1-903, 18 Eonju-ro 146-gil,
Gangnam-gu, Seoul, Korea
All Digital Startup Indonesia businesses have to have started somewhere. Those faltering baby steps of a company that will become a giant someday are what we call a startup. It is a new business by an entrepreneur to create unique products or services. Google, Facebook, and every single one of those digital products that have become a part of our lives was once startups. The startup landscape is filled with various types of tech startups, including digital startups, lifestyle startups, and more. Taking your startup business from a concept to an actual company is extremely challenging.
Southeast Asia is a fast-growing digital economy where digital startups are emerging and thriving. A larger middle class with better purchasing power makes Indonesia one of the new markets in Southeast Asia with significant potential for growth. In this blog post, we are going to talk about what you need to know about digital startups in Indonesia.
Before diving into digital startups, let’s first take a look at the country, market, and culture of Indonesia. Lying on one of the busiest trade routes in the world, Indonesia has gained its place in the global economy. Due to its advantageous geographical location, Indonesia has direct access to Chinese, Southeast Asian, South Asian, and Australian markets. The country has several islands, of which Java, Sumatra, and Bali are the most well-known. Indonesia is a nation that can boast of its diverse culture, food, natural beauty, and people.
Indonesian Market and Culture
Indonesia, though it is one country, is not a singular culture. It has over 300 ethnicities, each with its own customs and traditions. There are similarities, as every culture borrows from each other, but the diversity is evident.
The people of Indonesia are proud of their close-knit families, like most Asian countries. It is very common to see extended families living in the same household or in the neighborhood. Indonesia has six major religions, with Islam being the majority. Other major religions include Protestantism, Catholicism, Hinduism, Buddhism, and Confucianism. Added to this are the traditional belief systems that have continued to various degrees since ancient times.
Indonesia is a nation with a unique blend of food and culture. Being an archipelago, different parts of the country have their own unique cuisine. This, combined with their love of celebration, connects individuals, making Indonesia another unique nation in the world.
How Active Is Indonesia’s Startup Ecosystem?
Indonesia is ranked 73rd in the World Bank Group’s list of “Ease of Doing Business.”This is a good indicator for Indonesian startups, as foreign investors and venture capital firms are more willing to enter the country’s economy. Indonesia’s digital economy is showing rapid growth with the popularity of e-commerce platforms, food delivery services, etc. among the young population.
Indonesia has one of the most active startup ecosystems in the world. We cannot point to an exact number of startups because the survival of startups is not guaranteed. Some international sources record over 2000 startups in certain years, whether they succeed or fail. These startups can be e-commerce startups, small businesses, or an online marketplace. Most of these were centered around Indonesian cities like Jakarta and the suburbs.
Why Is Indonesia a Good Place to Run a Startup?
If you are thinking about building a digital startup in Indonesia, you must be wondering why it is a good place to do so. Here’s why we think Indonesia is a good place for a startup:
Southeast Asia’s Largest Economy
Indonesia is the fourth most populous country in the world, with a population of 278 million. Building a startup involves a lot of trial and error. What better place than a diverse market of over 270 million people to test out your products and services?
Indonesia has signed Free Trade Agreements (FTAs) with many countries, which open further growth opportunities for your business. Indonesia is a member of ASEAN and has an increasing economy.
Because of its ASEAN membership and FTAs, foreign investments in Indonesia have increased over the years. Market giants like Alibaba are pumping funding into Indonesian startups trying to gain a foothold.
Over 60% of the Indonesian population is connected to the internet, making it a large digital space for startups to establish themselves. The increased use of mobile phones has led to the digital adoption of Indonesian consumers and businesses.
The Government Is Committed to Helping Startups Grow
The Indonesian government has continued to express its support for startups by facilitating small and medium-sized enterprises. The government will continue funding, community and infrastructure building, and regulatory support.
Low Startup Costs When You Set Up as a Local Company.
There are many types of companies in Indonesia with different limitations. Setting up your startup as a local limited liability company (PT PDMN) is a good option. A local company has fewer regulations and costs to set up. However, you need to have a local partner to register as a local company.
Challenges of Running a Digital Startup in Indonesia
Running a startup and building your own company is very enticing, but extremely challenging. While Indonesia’s startup ecosystem is thriving, there are several challenges startup founders have to overcome.
The majority of the population is still unbanked.
Almost half of the Indonesian population does not use banking services. This is one of the biggest challenges for digital startups that usually depend on a financial platform to facilitate their digital payments. Especially in rural areas, unbanked customers are a difficult market for start-ups to tap into, but not impossible. E-commerce solutions offer alternative cashless transaction options like e-wallets.
Skilled Talent Scarcity
Indonesia has a large young workforce. But it has a very low number of skilled workers, especially in the information technology field. This is yet another challenge for an Indonesian startup trying to enter the digital economy.
In the Ease of Doing Business index, Indonesia has risen from the 90s to 73rd place. Even though it is a development compared to the best, it is not the best. Indonesia still has a lot of complex regulations to navigate, from setting up a business to hiring employees. The government continues to update its policies regarding businesses and investments.
Marketing in Indonesia
A digital startup needs marketing to understand its customers and develop visibility. Understanding your customers is key to a good business, whether you are a startup or an established company.
Favoritism for a Brand
Indonesian consumers show a higher level of preference for local brands than other nations in the region. Around 60% of the population prefers local brands. This is especially true for food and beverages and certain consumer goods.
The City Dynamics
A company needs to understand the differences between the city and the suburbs. Consumer habits and preferences vary according to the lifestyle differences in cities and suburbs. Also, the unequally distributed infrastructure affects the purchasing power and habits of the population.
Digital Marketing Channels in Indonesia
Every business entering the Indonesian market needs to consider digital marketing channels. Some of the most popular channels are Facebook, Instagram, WhatsApp, LINE, YouTube, and Google Maps.
Facebook is one of the most popular social media platforms in Indonesia and is a great way to run your digital marketing campaigns.
The number of Indonesian Instagram users is rapidly growing, making it another very influential channel for startups to do their marketing.
WhatsApp is another great channel for startups to communicate with and retain clients. With its easy-to-use interface, it has been one of the most favored direct messaging platforms.
LINE is another popular instant messaging platform that has great potential for marketing a business.
Another one of the most popular sites in Indonesia is YouTube. For digital startups, it is a great way to increase visibility and interact with potential customers.
In Indonesia, Google Maps is used as a way to discover new businesses. With its ability to customize results according to the location, Google Maps can help startups be discovered by users in the area.
Starting a startup in Indonesia is both profitable and challenging. With Indonesia’s rapidly evolving startup landscape, entrepreneurs need to establish their companies with the best strategies available. We hope that the insight we gave on why you should build your digital startup business in Indonesia encourages you to take that leap of actually starting your business.