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Super apps race to digitize Indonesia’s MSMEs with new initiatives

Written by Khamila Mulia Published on     3 mins read

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Tech giants are supporting MSMEs and bringing more customers into their ecosystems, especially from Indonesia’s tier-2 and tier-3 cities.

After the formation of GoTo and the strategic partnership between Grab, Bukalapak, and Emtek, Indonesia’s tech giants are now racing to digitize micro and small businesses.

Grab, Bukalapak, and media conglomerate Emtek Group have launched an accelerator program called Kota Masa Depan (“future cities”), the companies announced on Thursday. The program targets micro, small, and medium enterprises from Indonesia’s tier-2 and tier-3 cities.

Kota Masa Depan has three priorities—onboarding businesses to the platforms of Grab and Bukalapak, empowering enterprises through training and mentoring sessions, and providing vaccination to MSMEs employees. Businesses will also get exposure from media networks owned by Emtek Group, including television channels SCTV and Indosiar, as well as video streaming platform Vidio.

The program aims to reach 10,000 MSMEs by the end of December 2021 in regions such as Kupang, East Nusa Tenggara, Solo in Central Java, Gowa in South Sulawesi, Malang in East Java, and Pekanbaru in Riau.

Grab, Emtek, and Bukalapak have deepened their business ties over the past months. In April, a few days after Grab announced its SPAC merger with Altimeter Growth Corporation, the Singapore-based company reportedly spent IDR 4 trillion (USD 274 million) to buy a 4% stake in Emtek. In May, Emtek acquired a minority stake (2.59%) in Grab’s Indonesia unit, and later in June, it injected another dose of capital to the tune of IDR 3.09 trillion (USD 210 million). Currently, Emtek owns 5.88% of Grab. Emtek is the largest shareholder in Bukalapak.

Platforms in the Grab and Bukalapak ecosystem available to MSMEs include GrabFood, GrabMart, and the Bukalapak marketplace. Grab also runs a program called GrabKios to digitize neighborhood shops. It has already partnered with over 2 million agents. At the same time, Bukalapak has been aggressively expanding a similar O2O initiative named Mitra Bukalapak, which already counts around 8.7 million agents.

Meanwhile, GoTo has introduced its own program called BangkitBersama (“rise together”) to assist local MSMEs with the process of going digital. The program has several focuses. It seeks to boost MSMEs exposure on Tokopedia through a hyperlocal approach involving geotagging. Also, it aims to empower MSMEs via a series of online and offline business classes, and helps e-commerce sellers to expand their reach through fulfillment service platform TokoCabang.

MSMEs on the GoTo ecosystem can access an array of platforms such as GoFood, GoShop, and the Tokopedia marketplace. In the O2O space, the group has Mitra Tokopedia, which was launched in 2018, and GoToko, an initiative that was launched last year. GoTo also has an e-commerce enabler named GoStore that helps MSMEs to create online stores. Thanks to an investment from Facebook last year, merchants on GoStore can integrate their online stalls with Facebook Shops and Instagram Shopping. The group has a combined 11 million merchant partners as of December 2020.

Currently, there are about 64.2 million MSMEs in Indonesia. These businesses absorb around 97% of the total workforce and contribute about 61% of the country’s gross domestic product, according to Indonesia’s Ministry of Cooperatives and SMEs.

The digitization of MSMEs is becoming increasingly important to allow these businesses to reach out to a wider consumer base, expand their business, and gain access to financing. For tech giants, MSMEs can bring more customers into their ecosystems, especially in tier-2 and tier-3 cities, where the next 100 million internet users live.

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