Indonesian consumers have embraced digital platforms. 81% of mobile internet subscribers have adopted digital payments via mobile wallets as of May 2021, the Tech for Good Institute’s (TFGI) Platform Economy report shows. This adoption is higher than in other countries in the region, such as Singapore, Vietnam and the Philippines.
TFGI’s Indonesia Launch Dialogue on 13 January 2022 explored the opportunities and challenges posed by this rapid adoption of the Platform Economy, and its potential to contribute to the economy’s recovery from the Covid-19 pandemic.
- Dr Bambang Susantono, Vice President, Knowledge Management & Sustainable Development, Asian Development Bank, and Advisory Board Member, Tech for Good Institute
- Mira Tayyiba, Secretary-General, Ministry of Communication and Information Technology of the Republic of Indonesia
- Dr Bambang Brodjonegoro, Chairman, Indonesia Forum Foundation
- Ridzki Kramadibrata, President, Grab Indonesia
- Edy Widjaja, Partner & Lead, Southeast Asia Financial Services Practice, Bain & Company
Here are three takeaways from the dialogue:
- Both network infrastructure and digital literacy are needed to increase digital accessibility. As of 2020, 12,500 villages across Indonesia do not have internet connectivity, according to the Indonesian Internet Service Providers Association. Public-private collaborations will be critical to boost their development, alongside the government’s ongoing investments in network infrastructure. Tier two and three cities require further attention to be adequately equipped with the infrastructure and digital literacy to participate in the platform economy, alongside their companions in tier one cities like Jakarta and Surabaya.
- Indonesia must be vigilant against the growth of inequality. With the Covid-19 pandemic, economies risk falling into K-shaped recovery, in which businesses with smaller capital lag behind those with greater capital. With this looming risk of an economic catastrophe, the participants challenged the platform economy to support the sustainable growth of MSMEs, which were disproportionately hurt by the pandemic. While platforms are enabling MSMEs to expand their reach online, there remains the risk of a “digital paradox”, where a shift to digital widens rather than reduces social and economic gaps between those adopting digital technology and those who have not.
- As digital adoption continues to expand in Indonesia, three key areas require work to ensure a sustainable transition: talent, competition and data protection. Participants highlighted the need to strengthen digital talent, calling for public and private sector investment in the labour force and SMEs – which accounted for 97% of employment, based on data from the Indonesia Government as of 2018. In addition, participants cautioned that the rapid growth of digital businesses could result in a winner-takes-all situation, stifling competition and resulting in monopolies. Personal data and consumer protection were also discussed as new and necessary focus areas in the digital economy, with others suggesting that collaborations between platforms and institutions will benefit businesses and consumers alike in the data safety realm.
Catch up on the dialogue below: