JAKARTA — U.S. tech giant Microsoft is to invest in Indonesia’s e-commerce platform Bukalapak, in the latest example of global tech firms’ interest in Southeast Asia’s biggest economy.
Microsoft’s announcement of the deal on Tuesday did not specify the value of its “strategic investment” in the Indonesian unicorn — private companies valued at over $1 billion. However Bloomberg said in an earlier report that Bukalapak would receive $100 million from a group that also includes existing investors GIC, Singapore’s sovereign wealth fund, and PT Elang Mahkota Teknologi or Emtek Group, a local media conglomerate.
The latest funding values Bukalapak at between $2.5 billion and $3 billion, Bloomberg said.
As part of the deal, Bukalapak will use Microsoft’s cloud service as its “preferred cloud platform”, switching from Google’s service.
According to a document filed to Indonesian authorities, Emtek was the largest shareholder in Bukalapak as of May, holding 34.8% of the company, while GIC was the third largest with 12.5%. China’s Ant Group, which is readying the largest initial public offering in history this week, is the second largest with 19.4%.
E-commerce is a burgeoning sector in Indonesia and was one of the few to benefit from the COVID-19 pandemic as people shopped online more. Bukalapak was the third most visited e-commerce platform in the country in the second quarter of this year, behind Singapore’s Shopee and Indonesia’s Tokopedia.
The investment from Microsoft continues the recent trend of U.S. tech juggernauts investing in Indonesian unicorns, as they vie for the region’s biggest digital market.
Facebook and PayPal invested an undisclosed amount in Gojek in June, while reports say Google has agreed to invest $350 million in SoftBank-backed Tokopedia, alongside Temasek Holdings, Singapore’s other sovereign wealth fund.
Microsoft is already an investor in Singapore’s super app Grab, whose major market is Indonesia.
The archipelago’s major tech companies have reached a size where cheques need to be a significant size, allowing for a select few investors — like the U.S. tech companies — to take part in funding rounds.
Venture capital investors have also pointed to continuing U.S.-China tensions as a reason for heightened interest in Indonesia as well as Southeast Asia.
“With the rise of U.S.-China trade and tech wars, U.S. and Chinese investors who have invested respectively are looking for other places to invest,” said one investor. “So we will see an increased investment into Southeast Asia from [both countries].”