INDONESIA DIGITAL TRANSFORMATION

OUTLOOK BRIEFING 2016

ASEAN & Indonesia e-Commerce Outlook

Spike Choo
Country Director, Indonesia

1
Year in Review: Global Key Highlights of 2015

1 Startup investment is cooling down

Number of mega deals (100Mn & above) drop to <20
Several tech IPO perform badly despite lowering their IPO
price or shares (eg Square, Etsy, Shopify, First Data etc)

2 Asia E-Commerce flexes its muscle

Alibaba Singles Day sales reached USD 14.3Bn
Indias e-Commerce grew ~40% in 2015 to USD 7.5Bn
SEA e-Commerce to double to $15Bn by 2019 from $6.5Bn

3 Wearables goes mainstream

Apple Watch debut; mainstream watchmakers join the fray
Activity trackers make it to top 10 Xmas shopping lists
More niche wearables (kids , elderly , etc) emerges

4 Cross industry disruption will continue to accelerate

More disruptive services from Uber and the likes; UberCargo in
HK, GoJeks Food Delivery, WeChats WePay, etc
Fintech continues to evolve, ie Crowd-finance, Digital Banking
2
 ASEAN e-Commerce Market Overview

Robust growth (~25% YoY) but market still small compare to China and US
Positive factors driving e-Commerce growth in APAC such as sizable and youthful
population, robust economic growth from and higher domestic spending

ASEAN 6, China & US e-Commerce ASEAN 6, China & US Population,

Market Size, 2015-2019, USD Billions 2015E, Millions

2015
2019 US, ASEAN 6,
11.6%
CAGR 321.2
553.2
24.1%

411.6 430.0

277.0 China,
24.9% 217.3 1,375.0

6.5 14.8

ASEAN 6 China US

ASEAN 6 refers to SG, MY, ID, TH, PH, VT Source: Frost Analysis 3
Indonesia e-Commerce Market Snapshot

GROWTH DRIVERS KEY RESTRAINTS

1. Positive demographics profile 1. Poor logistics infrastructure
2. Robust economic growth 2. Large unbanked population
3. High ICT adoption 3. Low adoption of cashless payment
4. Large number of local players 4. Limited ICT competency

Indonesia e-Commerce Market Size, 2015-2019, USD Millions

3,800

31.1% 2,950
2,400
1,850
1,350
1,100
750

2013 2014 2015 2016 2017 2018 2019

4
Growth Drivers of Ecommerce
A fast growing economy with a young population and increasing income

Real GDP & Disposable Income Level

$2,464 Real GDP

$2,148 3.5% (USD, BN)
Disposable
7.8% Income (USD)

$896 $1,207

2015 2019

Indonesia Internet User Forecast Indonesia Population by Age Group,

2013
Internet Users (million)
150 % population 60%
0-14
CAGR = 16.6% 50% 8%
100 40% 28%
15-59
135.0 30%
104.0 119.5
50 88.5 20% 60 and
73.0 64%
10% above
0 0%
2015 2016 2017 2018 2019

5
Growth Drivers of Ecommerce
Highly saturated & competitive landscape with good mix of local and global players

C2C

B2B2C

B2C
Niche Multi-category Brokers

6
Key Restraints of Ecommerce
Poor land infrastructure and inaccessibility of banking services are key challenges

Logistics Cost Share to GDP

of selected ASEAN Countries, 2014

25% 26%
20%
13%
8%

Indonesia Banking Population (millions) Preferred Online Payment Mode, Q3, 2013
Banked Population Unbanked Population
Credit Card 11%
Debit Card 29%
36%
61% Prepaid Card (Pre-loaded with money) 4%
Cash 51%
64% Cheques 1%
39%
Electronic Payment 3%

2014 2019
Other 1%

7
Credit & Debit Card Payment Market Growth
Cash is still the predominant payment mode for offline transaction

Estimated 113 million ATM+Debit cards and 17 million credit cards in circulation at the end
of 2015.
Debit card outnumber credit card by about 6.7 to 1
Total annual credit card transaction value is ~1.3 times higher than debit cards.
Average annual transaction per credit card is 16, per debit card is 3
The average transaction value per credit card is about IDR1Mn compare to IDR605K
for debit card

Credit, ATM+Debit Cards in Annual Transaction Annual Transaction Value,

Circulation, 2010-15, Mn Volume, 2010-15(E), Mn 2010-15(E), IDR Bn
Credit card ATM+Debit Card Credit card ATM+Debit Card Credit card ATM+Debit Card
130.4 613.7 477.2
15.9% 14.9% 16.3%
342.5 207.3
62.5 306.4
113.5 224.0
111.7 65.3
48.9 269.9
271.2
194.7 158.7
13.6 16.9
2010 2015(E) 2010 2015(E) 2010 2015(E)

Source: Bank Indonesia, Frost Analysis Source: Bank Indonesia 8

E-Money Payment Market Growth
Fast growing user base with high volume but small-value transaction

First E-Money product (Gazcard) was launched by Pertamina in 2006 in collaboration with
Bank Mandiri, BNI and BRI. Numerous banks, telco, gaming and other companies have
launched numerous e-money instruments (both cards and server based products)
More than half of issuers are Banks follow by telecom (T-Cash, XL Tunai) & others
(Doku, Artajasas Mynt, etc)
Most cards focus on Retail & Transportation, follow by online & bill payment
Average value per transaction ~IDR10,000, Annual transactions per card ~12

E-Money Accounts in E-Money Transaction Annual Transaction Value,

Circulation, 2010-15(E), Mn Volume, 2010-15(E), Mn 2010-15(E), IDR Bn

45.4 537.3 5.3

41.8% 82.5% 50.1%

7.9
0.7
26.5

2010 2015(E) 2010 2015(E) 2010 2015(E)

Source: Bank Indonesia, Frost Analysis Source: Bank Indonesia 9

 Indonesia Ecommerce Summary
Most promising market in ASEAN in the long term

E-Commerce in Indonesia looks a lot like the early years in China

High growth potential due to favourable key factors such as rising income level, youthful
population, maturing of e-Commerce offerings, etc
However, short-term obstacles such as poor infrastructure, high logistics costs and low access
to credit and debit cards will remain a drag on growth

Indonesia E-Commerce Enablers Maturity

Consumer Readiness Infrastructure and Resource Pool

Ability to consume
Availability of Skilled Labour

ICT Literacy
Infrastructure Upgrading

Broadband & Device Adoption
Banking/ Logistics Readiness

Regulatory Government Schemes & Support

Consumer Protection Laws
E-commerce Adoption Grants &

Electronic Transaction Laws Fundings for enterprises

E-Commerce Investment Schemes
ICT Education and Training

10
Predictions for 2016

1 Consolidation expected especially for E-Commerce firms

2 Hybrid O2O Business Models to emerge

3 M-Commerce transaction to account for ~35%, up from ~25%

Online payment using credit card, debit card, e-banking, etc to

4
exceed COD and OTC payment by end of 2016

11
F&S E-Commerce & E-Payment Capabilities

Market Growth Financial

i Research Consulting Advisory

Custom Research Custom Consulting IPO & DD Advisory

a) Market Landscape
Assessment & Sizing
b) Competitive Market
Intelligence
c) Market Feasibility Study
a) Strategy Development
b) Product and Service
Roadmap Development
c) Go-To-Market Planning
d) Partnership Profiling and
Scanning
a) IPO Prospectus Support
b) Commercial Due
Diligence
c) Portfolio Valuation

12
 Thank You

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