How 2 startups make up 2% of Indonesia's GDP
The merger between two of the country's unicorns yields a new era for Indonesian tech
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A golden opportunity
In May 2021, two of Indonesia’s largest startups, Gojek and Tokopedia, merged through an $18B deal to become GoTo. The newly formed “super startup” claims to represent between 2 and 4% of Indonesia’s GDP (a $1.19 trillion beast as of 2021) and is a testament to the economic opportunity represented by the country, and the region’s, rapidly growing digital economy.
GoTo’s most impressive feat isn’t that it claims to represent roughly 3% of the Indonesian economy. Rather, it is the fact that it is aiming to represent 10% of it, and probably will if everything goes to plan. The digital opportunity in Southeast Asia (SEA), and the speed with which it is growing, are hard to grasp. According to a Google, Temasek, and Bain report, the SEA’s internet economy is projected to be worth $1 trillion in 2030, up from $174B today. This is due to the region's exponential growth in internet adoption and the subsequent growth in digital services usage. The pandemic considerably accelerated both of those trends.
As the region’s economic leader, Indonesia posts some of the most impressive numbers. Technology and startups in particular are radically transforming the lives of Indonesians, providing solutions to the logistical nightmare caused by the country’s geographical layout (17,000 islands).
“The upshot is that Indonesia's e-commerce market is estimated to be worth a formidable $30.3 billion but should top $56 billion in five years. The entire digital economy stands at $44 billion, projected to expand at an astonishing 23% compound annual growth rate to hit $124 billion by 2025. At that point, the market size will be more than twice that of the region's runner-up, Vietnam” - The Generalist
Almost all aspects of the Indonesian economy are being re-invented by digital services. The Gojek and Tokopedia merger aims to create the country and the region’s go-to (pun intended) super-app covering all bases of the digital economy. But before we dive into the merger itself, let’s take a look at both companies’ individual stories.