Masyitha Baziad: My Fave 5 of 2016

• Spotlight was firmly on the Indonesian digital economy in 2017
• Indonesia struggles to come to terms with e-commerce definitions and targets

IT IS not easy trying to choose only a few favourite stories, especially when the spotlight was firmly focussed on technology startups, and the digital economy in Indonesia last year.

I met and spoke with amazing people in the industry, from passionate young startup founders, to wise men and women who have been in business for years. I also met confused and worried business players as well as many of Indonesia’s policy makers.

If you are reporting from Indonesia, you must deal with the fact that there will be days when the news will be all positive, sweetness and light but then it might just right flip over the next day and confuse us all.

Indonesia holds tremendous potential and every single businessperson, investor, and even its people believe this. What haunts the country is its immaturity, its unpreparedness, its own dilemma of nationalism, and its classic way of trying to ensure that all parties are happy.

While Indonesia continues along its learning curve, I have compiled the five stories that I feel showcase the Indonesian digital year.

1. Indonesia needs to rethink its e-commerce targets and definition: IDC

It was a bold move by IDC Indonesia to come up with such a statement, however no one in the room filled with media argued the fact that Indonesia might have over-calculated its forecast US$130 billion e-commerce transaction value in 2020.

Google and Temasek earlier came up with a report, saying that the country’s Internet economy will only be worth US$81 billion in 2025. This estimate includes e-commerce, online travel, and online rides.

IDC however argued, that when it comes to e-commerce transactions, it should not include online travel, and online rides. Ideally, it should only counts the transactions that happen on e-commerce site.

The government of course, dismissed IDC’s argument, saying that an online transaction was any transaction that occurs online, hence these needed to be included in calculating e-commerce value.

This then brings us to the second argument by IDC that the country needs to have a firm definition of e-commerce. Once clearly defined, it will be easier to calculate the value of the industry.

2. E-commerce gold mine is not in Jakarta, but cities outside the metropolis

This proposition comes from Indonesia’s top retailers’ online subsidiary, Alfacart. Specialising in groceries, Alfacart is trying to get more people to buy stuff online with its strong online to offline (O2O) strategy.

In a country so scattered like Indonesia, closing the gap and increasing equality is important. This is why the government has put its hopes into the e-commerce sector, saying that e-commerce needs to help the underprivileged, either to get more exposure and open up the market, or the other way round by giving people living outside Jakarta access to the same products that people in Jakarta enjoy.

Since its first operation as a separate business entity, Alfacart’s biggest market has not been in Jakarta, unlike many other e-commerce players, but in Surabaya, Indonesia’s second biggest city. Many other second tier cities’ growth is also increasing rapidly.

This is made possible, thanks to the strong offline presence of its big brother Alfamart. The company argued that rather than battle over Jakarta, where e-commerce players fight over the same urban customers, it needs to focus on growing other markets, and hopefully help increase the number of e-commerce users.

3. The high tech way to fight religious conflict

Now when it comes to ideas and innovation, you will rarely see many coming from academics. But when our then editor Asohan Aryaduray introduced me to two senior academics Dr Leo and Dr Dicky, I knew the story would be an interesting one.

True enough, both founders had been working on a system to detect sources of conflict and act as an early warning system which will alert the public when a conflict is brewing. The system, called Indonesian Interfaith Weather Station (IIWS) has received a small grant from the US Embassy, and now on its way to further research and enhancement.

While the mobile app is still on trial, both founders believe that once they can find a way to capture the right data, and have enough experts to analyse the data, the IIWS can play an important part in minimising conflict, especially religious conflict in Indonesia.

Both founders admitted that they are still struggling to answer some tough questions, such as how to ensure that the system will do more good rather than inciting fear amongst the citizens, and how to ensure the data captured are not from fake sources.

However, they are determined to step out from their academic comfort zone, and start doing something that can prevent problems from occuring, rather than sitting down and analysing why the problem has occurred.

4. Pos Logistics’ digital transformation: You will not believe some of its issues

It was one of the most candid and interesting interviews I have ever had, where the CEO of a state-owned enterprise’s subsidiary, Yan Hendry Jauwena (pic, above), without any hesitation shared his struggle to start the company's digital transformation.

While the challenges might sound ridiculous to more mature countries, the email problem, copier problem, and scanner problem are some of the ‘usual’ problems you can find in any corporations, big or small.

It is the culture that needed to be shifted, and then the technology will matter. This story shows how shifting culture and mindset is the hardest challenge any leader can have, be it in an organisation, company, small business or even a nation.

Yan is no longer Pos Logistics’ chief executive officer as he stepped down in October last year, after seven months of leading the company. He is now founding his own e-commerce fulfilment company, and I guess we will hear from him as soon as his company is ready to serve the market.

5. Go digital or go bust: Indonesian ‘old-school’ tycoon Mochtar Riady

In case we all need a reminder, think of this story as your go-to book that holds the basic principle to continue your transformation journey, despite the challenges that might put you on hold.

And it is true, Mochtar Riady (pic, above) says as he softly repeats the mantra of the digital age: “Think no more, now is the time, or you will get left behind, transform your company, get everyone on board, no matter what it takes,”

For his grandson, John Riady, who heads Lippo Group’s digital initiatives, the key to transformation is either top down, or revolution. For Lippo, it is always from the great founder, his grandfather.

Many Indonesian companies are still struggling in the process of digital transformation. Some have been disrupted, some are still actively asking “What’s Next?”and some are too afraid to change because of the consequences.

Bear in mind, that while we all thought business was rough in 2016, 2017 it might get worse, so we must do what it takes to be able to compete and stay relevant.

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