In June 2016 the "1,000 digital startup movement" was launched by Indonesia's Communication and Information Ministry in cooperation with KIBAR, the nation's technology startup ecosystem builder. This government-backed program targets to see 1,000 startups in the digital economy by the year 2020 with a combined valuation of USD $10 billion. Considering that digitalization has been a key trend around the globe (covering basically all aspects of life), Indonesian authorities want this sector to boom in Indonesia as well, which would also make the whole economy more efficient.

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In line with Indonesia's promising e-commerce market - supported by rising Internet penetration, rising smartphone penetration and per capita GDP growth in Southeast Asia's largest economy - online shopping site MatahariMall.com has grown strongly since its launch a year ago. The online retailer, which celebrated its 1-year anniversary on Friday (09/09), sees its turnover grow by an average of 10 percent each month and already entered the top five of biggest e-commerce players in Indonesia (in the business-to-consumer category). However, exact (turnover) figures were not mentioned.

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Google Inc. and Temasek Holdings Pte released joint research that signals Southeast Asia's digital economy (which includes e-commerce, online games, advertising and other economic activities related to the Internet) will surge to USD $200 billion by 2025. Indonesia's digital market will account for 40.5 percent - or USD $81 billion - of this total market. With an estimated USD $46 billion, Indonesia's e-commerce sector will contribute most to the total.

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Global software security group Kaspersky Lab says Indonesia is the leading country in terms of online financial fraud. Based on a survey conducted by Kaspersky Lab involving 26 countries around the globe, 26 percent of online consumers in Indonesia become victim of online financial fraud. Countries that rank second and third in this index are Vietnam (25 percent) and India (24 percent). Ross Hogan, Global Head of Kaspersky Lab's Fraud Prevention Division, says the company detected an increasing amount - and a wider variety - of online financial scams worldwide.

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Soon foreign investors will be allowed to control a full 100 percent stake in electronic commerce (e-commerce) businesses in Indonesia. Currently, the Indonesia Investment Coordinating Board (BKPM) is completing a new regulation that streamlines the latest regulatory changes in this industry (this regulation is expected to be completed in June 2016). Earlier this year, Indonesian President Joko Widodo signed a decree that opens (more wider) foreign ownership in various industries, including Indonesia's e-commerce industry.

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The world's Internet giants that provide services in Indonesia (such as social media platforms) are encouraged to establish a permanent presence in Indonesia in the form of a representative office or foreign investment company (PT PMA) hence becoming taxable entities. If not, their services can be blocked by Indonesian authorities. Finance Minister Bambang Brodjonegoro informed reporters about this plan on Monday (29/02). Although he declined to mention any names, it is assumed Brodjonegoro refers to social media platforms and those that sell products/services to the massive online audience of Indonesia.

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Growing Internet penetration does not only give rise to a thriving online dating business but also to an expanding online gaming industry in Indonesia. Netherlands-based Newzoo, a global market research and predictive analytics firm (with a main focus on the gaming industry), said revenue in Indonesia's online gaming industry rose 77 percent year-on-year (y/y) to USD $321 million in 2015 from USD $181 million in the preceding year. This year the online gaming industry of Indonesia is expected to grow 12 percent (y/y).

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As Indonesia is expanding its high-speed 4G mobile broadband network across the archipelago - meaning that more and more Indonesians will be connected to the Internet - the online mobile games industry has ample room for growth in Southeast Asia's largest economy. According to Netherlands-based Newzoo, a global market research and predictive analytics firm (with a main focus on games), revenue in the mobile games industry of Indonesia is expected to grow over 45 percent annually during the next couple of years.

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Based on a recent survey conducted by Google, online transactions in Indonesia continue to rise (particularly the purchase of goods through mobile gadgets) despite the nation’s economic slowdown and weak rupiah (which makes imported products more expensive). Henky Prihatna, Google’s Country Head for Indonesia, said the survey shows that Indonesian consumers are increasingly using Internet to purchase consumer goods.

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Before allowed to operate, online businesses in Indonesia will be required to register and secure permits in an effort to enhance supervision on online trading according to a new government draft regulation. The draft, which is currently being discussed by the Indonesian Trade Ministry, the Communication and Information Ministry, and the Law and Human Rights Ministry, is expected to be issued before February 2016. Foreign businesses engaged in online trading activities in Indonesia will also be required to register and obtain necessary permits.

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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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Grab, the Malaysia-founded online application used for transportation services, has experienced remarkable growth in Indonesia during the first half of 2016. GrabCar and GrabBike have grown some 250 percent despite a 50 percent cut in its fare subsidy in this period. More than 25 percent of active Grab users in Indonesia use Grab services more than once a month. This success is due to the government's decision to legalize mobile application-based transportation services (under specific conditions) and the re-branding of Grab (formerly it was known as GrabTaxi).

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