With 17,000 islands strung out across thousands of kilometres, Indonesia spans a vast arc of the planet's surface and at least 17,000 potential points of pain as climate change accelerates sea level rise and the chaotic disintegration of long-established weather patterns. But with more than 270 million people scattered through that island chain, working and living in one of the world's largest, rapidly developing economies, the huge republic is destined to drive technological and economic adaptation to change, both locally and at global scale.

That’s also seen the emergence of a strong digital sector, capturing opportunities in sectors as varied as transportation, eCommerce, Fintech and logistics (See Six Indonesian digital leaders to watch).

The choice of Bali to host the G20 later this year has so far mostly attracted attention thanks to the presence of Russia's Vladimir Putin. As the summit draws closer, though, some of the geo-theatrical drama will inevitably give way to greater interest in the region's challenges and opportunities awaiting investors.

In April of this year, a short report by McKinsey identified "four technology-based growth drivers as being especially significant for Indonesia's economy", an economy forecast to grow USD 2.8 trillion by 2040 simply through technology adoption. The four drivers — green tech, 5G and IoT, distributed digital infrastructure, especially large-scale cloud utilities, and next-level process automation — are individually significant but also likely to feed into each other.

The government of President Joko Widodo has legislated both financial and non-financial incentives to quickly grow and expand the country's capacity to manufacture electric vehicles, "with a target of 600,000 electric cars and 2.5 million electric motorcycles by 2030, expanding to 5.7 million units by 2035."

Meanwhile, in a separate but closely related evolution within the country's energy infrastructure, two pieces of regulatory reform are designed to rapidly grow Indonesia's renewable energy base, which has lagged behind the rest of Southeast Asia for a decade. The first change boosts to 100 percent the amount of electricity a homeowner or business can export to the grid from their rooftop solar systems. The second sets a national target of 51 percent renewable energy (RE) as part of the national energy mix by the end of the decade. The Ministry of Energy and Mineral Resources estimates the country has "a solar rooftop potential of 32.5 GW," of which only 3.6 GW will be installed by 2025, promising a vertiginous growth curve in the back half of the decade. As the national energy market transitions to Renewables, the grid will need to be re-engineered with intelligent technology and storage at scale.

At the same time, the mining industry is preparing for a massive expansion of nickel extraction. Indonesia is home to at least 30 percent of the world's nickel deposits. The silvery-white metal is a crucial component in the millions of batteries that will power the nation's EV fleet and build out its dispatchable electricity storage.

Tying together 17,000 separate islands while driving down carbon emissions to ensure an unknowable number of them don't disappear under the waves is certain to precipitate growth in the archipelago's digital infrastructure, with McKinsey identifying global "hyper-scalers" already surging into the market. Alibaba, Google, Microsoft and Amazon Web Services have either broken ground on new data centres or expanded existing facilities even as Covid raged through the country. With hundreds of millions of mobile internet users already online and another hundred million in prospect, the potential rewards for growing platforms and the users of those platforms are massive.

Our direct experience confirms that this explosion in activity has placed Indonesia firmly on global investors’ radar screens. Last month, when we helped close out the USD 300m carveout of some of Indonesia’s most strategic data centre assets, international demand was incredibly strong.

Another example of how the Indonesians are dealing with their unique challenges is in the mass digitisation of the corner store or ‘warung’. It’s a space that North Ridge Partners has also been active in. Early last year, during the pandemic when borders were closed, we were acting for Bizzy Digital, an e-procurement platform, when Warung Pintar acquired it for USD 45m. This transaction, backed by East Ventures, created the largest fully integrated player bringing together 600 brands, and 230,000 retailers across 65 cities.

Not all communication is digital, of course. Some connections require hard links in the world of real things and in an archipelagic state that necessitates transport across the water. Indonesia's plans to build an EV sector will inevitably feed into cleaner shipping between the islands and internationally, with battery-powered ships and vessels running off ammonia and carbon-neutral methanol replacing existing fleets. Cleaning up the propulsion systems is only part of the solution, however. Indonesia's green steel production should expand as China decarbonises its industrial base and "associated steelmakers in Southeast Asia switch to cleaner technologies", according to Jakarta's Gunung Prisma, a leading steel trading company.

Away from Jakarta's server farms and RE fired smelters however, one of the country's most significant resources remains one of its most ancient. Biodiversity. Indonesia is officially a mega-diverse country thanks to the thousands of individual ecologies stretching from Timor to the tip of Sumatra. The immense richness of Indonesia's biomass can sometimes get lost in the thick smoke from the dry season's forest fires. Still, increasingly the republic is coming to see its large number of micro climates and biomes as repositories of value for pharmaceutical, cosmetic and bioengineering sciences. Harvesting algae for low-methane livestock feed and processing plastic waste in bacterial pools were both identified as potential fields for emergent bio-industries at Jakarta's Bio-Economy Business Expo in 2019.

As we often say, the tech sector is a broad church, and it is certainly front and centre in Indonesia.