What the Gig Economy Means for Indonesia

Indonesia has seen a specific kind of renaissance with the rise of its gig economy. Young people and expats are getting comfortable being micro-entrepreneurs.

According to Indonesia’s Central Agency for Statistics, a staggering 57.6 million small- and medium-sized enterprises operating in the country contribute to nearly 60 percent of the gross domestic product. Small businesses represent more than 90 percent of all the companies in the country, making them the backbone of the nation. In effect, this means that Indonesians are no strangers to entrepreneurship. In fact, for many, working for one’s self is simply the only option.

If you’ve lived here for any substantial amount of time, then this should not be new information. However, in recent years, Indonesia has noticeably seen a rise in a different form of entrepreneurship: the gig economy.

The first thing that comes to mind, and the one that is most visible in the streets, is the existence of on-demand ride hailing services like Go-Jek, Grab and Uber. For those who have been living under a rock for the past five years, the business models work by routing orders to freelance drivers. In this sense, companies like Go-Jek in fact don’t actually employ anyone who drives a vehicle. Founder Nadiem Makarim recently went on record saying Go-Jek drivers need to view themselves as “micro-entrepreneurs” participating in a newly formalized gig economy.

For those who think this is just a fad, think again. Go-Jek is valued at more than US$3 billion after sucking up US$1.7 billion in disclosed venture capital funding over the span of three rounds from 11 high profile investors including the likes of Sequoia Capital and China’s Tencent Holdings.

The seven-year-old company has acquired four smaller companies in multiple countries to build out what may be the largest organized gig economy in Indonesia. Go-Jek provides gigs to hundreds of thousands of micro-entrepreneurs. Its direct competitors Grab and Uber are doing the same thing on an even larger scale around the world. (According to Reuters, Uber is valued at some US$70 billion in private markets).

But on-demand car transport is just the tip of the iceberg. With just a few swipes on a smartphone, companies like Seekmi, Ahlijasa and ServisHero will send people to your home to fix the air conditioning, clean your basement, do your laundry, fix the car and whatever else is conceivable.

“What gets lost in the telling of these stories, though, is the step-up the gig economy represents for some. Setting your own hours and earning double minimum wage is both remunerative and empowering for an entire class of men (and they are almost entirely men) who have had few options in life until now,” writes Jakarta-based veteran journalist and regular Indonesia Expat contributor Jeff Hutton in his blog. “Ojek drivers were almost untouchable. They waited at the side of the road for fares, had a reputation for reckless driving and gouging the unwary. The smartphone app made fares transparent. The company gave the whole industry a makeover, fitting out drivers with helmets and jackets and driver training

What does this mean for expats?

By and large, the majority of expats in Indonesia won’t be found riding motorcycles in green jackets (largely because they most often won’t have driver’s licenses and the lion’s share of them just wouldn’t find themselves occupying that link on the socioeconomic value chain). But for other industries such as creative services, consulting, content, design and virtually anything in the field of tech, expats fill a unique hole.

Many web-savvy foreigners are here because they were parachuted in by a consulting firm or an aggressive company builder. They bring advanced insights from other markets and special know-how that they can monetize if they only take the leap of faith into micro-entrepreneurship.

Some expats come here for work, but then end up staying on a spouse KITAS after finding love. Others can work out various visas via government cooperations between Indonesia and their home countries.

Whatever the case may be for the individual, one thing is certain: expats are freelancing in Indonesia.

Micro-entrepreneurs often arrive at the conclusion that they must ‘fish where the fish are.’ This leads them to set up shop in shared co-working spaces. Ubud in Bali has long been known as a hotspot for foreign digital nomads. Co-working spaces such as Hubud and Outpost have been known to attract hordes of roving freelance journalists, web developers, graphic designers, consultants and everything in between.

Jakarta on the other hand has witnessed a bona fide co-working space boom this year, with names like Freeware, EV Hive and Cre8 doubling down, not just on startups, but on individuals who work for themselves. The same phenomenon is happening in satellite cities as well. Surabaya has seen multiple new coworking spaces open recently such as Cubicle and SUB in the city’s affluent west area.     

While there seems to be no reliable data for how large of an opportunity Indonesia’s gig economy is for expats, the results can be observed and felt firsthand, depending on which sector you work in.    

Hutton says, “Thanks to the same gig economy that has pummelled entire trades including my own and turned the notion of permanent work into a fantasy, in Indonesia it means something else. Here hundreds of thousands have a shot at being fully fledged members of the middle class rather than frustrated outsiders.”   

 

Featured Image by Tim Gouw

 

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Leighton Cosseboom covers a variety of topics related to news, business, and technology in the region.


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