The recently announced Gojek-Tokopedia merger has once again brought Indonesia’s booming tech sector into the headlines. And given the country’s immense potential, this boom is set to continue for some time to come.


It’s no secret that tech companies in Indonesia are on the up. The country’s digital economy is expected to grow to $124 billion by 2025, according to a 2020 study by Google, Temasek Holdings and Bain & Company, and over the past few months, a flurry of head-lines have mapped formidable growth as companies push towards listing and unicorns expand their ambitions. Lawyers in Indonesia expect this trend to continue, telling Asian Legal Business that what we are seeing now is only the first wave.

In May, Indonesian ride-hailing and payments firm Gojek announced a merger with the country’s e-commerce leader Tokopedia. According to Reuters, the merger will create a multi-billion-dollar tech company called GoTo in Indonesia’s largest-ever deal. The combined entity, which will span online shopping, courier services, ride-hailing, food delivery and other services in Southeast Asia’s largest economy, will also be the biggest privately held technology firm in the region. But that’s not the end of the company’s ambitions; Reuters reports that it plans to list in Indonesia and the United States and is courting pre-IPO funding.

Gojek and Tokopedia, and others like Bukalapak and Traveloka are just a few examples of the exponential growth of technology companies in Indonesia that has seen unicorns flourish, undaunted by the COVID-19 pandemic. In fact, in some areas, the growth in the tech sector has been assisted by the pandemic. Ride-hailing and food delivery markets in Southeast Asia are gaining traction as stay-at-home pandemic restrictions turn such tools into a necessity.

Joel Shen, a corporate partner at Withers, says the growth of Indonesian tech companies is a result of a convergence of various factors.

This includes “excess liquidity in the market due in part to the government stimulus programmes; interest rates at a historical low; declining yields from traditional businesses; the recent rise of SPACs, which are now seeking good targets in growth markets; and a maturing tech and venture capital ecosystem in Southeast Asia generally, and in Indonesia in particular. Many of the largest and most well-funded tech companies in Indonesia are backed by venture capital, and are on a runway to exit from the moment they accept their first VC dollar,” says Shen.

Shen says he would compare the current Southeast Asian tech scene to the Three Kingdoms period in China, “with Sea, Grab and GoTo being likened to the Cao Wei, Shu Han and Dong Wu kingdoms respectively, with Indonesia being their key battleground.”

But unlike third-century China, Shen doesn’t believe Indonesia’s digital economy is a “winner-takes-all market. “It can likely accommodate more than one dominant player.”


Sugianto Osman, a partner at Ginting & Reksodiputro in association with Allen & Overy, says the developments are part of a trend that goes back several years.

“If we look at all these unicorns [and] decacorns, they were set up in 2010 to 2011, but they really got people’s attention in 2015 when substantial fundraising occurred,” Osman says, noting his firm has been involved closely with a number of these headline-grabbing tech companies, including Tokopedia.

“Five years is actually nothing if you compare to any other industry but of course in this sector five years feels like a long time,” he says.

In Indonesia “there are always new startups,” Osman says, noting this is underpinned by the growth of telco infrastructure and the proliferation of accessible personal tech.

“Cheap smartphones are really what makes this possible. This enables everyone to have a sophisticated mobile [device] that allows you to operate apps,” Osman says. “Again, without relatively affordable mobiles, we wouldn’t be where we are now. If only 10 or 20 percent of the population were holding a smartphone that would a very different story.”

As a result of this, data subscription has become “a priority for everyone now, and this cuts across the board in terms of income level and age level. That’s what’s really driving this,” he notes.

Indonesia’s young population are also playing a “significant role” in this development.

“I think that’s also one of the key consideration from the investor perspective, coming into Indonesia investing in the tech companies,” says Osman. “So, everything is promising in terms of a long term future for their investment.”


The types of tech companies thriving in Indonesia cut across a range of industries.

There’s logistics for one example, notes Shen. “Sicepat raised $170 million this year, Not only is it the largest Series B financing in Indonesia, a record previously held by Grab’s $100 million investment in LinkAja, it is also the largest Series B financing in Southeast Asia, deposing RWDC’s $133 million stapled Series B),” says Shen, adding that he advised on all three landmark deals.

Another hot area is MSME digitisation/empowerment. “BukuKas recently announced its $50 million Series B and BukuWarung is reported to be in talks to raise a round from Peter Thiel’s Valar Ventures. Recent fundraising rounds were also announced by Credibook, Majoo, and Wahyoo,” Shen adds.

Then, there are digital banks. “Indonesia is one of the most under-banked markets in the world – 52 percent of all Indonesian adults (92 million adults) are unbanked, and an additional 47 million adult Indonesians are underbanked, and have inadequate access to even basic financial services such as credit, insurance, and small business loans,” says Shen.

Indonesia is also “the largest archipelagic country in the world, and its 17,000 islands span the distance from London to Baghdad, which makes it incredibly difficult for traditional banks to serve customers in small towns and villages,” he adds. As a result of this, digital banks have been gaining traction and investor interest too.

Osman notes that the pandemic's impact cannot be overlooked. Food delivery has stood out, but he points to two other sectors. “Of course, health tech is another sector that we’re starting to really see. Again, the pandemic really helps in terms of accelerating that,” he says. E-commerce is developing rapidly, and “even online travel agencies, which suffered at the beginning of the pandemic have now been making a turnaround.”


Such developments are leading to a spike in legal work.

“Every lawyer is now a tech lawyer. From transaction lawyers like me to disputes specialists, IP lawyers to regulatory lawyers. I don't know many lawyers who do not act in some way for a technology business or investor… It may not be long before we retire the term ‘technology lawyer.’”

-Joel Shen, Withers

“Every lawyer is now a tech lawyer,” says Shen. “From transaction lawyers like me to disputes specialists, IP lawyers to regulatory lawyers. I don’t know many lawyers who do not act in some way for a technology business or investor. There is a very quaint term I remember from the late 90’s – there was a breed of lawyers who used to call themselves ‘Internet lawyers.’ The term is, of course, no longer used, because every lawyer is, today, an internet lawyer to some degree. It may not be long before we similarly retire the term ‘technology lawyer,’” he adds.

Both the legal work, and Indonesia’s tech growth, are unlikely to shrivel any time soon. Looking ahead, despite the current unpredictability the COVID-19 pandemic brings, lawyers are confident it’s here to stay. “There will be periods of consolidation and expansion, but I fully expect the current growth trend in the industry to continue throughout the year and, likely, the decade,” Shen says.

Osman agrees. “I don’t see the trend reversing; it will only continue. This first group of unicorns, decacorns, will actually be paving the way for the next ones,” he says.


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