The Next Big Thing in Transborder e-commerce Shipping to Indonesia

Indonesia will be the leader of e-commerce in the next few years in South East Asia. With such a large population of around 250 million within the larger South Ease Asia population of around 650 million and internet users penetration in Indonesia is around 45 percent of the total population. The development of the internet e-commerce industry will be tremendous.

Many large e-commerce sites start operating in Indonesia to cater to market demand. But always some questions arising in regard to what is the best way to import e-commerce purchases to Indonesia.

The demand for global or cross border e-commerce purchases will always keep raising for Indonesia. Furthermore, even Amazon has just set up its largest operation in South East Asia in Singapore and already planning to handle the Indonesian market.

The current e-commerce market in Indonesia

As in year-to-year, the improvement in revenue is double-digit and the way government pushing forward for the high-speed internet all over the country, Indonesia expecting the penetration internet within 5-10 years to up to 70 percent from 45 percent currently.

It might improve and change the maps of internet activity around the region and Indonesia itself and will impact the e-commerce countrywide. After a few years user have been familiar with internet technology, he or she will understand more and maximize the benefit of internet technology in day to day life and daily basis.

The e-commerce sites need to be able to penetrate the mass population to keep increasing the sales in general, as an example the online grocery market in Indonesia will grow in the future especially the city with bad traffic jams such as Jakarta and other big cities in Indonesia.

Internet technology will always enhance the growth of e-commerce directly as e-commerce life by the advancement of technology. Furthermore, there are always three main pointers in upgrading such businesses to thrive. They are:

  • E-commerce players and Investment
  • Regulator and Infrastructure
  • Consumer

Let us talk more about e-commerce providers and investments. Temasek holding as the one large investor in the e-commerce industry, mentioning that it will be needed around 40-50 billion investments to be able to generate a market of 250 billion revenue across the region.

It might need more investment for the player of e-commerce provider to thrive in the industry but keep in mind that “the big players of investment” such as Alibaba, Temasek, Google, Amazon, SoftBank, etc, have invested a huge amount in the South East Asia unicorn companies even though the market needs such a large investment to thrive.

With such investment, companies around the e-commerce industry able to reach the potential customer and offer a service that helps the customer obtain to fulfill their needs as to be able to create the economy to work.

As with current existing players in e-commerce, they need to understand more the existing customers and how to deliver the service or product in the most efficient way to the customer with such expectations.

For the shipping e-commerce delivery, the e-commerce provider needs to workaround on how to be able to serve the Indonesia market by finding the right partner to able to import the goods to Indonesia and to cater to more customers.

From the regulatory side, the current main hindrance as the e-commerce slowing down the region due to high regulation in regards to the importation of the goods by the Indonesian government. 

The Indonesian government needs to push the next big thing in internet technology such as e-commerce to the next level and not feeling worried that the influx of consumer goods from out of the country will suppress the local Indonesian business.

Regulation might be needed but the Indonesian government needs to create such rules to enhance entrepreneurship and competitiveness thrive in the region. Protection measures for the local business by limiting the influx of consumer goods purchased by the individual to one’s country need to be lessened.

There are few major regulations by the Indonesian government that indirectly affecting the e-commerce market is

  • The increases of tariff for almost hundreds of consumer goods as the measure to protect rupiah towards other currencies.
  • Decreasing the minimum threshold of tax from USD 75 to USD 3 per person per day.
  • The subjected additional rules of tax for every e-commerce transaction that the consumer might need to produce the NPWP (national personal tax code) for every purchase in an e-commerce site for tax purposes.
  • The monopoly of Pos Indonesia as the official company to handle importing goods by EMS and other measures to limit the growth of e-commerce shipping in Indonesia.

From the consumer side point of view, with the rapid growth of technology, consumers need to be educated and encouraged to move toward the internet of things that comprise all aspects of technology that able to make daily life better with effectively.

Indonesian consumers as mostly is below 18-45 which comprises around 60 percent of the total population.  For such a young country, Indonesia will have a massive role in the future in regards to the development of e-commerce in Indonesia.

As surveyed, almost around 70-80 percent of internet users in Indonesia have used the e-commerce service before. The most common things are Gojek or Grab as the application that helps provide the transportation needs for the people and foodservice delivery, further until purchasing tickets and travel arrangements through e-commerce sites.

Currently, the market penetration for Indonesia is around Jabodetabek or Greater Jakarta comprising 60 percent of total e-commerce for the country, 20 percent around Java Island and another 20 percent is spread out through the country.

In Indonesia alone, most of the users pay the transaction by interbank transfer or cash on delivery. The penetration of credit card payment or any other payment is still low compared to the traditional way of payment.

What is the next measure from the Indonesian government to enhance trans-border or international shipping to Indonesia?

As the main regulator of the industry of commerce, a few aspects of the Indonesian government needs to look after. The private sector of e-commerce or education for customers alone will not be able to cater to the next big things when e-commerce grows in the region.

Few measures that the Indonesian government needs to improve for the next big thing in trans border or international of e-commerce growth in the region are:

  • The Indonesian government needs to decrease the tariff to the competitive level comparing to another developed country so the marketable to growth to a certain level with the investment from other countries.
  • The Indonesian government needs to improve the investment measure and reduce restriction even the monopoly by certain companies in regards to e-commerce operations, finance, shipping.
  • Ease of measure for the tax measure as to keep the growth for e-commerce whilst the industry still has not mature enough to increase the transaction and revenue for the market player.
  • Increase the minimum tax threshold to a minimum of USD 250 (similar to Singapore)
  • Increase the gateway of import not only by Jakarta to cater to the import industry but expand to the cities that share the border with a neighboring country such as Singapore, Malaysia, or the Philippines to clear the import cargo as soon as possible.
  • Keep up with the infrastructure build-up within the country for easy access to the connectivity within the region that able to push down the price of transportation.
  • Encourage the cashless payment method for customers using the e-commerce website by building adequate finance infrastructure.

Please bear in mind, for new rules or development implanted, or anything changes, expect 5-10 years for a country to change their own behavior or rules towards an industry. Before we are able to see some improvement, we might not see any changes in the international express shipping in the Indonesia region.

So the main question still lingering, what will be the next big things or future in express international shipping of e-commerce to Indonesia?

The next big things that we might see in the transborder e-commerce shipping to Indonesia are:

  1. We expect that no more border checks between one economy region of South East Asia and Indonesia. As we can see the model of the European Union which ease the border security between neighboring countries able to help the e-commerce shipping flourish and borderless. The Indonesian government and South East Asia need to work together to ease the border within South East Asia countries.
  2. In the future, there will be the same day express delivery from between different countries including to and from Indonesia as the market also integrated from the warehouse, etc is easily accessible around South East Asia.
  3. For ground delivery, there is more automation in terms of delivery like drones, and robot shipping will be applied as in South East Asia especially Indonesia, A traffic jam is one of the reasons for the limited list of deliveries and with drones hopefully, we expect  24/7 deliveries.
  4. More integration between all of the stakeholders in the e-commerce that the delivery can work seamlessly to cut the delivery time effectively with digital technology.
  5. The future payment system might be in blockchain technology, as every customer has the account online and full contact and data, it will help speed up the payment system, delivery payment, even the customs border check time can be reduced with the right identification.
  6. Live tracking technology will be improved even the owner of the goods will be able to track the location in real-time even while on an airplane or at the warehouse even to the truck delivery locations.

SindoShipping specialized on liquid/ chemical items, medical products, & personal effects air shipment from Singapore to Indonesia & daily hand-carry Singapore-Batam and we ship effectively and committed to providing the best service to Indonesia.

By partnering with us, your company eligible to use our office address in Singapore as the main shipping address and our staff with help you label the address on the package to your customer directly. Our company offers you a simple way to import your goods to Indonesia by using Singapore as your transit point to Indonesia. Few benefits on using Singapore as transit points:

  • No customs hassle, as in Singapore the customs import tax and procedure is fair and square based on the regulation stated.
  • Singapore based address is recognized by online retailers around the world.
  • By using Singapore address, you able to get more profiles on your account in an online merchant.
  • Singapore’s address is more reliable to track online with International Shipping companies such as FedEx, UPS, DHL, etceteras.
  • You can consolidate your shipment through Singapore to save more costs.
  • You are able to shop any product locally ( in Singapore) with more variant and easy access.
  • Obtain a free address to use for your shipment internationally.
  • Received up to SGD$400 free tax from Singapore Customs (GST is calculated based on the Cost, Insurance, and Freight (CIF) value of the goods, together with all duties payable). Refer to: Singapore Custom
  • We help you to pay your import tax to a government with Free of Charge (FOC).

The company working together with local courier services in Indonesia such as Pos Indonesia, JNE, TIKI, DHL, EMS, WAHANA, etc and internationally with FedEx, UPS, TNT, DHL, USPS, etc.

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