Traditional retail companies in Indonesia need to change their business-as-usual mindset to overcome fierce competition from online shops or e-commerce. In line with rising Internet and smartphone penetration as well as improving infrastructure, more and more goods and services can now be purchased online - often at more competitive rates -, implying the role of Indonesia's "old fashioned" traditional retail companies is on the decline.

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American multinational technology company Google and American global management consulting firm AT Kearney completed a joint study and released a report, titled "Indonesia Venture Capital Outlook 2017", that shows Indonesia's startup market is thriving - albeit coming from a low base. Financial technology is regarded the top category for future investment.

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The number of mergers and acquisitions in Indonesia rose 5.4 percent year-on-year (y/y) to 136 deals up to August 2017, mostly involving technology companies. In terms of value, on the other hand, M&As in the first eight months of the year actually fell 9.9 percent (y/y) to USD $6.8 billion. However, not all M&A deals in Indonesia have revealed the value of the deal.

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One of Indonesia's leading cellular services providers, XL Axiata, may sell part of its stake in online marketplace Elevenia to collect new funds for expansion of this e-commerce platform. However, there is also another option. XL Axiata could also decide to use funds from its internal cash reserves. Dian Siswarini, President Director of XL Axiata, said a decision will be taken within the next two months.

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Indonesia's e-commerce industry has grown rapidly (in two-digits, annually) over the past five years. This growth is expected to continue in 2017 as well as in the years ahead. Aulia Marinto, Chairman of the E-Commerce Association (idEA), expects the value of e-commerce transactions in Indonesia to surge between 30-50 percent year-on-year (y/y) to USD $45 billion in 2017 from an estimated USD $30 billion in 2016. Indonesia is still in the early stages of the digital economy revolution and therefore there is ample room for robust growth, particularly due to rising Internet and smartphone penetration.

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Indonesia's Communications and Information Minister Rudiantara says all Indonesians across the whole archipelago will be able to enjoy Internet access by 2019. Through the Palapa Ring project, one of Indonesia's priority infrastructure projects, all cities and districts in Indonesia will have fast broadband Internet through an undersea fiber-optic cable network that stretches across 13,000 kilometers as well as an onshore network of nearly 22,000 kilometers.

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The government of Indonesia will soon release the 15th economic policy package in an effort to maintain the "structural reform momentum" and encourage investment into Indonesia as well as macroeconomic growth. Based on the words of Indonesian Chief Economics Minister Darmin Nasution, the 15th policy package will touch on subjects related to deregulation, (improvement of the) investment climate, infrastructure, medical equipment, as well as the textile and agri industries.

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Indonesia Investments often reports about Indonesia's blossoming e-commerce industry (a lucrative sector for investors). Online retail is growing rapidly in Southeast Asia's largest economy because both Internet and smartphone penetration are rising sharply in Indonesia, while expanding per capita GDP boosts people's purchasing power. But what do Indonesia's consumers actually buy online? A new survey from Google Indonesia gives some more information.

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Bank Indonesia curbed foreign ownership in local companies that offer electronic payment services to a 20 percent stake through the implementation of Bank Indonesia Regulation No. 18/40/PBI/2016 on the Operation of Payment Transaction Processing. Central Bank Governor Agus Martowardojo said this new regulation will strengthen the development of technology-based financial services firms in Indonesia by enhancing the sector's regulatory framework amid growing interest in financial technology.

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According to the Indonesian Internet Service Provider Association (or APJII) there are currently 132.7 million Internet users in Indonesia, or approximately 51.8 percent of the total Indonesian population. These figures, which are the result of a survey, are much higher compared to 2014 when APJII data show that there were 88 million Internet users in Indonesia. Meanwhile, APJII Chairman Jamalul Izza informed that about 70 percent of Indonesian Internet users use a mobile device to access the Internet.

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After the closing of several Ramayana Department Stores and Matahari Department Stores, as well as the (planned) closing of all remaining Lotus Department Stores (per 26 October 2017) in Indonesia, Indonesia's conventional department store industry needs to come up with a new strategy or shopping concept to survive amid increasingly fierce competition from domestic and global e-commerce platforms.

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E-commerce company Kioson Komersial Indonesia became the nation's first e-commerce startup to go public on the Indonesia Stock Exchange on Thursday (05/10). There was plenty of interest for the company during its trading debut as its shares rose 50 percent to IDR 450 a piece. The offering was more than 10 times oversubscribed. Local brokerage Sinarmas Sekuritas was the sole underwriter for the IPO.

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Chinese e-commerce giant Alibaba founder Jack Ma having been appointed as special advisor to the Indonesian government for the development of Indonesia's e-commerce sector has led to some concern whether it puts China's richest man in a position of conflict of interest. Ma's Alibaba Group owns big stakes in Singapore-based e-commerce giant Lazada (which operates across Southeast Asia) and Indonesian online shopping facilitator Tokopedia.

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Rumors are that China's e-commerce giant Alibaba Group Holding Ltd is interested to expand its business in Indonesia, attracted by the nation's per capita GDP growth as well as rising smartphone and Internet penetration. Alibaba may invest in Indonesian online shopping facilitator Tokopedia. Tokopedia, established in 2009 by William Tanuwijaya and Leontinus Alpha Edison, is one of Indonesia's biggest online marketplaces.

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A new study conducted by the Better Than Cash Alliance, a partnership consisting of governments, companies, and international organizations, shows Indonesia has now become the world's fastest-growing mobile-commerce market (m-commerce). Growth of online shopping in Southeast Asia's largest economy is attributed to the rising spending power of Indonesia's middle class as well as expanding Internet and smartphone penetration. According to the study, Indonesia's m-commerce market surged 155 percent in 2016.

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The number of smartphone users in Indonesia is rising rapidly in line with growing per capita GDP and widening Internet penetration across the Archipelago. Based on data from research institute eMarketer there were 69.4 million smartphone users in Indonesia at the end of 2016. Moreover, the number of Indonesian smartphone users is expected to grow to 103 million by 2018, which would make Indonesia the fourth-largest smartphone market worldwide after China, India and the United States.

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The USD $1 billion acquisition of Southeast Asia-based e-commerce platform Lazada Group SA by China's e-commerce giant Alibaba Group Holding Ltd may give rise to a larger flow of Chinese products into Indonesia. Lazada is an e-commerce platform that operates in Indonesia, Malaysia, the Philippines, Thailand and Vietnam. Southeast Asia is an interesting market for Alibaba as only 3 percent of retail sales are conducted online in this region, implying huge growth opportunities. Meanwhile, Alibaba has been eager to expand abroad as growth in China has been slowing.

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During Indonesian President Joko Widodo's visit to Googleplex, Silicon Valley (California) - headquarters of Google, Facebook, Twitter and Plug and Play - he emphasized that the government of Indonesia is committed to push for the development of the digital economy, aiming to make it the largest in Southeast Asia, worth USD $130 billion by 2020 (including the emergence of 1,000 Indonesian technopreneurs). In this context, Widodo also requested the assistance of Google, Facebook and Plug and Play in the form of IT development education.

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