The IMF has developed an approach to understanding and measuring the impact of the digital economy. Based on this framework, the IMF clearly distinguishes between the Digital Sector—which includes industries primarily focused on digitalization, the production of information and communication technology (ICT) goods and services, and online platforms supporting the sharing economy—and the broader Digital Economy, where internet usage permeates all economic sectors without exception.

This distinction is crucial in recognizing that the digital economy is not confined to high-tech industries but also influences traditional sectors such as agriculture, manufacturing, and public services. To conduct its analysis, the IMF utilizes formal administrative data from various institutions and incorporates Big Data to provide in-depth and up-to-date insights into digital economic activities across sectors.

Beyond measuring economic impact, it is also essential to assess digital welfare, which encompasses the non-economic benefits of digitalization. Digital welfare includes various aspects that enhance quality of life, such as improved access to information, greater participation in education and healthcare services, and strengthened social connectivity. Therefore, measuring the digital economy should not only consider its contribution to GDP but also evaluate how digital technology improves overall societal well-being.

According to this measurement model, China’s digital economy accounted for 30% of GDP in 2016, while in the United States, it contributed 8.3% of GDP in 2015.

The G20 does not specifically calculate the value of the digital economy as a separate entity. Instead, it utilizes various existing indicators from multiple sources to formulate policies that support digital economy development. These indicators serve as the foundation for policies that focus on:

Through this approach, the G20 aims to ensure that digital transformation delivers widespread economic and social benefits while mitigating potential risks associated with technological disruption.

The Asian Development Bank (ADB) defines the digital economy as an economic system that is not only supported by digital technology but also actively provides digital support. This concept encompasses various aspects, from the use of digital technology in production, distribution, and consumption processes.

To measure the contribution of the digital economy to the overall economy, ADB employs the Leontief Input-Output Table, which enables the analysis of backward and forward linkages between economic sectors. Through this method, the role of the digital economy can be quantified and assessed within the broader economic structure, offering a comprehensive view of how digitalization has penetrated and influenced various sectors.

Figure 1 illustrates the flows and interactions among different economic sectors using two main approaches: production and consumption/expenditure.

The production approach highlights the relationships between three key sectors:

The digital production sector plays a central role in generating digital products, which are then utilized by other sectors. To produce output, this sector relies heavily on inputs from the digital supplier sector, forming backward linkages. Meanwhile, the output generated is subsequently used by the digital user sector, creating forward linkages that drive further economic activities.

The consumption/expenditure approach illustrates how the output consumed by the digital user sector can generate a ripple effect throughout the economy, known as the multiplier effect. When this sector spends on digital goods and services, it not only has a direct impact on the sector itself but also stimulates income growth and increased output in other sectors.

This multiplier effect is crucial because it demonstrates how spending or production in one sector can create widespread economic impacts, ultimately driving overall economic growth. In essence, this model provides a comprehensive understanding of how interactions between different sectors form complex and interdependent value flows, strengthening the economic structure through reciprocal relationships and multiplier effects.

The digital economy is analyzed using three globally recognized approaches, namely those proposed by the International Monetary Fund, the Asian Development Bank, and the G20.

The IMF approach focuses on assessing the Information and Communication Technology (ICT) sector as a core driver of digital transformation. This approach evaluates the sector’s growth trends, economic contribution, and productivity using Gross Regional Domestic Product (GRDP) data for Bandung City.

The ADB approach investigates the interlinkages between the ICT sector and other economic sectors through Input-Output (I-O) Table analysis. Backward and forward linkages are analysed to determine the extent to which digitalization supports and amplifies wider economic activity.

The G20 approach examines digital adoption among business actors, with particular emphasis on small and medium sized enterprises. This analysis is based on primary survey data and considers level of ICT usage, digital business practices, perceived benefits of digitalisation, and technology preferences.

The integration of these three approaches enables a comprehensive assesment of digitalization trends, economic impact, and the degree of digital integration across key sectors in Bandung City.

To ensure the digital economy reaches its full potential, the study identifies sector-specific digital support requirements. These needs are mapped out in a Digital Economy Roadmap, which highlights the following key areas:

By systematically analyzing these factors, Bandung City can develop data-driven policies and investment strategies that foster an inclusive and competitive digital economy.

Indonesia has established itself as the largest digital economy in the ASEAN region for two consecutive years, reflecting the country's rapid adoption of digital technology and its increasing economic reliance on digital transactions. In 2022, Indonesia recorded a digital economy value of USD 76 billion, demonstrating its strong position in the regional market. This upward trajectory continued into 2023, with a 7.8% growth rate, bringing the total digital economy value to USD 82 billion. This consistent expansion highlights Indonesia's resilience and adaptability in leveraging digital innovations to drive economic progress.

Looking ahead, Indonesia's digital economy is projected to maintain its dominance in the ASEAN region, with significant growth anticipated by 2025. Even under a low-expectation scenario, Indonesia's digital economy is expected to reach USD 109 billion, surpassing all other ASEAN countries by a substantial margin. This projection underscores the nation’s robust digital infrastructure development, increasing internet penetration, rising adoption of e-commerce, and expanding fintech ecosystem.

When compared to other ASEAN economies, Thailand is expected to secure the second position in the region with a projected digital economy value of USD 100 billion by 2025. Vietnam follows closely behind with an estimated USD 90 billion, reflecting its strong government policies supporting digital transformation and the rise of tech startups. The Philippines is projected to reach USD 80 billion, benefitting from the rapid adoption of digital financial services and a booming e-commerce sector. Meanwhile, Malaysia is expected to record USD 45 billion, showing steady growth but at a more moderate pace due to its smaller market size. Singapore, despite being a global technology hub, is projected to reach USD 40 billion, which is relatively lower compared to its regional counterparts due to its smaller population size and market constraints (see Figure 5).

The dominance of Indonesia's digital economy is largely attributed to several key factors. First, its large and digitally active population provides a substantial consumer base for digital platforms. Second, government initiatives supporting digital transformation, such as the National Digital Economy Framework and Smart City programs, have accelerated the adoption of technology across industries. Third, the rapid expansion of e-commerce, fintech, and digital banking services has fueled market growth, making Indonesia a key player in the digital economy landscape.

However, despite these impressive achievements, Indonesia must address several challenges to sustain its growth momentum. These include improving digital infrastructure in rural areas, enhancing cybersecurity measures, increasing digital literacy, and fostering an inclusive digital economy that benefits all socio-economic groups. Overcoming these challenges will be crucial for Indonesia to not only maintain its leading position in ASEAN but also to establish itself as a major global player in the digital economy.

By leveraging strategic investments, policy support, and technological advancements, Indonesia is well-positioned to further expand its digital economy, driving innovation, job creation, and long-term economic prosperity in the years to come.

The value of Indonesia’s digital economy can be assessed using the Gross Merchandise Value (GMV) calculation method, which measures the total sales value of goods and services transacted over a specific period. GMV serves as a key indicator of digital economic growth, particularly in sectors such as e-commerce, digital payments, online services, and financial technology (fintech). As digital adoption continues to expand across Indonesia, GMV is expected to demonstrate consistent and significant growth, further solidifying Indonesia’s position as a leading digital economy in the ASEAN region (See Figure 6).

According to recent projections, Indonesia's GMV in 2022 served as a baseline for forecasting future digital economic growth. By 2023, Indonesia’s GMV was estimated to increase by 8%, reaching a total value of USD 82 billion. This steady expansion reflects the continued increase in digital transactions, higher consumer demand for online services, and the growing contribution of micro, small, and medium enterprises (MSMEs) in the digital landscape.

Looking further ahead, Indonesia’s GMV is projected to grow by 15% in 2024, reaching an estimated USD 109 billion. This acceleration indicates that Indonesia's digital infrastructure and digital business ecosystem are maturing, supported by the rapid adoption of cloud computing, artificial intelligence, blockchain, and data-driven services across industries. The increasing trust and reliance on digital financial services, e-commerce platforms, and digital logistics solutions also contribute to this strong growth trajectory.

Over the next five years, Indonesia’s GMV is forecasted to expand by approximately 3.5 times, reaching an estimated USD 210 billion by 2030. This long-term growth projection underscores the vast potential for digital business models, technological innovation, and cross-sector digital integration in Indonesia. The expected surge in mobile transactions, cashless payments, digital banking adoption, and the gig economy will further fuel GMV expansion. Additionally, the government's continuous push for smart city initiatives, digital inclusion programs, and regulatory support for digital startups will play a crucial role in fostering a sustainable and inclusive digital economic ecosystem.

With this rapid growth trajectory, Indonesia is poised to strengthen its role as a major market and producer in the global digital economy. The country's large population, increasing internet penetration, and highly active digital consumers provide a competitive advantage in scaling digital businesses. Moreover, Indonesia's ability to attract foreign investments in technology startups, digital finance, and innovation-driven industries will further enhance its position as a regional and global leader in the digital economy.

However, to fully realize its potential, Indonesia must address key challenges, including bridging the digital divide between urban and rural areas, improving digital literacy, ensuring cybersecurity resilience, and fostering a regulatory environment that encourages innovation while ensuring fair competition. Strategic policies and investments in digital infrastructure, workforce development, and public-private collaboration will be critical in ensuring that Indonesia's digital economy growth remains sustainable and inclusive for all segments of society.

By maintaining a proactive approach to digital transformation and leveraging technological advancements, Indonesia can maximize its digital economy potential, drive economic resilience, and establish itself as a global digital powerhouse by 2030.

Over the past decade, Indonesia has experienced a rapid increase in internet adoption, driven by advancements in digital infrastructure, the widespread availability of mobile networks, and the growing affordability of internet services. Since 2014, the number of internet users in Indonesia has quadrupled, reaching approximately 185 million in 2024 (see Figure 7). This significant growth indicates a transformation in how Indonesians interact with digital platforms, engage in e-commerce, and participate in online communication. However, as internet penetration nears saturation—particularly among the population aged 16 to 64—the rate of new user growth has begun to slow. Instead of acquiring new users at the same pace as before, future expansion will likely be fueled by increased data consumption per user, greater diversification of online activities, and improvements in internet accessibility in rural areas.

Among the various devices used to access the internet, mobile phones have emerged as the dominant choice for Indonesians. In 2023, approximately 62.76% of users accessed the internet primarily through their smartphones, significantly outpacing the use of computers or laptops (36.90%) and tablets (0.35%). Several factors contribute to this preference for mobile devices. Firstly, mobile phones offer greater portability and convenience, allowing users to stay connected anywhere and at any time. Additionally, mobile phones provide seamless internet access through wireless networks, making them more practical compared to traditional computers, which often require fixed broadband connections. Affordability also plays a crucial role, as smartphones are available in a wide range of price segments, making them accessible to a broader demographic. Furthermore, the mobile-first nature of many digital services in Indonesia, including e-commerce platforms, social media applications, and fintech solutions, has reinforced the preference for mobile internet usage.

Despite the dominance of mobile devices, computers and laptops continue to play an important role, particularly for professional and academic purposes that require larger screens and more advanced processing capabilities. However, tablets remain a niche device, accounting for only a small percentage of internet access due to their higher cost and competition with both smartphones and laptops.

Looking ahead, several trends are expected to shape the future of internet usage in Indonesia. The expansion of 5G networks will enhance internet speed and reliability, further improving the digital experience for users. Additionally, the growth of digital financial services, such as mobile banking and e-wallets, will accelerate financial inclusion, allowing more Indonesians to participate in the digital economy. As artificial intelligence (AI) and the Internet of Things (IoT) become more integrated into daily life, mobile devices will serve as essential tools for automation, smart applications, and personalized digital experiences.

However, challenges remain in ensuring equitable digital access across all regions. While urban areas benefit from well-developed infrastructure, rural and remote communities still face barriers to connectivity. Addressing this digital divide requires collaborative efforts between the government and private sector to expand network coverage, lower internet costs, and implement digital literacy programs. Additionally, as reliance on digital platforms increases, issues related to cybersecurity and data privacy must be prioritized to create a safer and more trustworthy online environment.

Overall, the widespread use of mobile phones for internet access in Indonesia reflects the country’s evolving digital landscape and its transition into a mobile-first economy. With continuous advancements in technology, infrastructure, and digital services, Indonesia is well-positioned to maximize the benefits of its digital economy. However, ensuring sustainable and inclusive growth will require ongoing efforts to improve accessibility, enhance digital skills, and strengthen cybersecurity measures to support a resilient and future-ready digital society.

In 2023, the digital behavior of Indonesians continued to evolve, with certain web and application categories emerging as the most frequently visited and utilized. Figure 8 illustrates that social networking platforms dominated online activity, with an overwhelming 98.4% of users engaging in social media. This trend underscores the central role of social networks in everyday digital interactions, from communication and content sharing to entertainment and business promotion. The near-universal adoption of social media in Indonesia reflects the increasing reliance on these platforms not only for personal connections but also for professional networking, digital marketing, and community engagement.

Closely following social networks, chat and messaging applications ranked as the second most-used category, with 98.1% of users relying on these platforms for instant communication. The widespread use of messaging apps highlights the growing preference for fast, convenient, and cost-effective digital communication. With features such as voice and video calls, multimedia sharing, and business integration, messaging applications have become indispensable tools for both personal and professional interactions. Businesses, particularly in the micro, small, and medium enterprise (MSME) sector, leverage these platforms to engage with customers, facilitate transactions, and provide customer support.

Search engines and web portals ranked third, with 91.7% of internet users relying on them for information retrieval, navigation, and accessing online content. This statistic underscores the fundamental role of search engines in shaping digital experiences, enabling users to explore a vast array of information, products, and services efficiently. The heavy dependence on search engines reflects the increasing demand for quick and accurate access to knowledge, whether for educational purposes, business research, or everyday problem-solving.

E-commerce and online shopping applications ranked fourth, with 81% of users engaging in digital retail activities. This significant adoption of online shopping platforms highlights the rapid growth of Indonesia’s e-commerce sector, fueled by factors such as increased internet penetration, mobile payment adoption, and improved logistics infrastructure. Consumers are increasingly turning to digital marketplaces for convenience, product variety, competitive pricing, and promotional discounts. The rise of social commerce—where purchases are made directly through social media platforms—has further contributed to the expansion of online shopping in Indonesia.

Lastly, applications related to maps, parking, and location-based services ranked fifth, with 69.5% of users utilizing these tools for navigation, transportation, and urban mobility. The widespread use of these applications reflects the growing reliance on digital solutions for daily commuting, travel planning, and real-time location tracking. The integration of geolocation technology in various sectors, including ride-hailing services, food delivery, and logistics, has reinforced the importance of location-based digital tools in Indonesia’s digital economy.

Overall, these top five web and app categories demonstrate the diverse ways in which Indonesians engage with digital platforms. The dominance of social media and messaging applications highlights the social and communicative nature of internet usage, while the prominence of search engines, e-commerce platforms, and location-based services underscores the increasing integration of digital technology into everyday life. As digital adoption continues to grow, these trends are expected to shape the future of Indonesia’s digital economy, driving innovation, business transformation, and consumer behavior in the coming years.

The widespread use of the internet in Indonesia is driven by diverse motivations, reflecting the growing role of digital connectivity in everyday life. As illustrated in Figure 9, the primary reason for internet usage among Indonesians is to seek information, with 83.1% of users relying on digital platforms for knowledge acquisition. This trend underscores the internet’s role as a critical source of learning, research, and professional development. Whether searching for educational materials, consumer product reviews, or industry insights, users leverage online resources to make informed decisions in various aspects of life, including business, health, and personal finance.

Maintaining social connections is another major driver of internet usage, with 70.9% of Indonesians using online platforms to stay connected with friends and family. The increasing dependence on social networking sites and messaging applications reflects the need for real-time communication and interaction, particularly in an era where digital engagement has become a fundamental aspect of social life. The availability of video calls, group chats, and social media communities enables users to foster relationships regardless of geographical barriers, reinforcing the internet’s role in enhancing social cohesion.

A significant portion of Indonesian internet users (70.6%) also turn to online platforms for inspiration and new ideas. Whether for creative endeavors, business strategies, or personal projects, the internet serves as an endless repository of innovation. Entrepreneurs and professionals often explore digital resources for insights on emerging market trends, innovative business models, and creative problem-solving approaches. The accessibility of diverse content, from blogs and tutorial videos to expert discussions and webinars, allows individuals to broaden their perspectives and enhance their knowledge.

Additionally, 62.9% of users go online to fill their free time, engaging with entertainment content such as videos, music, gaming, and social media. The rising popularity of digital entertainment platforms indicates a shift in consumer behavior, where traditional media consumption is increasingly replaced by on-demand digital content. Streaming services, interactive media, and online gaming communities continue to shape the digital entertainment landscape, driving engagement across various demographics.

Keeping up with current events is another key motivation for internet usage, with 61.1% of users relying on digital sources for news and updates. The rapid dissemination of information through online news portals, social media, and video platforms enables users to stay informed about local and global developments. However, this trend also highlights the need for digital literacy, as the abundance of information requires users to critically assess sources and verify the accuracy of content before sharing or acting upon it.

Ultimately, these diverse motivations for internet usage contribute to the expansion of Indonesia’s digital economy. Activities such as researching shopping trends, analyzing consumer behavior, implementing digital marketing strategies, developing fintech applications, securing digital funding, obtaining digital certifications, and producing online content all play a role in strengthening the digital ecosystem. As internet access becomes increasingly widespread, its impact on economic productivity, innovation, and entrepreneurship is expected to grow, further reinforcing Indonesia’s position as a leader in the ASEAN digital economy.

The information and communication sector has demonstrated remarkable performance with consistent growth year after year, as illustrated in Table 1. This sector plays a crucial role in Bandung City's economic structure, serving as a key driver of digital transformation and a pillar of economic resilience.

One of the most significant milestones for this sector occurred in 2020, when it recorded an exceptional growth rate of 37.87%. This surge was largely attributed to the COVID-19 pandemic, which drastically increased society’s dependence on digital technology. With widespread remote work, online learning, digital communication, and e-commerce adoption, the demand for internet services, cloud computing, digital applications, and telecommunications infrastructure skyrocketed. Unlike many other sectors that faced disruptions and contractions during the pandemic, the information and communication sector not only remained resilient but also experienced unprecedented expansion.

Beyond simply responding to heightened demand, this sector demonstrated exceptional adaptability by quickly innovating and expanding services to meet emerging digital needs. Its ability to function as an economic enabler was evident, as it played a vital role in sustaining business operations, government services, and educational institutions during lockdown periods. The strengthened reliance on digital solutions further reinforced this sector's importance, ensuring that economic activities in Bandung City could continue despite movement restrictions and social distancing measures.

As a result, the information and communication sector has solidified itself as a fundamental component of Bandung City's economic landscape. Even beyond the pandemic-driven surge, the sector maintained strong momentum, contributing significantly to Gross Regional Domestic Product (GRDP). By 2023, it accounted for 14.69% of Bandung City’s total GRDP, underscoring its long-term economic significance and its role in shaping the city’s technological and economic future.

Looking ahead, the continued expansion of digital infrastructure, the rise of tech startups, increasing digital literacy, and government-led smart city initiatives are expected to further strengthen the sector’s contribution to economic growth. As Bandung City continues to position itself as a hub for digital innovation, the information and communication sector will remain a driving force behind sustainable development, technological advancement, and economic competitiveness.

The information and communication sector has demonstrated remarkable performance, consistently recording strong growth each year, as illustrated in Table 1. Among its peak periods of expansion, 2020 marked the highest growth rate at 37.87%, primarily driven by the increased reliance on digital technology during the COVID-19 pandemic. As businesses, educational institutions, and individuals adapted to remote work, online learning, and digital communication, the demand for internet services, digital platforms, and telecommunication infrastructure surged significantly. This rapid acceleration highlighted the sector’s crucial role as an economic enabler, ensuring that various industries remained operational despite the constraints of physical distancing measures.

One of the key strengths of the information and communication sector is its ability to quickly adapt to evolving demands, particularly during periods of crisis. The pandemic underscored the sector’s resilience and flexibility, as it responded to increased demands for video conferencing tools, cloud computing services, e-commerce platforms, and cybersecurity solutions. Additionally, government and private sector initiatives to enhance digital connectivity, broadband expansion, and ICT literacy further strengthened the sector’s position as a critical driver of economic sustainability. By facilitating seamless communication and enabling digital transformation across industries, the sector played a pivotal role in mitigating economic disruptions and maintaining business continuity.

Beyond its exceptional growth during the pandemic, the information and communication sector continues to serve as one of the main pillars of Bandung City’s economy. Its contribution to Gross Regional Domestic Product (GRDP) has remained substantial, reflecting its importance in sustaining economic momentum and driving regional competitiveness. By 2023, the sector accounted for 14.69% of Bandung City’s total GRDP, reinforcing its integral role in the regional economic structure. This strong contribution is a testament to Bandung’s rapid digitalization, thriving tech ecosystem, and increasing reliance on digital services across public and private sectors.

Looking ahead, the information and communication sector is expected to maintain its upward trajectory, fueled by continuous advancements in technology, expanding digital infrastructure, and increasing investments in ICT innovation. As Bandung positions itself as a smart city and a hub for digital entrepreneurship, the sector’s growth will be further supported by emerging technologies such as 5G, artificial intelligence (AI), big data analytics, and the Internet of Things (IoT). By leveraging these innovations, Bandung can further enhance its digital economy, improve public services, and strengthen its global competitiveness.

In conclusion, the information and communication sector has become a cornerstone of Bandung’s economic development, not only as a high-performing industry but also as a catalyst for digital transformation across multiple sectors. Its sustained growth and significant contribution to GRDP underscore its strategic importance in shaping the city’s future economic landscape, making it a key priority for policy development, infrastructure investment, and talent development initiatives in the years to come.

The information and communication sector has emerged as a key driver of Bandung City's economy, contributing an average of 14.7% to Gross Regional Domestic Product (GRDP), as illustrated in Figure 10. This substantial contribution places it among the top three economic sectors, each of which consistently contributed more than 10% to GRDP during the 2018-2023 period. The sector’s steady and significant presence highlights its critical role in shaping the city's economic landscape, particularly in the era of digital transformation.

The strong correlation between the information and communication sector and digital development further emphasizes its strategic importance in sustaining economic growth. The rapid expansion of internet infrastructure, the proliferation of digital platforms, and increasing digital adoption across industries have positioned this sector as a cornerstone of economic progress. Businesses, government institutions, and individuals alike increasingly rely on digital services for communication, commerce, and productivity, reinforcing the sector’s enduring relevance.

This growth is not only driven by technological advancements but also by supportive policies and investments in digital infrastructure. Initiatives such as smart city programs, digital literacy campaigns, and incentives for tech startups have further fueled the expansion of the digital economy, making the information and communication sector a key enabler of innovation and economic resilience.

As Bandung City continues to strengthen its position as a regional technology hub, the information and communication sector is expected to play an even greater role in shaping future economic trends. With rising digitalization across industries, the acceleration of e-commerce, and increasing demand for cloud computing and artificial intelligence (AI) solutions, this sector is poised to drive sustained economic growth and competitiveness in the years to come.

The Leontief coefficient, which is fundamental in this analysis, is derived from the 2016 Input-Output Table. This coefficient helps in measuring the interdependencies between economic sectors, particularly in assessing how inputs from one sector contribute to the output of another. In this case, the output value of the Information and Communication sector is determined based on the 2023 GRDP of Bandung City at current prices.

In 2023, the Information and Communication sector contributed a significant added value of IDR 51.5 trillion to the city's GRDP. This added value represents the sector’s role in producing goods and services for final consumption, investment, and export (see Figure 11). The sector's economic significance is not only reflected in its direct output but also in its linkages with other industries, as it serves as a key enabler of digital transformation across multiple economic activities.

The production process within this sector relies on various input sources, amounting to a total value of IDR 27.8 trillion. These inputs are essential in sustaining digital infrastructure, supporting digital businesses, and enhancing technological capabilities. The input sources can be classified into two main categories:

The significant reliance on imported inputs suggests that Bandung’s Information and Communication sector is highly integrated into both the national and global supply chains. While this dependence on external inputs highlights the importance of foreign technology and digital services, it also underscores the need for local industry development to reduce reliance on imports and enhance domestic digital innovation.

Looking ahead, strengthening local digital production capabilities, investing in research and development (R&D), and fostering collaboration between local tech firms and global digital players will be crucial strategies to enhance the sector's self-sufficiency and competitiveness. By doing so, Bandung City can further capitalize on its digital economy potential, positioning itself as a leading tech-driven urban center in Indonesia and Southeast Asia.

The data presented in Figure 12 highlights the dominance of the food and beverage (F&B) sector, which accounts for 48% of all SMEs in Bandung City. This significant share indicates that almost half of the small and medium enterprises (SMEs) in the city are engaged in the food and beverage industry, making it the largest contributor to the SME landscape.

Several key factors contribute to the strong presence of the F&B sector within Bandung’s SME ecosystem:

The dominance of the F&B sector within Bandung’s SME landscape also reflects the city’s rich culinary heritage and vibrant food culture. Bandung is widely known as a culinary tourism hub, attracting visitors eager to experience local delicacies and innovative food creations. This further strengthens the industry's appeal, as the demand for unique food products and dining experiences continues to grow.

However, while the F&B sector presents significant opportunities, business owners also face challenges such as intense market competition, fluctuating ingredient prices, supply chain disruptions, and evolving consumer preferences. To remain competitive, SMEs in the F&B sector must focus on product differentiation, quality consistency, digital marketing strategies, and efficient operational management.

By leveraging Bandung’s strong culinary identity, embracing digital platforms, and fostering innovation in food production and distribution, the F&B sector can continue to thrive and serve as a major driver of Bandung’s SME economy. Furthermore, targeted support from local government initiatives, business incubators, and industry partnerships will be essential in enhancing the resilience and competitiveness of SMEs in this sector.

The data presented in Figure 13 indicates that SME entrepreneurs in Bandung City are predominantly individuals with a high school and undergraduate education background, each comprising 47% of the total SME owners. This dominance suggests that most business owners in the city have at least a high school diploma or higher, which may provide advantages in terms of business knowledge, managerial skills, and technical expertise.

A higher level of education among entrepreneurs can enhance their ability to manage businesses more effectively, make strategic decisions, and adapt to market changes. Educated entrepreneurs are also more likely to have better financial literacy, stronger problem-solving abilities, and access to professional networks that can support business growth. Moreover, they tend to be more open to adopting digital technology, utilizing e-commerce platforms, digital payment systems, and online marketing strategies to expand their business reach and increase operational efficiency.

Despite these advantages, entrepreneurial success is not solely determined by formal education. Many successful businesses are built by individuals with strong practical experience, creativity, and resilience, regardless of their educational background. However, the dominance of entrepreneurs with at least a high school education suggests that access to business training programs, mentorship, and digital literacy initiatives is crucial to ensuring that all SME owners, including those with lower educational backgrounds, can compete and thrive in the evolving digital economy.

Moving forward, efforts should be directed toward providing equal access to business development resources, financial support, and capacity-building programs to empower entrepreneurs at all educational levels. By fostering an inclusive and innovative SME ecosystem, Bandung can further strengthen its role as a key player in Indonesia’s growing digital economy.

The distribution of monthly turnover among SMEs in Bandung City exhibits substantial variation, highlighting the diverse financial performance of business actors in the region. As shown in Figure 14, the turnover levels of SMEs are categorized into five distinct groups: less than IDR 50,000,000; IDR 50,000,001 – IDR 100,000,000; IDR 100,000,001 – IDR 150,000,000; IDR 150,000,001 – IDR 200,000,000; and more than IDR 200,000,000.

The data reveals that the vast majority (82%) of SMEs in Bandung City fall into the lowest turnover category, earning less than IDR 50,000,000 per month. This dominance suggests that most small businesses operate on a relatively modest scale, likely catering to local markets with limited capital, operational capacity, and access to advanced business development resources. The prevalence of SMEs in this category may also indicate that many entrepreneurs are still in the early stages of business growth, focusing on sustaining their operations rather than scaling up aggressively.

On the other hand, a smaller percentage of businesses achieve higher monthly turnovers, reflecting differences in market reach, business model effectiveness, and financial investment. Businesses with turnovers exceeding IDR 100,000,000 per month are likely to be more established, benefiting from better supply chain management, digital integration, and competitive differentiation strategies. These SMEs may have stronger customer bases, larger operational capacities, and more sophisticated financial management practices, allowing them to scale and sustain higher revenue levels.

The significant gap between lower and higher-earning SMEs underscores the need for targeted interventions to support business growth and financial resilience. Policies aimed at enhancing financial access, providing digital transformation training, and improving market linkages could help small-scale entrepreneurs transition into higher revenue brackets. Encouraging the adoption of e-commerce, digital marketing, and data-driven decision-making could also play a crucial role in increasing turnover levels among SMEs, fostering a more competitive and inclusive business environment in Bandung City.

The age composition of SMEs in Bandung City exhibits a diverse distribution, reflecting both the emergence of new businesses and the sustainability of long-standing enterprises. As depicted in Figure 15, the surveyed SMEs fall into five business age categories: less than 1 year, 1-5 years, 5-10 years, more than 10 years, and those who did not provide information on business age.

A notable finding from the survey is that 40% of SMEs in Bandung City have been operating for 1-5 years, demonstrating significant entrepreneurial activity and business formation in recent years. This trend suggests that various factors are contributing to the establishment of new businesses, including easier access to capital, advancements in digital technology, and supportive government policies aimed at fostering small business growth. Additionally, the rise of e-commerce platforms and digital payment systems has provided new entrepreneurs with opportunities to enter the market with relatively low barriers.

Meanwhile, SMEs that have been operating for more than 10 years indicate the presence of experienced and well-established businesses that have successfully navigated market challenges over time. These longer-standing enterprises contribute to the stability of Bandung’s business ecosystem, providing employment opportunities and economic resilience. However, sustaining business longevity requires adaptability, particularly in an era of rapid digital transformation and changing consumer preferences.

The presence of newly established businesses (less than 1 year old) also highlights the dynamic nature of Bandung’s SME landscape. Many of these ventures are likely experimenting with innovative business models, leveraging digital platforms, and responding to emerging market trends. The challenge for these new businesses is ensuring sustainability and scaling operations effectively to transition into higher revenue brackets and long-term stability.

Overall, the varied business age composition among SMEs in Bandung City reflects a healthy and evolving entrepreneurial ecosystem. However, continued support in terms of business mentoring, financial access, and digital literacy programs will be essential in enhancing business resilience, reducing failure rates, and fostering long-term economic growth.

The results of a survey conducted on MSMEs in Bandung City reveal that business activities are concentrated in five main sectors, namely fashion, crafts, food and beverages, trade, and services (see Figure 16). Among these categories, the food and beverage sector dominates, accounting for 67.6% of total MSMEs. This overwhelming percentage indicates strong interest and market potential in the culinary business, positioning it as a key driver of Bandung’s MSME sector.

Bandung has long been recognized as a Culinary City, renowned for its diverse and innovative food culture. The city's rich culinary heritage and vibrant street food scene make it a magnet for both local and international tourists. This status significantly contributes to the rapid growth of food and beverage businesses, as entrepreneurs continually introduce new flavors, fusion cuisines, and contemporary dining experiences to cater to evolving consumer preferences.

Several factors support the dominance of the food and beverage industry in Bandung. First, the high demand for ready-to-eat food, specialty snacks, and unique beverages has encouraged more entrepreneurs to enter this sector. Second, the rise of digital platforms and online food delivery services has made it easier for food businesses to reach a wider audience with lower operational costs. Additionally, social media and influencer marketing have played a crucial role in boosting brand visibility, enabling MSMEs to thrive even with minimal physical presence.

Beyond its economic significance, the flourishing food and beverage industry also enhances Bandung’s tourism appeal. Tourists often visit the city specifically to explore its renowned culinary destinations, ranging from traditional Sundanese cuisine to modern café culture and artisanal street food. This culinary tourism boom further stimulates local economic activity, creating a cycle of growth and innovation within the MSME sector.

Despite its dominance, the food and beverage industry also faces challenges, such as market saturation, fluctuating raw material costs, and the need for continuous innovation to remain competitive. To sustain growth, businesses in this sector must adopt strategies that emphasize quality, branding, digital integration, and customer experience enhancement. Moreover, government support in the form of business training, access to funding, and culinary festivals can further strengthen this sector’s role in Bandung’s overall economic landscape.

A survey conducted on MSMEs in Bandung City reveals that the majority of business actors market their products within the city, accounting for 28.8% of the total MSMEs (see Figure 17). This indicates that Bandung remains the primary market for most small and medium-sized enterprises, benefiting from high local demand, strong consumer purchasing power, and a well-established economic ecosystem.

However, the survey also highlights a notable expansion trend, with 26.5% of MSMEs successfully reaching markets beyond Bandung, including other regions in West Java and various provinces across Indonesia. This demonstrates the growing regional influence of Bandung-based MSMEs, supported by improved logistics, digital marketing strategies, and e-commerce platforms. The ability to penetrate wider markets signifies substantial growth potential, allowing businesses to scale operations, increase revenue, and build brand recognition beyond their immediate geographical area.

Several factors contribute to the successful regional expansion of Bandung MSMEs. First, the availability of digital sales channels, such as online marketplaces, social media commerce, and direct-to-consumer platforms, enables businesses to reach a broader audience with minimal physical infrastructure. Second, collaborations with regional distributors and retail networks provide additional access points for MSME products. Third, the unique appeal of Bandung’s fashion, craft, and food industries makes these products highly desirable outside the city, further fueling demand.

Despite this positive expansion trend, some MSMEs still face challenges in scaling their businesses beyond local markets. Barriers such as logistics constraints, regulatory compliance, access to financing, and market competition can slow down growth. To further support MSMEs in achieving broader market penetration, policymakers, business associations, and digital platforms must provide capacity-building programs, export facilitation, and financial incentives.

Overall, the marketing expansion of Bandung’s MSMEs beyond city borders represents a crucial step toward long-term sustainability and economic resilience. By leveraging digital transformation, strengthening supply chains, and fostering innovation, Bandung’s MSMEs have the potential to compete nationally and even enter the global market in the future.