Over the past two years, Indonesia has experienced a wave of support for its fledgling technology sector, including ride hailing apps and e-commerce firms. Now big-end-of-town firms like Expedia and Alibaba are pumping billions of dollars into Indonesian tech start-ups in what may become Southeast Asia’s largest online market.

To base these start-up businesses, an increasingly large number of companies are considering Bali as the place to start their businesses.

At a glance:

• Technology start-ups have been relocating to Indonesia with its large market and promising future
• Global giants are now investing in Indonesia as the future leading tech destination in Southeast Asia
• Many large companies are looking to Bali as their base
• It is cheaper than being based in Singapore, or the Silicon Valley
• Office buildings are being built to accommodate the demand
• Communities of expat digital nomads are being formed to work together and stimulate ideas

Tony Eddy, a property consultant from Keller Williams, said office buildings offered significant potential in Bali as the island had good internet infrastructure, as well as a cheaper rental price compared to developed countries.

“The rental price for office space in the United States is very expensive, especially for tech start-ups that have just started their businesses,” Tony said, referring to the situation faced by tech start-ups in Silicon Valley.

Some companies are now opting to move to Bali, as it is a cheaper option compared to Singapore and the US, he added. Start-ups with a budget of US$500,000, for example, can cover costs for two years in Bali, compared with nine months in Singapore and only six months in the US, he said.

Start-up businesses are attracted to Bali, and as technology continues to improve, digital nomads have become location independent, meaning they can do their business from anywhere in the world, and many choose Bali for the dream lifestyle. As well as the tech savvy, creative and confident Indonesian entrepreneurs-who are also location independent-and use telecommunication technologies to perform their jobs, the island is attracting expats. Communities have been formed to share ideas, creativity and actual workspace. Bali’s first co-working space called Hubud, opened its doors in 2013, and the talented and creative people from around the world there share knowledge and stimulate great ideas.

"We believe that Indonesia is poised for a huge leap forward for its digital economy, following China's growth and becoming the leading tech destination in the Southeast Asia region," Adrian Li said, a partner in Jakarta-based Convergence Ventures.

Research firm CB Insights reports $631 million in disclosed venture capital was ploughed into the country last year, up from $31 million in 2015.

But this year, that figure has skyrocketed to $3 billion worth of deals clinched as of September 2017, said Meghna Rao, tech analyst from CB Insights. These include Tokopedia, with $1.1 billion in capital from China’s Alibaba, and Go-Jek, which secured $1.2 billion from Chinese tech giants JD.com and Tencent Holdings. Plus, Koison became Indonesia's first e-commerce service to go public in October.

Google reports Indonesia's mobile-first market will comprise more than half of Southeast Asia’s e-commerce market by 2025, with an estimated value of $46 billion.

"When you do start-up business in Malaysia, Singapore, Thailand and Indonesia, the cost, effort and time that you spend is almost even. But when you go to Indonesia (growth) is unlimited, the market is so big," said Willson Cuaca, whose venture capital firm East Ventures specializes in early-stage investments.

President Joko Widodo plans to create 1,000 local tech start-ups worth $10 billion by 2020. But the sector still faces a number of challenges including a small talent pool, low internet penetration in areas outside Java, bureaucracy and infrastructure.

Sources: The Express Tribune and Seven Stones Indonesia

This article was first published on Gapura Bali

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