On-demand platforms add over Rp 90 trillion to the Indonesian economy

The on-demand service industry in Indonesia has become a vital component of the country’s digital economy, generating employment and improving the everyday lives of millions of Indonesians through its multiservice platforms. That is according to a report from Oxford Economics.

The analysis from the global economics consulting firm found that the on-demand service industry, which covers ride-hailing and delivery services, supported a total economic contribution worth Rp 91.7 trillion to the Indonesian economy in 2023, equivalent to around 0.4% of Indonesia’s GDP.

Every Rp 100 of GDP generated by purchases made through on-demand service platforms leads to further economic activity worth Rp110 across the rest of the Indonesian economy.

Economic activity of the on-demand service industry, which in Indonesia is led by Grab, Gojek and SPX, supported an estimated 588,000 jobs throughout Indonesia’s economy. For every employee hired by platform operators, an additional 112 workers are supported in other parts of the Indonesian economy.

Further, the Oxford Economics economic assessment study estimates that earning opportunities supported by the on-demand service industry contributed Rp 33.2 trillion in household income in 2023.

Overall, the total economic impact of the on-demand service industry includes:

• On-demand service platform operators in Indonesia, which supported an economic contribution of Rp 15.5 trillion to Indonesia’s GDP in 2023, and nearly 70,000 jobs.
• Merchant-partners, which contributed an estimated Rp 31.9 trillion to Indonesia’s GDP in 2023, as well as 387,000 jobs.
• Driver-partners, who contributed approximately Rp 44.4 trillion to Indonesia’s GDP in 2023, and account for almost half of the industry’s total economic contribution.

These three pillars supported economic activity and employment across Indonesia’s supply chains. The sectors in the wider economy which benefitted most from these on-demand services were the professional services, wholesale and retail, agriculture, and the finance and insurance sectors.

Beyond financials

Beyond the measurable economic gains, on-demand platforms promote financial inclusion in Indonesia by offering unbanked individuals and small merchants access to financial services and microloans.

On-demand platforms also promote digitalisation by exposing Indonesians from diverse demographics to mobile apps and online payments, thereby promoting digital literacy. Initiatives focused on skills development further empower individuals to navigate the digital economy, while small businesses benefit from integration into these platforms, helping them reach new customers.

Conclusion

By leveraging advanced technology, on-demand platforms offer a range of services, including mobility, food and grocery delivery, parcel services, and financial solutions. “This extensive service portfolio offered by the industry has redefined convenience for users across the nation, while supporting broader economic growth, promoting financial inclusion, and digitalisation in Indonesia,” say the authors.