GoTo chief credits Indonesia’s economy for helping stocks beat tech

GoTo Group, the Indonesian e-commerce giant that defied the volatile IPO market to debut on the Indonesian stock exchange earlier this year, says it plans to wait and see before launching a second overseas listing.

“Given where the markets are and the volatility, I think we are waiting for more stable and supportive markets before we consider doing that secondary listing outside [Indonesia Stock Exchange]Patrick Kao, President of GoTo Group, said during the Spark Founders Summit organized by Huawei Technologies in Bangkok, Thailand on Tuesday.

GoT debuted on the Jakarta Stock Exchange on April 11, on a list that raised $1.1 billion. Shares rose more than 13% on opening day, giving the company a market capitalization equivalent to about $30 billion. The company awarded thousands of shares to its 600,000 drivers before its commercial debut. In its prospectus, the Indonesian startup said it will also launch a secondary listing on the foreign stock market by the end of 2023, citing options such as the New York Stock Exchange, Nasdaq and Hong Kong Stock Exchange, among others.

GoTo shares have struggled since its inception, having fallen about 30.3% since April. However, the company handles the technology track better than its major competitors in Southeast Asia.

Shares in Singapore-based Grab, which raised $4.5 billion in its December debut on Nasdaq, worth $37 billion, are down 62.6% since the start of 2022. Shares in SEA, a Singapore-based digital entertainment company Which expanded into e-commerce, digital payments and deals on the New York Stock Exchange, fell 75.4% over the same period. SEA remains the most valuable company in Southeast Asia with a current market capitalization of about $25 billion, compared to about $20 billion for GoTo, and $10 billion for Grab.

GoTo is the product of the May 2021 merger of car delivery company GoJek and e-commerce platform Tokopedia. Cao, who was president of Tokopedia before the merger, became president of the newly formed GoTo, while Andre Soelistyo, founder of GoJek, became CEO.

“Economy hum”

Cao cited Indonesia’s strengths as a market for GoTo’s resilience amid global economic uncertainty. “Not only are commodity prices doing well, but the government’s move towards more downstream operations to support more high-tech areas like batteries has created a lot of value,” Kao said.

Indonesia has the world’s largest reserves of nickel, an important metal for electric car batteries. Indonesian President Joko Widodo has banned the export of unprocessed nickel to encourage investment in domestic nickel processing and electric vehicle manufacturing. Widodo even took a turn during an official visit to the United States to personally pressure Elon Musk to get Tesla to invest more in Indonesia.

Cao said the government’s efforts “created a nice virtuous circle within Indonesia itself, in terms of GDP growth and consumption growth.” In September, the Asian Development Bank raised its 2022 GDP growth forecast for Indonesia, from 5.0% to 5.4%. The bank expects GDP growth of 4.3% for this year across Asia.

The GoTo head also noted the strength of Indonesia’s stock market: The Jakarta Composite is up 7.8% for the year, making it one of the few – if not global – Asian countries.Stock markets in positive territory in 2022.

Indonesia, with a population of 274 million, accounts for nearly half of Southeast Asia’s population, and generates nearly 60% of the region’s GDP. GoTo relies on Indonesia for over 95% of its revenue.

Cao argued that the Indonesian economy has plenty of room for further growth. He noted that while the Indonesian economy was centered around the main island of Java, which includes the country’s capital Jakarta, the growth is now spreading across Indonesia’s many islands. “The economy is humming” across the country, Cao said. “This means that the entire nation is growing in a very healthy way.”

Cao said there are still gaps in the country’s economy that GoTo can fill, particularly in financial services. He estimated that “about 48%” of Indonesia’s population do not have bank accounts, while only about 6% of Indonesian consumers have credit cards. “There is a lot of work to be done,” Kao said.

More broadly, Cao argued, Southeast Asia is characterized by high smartphone usage, but low e-commerce and digital finance penetration, making it a good market for anyone seeking to launch a startup.

“There are a lot of opportunities,” he said.

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