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Overview

Indonesia’s digital economy has experienced remarkable growth in recent years, with the country emerging as the largest digital economy in the region. In 2022, Indonesia’s digital economy was worth an estimated USD 77 billion (AUD 113 billion) in terms of gross merchandise value (GMV), with that value expected to almost double by 2025 and hit USD 130 billion (AUD 191 billion). In comparison, the second largest digital economy in Southeast Asia, Thailand, had an estimated GMV of USD 35 billion (AUD 51.5 billion) in 2022.

Growth of Indonesia’s digital economy is primarily driven by the rise of its e-commerce sector. This rise has been supported by several factors, including the proliferation of digital wallets that have made it easier to shop online, a large and growing tech-savvy population, as well as a rising middle class that has led to increased smartphone usage and internet penetration rates. The Indonesian government has identified the e-commerce sector as one of two strategic growth sectors to support Indonesia’s post COVID-19 economic recovery. Plans to support this include deepening the use of digital payments and other digital financial services, leveraging on emerging technology to simplify logistics and custom processes, and accelerating the digitalisation of micro, small, and medium-size enterprises (MSMEs) to enable their participation in the digital economy, among others.

These and other initiatives present a critical opportunity for Indonesia to adopt digital trade standards to fully realise the potential of its digital economy and ensure sustained growth. Digital trade standards provide a common framework and rules that can facilitate seamless cross-border transactions, enhance interoperability of systems, and foster trust among trading partners. By implementing digital trade standards, Indonesia can streamline trade processes, reduce transactions costs, expand access to newer markets, and overall improve efficiency and productivity of cross-border trade. Digital trade standards can also help promote inclusivity by providing a level playing field for businesses of all sizes. Standardised processes and technical specifications can reduce the cost of transaction and information, which in turn can empower MSMEs – which form a significant part of Indonesia’s economy – to access international markets and compete on a relatively equal footing with larger corporations.

For Indonesia, this report estimates that the economic value of digital trade could reach AUD 1,108 billion by 2030, equivalent to 237% growth from current estimated value of AUD 328.6 billion. However, roadblocks, such as urban-rural digital divide, fragmented approaches to ambitions national digital transformation agendas, among others, remain. Against this context, it is perhaps useful to examine Indonesia’s approach to digital trade, including policies it has introduced to grow its digital economy and adoption of digital trade standards. Specifically, this report will:

  • Examine digital trade and provide a breakdown of its components;
  • Estimate the economic value of Indonesia’s digital trade;
  • Identify priority digital trade areas;
  • Identify key international standards for each priority area; and
  • Map out a potential way forward to accelerate digital trade growth.

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