Traversing Indonesia’s FinTech Landscape – Investment Perspective

Over the next few weeks, MEDICI brings you a series of articles exploring FinTech in the ASEAN region. The articles, each focused on a different ASEAN country, provide comprehensive insights into the FinTech investment landscape in the region.

ASEAN in Figures

ASEAN (the Association of Southeast Asian Nations) is the third-largest Asian region. It is home to more than 630 million people and one-fourth of the population lives in urban areas. ASEAN has an annual growth rate of 4.7% and USD 119.97 billion in FDI; it is also one of the fastest-growing regions as well as the seventh-largest economy globally.

Its population is young and educated with a literacy rate of over 80%, phone-savvy with more than 0.5 phones per person, and enjoys a low-to-mid unemployment rate of 0.5%–6.9%. ASEAN members also have an average to a high life expectancy of 69–82.7 years, and a gender parity of 49.9% males to 50.1% females.

So far, we’ve explored Thailand, Singapore, and Vietnam’s FinTech ecosystems from an investment perspective. In this article, we take a comprehensive look at another interesting ASEAN country – Indonesia.

Indonesia in Figures

With more than 250 million people, Indonesia is the most populated country in the region. Its largest city, Jakarta, is inhabited by more than 8.5 million people, and 53% of Indonesians live in urban areas.

While Indonesia shows strong growth at 4.8% per year, high cell phone penetration with 1.3 phones per person, and a high literacy rate with 95%, it has a relatively high unemployment rate of more than 6%. More than 25 million people live below the national poverty line. With life expectancy at 70 years, Indonesia performs lower than the rest of the ASEAN region.

Indonesia is ranked 91 in terms of ease of doing business. The country performs particularly poorly when it comes to starting a business and ranks at 151. Foreign ownership is also limited at up to 40% for banks and NBFIs. Besides this, there are some tax incentives; the corporate tax rate is 25% with a tax break if 40% of capital is traded on the stock exchange. In addition, if turnover is below IDR 50B, there is a 50% tax rate reduction. There are also incentives for new investments as well as investments to expand the current business.

Macroeconomic Overview

Indonesia is the largest economy in Southeast Asia with nearly half of the region’s GDP. It has been growing at a steady 5% to 6% for over the last 10 years and is predicted to be in the top 10 largest economies in the world by 2030.

In 2015, the Indonesian economy underperformed due to prolonged delays in government spending, sluggish private investment, and the impact of weak global markets on external sector growth. FDIs went below 2% of GDP, which happens to be their lowest levels since 2010.

However, the economy is expected to recover in the future from an increase in government spending (over 15% of GDP). The country’s fast-growing middle-class and affluent population is expected to double from 70 million in 2012 to 140 million in the next three years and drive economic expansion. Furthermore, in the next 30 years, two-thirds of Indonesians are expected to live in cities, which will also drive the country’s growth.

Indonesia’s Financial Sector: A Snapshot


The retail and institutional demand for mutual funds is expected to rise, driven by a young and growing population with the need to build a financial base; rising disposable income; and increasing awareness about the benefits of investing. At the end of 2015, there were an estimated 170 mi ...

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