Despite the disruption caused by the coronavirus pandemic, the likes of Facebook, Google and Microsoft have cut a swath of deals to invest in the archipelago's unicorns -- private companies valued at over $1 billion. Investments in companies such as Gojek, Indonesia's largest tech company, as well as e-commerce platforms Tokopedia and Bukalapak this year are set to reach hundreds of millions of dollars.
Just as the same U.S. tech companies, sometimes grouped under the acronym GAFAM along with Amazon and Apple, are also betting big on India, the investments acknowledge that Indonesia is a market too big to ignore. The Southeast Asian country is the fourth most populous in the world, accounting for a third of the region's economic output.
The importance of the investment opportunities is even greater now that China, Asia's largest market, seems a more hostile territory for U.S. tech companies because of Beijing's spat with Washington.
Tokopedia and Bukalapak became the latest recipients of U.S. tech money in November. Microsoft announced earlier in the month it had made a "strategic investment" in Bukalapak, with the American software provider taking part in a reported $100 million funding round alongside existing investors GIC, Singapore's sovereign wealth fund, and PT Elang Mahkota Teknologi, or Emtek Group, a local media conglomerate.
Google invested in Tokopedia, alongside Singapore's Temasek, in late October or early November, according to filings made to Indonesian authorities. Both investors are said to have pumped $350 million into the e-commerce platform.
The investments follow Facebook's and PayPal's cash injections into Gojek in June. Google is already an investor in the ride hailer-cum-superapp, which offers services from payments to food delivery and logistics.
The investments are testament to how far Indonesia has come in terms of its digital ecosystem, and to its growth potential. Its internet economy has grown more than fivefold in five years to be worth $44 billion in 2020, by far the biggest in the region, according to a report by Google, Temasek and Bain & Company. The market will be worth $124 billion in 2025, according to the report, further cementing the archipelago as the region's top digital economy.
(source: Nikkei Asia)