Indonesia's digital economy closes in on US$100b as video commerce, AI adoption surge

Indonesia is on track to reach nearly US$100 billion in digital gross merchandise value (GMV) in 2025, according to the latest e-Conomy SEA 2025 report from Google, Temasek and Bain & Company. The findings reinforce Indonesia’s position as the region’s largest digital economy, underpinned by explosive gains in video commerce, digital payments and AI-led consumer activity.

The eCommerce sector continues to dominate the country’s digital landscape, projected to expand more than 14% to US$71 billion. The sector’s momentum is being accelerated by a steep rise in video commerce: transaction volumes surged 90% year on year to 2.6 billion, alongside a 75% jump in active sellers and online shops, reaching 800,000 in total.

“The convergence between content and commerce is now inevitable: Indonesia has become the largest and fastest-growing video commerce market in Southeast Asia,” said Veronica Utami, country director of Google Indonesia. “This success is driven by strong adoption of digital lifestyles by consumers, which also has a direct impact on other sectors. We are seeing sustained double-digit growth across key digital sectors, demonstrating that Indonesia’s momentum is spreading evenly throughout the ecosystem.”

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Across Southeast Asia, investor sentiment and macroeconomic shifts have placed greater scrutiny on growth models, yet Indonesia remains a stabilising force in the regional digital economy. “Southeast Asia’s digital economy has shown remarkable growth and strong resilience, maintaining its momentum despite periods of investor caution and shifts in macroeconomic conditions over the past decade. Indonesia has become a key force in this transformation,” Aadarsh Baijal, partner at Bain & Company, noted.

“Indonesia’s digital economy is projected to approach a GMV of US$100 billion in 2025, driven by strong growth in video commerce, digital financial services, digital media, and AI adoption. This trend reflects how the region’s ‘digital decade’ has built a strong foundation to drive the next stage of value creation,” he added.

Media, gaming and entertainment accelerate

While eCommerce retains its heavyweight status, online media has emerged as the fastest-growing sector, with GMV expected to rise 16% to US$9 billion in 2025. Digital advertising, gaming and subscription-based video and music are driving this climb. Indonesia now accounts for about 40% of all mobile game downloads and 35% of gaming app revenue in Southeast Asia - making it the region’s gaming powerhouse.

Transport, ride-hailing and food delivery services remain on stable growth trajectories, projected to reach US$10 billion. Platforms are sharpening their subscription models, in-app advertising and trip-frequency plays to lift profitability.

Online travel also records renewed strength, forecast to grow 11% to US$9 billion as inbound tourism climbs back to pre-pandemic levels. Expanded visa schemes and an influx of visitors from China and India helped deliver double-digit growth in arrivals during the first half of 2025.

QRIS strengthens Indonesia’s dominance in digital payments

Digital financial services (DFS) have become a critical pillar of Indonesia’s digital expansion. The country is now the largest and fastest-growing digital payments market in Southeast Asia, with gross transaction value expected to hit US$538 billion in 2025.

Much of this scale is driven by QRIS, the national QR-based payments infrastructure that has unified merchants and consumers in a single interoperable ecosystem. Digital lending is also expanding rapidly, projected to rise 29% CAGR to US$13 billion. However, Indonesia’s overall loan book remains smaller than Malaysia or Thailand, signalling substantial runway for micro-SME and working capital financing.

Despite the sector’s rapid growth, trust remains a barrier. Nearly half of Indonesian consumers (46%) express lower trust in digital finance players than in traditional banks - an obstacle the report stresses must be addressed to sustain long-term adoption.

AI places Indonesia at the forefront of SEA’s next digital era

Beyond commerce and payments, AI is emerging as the defining force of Indonesia’s next decade of digital growth. The country scored high in user adoption, with 80% of Indonesians interacting with AI tools daily. AI application revenues grew 127% from the first half of 2024 to the first half of 2025 - the highest increase in Southeast Asia.

Skills development is also surging, with 79% of users actively upskilling in AI to boost efficiency, reduce research time and obtain more personalised recommendations.

Yet despite the demand, Indonesia remains underfunded relative to its potential. The country has just over 45 AI startups and represents only 4% of the region’s total AI funding - far behind Singapore and Malaysia.

“Investments in connectivity over the past few years have built a strong foundation for Indonesia to lead the AI transformation,” Utami said. “We are seeing widespread adoption among businesses, strong market demand, and overwhelmingly positive user response, all of which confirm that AI is not just a new wave of technology, but will transform the way businesses operate and grow.”

But she also cautioned that growth must be matched with ecosystem readiness: “The urgency is clear. Indonesia needs to strategically convert user enthusiasm and market momentum into domestic innovation.”

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