by Dandi Rafitrandi, Centre for Strategic and International Studies (CSIS) Indonesia
With the rising importance of digital technologies in economic development, Indonesia’s G20 presidency championed the digital transformation agenda at the 2022 Bali summit. Indonesia, the only country from Southeast Asia in the G20, ensured that efforts towards digitalisation were tackled under the “Recover Together, Recover Stronger” theme. In several working groups, digital economy issues were highlighted as one of the engines for post-pandemic recovery. At the end of the summit, Indonesia’s presidency ended with notable accomplishments.
The G20 Digital Economy Working Group, for example, focused on connectivity, post-COVID-19 recovery, digital literacy and skills, and cross-border data flows. The working group developed the G20 Toolkit for Measuring Digital Skills and Digital Literacy which helps countries assess their digital development. In the finance track, there were discussions on fintech including cross-border payments and Central Bank Digital Currency (CBDC) initiatives. Various sectoral groups also focused on digital economy issues. The Youth-20 (Y20) highlighted the importance of financial literacy for the younger population, while the Business-20 (B20) emphasized the importance of accelerating digital skills for entrepreneurs. In addition, the Think-20 (T20) initiated a G20 Smart World Living Lab to promote innovation, meaningful connectivity, and evidence-based policymaking.
In general, Indonesia’s G20 presidency has set the stage for discussing key initiatives in support of the digital economy. In 2023, Indonesia transitions from one leadership role to another – from G20 presidency to ASEAN chairmanship. Given the momentum built by the G20 discussions, there is a unique opportunity for Indonesia to double down on its efforts towards finding areas of international cooperation in digitalisation.
To further advance the digital transformation agenda, Indonesia can push for the following policy goals during their 2023 ASEAN chairmanship:
- The need for policy convergence in digital trade including data governance and cross-border data flow in ASEAN.
According to the Digital and Sustainable Regional Integration Index, digital trade regimes in several ASEAN countries still tend to be closed and less integrated. There are still areas for improvement in harmonising regulatory frameworks, especially on data governance and cross-border electronic trade. As technology rapidly evolves, regulatory innovation is essential to transform traditional and siloed frameworks into agile and effective policy mechanisms. The potential benefits from ASEAN’s digital economic integration will only be maximized if regulatory frameworks conform to best practices aimed at protecting consumers and encouraging innovation.
- Improving digital literacy and skills for small and medium enterprises (SMEs) and other vulnerable groups.
To encourage an inclusive and productive digital economy, digital literacy and skills are one of the most important aspects. The ASEAN Digital Integration Index (2021) identified digital skills and talent as one of the core challenges of digital development in the region. Similarly, Tech for Good Institute’s New Economy Progress Index (NPI) also notes that digital skills are essential for the platform economy development. In line with this, the next ASEAN’s digital economy agenda should incorporate the need to improve digital literacy and skills, especially for vulnerable groups such as women, the youth, and people with disabilities. In addition, encouraging digitalisation of SMEs can increase competitiveness and productivity. Finally, ASEAN should develop a monitoring and evaluation model to track the level of development in digital skills and talent in the region.
- Reducing unnecessary regulatory burden in labor mobility supports the region’s dynamic digital economy.
As noted in a recent study by the Asian Development Bank, mobility of skilled-labor positively impacts the economy, including investment and trade. In addition, labor flows also increase the possibility of diffusion of technical knowledge and skills, which in turn can help spur the start-up ecosystem. ASEAN must develop a supportive environment for innovators and collaborators to become a global hub in the digital economy sector. Harmonization and streamlining of worker visas can reduce the cost of worker mobility in the region. ASEAN already has several Mutual Recognition Agreements (MRAs) for several occupations, but the implementation is still hampered by restrictive domestic regulations and requirements. Indonesia’s chairmanship can help lead the discussion in breakthrough initiatives to facilitate worker mobility.
Indonesia should lead ASEAN this year with bolder digital transformation agenda amidst the concerns of the upcoming “tech winter.” ASEAN can continue to build on existing regional digital economy plans such as e-ASEAN, the Masterplan on ASEAN Connectivity 2025, and the ASEAN Agreement on E-Commerce. Indonesia should also continue to support the negotiation preparations on the ASEAN Digital Economy Framework Agreement (DEFA). There is momentum for Indonesia to bring ASEAN members together in reaffirming commitment and support to regional cooperation instruments. Leveraging on the G20 accomplishments, Indonesia’s ASEAN chairmanship should strive to make the digital economy more inclusive, empowering, and sustainable.
Dandy Rafitrandi is a researcher at the Department of Economics, Centre for Strategic and International Studies in Jakarta, Indonesia. Currently, he undertakes several research projects related to ASEAN trade agreements and economic cooperation, digital skills and literacy, and services in manufacturing sector. He also served as an adjunct lecturer at Prasetiya Mulya University.
The views and recommendations expressed in this article are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute.