Indonesia’s Lippo continues e-commerce push with payment service

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Indonesian conglomerate Lippo Group plans to launch payment, chat and other online services early next year as it continues expanding in the nascent e-commerce industry of the world’s fourth-most populous country, according to Reuters.

Lippo has already earmarked $500 million for a new online department store, and investment in services planned for the first quarter of 2016 will be on top of that, director John Riady said.

Indonesia has one of Asia’s biggest untapped e-commerce markets which is only recently drawing major investors in search of the next Alibaba Group Holding Ltd. Japan’s SoftBank Corp late last year led a $100 million investment in Indonesian online marketplace Tokopedia.

Lippo owns the infrastructure that makes e-commerce possible, such as fiber optic cables, satellites, data centers and fourth-generation mobile network base stations, and will be focusing on “what goes through those pipes”, Riady said.

“It’s all about the flow of money, data and merchandise,” Riady said. “We are beginning with MatahariMall.com which addresses the flow of merchandise, but we are also looking at the flow of money and data.”

Lippo will make a “significant” investment in a payment service similar to U.S. offering PayPal but with localized features, while data services could include chat and news functions, Riady said. The conglomerate is also open to partnerships to quicken its e-commerce push, he said.

Investors have been pouring money into firms that they hope could be the next e-commerce giant or social networking site like Facebook Inc, spurring concern of lofty valuations.

In January, SoftBank, Alibaba and others invested about $600 million in Chinese taxi app operator Travice. SoftBank also put $627 million into Indian online marketplace Snapdeal last year.

Riady said some investment in the sector reflects “pockets of euphoria” rather than a technology bubble.

“Today, it’s not just about how many eyeballs you have, which was the case in the 2000 dotcom era” when many technology firms went bankrupt, Riady said. “Today, companies have real revenue and there is underlying economic activity.”

“Whether that justifies the high valuations, I don’t know. But at least you know there is really underlying stuff, it’s not all just fluff.”

Lippo Group, founded by Riady’s grandfather, includes PT Matahari Department Store Tbk, PT Siloam International Hospitals Tbk, PT First Media Tbk and property developer PT Lippo Karawaci Tbk.

The group is planning an initial public offering this year for its satellite television company, through which it could raise “a lot more” than $100 million, Riady said.

(Reuters)

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