“This is the cow with the crumpled horn that tossed the dog that worried the cat that killed the rat that ate the malt that lay in the house that Jack built.”
This famous children’s nursery rhyme could describe the empire that Chinese billionaire Jack Ma built: A lot of things are connected to his Alibaba Group, with Indonesia also in the loop.
From local coffee to women’s dresses and imported smartphones to baby feeding kits, many are probably sourced from one of the websites owned by Ma’s Alibaba.
Now that he has a more strategic role in Indonesia, what will it mean for the country, its e-commerce industry and consumers?
Ma, owner of some of the world’s biggest e-commerce companies under Alibaba, will be an adviser to Indonesia’s e-commerce steering committee that will shape policies, rule of thumb and the direction of the burgeoning industry after accepting a job offer directly from President Joko “Jokowi” Widodo during a visit to Alibaba’s headquarters in Hangzhou, China, on Sept 2.
The extent of influence Ma will have on e-commerce policy remains unclear as the government has yet to disclose his job description.
But there are arguably three things that we can expect.
First, change. E-commerce is already changing the way people shop around the world: borderless, spaceless and timeless. But Ma in particular has integrated the transformation of online shopping, trade, payment, investment and credit altogether in China.
As with a lot of advisers to the government, there will be to some extent influence on policies. But Ma, an English teacher-turned-billionaire, is a highly ambitious individual.
He once said: “China changed because of us in the past 15 years. We hope in the next 15 years, the world changes because of us.”
Without a technology background or even possessing technological knowledge, which he is proud of, he has transformed the way the Chinese spend their disposable incomes through online innovations, with his empire Alibaba that merges Amazon’s home delivery mechanism and eBay’s middleman principal of being a marketplace for buyers.
Furthermore, its AliPay has now expanded from a PayPal-like virtual wallet for Alibaba’s transactions into a one-stop financial services platform through which people can pay utility bills, purchase train tickets and top up cell phone credit. It also now runs the world’s largest money-market fund.
Born Ma Yun, Jack Ma is an experienced public speaker, who also rippled the world’s financial market with the largest initial public offering a Chinese company has ever conducted on Wall Street.
With that background, it’s just natural to expect great things to come from Indonesia’s e-commerce industry, with Ma as a consultant and mentor to a 10-member government committee. It is not without reason that expectations are high for him to create breakthroughs like he did in his home country.
Ma will have access to monitoring the implementation of Indonesia’s e-commerce road map and its future derivative regulations, as will committee leader Coordinating Economic Minister Darmin Nasution and member Communications and Information Minister Rudiantara.
The road map, launched earlier this year, gives guidelines to seven key issues: logistics, financing for startups, consumer protection, communications infrastructure, e-commerce business tax, the education sector and cyber security.
Second, focus on small and medium enterprises (SMEs). Ma and Jokowi both came from an SME background. The former started Alibaba as a startup and the latter was a furniture producer and exporter in Surakarta, Central Java.
They are both passionate about boosting the contribution of that segment to the overall economy. Both want to foster SMEs and give them a place on the internet to increase their consumer base and efficiency, as well as innovate in growing their businesses to better serve consumers.
SMEs in Indonesia account for around 60 per cent of gross domestic product and nearly 100 per cent of business units and the workforce. However, less than 5 per cent of the millions of businesses have access to online trade, something that many local e-commerce marketplaces and technology operators are keen to improve.
“Third, investment. Apart from great ideas and a boon to SMEs, a great deal of investment by his empire may come into Southeast Asia’s largest economy, as he now has the ability to influence policy making and development design of the multi-billion dollar e-commerce industry. This is where the risks of conflict of interests can arise from his appointment.”
A vast market of a 250 million population, Indonesia’s e-commerce transactions are to triple to US$24.6 billion (S$33.34 billion) this year from 2013 and Ma is expanding his presence in and partnerships with Southeast Asia.
The recent US$1 billion deal to buy e-commerce platform Lazada, a major player in the region, is Alibaba’s biggest overseas deal. Its subsidiary Inamall also recently announced a partnership with the Indonesian Chamber of Commerce and Industry (Kadin) in which many Indonesian products can be bought from the online market platform that is based in China.
Indonesia’s e-commerce sector hosts three different types of businesses: established ones, startups and SMEs. The last two segments are most prone to expansion by big players, but they can also collaborate to grow their businesses.
“So by putting forward the needs of consumers and involving local businesses’ participation in the shaping of e-commerce policy and development programs, Indonesia can cash in on Jack Ma’s expertise and tackle any risks of conflict of interests.”
Inviting Ma’s school of thought to Indonesia’s e-commerce scene is arguably a smart decision to send the right signal that the country cares for and is committed to developing the young industry, but it all boils down to the government as the gatekeeper of the country’s policies.
The government should clearly set its vision and goals in the e-commerce sector, taking into account local businesses’ and regulatory perspectives, while the technical ways to achieve them can flexibly be sourced from anyone, including Ma.
“It’s akin to hiring an interior designer for a new home. We want their expertise, but in the end, we are the ones who are supposed to be making decisions because it’s our home where we will spend our lifetime in a house that we built.