(Bloomberg Opinion) -- When political outsiderĀ Joko WidodoĀ was first sworn in as Indonesia's president five years ago, a little company called PT GO-JEK Indonesia was barely known. Their rise together since then has broken aĀ technology barrier that was holding back the world's fourth-most-populous country and promisesĀ the chance for a better future.
Jokowi, as he'sĀ known, is startingĀ his second termĀ with theĀ dramatic, yet pragmatic, appointment to his cabinet ofĀ Nadiem Makarim, the chief executive officerĀ and co-founder of what'sĀ now calledĀ Gojek, which has gone from ride-hailing novelty to one of theĀ engines of techĀ transformation in Indonesia.
At the time ofĀ Jokowi's first presidential run, hisĀ tech ambitionsĀ centered onĀ attracting device manufacturing in a bidĀ to diversify theĀ economy away fromĀ dependencyĀ on mining and energy. ThenĀ governor of Jakarta, heĀ worked hard to lure Taiwan's FoxconnĀ Technology Group to build a factoryĀ to manufacture iPhones and create thousands of jobs.
A deal signed with Foxconn Chairman Terry GouĀ in February 2014 to invest $1 billion into Indonesia amounted toĀ a de facto endorsement of Jokowi's economic chops, helping the former furniture makerĀ win election as Indonesia's first president who didn't hail from the traditionalĀ elite or the military.
The Foxconn investment never materialized. But it never really had an impact on Jokowi's standingĀ as the development of Indonesia's technology sector came from a very different direction.Ā
A play on the word ojek, or motorcycle taxi, Gojek was mostly operating as a call center for courier deliveries and motorbike ridesĀ when Jokowi took office. Three months later,Ā Gojek launched the mobileĀ app thatĀ would make it oneĀ of Southeast Asia's biggest startups, with a valuation of around $10 billion.
Today, Gojek offers rideĀ hailing, food delivery, payments and a host of other digital products not just in Indonesia, a nation of some 265 million people, but throughout the region. More importantlyĀ for Jokowi, it has more than 2 million drivers and 400,000 merchants on its platform āĀ creating far more jobs and livelihoods than an iPhone factory everĀ could.
In Indonesia, Gojek is nowĀ a national champion. ItsĀ riders vie on Jakarta's notoriously crowded streets with those of Singapore-based rival Grab Taxi Holdings Pte, both of them oddly liveried in green and black. They notably upended Uber TechnologiesĀ Inc.'s expansion into Southeast Asia and are vigorously competing around the region, total population nearly 650 million.
Now, GojekĀ will haveĀ a man on the inside. Harvard-educatedĀ Makarim, 35, resigned from the companyĀ Monday in order to join the cabinet, portfolio to be determined. The appointment is in lineĀ with Jokowi'sĀ goal of bringing industry professionals and millennials into the inner circle.Ā
It's hard to discern who's the bigger winner. Imagine Mark ZuckerbergĀ resigning from Facebook Inc. to join President Donald Trump's cabinet. NeitherĀ carriesĀ the baggage of their American counterparts. But Makarim is a political novice and risks becoming just one more pawn in the constantĀ maneuvering that consumes Indonesian governments.
Jokowi set policies in motionĀ early in his first term to open theĀ economy. They have had mixed success. A deep streak of economic nationalismĀ has long frustrated foreign direct investors. Growth has chugged along at a steady 5% for years. He has struggled against entrenched interests. Yet at a time when regulators and traditional taxi companies worldwide were pushing back againstĀ ride-hailing companies, Jokowi's government refused to crush them. His biggest contribution mayĀ have simply been to get out of Gojek's way.Ā
Being a local favorite hasn't hurt Gojek. It now has a coveted e-money license, allowing it to offer financial services toĀ millions of customers who don't have a bank account or credit card. Grab now gets around this by teaming up with local partner OVO.
Gojek isn't alone in Indonesia's expanded tech universe. Online travel provider Traveloka, e-commerce company Tokopedia and online marketplace Bukalapak have all become unicorns. From $8 billion in 2015, the internet economy grew to $40 billion this year and will triple again to $130 billion by 2025, according to a research report from Alphabet Inc.'s Google, Temasek Holdings Pte and Bain & Co.
The common element: Each operatesĀ in a space called O2O, or online-to-offline. They leverageĀ internet technology to deliver physical-world services, helping people eat, shop, and travelĀ in a nation where infrastructure is unevenly parceled out across 18,000 islands straddling the Indian and Pacific oceans.
A strong and viable digital services economy employingĀ millions was an accidental achievement of Jokowi's first term. It may not be enoughĀ to sustain future economic growth, however. The president and the entrepreneur will needĀ to sit down and write theĀ second act.
To contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
Ā©2019 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories ā On NDTV Profit.
