking up. Tee from Cashlez mentioned President Widodo and the government’s added attention on matters such as financing and easing regulations for the creation of new start-ups. Moreover, start-ups are confident more venture capital firms will continue to pay more attention to Indonesia. In the Emerald of the Equator, socially conscious technology innovators and the government are gradually aligning to magnify formal economic inclusion.