While the e-commerce market growing rapidly in Indonesia, the presence of Chinese online marketplace Alibaba Group Holding is not a threat to local players, Indonesia's former trade minister said on Tuesday. [Special coverage]
Considering the increasing number of e-commerce players offering various products to consumers through online platforms, there is a fear that the Chinese e-commerce giant will overtake all the online businesses in Indonesia, Mari Elka Pangestu told the Global Times on Tuesday during the ongoing ASEAN Business and Investment Summit 2016, which is part of the 28th and 29th ASEAN Summits and Related Summits.
"But it doesn't mean that," she said, noting that working with Alibaba is more like collaboration, with local players expected to set up e-commerce joint ventures.
Indonesia's e-commerce market scale is expected to reach $3.8 billion by 2019 thanks to factors such as a positive demographic profile, robust economic growth and high mobile adoption, market consulting firm Frost & Sullivan said in January.
To pursue its e-commerce strategy, the Indonesian government suggested that the founder and executive chairman of Alibaba, Jack Ma Yun, be the adviser for the country's e-commerce development, Reuters reported on Monday.
Pangestu suggested that the Chinese e-commerce company will help more local small and medium-sized enterprises (SMEs) to grow their business overseas, and collaborating with Alibaba will facilitate access to China, which is a lucrative market.
The Indonesian e-commerce market is still very young, with many untapped areas, Iam Usman, co-founder and CEO of an online tech-enabled education provider in Indonesia, told the Global Times on Tuesday.
"The fact that we are having giant companies like Alibaba or Amazon come to Indonesia will help companies to grow the ecosystem, because the technology will help educate the customers," he said, noting that foreign e-commerce leaders are likely to give a boost to the local industry.
U.S. e-commerce giant Amazon announced plans earlier to enter the Indonesian market, allocating $600 million for its first year, media reports said in June.
With foreign companies showing an interest in the Indonesian market, some local customers still have concerns over information security, for example the protection of privacy and safety of online transactions, according to Usman. "And also [over] the reliability of the platform itself," he said, noting that some people are still not well-educated about the benefits of using online platforms because they are used to offline activities.
