The number of young entrepreneurs has grown significantly, especially since the COVID-19 pandemic forced business to switch from conventional to digital. This switch provides new opportunities for the younger generation, especially Gen-Z, to contribute more in conducting digital transactions.
In line with this transformation, for the first time Xendit publishes Xendit Index, a digital transaction report that summarizes more than 150+ million annual internal transactions. This report highlights several insights that focus on the growth of digital businesses in ASEAN and the potential growth of the number of young entrepreneurs in Indonesia. Here are some takeaways.
The Trend of Increasing Digital Business in ASEAN
Overall, there is an increase in digital business in ASEAN. With the average population in six countries including Indonesia, Malaysia, Singapore, the Philippines, Thailand, and Vietnam reaching 700 million, 10% of them (70 million) are MSME actors. Moreover, 61% of MSME actors are young people under 35 years of age.
The number of young entrepreneurs is predicted to continue to grow due to several factors. The first one is related to the improvement of education, technological advances, and having investment assistance from the government, which nowadays has begun to support the development of digital businesses. This support is expected to help digital business growth and enable ASEAN to compete on the global stage, against other economic superpowers.
Indonesia, A Nation of Young Entrepreneurs
After the COVID-19 pandemic that changed the lives of many people, Indonesia is now in a phase of recovery. On the business side, the trend of digital business development in Indonesia is also getting better. There are 8 tech unicorns (companies valued over USD 1B) in Indonesia, a sizeable number given it has produced 20% of the total 40 unicorns across Southeast Asia. And the region’s tech scene is rising, with a $1 trillion forecast by 2025.
Not only that, the desire of the Indonesian people to embark on an entrepreneurship journey is also quite significant. Every 1 in 3 people of productive age (15-35 years) desire to be able to run their own business, and as many as 34% of the Indonesian people are entrepreneurs. This number also supports the business growth in Indonesia, which is dominated by MSMEs growth at 56%.
Several reasons for the increase also come from digital transformation, which has accelerated rapidly since the pandemic. Some digital trends that cover business developments include: use of social media (54%), e-commerce buying (51%), video streaming (50%), online education classes (59%), and e-commerce selling (45%).
Digital Business Opportunities and Challenges in Indonesia
As the most populous country in Southeast Asia, Indonesia is predicted to experience an explosion in the demographic group of productive age in 2030. But this is a double-edged sword that comes with both opportunities and challenges.
The future young generation will experience many challenges, such as the availability of jobs, inadequate skills, and poor infrastructure.
However, the growth of digital transformation can help alleviate these challenges, for example through the rapid growth of digital business opportunities. This generation can look forward to higher productivity and improved efficiency in doing business with the support of the developing fintech solutions.
Xendit is a financial technology company that provides payment solutions and simplifies the payment process for businesses in Indonesia, the Philippines and Southeast Asia, from SMEs and e-commerce startups to large enterprises. Amidst the fragmented payment landscape in Southeast Asia, Xendit enables businesses to accept payments from direct debit, virtual accounts, credit and debit cards, eWallets, retail outlets, and online installments
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