Indonesian edtech’s unexploited opportunities

This article is part of our deep dive into Indonesian edtech.

“So the last shall be first, and the first will be last.” This Bible verse might be an apt description of investor interest in the edtech sector.

According to Tech in Asia’s data, between 2015 and 2017, education ranked in the bottom half among Southeast Asia’s internet sectors in terms of amount invested.

But things have changed since then. Last year, Gojek founder Nadiem Makarim stepped down from his company to become Indonesia’s minister of education and culture.

This raised hopes that the adoption of edtech in the country would speed up, given his background and experience in running a tech firm.

Covid-19, a pandemic of biblical proportions, may also accelerate the transformation.

When local governments announced the closure of schools in March, teachers, parents, and students were forced to adopt e-learning solutions. While the process was far from smooth, this provided edtech companies such as Ruangguru and Zenius with a large boost in new users.

Huge potential, many problems

Indonesia’s demographic profile is especially suited to the education industry. Its education system is the fourth largest in the world, behind China, India, and the United States, according to the World Bank.

Private spend on education is expected to increase as incomes rise. However, the average Indonesian only earns 40% of the average Chinese, which indicates a lower ability to pay for learning products and services.

Indonesia’s education system also presents entrepreneurs with big challenges to solve.

First, the country underperforms in rankings despite having better numbers in metrics such as primary education enrollment and the pupil-teacher ratio in secondary education. Using PISA scores in reading, math, and science as a proxy for performance, the country ranks sixth out of its seven Southeast Asian peers.

What’s hot, and what could be