Digitally Savvy

What are core strategies for international firms coming to the Indonesian market?

There are 17,000 islands, with easily more than 200 ethnicities and languages. It is impossible to have a one-size-fits-all approach. However, if we focus on where the population is centered, it is definitely Java, which has 60% of the population. There is an urban migration of about 5% per year, and more people will move to Java. President Joko Widodo’s move to decentralize is great. It lends itself to talk about moving the administrative capital to central Java or even to Kalimantan. It then means we need to have an understanding of the thread that cuts across all these various logistics. The cultural nuances are one. Indonesia is a collectivist society, and people are consensus builders. When a company comes to Indonesia, it has to take stock of these cultural nuances. Otherwise, it would be a challenge to understand how to do business here.

What has your experience been with Indonesian companies wanting to reach out to the international arena?

Right now, we are working on one of the largest IPOs in Indonesia for 2017. We see that they are keen to expand. That is a sense of confidence now about local companies that can grow. For example, there is GO-JEK, which has hubs in India and is building in San Francisco, or Traveloka, which recently received USD500 million in investment, including from Expedia. Therefore, there is a sense of confidence that Indonesian companies can work on the global scale. In e-commerce technology, there is a great scope for Indonesian companies to push out.

How would you describe the e-commerce landscape?

Because of the spread of the islands and where people are, logistics is quite expensive. It can be a challenge to open up retail stores. Getting goods from the port to all parts of Indonesia will be tough. The infrastructure is not quite there yet, although the country is building on it currently. The road, port, rail, and air cargo infrastructures could all be improved, and they are being improved. The e-commerce business is the best way to reach Indonesia. With e-commerce and the smartphone service system, more and more businesses realize that in order to capture the 260-million population and maximize consumer spending power, it has to go online. We now see Alibaba and Amazon coming in because the market is so large and digitally savvy.

How would you describe the business media landscape of Indonesia?

Things have changed; there are more than 13 media groups, some of which are fiercely independent. We now also see the rise of citizen journalism. News as we know it, in terms of traditional media such as broadcast, is doing fine because outside of Java, TV is still key for media. The newspaper reach, however, is dropping. Everyone in terms of the media landscape in Java has converged and consolidated toward digital or online news platforms. The main obstacle for digital currently is the credibility of online platforms. Facebook has about 90 million users here, and almost 80% are active users. Social messaging platforms are huge. That is really how news is spread and shared among people, posing a challenge to traditional news outlets. In that sense as well, the online social space has got certain issues because of false news. People share a story before they have checked it. The traditional media still has a role to play in how social media is harnessed. Brands have a role to play by monitoring what is going on in conversations and reacting quickly. The media has transformed over the last two years. Indonesia is one of the most rapidly digitalizing countries in the sense of consumer social media. That is the news for investors coming here: to get people on their phones. From the brands and reputations side, this is extremely important. Data analysis and real-time insights will be the key differentiating factor for brands in Indonesia moving forward.