Indonesia's digital economy to hit US$119b as AI adoption accelerates

Indonesia’s digital economy is projected to reach US$119 billion in gross merchandise value (GMV) in 2026, up 16% year on year, as the country emerges as Southeast Asia’s largest market for AI users and leads the region in digital banking profitability.

According to the 11th edition of the e-Conomy SEA report, titled “Building the intelligent economy”, compiled by Google, Temasek and Bain & Company, Indonesia has approximately 162 million monthly active AI users, including 105 million generative AI users among its working-age population.

The findings point to a shift in the country’s digital economy, with AI adoption increasingly creating opportunities for businesses to improve productivity and reshape operations.

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The report found that two-thirds of AI users in Indonesia have become more trusting of the technology over the past year. Meanwhile, four in five said they would be willing to delegate digital transactions and purchasing decisions to AI agents, subject to appropriate safeguards.

However, widespread adoption has yet to translate into deeper usage. Around 80% of AI activity in Indonesia remains consumer-focused and exploratory, including tasks such as translating text and drafting written content. Per capita token consumption is also approximately 10% of the level recorded in the US.

The report identifies the next growth opportunity in moving beyond manual prompts towards AI agents capable of independently managing business processes, including logistics, inventory and credit underwriting. Such applications could benefit both large enterprises and Indonesia's millions of MSMEs.

This transition is expected to significantly increase AI activity by 2030, potentially supporting the country’s double-digit digital economy growth momentum through 2035.

“Indonesia’s digital economy has entered a pivotal stage in its development, with the focus shifting from expanding its user base towards creating sustainable economic value and making digital technology increasingly relevant to everyday life,” said Veronica Utami, country director of Google Indonesia.

“With 162 million people already actively using various AI tools, Indonesia has become one of the key drivers of AI adoption at scale in Southeast Asia. Going forward, the priority is to deepen token usage among enterprises and MSMEs in Indonesia. This will enable the scale of AI adoption to translate into sustainable improvements in national productivity,” she added.

Beyond AI, Indonesia’s online media sector recorded the fastest growth in Southeast Asia, expanding 28% year on year to reach US$12 billion in 2026.

Primarily driven by advertising revenue, the sector’s growth has been supported by the expansion of video-based content formats, AI-powered advertising products and targeting, as well as emerging digital advertising channels such as commerce media.

With GMV projected to reach US$85 billion in 2026, eCommerce remained the largest contributor to Indonesia’s digital economy. Growth has been supported by multimodal product discovery across formats and devices, alongside AI tools that help sellers improve sales conversions.

In financial services, Indonesia has 17 digital banks, the highest number in Southeast Asia. Its pure-play digital banks also recorded the region's highest profitability, supported by lower customer acquisition costs through established digital ecosystems and the use of first-party data to manage non-performing loans.

The report attributed the sector's performance partly to sustainable net interest margins from micro-lending and buy now, pay later (BNPL) facilities, alongside more cost-efficient customer acquisition.

Nevertheless, the report highlighted the need for greater investment in domestic computing capacity and workforce skills, particularly as more than 80% of AI usage in Indonesia remains concentrated among consumers rather than businesses.

Willy Chang, partner at Bain & Company, said Indonesia accounts for 43% of Southeast Asia's GenAI users, but its token usage represents approximately 37% of the regional total.

“However, the success of AI should not be measured solely by its adoption rate, but by the tangible impact it delivers for businesses,” he said.

“As AI becomes increasingly integrated across sectors, the companies that will stand out are those able to redesign their workflows and organisations by embedding AI into their business processes,” he added.

At the regional level, Southeast Asia's digital economy is projected to reach US$368 billion in GMV in 2026, representing 17% year-on-year growth. It is forecast to reach US$1 trillion by 2035.

The report also noted that the transition from basic digital connectivity towards an AI-powered economy is happening four times faster than the development of mobile internet.

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