Tokopedia, Indonesia’s largest e-commerce company in terms of gross merchandise volume, has secured $1.1bn in its latest funding round, led by Chinese e-commerce giant Alibaba and Japan’s SoftBank Group Corporation. This is an extension of previous investments into Tokopedia made by both investors; Alibaba invested $1.1bn in August 2017, and SoftBank used this funding round to shift previous investments into its technology-focused subsidiary Vision Fund.

The investment would help “broaden Tokopedia’s scale and reach” as well as improving its operational efficiency, CEO and co-founder William Tanuwijaya was quoted as saying in the South China Morning Post. Tokopedia, which was founded in 2009, has not confirmed its valuation following the round, but Bloomberg has cited an unnamed source claiming the company was valued at around $7bn.


SoftBank now owns almost 40% of the company, and Alibaba another 25%, according to Asian technology news provider KrAsia.

Tech giants battle for Indonesia

Amid slowing growth in China’s e-commerce market, Indonesia has become the new proxy battleground for Chinese tech giants. Alibaba is already the majority owner of Lazada, Tokopedia’s main competitor in the Indonesian e-commerce market, and doubled its investment into the company to $4bn in March 2018., China’s second largest e-commerce company, has its own Indonesian subsidiary and has aggressively invested in building a logistics network in Indonesia. Tencent – the Chinese technology giant which raised $ through an IPO of its music streaming service on the New York Stock Exchange last week – owns a 36% stake in Sea Ltd, which owns e-commerce site Shopee Indonesia.

Amazon has also planned a $960.8m cloud computing investment in Indonesia during the next 10 years, the Indonesian finance minister said in September. Alibaba also invested $107m in a data centre in Jakarta back in June 2017, according to fDi Markets.

Indonesian powerhouse

With 272 million online adults, total online retail earnings amounted to $19bn for south-east Asian markets, such as Malaysia, Indonesia, Thailand and Vietnam, according to a Forrester report published in November.

Indonesia is the largest market in the region, accounting for 41% of the online retail market, and is expected to grow at a compound average growth rate of 19.6% between 2018 and 2023, reaching $19bn in 2023, according to Forrester.

Capital market company CLSA estimates that with the help of Chinese investment, Indonesia – which generated almost $13bn-worth of e-commerce transactions in 2017 – will outpace India’s e-commerce revenue ($17.8bn) in two years’ time.

Indonesian FDI slowing

Despite its booming e-commerce industry, FDI as a whole is slowing down below Indonesia’s $20bn average of recent years,  Thomas Lembong, chief of Indonesia’s Investment Co-ordinating Board, was quoted as saying by Thomson Reuters on December 13. 

As FDI inflows are expected to be around $11bn to $13bn in 2018, the decline could be as much as 40%, which Mr Lembong claims to be “quite significant” and blamed a lack of policy reform momentum at the start of this year.

The country is holding presidential elections in April 2019.