Key Trends in Indonesia's IT Sector for 2025

Ekaterina Liasko

CEO at Global CIO

The Global CIO editorial team is continuing its series of articles focusing on the IT industry across various countries. In this edition, we explore Indonesia, one of Southeast Asia's largest economies. We interviewed local partners to discuss the sector's growth, challenges, opportunities, and key factors for success.

Ivan Gorkovenko, Regional Director for Southeast Asia at Softline Group, shares his insights about the region and provide more details about the IT sector in Indonesia.

What are the three most important facts about the country to know?

The largest economy in Southeast Asia. The country is located on one of the world’s major trade routes and has extensive natural resource wealth distributed over an area and is comprised of over 17,500 islands. About 40% of world trade flows and 50% of world oil and gas supplies pass through the Strait of Malacca, which Indonesia controls jointly with Malaysia, Singapore and Thailand, primarily from the Middle East to Asia-Pacific countries. Indonesia officially became a full member of BRICS at the beginning of 2025. In July 2024, the fifth round of negotiations on concluding a free trade agreement between the EAEU and the Republic of Indonesia was held. Indonesia's economy ranks 16th in the world and is the largest economy in all of Southeast Asia, with GDP growing by more than 5% per year due to open trade and investment policies, increased domestic consumption, abundant natural resources, and a growing workforce. Indonesia's annual GDP was $1,420 billion.

The dominant sectors of the country's economy are agriculture, mining, and manufacturing. There are multiple market opportunities in the world’s fourth-most populated country, including expansion in retail, health, education, telecom, and financial services sectors.

Digital Ecosystem Hub in ASEAN. Indonesia is positioning itself as the hub of the digital ecosystem within ASEAN. Indonesia’s strategic value and resources surpass those of other ASEAN nations. According to the digital attaché, the main tasks of the country's digital transformation are: strengthening the infrastructure, including the development of broadband networks and the introduction of satellite technologies in remote areas; developing the human resources potential of the IT industry by increasing the level of digital literacy.

Technology barriers in Indonesia. Indonesia has implemented various technology-related regulations that can hinder market entry and innovation. For example, the government requires that certain types of hardware and software products be certified by local authorities, a process that can be lengthy and complex. Additionally, restrictions on foreign technology providers in critical sectors can limit opportunities for foreign firms. Digital services companies are obligated to pay an 11% VAT rate on foreign digital products sold in Indonesia.

What is the volume and development forecast of the IT market for the next 5 years?

Business fields in the ICT sector are predicted to be consistent in maintaining economic growth, moreover, Indonesia’s digital economy potential is expected to grow rapidly in the next few years. Doubling investment in ICT could contribute up to 1% growth in Indonesia’s GDP by 2030. Indonesia’s Ministry of Communication and IT (Kominfo) plays a pivotal role in driving strategies, with a focus on expanding internet access, developing a comprehensive 5G network, and promoting cybersecurity measures. The government also plans to establish a national data center and strengthen regulatory frameworks to attract more investment in the digital sector. According to the digital attaché, Indonesia's IT market is worth $36.9 billion. The Indonesia ICT Market size is estimated at $48.91 billion in 2025, and is expected to reach $72.53 billion by 2030, at a CAGR of 8.2% during the forecast period (2025-2030).

The software and digital services sector in Indonesia are experiencing rapid growth, driven by the widespread adoption of cloud computing, enterprise software, and digital platforms. Telecommunications also remain a key area of investment, with ongoing upgrades to mobile and broadband networks. There are opportunities for companies offering SaaS, digital transformation consulting, and telecommunications equipment and services.

Promising niches for Russian IT companies include: state and corporate security, smart city, logistics, public administration, law enforcement and public safety, EdTech, AgTech, telemedicine.

What national strategic and digital initiatives have been adopted in the country?

Digital economy. Indonesia’s government has positioned the digital economy as a cornerstone of its broader economic development strategy. The digital economy in Indonesia, currently the largest in Southeast Asia, is anticipated to reach $130 billion by 2025. Estimates project an expanded digital economy could add as much as $2.8 trillion U.S. dollars to the Indonesian economy by 2040. The Ministry of Communication and Digital Affairs has outlined a comprehensive digital transformation strategy. This strategy focuses on four pillars: digital economy, digital society, digital government, and digital infrastructure. The Indonesian government has emphasized the critical role of digital sector investment in achieving the country’s 8% economic growth target. Central to this ambition is the “Making Indonesia 4.0” roadmap, which aims to position the country as a leading digital economy by 2030. This plan is underpinned by significant government initiatives, including the “100 Smart Cities” program and the “National Strategy for AI (2020-2045),” both designed to enhance digital infrastructure, boost innovation, and integrate advanced technologies across various sectors. Projected Digital Economy Growth: Indonesia’s digital economy is among the fastest growing in Southeast Asia, projected to exceed $130 billion by 2025.

In the coming years, the digital economy’s growth is expected to be bolstered by investments in infrastructure, increasing mobile broadband access, and continued innovation in services like HealthTech, EdTech, and AgTech, which are gaining traction as key verticals in Indonesia’s digital transformation journey.

Startup ecosystem. Indonesia is positioning itself as the hub of the digital ecosystem within the ASEAN. Indonesia’s strategic value and resources surpass those of other ASEAN nations. There are currently more than 20 SEZs in Indonesia. Residents of Indonesian SEZs enjoy a range of tax incentives, including an annual corporate tax reduction, import tax exemption and certain duty exemptions. According to the National SEZ Council, resident enterprises across the country have invested a total of IDR 31.4 trillion ($1.93 billion), 40% of this year’s target. Indonesia is not only attracting global tech investments but also strengthening its local innovation ecosystem. The nation is looking to boost domestic productivity and reduce reliance on imports in critical sectors like machinery and agriculture. “Golden Indonesia 2045” vision aims to raise science and technology spending from 0.28% to 2.2% of GDP by 2045.

AI technologies. AI is a rapidly growing field in Indonesia, with applications across multiple sectors, including finance, healthcare, retail, and government services. The rate of AI implementation in Indonesian organizations is 25%. Opportunities abound for AI solutions that offer predictive analytics, ML, NLP, and other capabilities that can optimize operations, improve decision-making, and personalize CX. The Indonesian government’s focus on AI within the “Making Indonesia 4.0” initiative further underscores the importance of this technology. The main areas of Indonesia's National AI Strategy (Stranas AI) are education, healthcare, food security, smart city and e-government. Indonesia Digital Vision 2045, a strategic document outlining how AI will play a role in advancing digital governance, the digital economy, and a digital society.

Indonesia is positioned to generate an estimated $366 billion in economic value from AI by 2030. This boost in the economy could lead to a national economic growth rate of 18.8%, far exceeding the 8% growth target.

GovTech. In December 2024, Indonesian President has issued new directives focusing on public service reform and the integration of technology to improve government services. Public service malls (MPPs) streamline service delivery by centralizing various government services in one accessible location. By consolidating various government services in one location, MPPs not only improve efficiency but also reduce bureaucratic delays, which are often a source of frustration for citizens. As of December 12, 2024, a total of 272 MPPs have been established, providing a convenient and accessible platform for a wide range of public services.

FinTech. In March 2023, Bank Indonesia announced plans to introduce its own credit card system in the near future. The bank is in talks with a number of local industries, and the development progress is 90%. Previously, Indonesian President instructed local governments to abandon Visa and Mastercard and switch to domestic credit cards to increase the country's independence in financial transactions. This is necessary to protect transactions from geopolitical changes in the world.

Telecom. The Indonesian telecommunications market thrives as a mobile-centric industry, featuring four large network operators and a dominant fixed-line provider with a near-monopoly. The growth will be driven by ongoing investments in 4G/5G network expansion and development by major operators and subsequent rise in mobile data usage, and investments in ICT and telecom infrastructure to accelerate digital transformation in the country.

Semiconductor manufacturing. National Medium-Term Development Plan for 2025-2029 outlines the government’s focus on nine priority investment sectors, with semiconductors being one of the key areas identified for growth. Indonesia’s advantage in semiconductor development stems from its abundant raw materials, including silica, bauxite, gold, and quartz sand.

The country has 27 billion tons of quartz sand, with an additional 330 million tons across 23 provinces. This resource can be processed into silicon, a key component in semiconductor chips.

Smart City. Indonesia is investing heavily in IoT and smart city technologies as part of its urban development strategy. Opportunities are particularly strong in areas like smart transportation, energy management, waste management, and public safety. Companies providing IoT devices, platforms, and analytics solutions can find significant growth potential in this sector.

What local infrastructure features influence the choice of technologies and solutions in your country?

Telecommunication infrastructure. In the Network Readiness Index 2024, Indonesia ranks 48th with an overall score of 53.84. With over 355 million mobile cellular subscriptions, Indonesia has the third largest cellular market in the world only behind India and China. According to Fitch Solutions, there were an estimated 258 million 4G subscribers and 79 million 3G subscribers. Indonesia faces more than the usual number of obstacles in terms of enabling widespread access to quality telecommunications services for its population; the fixed-line (fiber) and mobile operators have continued to expand and upgrade their networks across the country; Indonesia’s 17,500 islands (many of which, however, are sparsely populated) makes the deployment of fixed-line infrastructure on a broad scale difficult; mobile subscriptions have reached more than 130% and is projected to exceed 150% by 2026; with 4G LTE universally available, the major mobile companies have been busy launching 5G services in selected areas; the rollout of 5G will be hampered by the lack of availability of suitable frequencies. The analytical company Ookla has published an updated internet speed rating for January 2025.

Cloud infrastructure. Data center development is a key focus area. According to DataCenterMap, there are 137 data centers in Indonesia. They are located in 24 cities. The country’s data center capacity is projected to grow by 260% in the coming years, presenting significant opportunities for both domestic and international stakeholders. Substantial investments have already been made since 2021, with commitments extending into the next decade. These investments are expected to not only boost infrastructure but also create new opportunities for innovation and economic growth.

The Indonesia Data Center market size is expected to grow from USD 2.06 billion in 2023 to USD 3.98 billion by 2028 at a CAGR of 14.09% during the forecast period (2023-2028).

Quantum Computing: Though still in its nascent stages, quantum computing holds potential for solving complex problems in finance, logistics, and cryptography. Companies that offer quantum technologies could find early-stage opportunities in research collaborations and pilot projects in Indonesia. While still emerging, quantum technologies offer significant potential in Indonesia for applications in cryptography, secure communications, and complex data processing. Opportunities exist for companies to collaborate with local research institutions and government initiatives focused on quantum computing and its applications.

What is the situation with local software developers? What business applications are in demand among customers?

Blockchain. The Indonesian Internet Domain Name Management (PANDI) continues solidifying its position as a pioneer in digital technology development by introducing its latest innovation, IDCHAIN. This blockchain-based digital identity management system is designed to enhance the protection and management of personal data, an issue that has become increasingly critical amidst rising threats of hacking and data breaches. With a blockchain-based approach, IDCHAIN offers more secure digital identity management, where personal data is no longer centralized within a single entity but is directly managed by the data owner. Thus, IDCHAIN protects personal data and empowers individuals to manage their identities independently. This aligns with the demands of the digital era, which increasingly prioritizes privacy and security.

Digital identity. INA DIGITAL is a crucial initiative to streamline and integrate digital government services. One of the primary challenges the Indonesian government faces is the fragmentation of digital services. Citizens often must navigate many platforms and applications to access different government services, resulting in inefficiency, confusion, and frustration. The INA Pass application is designed to provide citizens with secure digital identities. It incorporates advanced liveness detection technology to verify that the person accessing a service is indeed the person they claim to be.

What cybersecurity and data protection regulations affect IT companies in your country?

Cybersecurity. As Indonesia’s digital economy grows, so does the need for robust cybersecurity solutions. There is strong demand for cybersecurity products and services that protect against threats such as data breaches, ransomware, and cyber espionage. Companies offering advanced cybersecurity technologies, training, and consulting services are well-positioned to capitalize on this demand. Cybersecurity regulations in Indonesia are becoming more stringent as the government seeks to protect critical infrastructure and data. The National Cyber and Crypto Agency (BSSN) oversees cybersecurity policies, which include requirements for companies to implement robust cybersecurity measures and report incidents. Non-compliance can lead to severe consequences, including fines and business disruptions.

Data privacy. Indonesia’s data privacy regulations are governed by the Personal Data Protection (PDP) Law, which imposes strict requirements on the collection, processing, and storage of personal data. Businesses must navigate complex compliance obligations, including obtaining explicit consent from data subjects and ensuring that data processing activities meet local legal standards. Violations can lead to significant penalties, including fines and imprisonment.

Cross border data flows. Indonesia has stringent regulations on cross-border data transfers. The PDP Law mandates that data transfers to other jurisdictions can only occur under specific conditions, such as when the recipient country has equal or higher data protection standards. This can complicate operations for multinational companies, particularly those with centralized data processing centers outside Indonesia.

Online harms regulation. Indonesia’s approach to regulating online content is increasingly stringent, with laws targeting misinformation, hate speech, and other forms of online harm. The Electronic Information and Transactions (ITE) Law is the primary legal instrument, and its broad interpretation has raised concerns about potential overreach and impacts on freedom of expression.

Anti-fraud. In September 2023, it became known that the Indonesian Government plans to amend the Ministry of Commerce Regulation No. 50/2020, prohibiting social networks from making transactions for online purchases. The regulation will also stipulate requirements for online trade participants to comply with laws regarding licenses, quality standards, tax regulations, and require them to obtain halal certificates and permits from the Food and Drug Administration (BPOM).

In addition, the amendments limit the right of e-commerce and social commerce platforms to act as manufacturers of goods. These measures are primarily aimed at ensuring the security of personal data.

Zoom ban. On April 23, 2020, it became known about the ban on the use of Zoom in the Indonesian government. The local Ministry of Defense saw in this service risks for intercepting the content of conversations. According to The Zoom Meetings video conferencing platform is prohibited from being used for official purposes due to the threat to national security that this product carries. There is information that during meetings through Zoom there may be duplication of traffic to servers to other states, which allows a third party to track the content of negotiations. The Indonesian Defense Ministry refers to the results of studies that reported a data breach due to the use of the Zoom application.

Safe digital environment. Indonesia is reinforcing its commitment to creating a secure digital environment by taking strong actions against illegal product promotions online. In collaboration with the Indonesian Food and Drug Supervisory Agency (BPOM), the Ministry of Communication and Digital Affairs has successfully removed more than 35,000 pieces of content promoting illegal food, drug, and cosmetic products since 2018. These figures highlight the growing challenge of ensuring digital spaces remain free from harmful and deceptive marketing practices, particularly as more consumers and businesses turn to digital platforms for their transactions.

Which sectors are the most digitalized in your country? What local specificities or challenges most often arise when adapting technologies in these sectors?

FinTech. Currently, FinTech Indonesia companies are experiencing very rapid growth. In just a few years, fintech startup companies in Indonesia have been growing in terms of number. Indonesia’s fintech sector is one of its promising industries. Indonesia is home to 20% of all fintech companies in ASEAN and is expected to generate USD 8.6 billion worth of revenue by 2025. One of the primary drivers of fintech’s success in Indonesia is the rapid adoption of digital platforms. These platforms have simplified transactions such as e-wallet, internet banking, and Quick Response Code Indonesian Standard (QRIS), facilitating the shift from traditional offline to online financial activities. FinTech innovation continues to grow due to supportive regulatory facilitation, especially after implementation of the Financial Sector Development and Strengthening Law (UU P2SK) and its implementing regulations. Digital payments in Indonesia experienced an increase of 10% in 2023 compared to the previous year and are expected to grow by 15% in 2025. In fact, the overall fintech industry, including P2P lending, is also expected to grow. The 2023 and early 2024 are good years for the FinTech industry’s growth.

E-Commerce. E-Commerce continues to dominate the digital economy, accounting for the largest share of digital services revenue. The sector is expected to grow further as more Indonesians shift to online shopping. The Indonesia E-Commerce market size is expected to grow from USD 52.93 billion in 2023 to USD 86.81 billion by 2028, at a CAGR of 10.4% during the forecast period (2023-2028). Indonesia’s E-commerce market is segmented by B2C e-Commerce and B2B e-Commerce. Digital wallet is the most popular payment method that used by 72% shoppers while buying things on e-commerce. The use of paylater is more common for older segments (Millenials and GenX).

EdTech. EdTech is a growing industry in Indonesia. With a population of 279.5 million people, Indonesia has a large and diverse education market that is ripe for innovation and disruption. The most popular Ed Tech products offer learning management systems for teacher-student collaboration and interactive classroom tools for hosting live teaching sessions.

The Indonesian Ed Tech market is expected to continue growing in the coming years. The Government of Indonesia has made a commitment to investing in education and technology, and there is growing demand for high-quality, affordable education solutions.

What examples of successful projects in the field of digital transformation or implementation of new technologies in your region can serve as a reference point for IT managers in other countries?

GovTech. The Indonesian government is increasingly embracing digitalization in the procurement of goods and services to streamline processes, boost transparency, and encourage the growth of local industries. The implementation of the e-catalogue system plays a central role in these efforts, driving substantial savings for the government. This system allows for the streamlined procurement of goods, reducing inefficiencies and ensuring that funds are used judiciously. The e-catalogue system has proven highly effective in cutting costs on essential equipment, with savings of up to 40% on purchases such as computers and laptops.

Logistics. Anteraja, also known as PT Triyadi Bersama, is a rapidly growing logistics company in Indonesia. It operates across all 34 provinces, handling up to 1 million deliveries daily. Since its inception, Anteraja has continued to experience exponential growth while quickly expanding its operations across Indonesia. With a vast network of over 20,000 couriers and a rapidly increasing order volume, the company is facing significant challenges in addressing its customers and maintaining seamless logistical operations. Additionally, managing such an extensive delivery network demands precise coordination, real-time visibility into parcel movement, and a swift issue resolution to meet rising customer expectations for fast and accurate deliveries. The company’s GenAI-powered customer experience platform provided a comprehensive ticketing system to streamline customer interactions. The platform automated routine inquiries and empowered Anteraja's support team with AI-driven insights for faster resolution.

What is the situation with highly qualified IT specialists, and what steps are being taken to develop local personnel in the context of global competition?

ICT workforce. Training and certification programs in cloud computing and related fields are being rolled out to equip the local workforce with the necessary skills. These programs aim to foster a robust talent pool that can support the country’s digital economy and contribute to its global competitiveness. Indonesia needs around 9 million digital professionals by 2030 to meet the country’s target of a $366 billion digital economy. However, reaching this ambitious goal will not be easy, and it will require collaboration from various stakeholders, including the government, industry players, and educational institutions. Providing basic digital literacy is not enough to meet the growing demand for skilled digital professionals. The focus must shift to equipping individuals with expertise in cutting-edge technologies such as AI, the IoT, cloud computing, and blockchain. These emerging technologies will play a central role in driving Indonesia’s digital economy forward, and the workforce must be prepared to meet the challenges and opportunities they present. To support the development of digital talent, the Ministry of Communication and Digital Affairs has launched several programs, such as the Digital Talent Scholarship and the Digital Literacy Academy. These initiatives aim to equip young Indonesians with the knowledge and skills they need to thrive in a rapidly changing digital landscape.

In 2024, the government launched 3,320 vocational training programs designed to address specific skills gaps and prepare the workforce for future challenges.

Digital nomads. The island of Bali has become popular among remote workers and those who are called digital nomads. In response to this trend, Indonesia's Immigration Department introduced a new "Remote Worker Visa" (E33G) and Temporary Residence Permit (KITAS). To obtain a visa, two main requirements are imposed on applicants: an employment contract with a company registered outside Indonesia, as well as the need to have an annual income of at least $60 thousand.

AI talents. The government recognizes that a skilled workforce is crucial to leveraging the benefits of technology, particularly in AI, which is set to drive economic growth, enhance public services, and support sustainable development. In December 2024, Graphen Singapore Pte Ltd and ASECH Indonesia have announced a strategic collaboration to nurture AI and digital human technology expertise in Indonesia. Graphen Singapore Pte Ltd is a global leader in AI, specializing in innovative solutions that leverage AI-powered digital humans and related technologies to transform industries. The partnership will focus on four main areas: educational programs; capacity building; mentorship and guidance; and community engagement.

What is the situation with the competitive environment?

According to the digital attaché, in order for exporters to be competitive in the Indonesian market, they need: a competent team responsible for foreign economic activity, a multilingual website, multilingual marketing and presentation materials, the willingness to localize the solution for the host country, and the willingness to offer flexible pricing for the solutions supplied.

I would like to thank Softline for providing such a thoughtful and detailed overview of IT development in Indonesia. It was truly interesting to learn about the country’s progress in this area from industry experts.

If you have your own experience working in Indonesia, we would be happy to share it on our website or social media. Feel free to write to us at feedback@globalcio.com.