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[JAKARTA, KUALA LUMPUR] They made fortunes in palm oil, resorts and retail. Now, some of Malaysia’s prominent tycoons, including Wilmar’s Robert Kuok and Genting Group’s Lim Kok Thay, are quietly funnelling serious money into Indonesia’s digital and logistics sectors.

It is not a new play but a strategic one, reflecting how Malaysian money is chasing South-east Asia’s biggest economy, where clicks are starting to matter more than commodities.

Malaysian investors have poured some US$905 million into Indonesia’s digital space so far, with deal activity peaking in 2023 at US$229 million – even higher than the pandemic-era surge of US$214 million in 2021, data from startup intelligence platform Tracxn showed.

“The post-Covid recovery and structural demand shifts are driving sustained activity,” said Neha Singh, co-founder and chief executive officer of Tracxn.

She added: “Despite global headwinds, Malaysia’s interest in Indonesia’s digital sector has only grown stronger.”

From commodities to clicks

For decades, Malaysian capital poured into Indonesia’s abundant natural resources, from palm oil estates in Kalimantan to mining ventures in Sumatra.

Many struck it rich. Tycoons such as Robert Kuok and Lim Kok Thay turned raw commodities into profit engines, cementing their place further among Malaysia’s wealth elite.

Other Malaysian players, from logistics outfits to venture-backed startups, have also expanded their footprint in Indonesia’s digital economy.

As Indonesia’s 280 million-strong population grows more urbanised, tech-savvy and digitally connected, the nature of consumption and investment is changing. Malaysia’s business elites have taken note.

Indonesia’s digital economy presents a compelling opportunity for Malaysian investors, driven by several strategic advantages, noted Tracxn’s Singh.

“The two countries share close geographical proximity, cultural similarities and strong diplomatic ties – all of which make cross-border business engagement more seamless,” she said.

Jerry Goh, investment director of Asian equities at Aberdeen, notes that Indonesia’s expanding middle class and rising purchasing power are laying a solid foundation for long-term growth in digital commerce.

“This shift is fuelling stronger consumer spending, particularly within the digital economy,” he said.

The rapid growth of smartphone adoption and Internet connectivity has significantly expanded Indonesia’s online consumer base – particularly in the gaming sector, which is valued at an estimated US$2 billion, indicated the country’s Ministry of Communication and Digital Affairs.

Sensing long-term potential, Genting’s Lim – who is credited for growing the family-controlled business empire into a global casino and leisure giant – has made a strategic play through investment arm Genting Ventures by backing Jakarta-based Evos Esports – one of South-east Asia’s top online gaming platforms.

The venture firm also took part in a US$6.2 million funding round for Eratani, an Indonesian agri-tech startup, capitalising on the rising momentum of digital transformation in the country’s agriculture sector.

Jeffrey Cheah, founder of Malaysian conglomerate Sunway Group, has also broadened his regional footprint through venture capital, teaming up with Jakarta-based investment firm Kejora Capital to launch the Orbit Malaysia Fund, an investment vehicle aimed at supporting startups across South-east Asia, with Indonesia as a key focus.

Beyond market size

As South-east Asia’s largest automotive market, Indonesia remains a pivotal growth engine for Carsome, Malaysia’s biggest used car platform, which has been operating in the country since 2017.

Carsome is backed by businessman Patrick Grove, the billionaire behind Catcha Group and iflix. Grove ranked 48th on Forbes’ list of Malaysia’s richest individuals in 2025, with a net worth of US$345 million.

Eric Cheng, co-founder and CEO of Carsome Group, emphasised that the company’s expansion into Indonesia was driven by more than just its market size.

“Indonesia’s growing appetite for used vehicles, alongside a rising preference for digital-first experiences, made it a natural next step in our regional expansion,” he told The Business Times.

While macroeconomic challenges and a softer automotive market in 2024 have weighed on the broader industry, Cheng said that Carsome is using this period to strengthen its operations in the country.

“We will be re-investing with more precision, buying the right inventory, improving unit economics and applying learnings from our turnaround in Malaysia,” he noted.

Warehousing: new goldmine

Experts view Indonesia’s booming digital storefront sector as a key driver of long-term growth for the delivery and logistics industry.

Gary Tan, portfolio manager for the intrinsic emerging markets equity team at Allspring Global Investments, said the growing demand for fast and reliable shipping has significantly boosted the valuations of supply chain companies – making them increasingly attractive to equity investors and reflecting strong confidence in the sector’s long-term prospects.

This is where many Malaysian investors are making early, strategic moves. They are not just backing consumer-facing digital ventures, but also investing in the physical infrastructure essential to powering South-east Asia’s digital evolution.

Wilmar’s Kuok, for instance, made an early move into Indonesia’s logistics space through Kerry Logistics, where he holds a significant stake.

In 2015, Kerry entered a joint venture with local player Puninar Logistics, tapping the country’s fast-growing logistics sector, with a strategic focus on inter-island distribution. Kuok topped Forbes Malaysia’s 50 richest list in 2024 with an estimated net worth of US$11.8 billion.

Meanwhile, Malaysian home improvement retailer Mr DIY – owned by tycoon brothers Tan Yu Yeh and Tan Yu Wei, and their family – has been ramping up its expansion in Indonesia following the initial public offering of its local unit at the end of last year.

To support the roll-out of hundreds of new stores in second-tier cities, the company has built a nationwide network of warehousing hubs in partnership with local logistics firms – including one of its largest facilities in Marunda, North Jakarta.

Since entering the market in 2017, Mr DIY has rapidly grown to nearly 900 branches nationwide, including in underserved regions.

Jai Mirpuri, head of South-east Asia at real asset management group ESR, emphasised that Indonesia’s growing automotive sector, particularly in electric vehicles, has attracted significant investments into manufacturing, assembly, and storage space requirements. This further boosts the demand for modern logistics real estate in the country.

“We see attractive investment opportunities in modern warehouses and even data centres that support the broader digital economy,” he said.

Geographically complex

Despite strong enthusiasm, Indonesia’s burgeoning digital economy faces significant challenges.

Industry players acknowledged that building efficient logistics networks across an archipelago of more than 17,000 islands is akin to threading a needle. Outside Java and Sumatra, low order density and high transportation costs create logistical headaches.

“Order fulfilment becomes expensive in remote regions. Logistics providers are under pressure to cut costs, especially in a cash-on-delivery environment,” said Swati Chopra, executive director, emerging markets equity, at investment manager Franklin Templeton. “This requires deep pockets and a long-term view.”

Cheng from Carsome noted that Indonesia’s vast geography added another layer of complexity, creating supply chain fragmentation and delivery inefficiencies.

“While digital adoption is rising, we quickly learnt that many consumers still prefer face-to-face interactions when buying cars. This required us to complement our digital model with strong on-the-ground engagement to build trust and deliver the experience customers expect.”

Cut-throat competition

Indonesia’s e-commerce sector, while brimming with potential, is among the most fiercely contested in South-east Asia, with both local and international players vying for market share.

The market is highly polarised, with Shopee and Tokopedia controlling about 71 per cent of the 2022 gross merchandise value, leaving other platforms to compete for a much smaller share of the market.

Indonesia has witnessed the permanent closure of more than a dozen marketplaces, including some that existed before the Covid-19 pandemic.

Major players such as Elevania and JD.ID – China’s JD Indonesia unit – have officially shuttered in recent years, with JD.ID closing its operations in March 2023 after a period of gradual downsizing.

Franklin Templeton’s Chopra highlighted that with price-sensitive consumers and intense competition, digital marketplaces must invest heavily in user acquisition and retention.

This makes long-term survival and growth especially challenging for both new entrants and some established players.

“In the short term, profitability may remain limited due to fierce competition, so patience is essential. We expect further industry consolidation, resulting in larger, stronger and better-capitalised players,” she said.