Jack Ma, China’s richest man on the back of his Alibaba online shopping empire, said yesterday that infrastructure and logistics are key challenges to Indonesia’s burgeoning ecommerce industry.
The comments came amidst a meeting in Beijing between Jack Ma and Indonesian ministers, for whom Ma is an official advisor on its digital economy. It’s a role he accepted last year.
“Mr. Ma said as Indonesians live across more than 17,000 islands, putting in place a comprehensive logistics network is a key challenge faced by the country’s ecommerce industry,” according to an Alibaba statement. Ma’s own words were not disclosed.
“To overcome this, two basic infrastructure issues need to be resolved with regards to the information network and logistics network. To that end, Alibaba has cordially invited Indonesian government officials to visit the company’s headquarters in Hangzhou to gain first-hand knowledge and experience on China’s ecommerce development through knowledge sharing sessions and courses,” continued the statement.
Ma met with Indonesian coordinating minister of economics Darmin Nasution – who heads the steering committee that Ma advises – and information technology minister Rudiantara.
The committee aims to produce a roadmap for Indonesia’s technological future, including complex issues around logistics, startup funding, communications infrastructure, education, cybersecurity, and taxing tech companies.
Indonesia’s online shopping market – the largest in Southeast Asia – is set to grow from last year’s US$5.3 billion to US$130 billion in 2020, according to data from its ICT ministry. That’s one aspect of Indonesia’s burgeoning digital economy, which is riding on top of fast-growing usage of smartphones.
Ma has two horses of his own in the race. Alibaba runs Lazada, a popular online marketplace in six Southeast Asian nations including Indonesia, and this month Alibaba contributed to US$1.1 billion in funding for an Indonesian shopping startup named Tokopedia.
Indonesia’s poor infrastructure is often cited by experts as being a major issue in the growth of the nation’s digital economy – as well as its overall economy.
“It is cheaper to ship a container of Chinese mandarin oranges from Shanghai to Jakarta than to send similar freight from Jakarta to Padang in West Sumatra, even though the distance between the two Indonesian cities is one sixth of the distance between Jakarta and Shanghai,” notes a World Bank report from late 2016.
Such inefficiencies make it tough for firms to improve their logistics systems and slows the delivery of packages bought online.
“Improved logistics for better connectivity will have significant effects on the country’s competitiveness as well as on poverty. Better logistics can reduce the cost of essential goods and services, particularly in more remote and less developed parts of the country,” said Rodrigo Chaves, World Bank country director for Indonesia, speaking in November when the World Bank approved US$400 million financing to improve the nation’s logistics.
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