Recent research conducted by Nielsen Informate Mobile Insights claims that the number of smartphone users in Indonesia - Southeast Asia's largest economy - is expected to grow by an average of 33 percent compound annual growth rate (CAGR) between 2013 and 2017. By 2017 there should be around 87 million smartphone users in Indonesia, particularly supported by those that are under the age of 30 years and belong to the country's rapidly expanding middle class.

According to the Association of Internet Service Providers in Indonesia (APJII), Indonesia had around 88.1 million Internet users in 2014, up 22 percent (y/y) from 71.9 million in the preceding year. Considering that the total population of Indonesia numbers more than 250 million individuals, Indonesia's Internet penetration ratio stood at around 35 percent in 2014. This low penetration rate implies there is still ample room for growth in the online business industry.

Smartphone Growth Indonesia:

   2013  2014  2015  2016  2017
Smartphone Users
(in million)
   27    38    52    69    87

Source: Nielsen

The idEA said the e-commerce industry is becoming a pillar of the Indonesian economy. The online retail industry may account for five percent of Indonesia's economy by 2020, from 0.7 percent currently.