What Happened in Indonesian & SEA Tech Sector in January 2024

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Time flies and now we’re already entering the second month of 2024. January was eventful, especially in the tech sector in Indonesia and SEA.

We'll cover some significant developments and changes in the tech industry that have taken place recently. From major investments and layoffs to surprising shutdowns and market expansions, there's a lot to catch up on. So, let's dive right in!

Lazada Layoff Post Alibaba Investment

Following China's 阿里巴巴集团 Holding's $634 million investment in Singapore-based Lazada , several layoffs were experienced in the Indonesia, Singapore, Vietnam, and the Philippines offices. The affected individuals included employees at various levels, including VP and C-level positions, across different divisions such as Customer Care, Product Procurement, Campaign, Design, Commercial, Platform Governance, Marketing, and Merchandise.

Additionally, the investment led to operational changes, including the centralization of marketing operations at Lazada to regional teams in order to align their branding and marketing strategies. Lazada Logistics also separated from Lazada to establish LEX, which now accepts orders from other commerce platforms.

Indonesian Zenius Shut Down After Two Decades of Operation

The closure of Zenius , an Indonesian Edtech pioneer, came as a surprise to many. With a strong presence for nearly two decades, Zenius held a special place in the memories of Indonesians who grew up learning with their platform. CEO Sabda Putra Subekti attributed the shutdown to various factors, including debts, high operational costs such as server and tech infrastructure, and the inability to secure additional funding or find potential acquirers.

Zenius provided an online self-learning platform catering to K-12 students in Indonesia and had a workforce of over 1,000 employees. The company successfully raised a total of USD 40 million in funding from notable investors. In February 2022, Zenius even acquired Lembaga Bimbingan Belajar Primagama , a prominent offline tutoring giant, foreseeing a shift towards offline learning after the pandemic. Despite Zenius' closure, Primagama outlets across Indonesia continue to operate independently under a franchise model, where individual owners manage and bear the operational costs of each outlet.

Shopee to Enter Luxury Market with the Launch of Shopee High End Brands (HEB)

The latest feature in development by Shopee aims to collaborate with luxury designers and brands beyond beauty and fashion. There will be a dedicated page for Shopee High End Brands within the Shopee app for this purpose.

To start off, Shopee will partner with local designers Tex Saverio, Sebastian Gunawan, KALA, as well as some international brands. The feature will be tested initially in Indonesia and then expanded to other ASEAN countries if successful.

This strategic move to focus on niche categories and prioritize higher take rates instead of volume is likely a response to Shopee's competition with TikTok Shop. Bukalapak has also expressed a similar shift towards niche retail marketplaces. This new strategy is aimed at both complying with Indonesian regulations and promoting local brands and small businesses.

Kemkominfo to Regulate Came Companies, Potentially Hindering Indie Games

The Indonesian Ministry of Communications and Informatics (Kemkominfo) recently announced upcoming regulations for the gaming industry.

These regulations include the establishment of an independent content rating system for games, similar to the US ESRB. Game publishers operating in Indonesia will also be required to have a local legal entity. Non-compliance with these regulations may result in punitive actions such as internet blocks and fines.

Many game developers are concerned that these new regulations will impede the growth of the local gaming industry, preventing it from competing on a global scale.

Tokopedia finalizes divorce with GoTo, making TikTok officially owner of 75% of Tokopedia.

Here's a brief summary of the sequence of events:

1. Market traders expressed concerns about a decline in sales, attributing it to TikTok. They noted that markets like Tanah Abang, Southeast Asia's largest textile and clothing market, were less crowded than before.
2. The Indonesian Trade Minister, Zulkifli Hasan, accused TikTok of facilitating predatory pricing practices and the influx of cheap imported goods. He also stated that transactions should not be allowed on social media platforms.
3. As a result, TikTok Shop was banned in Indonesia.
4. Bytedance, the parent company of TikTok, reportedly held discussions with other e-commerce platforms, including Bukalapak, regarding potential collaborations.
5. In December 2023, it was announced that Bytedance had acquired 75% of Tokopedia shares for $1.5 billion.

Following this investment, TikTok Shop was allowed to continue operating on the app. However, there is now a change in the checkout process, with users being redirected to the Tokopedia app to complete their purchases after adding items to their cart in the TikTok app.

That concludes our roundup of the significant tech developments and changes in Indonesia and Southeast Asia for the month of January 2024. From the impact of major investments and closures to new market expansions and regulatory developments, the tech industry in the region continues to evolve rapidly. Stay tuned for more updates and exciting news in the coming months!

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