By Florida Andriana, Co-Founder at Think Policy Indonesia

The past few years have cemented Indonesia’s position as one of Southeast Asia’s most dynamic AI frontiers. Generative AI has moved rapidly from niche experiments to a common tool within the digital economy—shaping marketing content, automating professional tasks, and powering local startups that build Bahasa Indonesia models. This reflects a familiar pattern in Indonesia’s digital story: leapfrogging into new technologies with a grassroots enthusiasm that often outpaces regulatory certainty.

While there is clear progress, AI adoption varies. The digital-native sectors of e-commerce and finance are natural early adopters, while integration in other areas is still nascent. Policymakers are aware of the stakes. The National Strategy for Artificial Intelligence (Stranas KA) sets an ambitious vision for leveraging AI to help achieve the nation’s goal of becoming a developed country by 2045. Yet, its success hinges on translating broad principles into effective, adaptive policies.

A Governance Framework at a Crossroads

The country’s AI adoption has been strikingly bottom-up. This grassroots energy is a powerful asset, but it rests on a governance foundation that is still taking shape and remains fragmented.

Currently, Indonesia does not have a single, overarching AI law. Instead, governance relies on a mosaic of existing frameworks that indirectly address AI:

• Strategic Frameworks: High-level guidance comes from documents like the National AI Strategy (Stranas KA).
• Sector-Specific Guidelines: Ministries and agencies are issuing targeted rules, such as the OJK’s framework for AI in finance and the Ministry of Education’s guidelines on using AI.
• General Regulations: Core digital activities are governed by broader laws like the recently amended ITE Law and the crucial Personal Data Protection (PDP) Law.

This approach is supplemented by soft-law instruments like Kominfo’s Circular Letter No. 9/2023 on AI Ethics. While these pieces are foundational, the current framework is more reactive than proactive, raising a critical question: Is this governance model agile enough for the rapid, scaled-up changes AI will bring?

This isn’t a simple call for more rigid regulation. Rather, it highlights a pivotal moment to embrace a more adaptive approach—one that enables innovation while proactively mitigating future risks. This is where forward-thinking policy tools become essential. Expanding the use of regulatory sandboxes offers a powerful path forward. A sandbox allows the government and innovators to collaborate in a controlled environment, making it possible to co-create useful solutions, iterate on safeguards, and build meaningful policies prepared for the next wave of disruption.

Non-Negotiable Foundations for an Era of Disruption

If recent digital shifts have shown anything, it is that Indonesia thrives when it combines grassroots innovation with clear rules that build trust. However, significant gaps remain across several key building blocks.

• Infrastructure: While Indonesia’s data center market is experiencing growth, challenges in digital infrastructure persist. The “digital divide” between urban and rural areas remains a significant hurdle to equitable access, as highlighted by the World Bank.
• Digital Talent: The talent gap is a critical bottleneck. The Indonesian government frequently cites the national need for 9 million skilled digital talents by 2030 to build a competitive digital economy, a target that requires massive upskilling and educational reform.
• Data Governance: Data remains siloed across ministries. The Satu Data Indonesia (One Data Indonesia) initiative aims to standardize and integrate government data, but achieving seamless interoperability between government agencies and with the private sector remains a complex, ongoing challenge.

A Defining Question: A Sovereign Large Language Model?

The debate over developing a sovereign Large Language Model (LLM) has come to symbolize Indonesia’s ambitions. Projects like the “Merah Putih” LLM are driven by a compelling rationale: to preserve linguistic nuance, ensure cultural data sovereignty, and build domestic capacity.

Yet this ambition must be balanced with pragmatism. Training a foundational LLM demands immense computational power and access to high-quality data. A hybrid strategy—combining regional partnerships, fine-tuning leading open-source models, and engaging in AI open-source initiatives— present a more realistic path forward.

The Test Ahead: Co-Creating Indonesia’s AI Future

Indonesia’s AI moment is about governance choices. The key is not necessarily more regulation, but more collaborative and agile governance where all stakeholders work together to drive meaningful adoption across the country.

This presents a wake-up call for the government, which must carefully and tactfully redefine its position within this collaborative effort. To be an effective partner, it must move beyond the traditional labels of regulator, but as accelerator and facilitator to become a strategic architect of the entire AI ecosystem. This means establishing clear frameworks for collaboration between government agencies, industry, academia, and civil society, while building the institutional capacity to guide AI’s rapid adoption and ensuring citizens’ rights are safeguarded in all AI policies and programs.

Ultimately, the question remains: will sandbox pilots and ethical guidelines evolve into a resilient governance regime, and will the nation invest enough in its infrastructure, talent, and data ecosystems to turn ambition into reality? Like past waves of digital change, AI’s promise will not deliver itself. It requires a deliberate, collaborative effort to match disruption with direction, ensuring this technological leap forward becomes a true advancement for all of Indonesia.

About the Author(s)

Florida Andriana is the Co-Founder and Chief Growth Officer at Think Policy Indonesia. She leads the organization’s strategic growth and stakeholder engagement efforts, while spearheading its advisory arm that works at the intersection of public policy, business, and systems change. Her work focuses on turning ideas into action by bridging government, private sector, and civil society toward meaningful policy reforms.

About the Organisation

Think Policy is an ecosystem-oriented advisory based in Indonesia. Think Policy supports government reforms through interdisciplinary implementation support, capacity building, and public engagement, collaborating with 200+ partners, 3,000+ alumni, and a 100K-strong online community. In 2022, Think Policy initiated a pro-democracy, tech-enabled political education Bijak (bijakmemilih.id and bijakmemantau.id), which got recognized in the MIT Solve global competition.