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Indonesia Digitalising Local Traditional Markets to Elevate Its Digital Economy

As part of its digital transformation strategy, the Ministry of Trade has set a goal of digitising one thousand traditional markets and one million MSMEs across Indonesia. There are currently 2,047 traditional markets using local market websites via the Trade Facility Information System (TFIS), ten traditional markets implementing digital marketing, and 51 traditional markets conducting non-cash transactions via QRIS.

“For MSMEs and traditional traders, 326 traditional markets in 42 sub-districts with 106,702 local traders have implemented e-retribution, and 9.7 million MSME traders have made non-cash transactions through QRIS. This figure will rise as the programme progresses,” according to Vice Minister of Trade Jerry Sambuaga.

Indonesia’s government’s digitalisation efforts have assisted the country in reaching IDR980 trillion (US$ 63 billion) or 5.7% of GDP by 2021. Indonesia’s GDP is expected to reach IDR24 thousand trillion (US$ 1,5 trillion) in 2030, with the digital economy contributing 18% of GDP, or around IDR4,531 trillion (US$ 290 million).

Furthermore, Southeast Asia’s digital economy outlook in 2030 will show significant developments. For example, Indonesia’s digital economy’s gross merchandise value (GMV) is expected to increase fivefold and double the GMV value in Southeast Asia.

Jerry went on to say that Indonesia’s digital economic growth also impacted digital asset trading. For example, the transaction value of crypto assets in 2021 was IDR859.4 trillion (US$ 55 billion), or more than 1,200% higher than in 2020. Meanwhile, the total transaction value from January to August 2022 was IDR249.3 trillion (US$ 16 billion). On the other hand, the number of registered crypto asset customers in Indonesia as of August 2022 was recorded at 16.1 million customers, with a monthly average increase of 725 thousand subscribers.

Moreover, The Indonesia Central Bank noted that significant e-commerce growth reflected Indonesia’s trade-side digital economic growth. E-commerce transactions increased by 22.1 % year on year to IDR 227.8 trillion (US$15 million) in the first half of 2022, while volume increased by 39.9 % to 1.74 million transactions. E-commerce business-to-business (B2B) and business-to-consumer (B2C) are expected to contribute the most value to Indonesia’s digital economy ecosystem in 2030 for 34%, IDR 1,908 trillion (US$120 billion).

Given the rapid growth of Indonesia’s digital economy, Jerry encouraged students to participate in the ASEAN region. In addition, he encourages students to contribute to developing the national digital economy through innovation and international collaboration.

“ASEAN’s young generation is an important part of digital transformation. As a result, students, as the nation’s next generation, are driving the ASEAN region’s digital transformation,” he said.

The Ministry spokesperson urged ASEAN’s younger generation to have the courage to lead changes for ASEAN’s economic progress, particularly in accelerating digital transformation. As members of the ASEAN community, Indonesian students must embrace the rapid advancement of technology and the digital world to remain competitive and relevant.

Jerry also encourages the younger generation to take advantage of the available opportunities to help advance the national digital economy sector. The Ministry of Trade will continue to promote and assist in developing a robust digital economy ecosystem. He believes that by using the opportunities creatively and intelligently, Indonesia will become the most prominent digital economic player in Southeast Asia.

Aside from accelerating digital transformation in traditional markets, Indonesia is also accelerating digital transformation in e-commerce. It has become a way for Southeast Asian MSMEs to survive the pandemic, and digital financial services are emerging as critical enablers.

As a cross-sectoral activity, the government must collaborate to determine development policy directions, increase growth, and create a conducive e-commerce ecosystem. The ministry also encourages collaboration among various parties to address several e-commerce issues such as a lack of regulations, coaching, cyber security issues, logistics, payments, and strengthening workers, businesses, and local products’ competencies.

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