Imagining the future of the digital economy in Indonesia

In this article, Siwage Dharma Negara, Senior Fellow at the ISEAS-Yusof Ishak Institute, offers his commentary on the key priorities outlined by the three representatives of the National Campaign Team for Indonesia's presidential and vice-presidential candidates.

From left to right: Safrina Nasution, CNBC (Moderator); Wijayanto Samirin, representative of Anies-Muhaimin campaign team; Budiman Sudjatmiko, representative of Prabowo-Gibran campaign team; Andreas Renard Widarto, representative of Ganjar-Mahfud campaign team; Guinandra Jatikusumo, Allobank; Tirza R. Munusamy, Grab; Yohanes Lukiman, Blibli; Monika Rudijono, Vidio

At the Indonesia Digital Summit 2023 event organised by the Indonesian Employers Association (Apindo) in Jakarta on Tuesday, November 28, three representatives from the National Campaign Team for Indonesia’s presidential and vice-presidential candidates shared their insights on the candidates’ digital economy strategies.

During her keynote speech, Minister of Finance Sri Mulyani Indrawati emphasised the remarkable growth of Indonesia’s digital economy. This year, the national digital economy surged to a value of US$82 billion, marking an 8% increase from the previous year. Minister Mulyani underscored that online commerce would continue to be the primary catalyst for the sector’s expansion. However, she acknowledged the persistent challenges in formulating appropriate policies and regulations for this dynamic sector, attributing these difficulties to the rapid pace of technological advancements.

The government, in collaboration with key entities such as the Ministry of Finance, Bank Indonesia (BI), the Financial Services Authority (OJK), and the Deposit Insurance Corporation, is actively navigating the complexities of regulatory frameworks to foster a conducive environment for the flourishing digital economy.

 

Anies-Muhaimin’s Five Strategic Focus

Wijayanto Samirin, Economic Adviser to the Governor of Jakarta, representing Anies Baswedan-Muhaimin Iskandar’s (Anies-Muhaimin) national campaign team, outlined five strategies proposed by Anies-Muhaimin to foster the development of the digital economy. These strategies commence with establishing legal certainty and reinforcing the bureaucratic mindset regarding digitalisation.

The initial strategy entails providing regulatory certainty to facilitate digital innovation. Robust legal measures will be implemented to eliminate sectors that negatively impact society, such as illegal online loans. Simultaneously, the Anies-Muhaimin government, if elected, pledges to ensure that regulations do not impede innovation, fostering an environment for digital economy actors and innovators to thrive and unleash their creativity.

The second strategy aims to cultivate more digital talent by enhancing educational infrastructure and aligning the curriculum with market needs. Furthermore, the third strategy promises to enhance internet network access across Indonesia, ensuring equitable access to and quality of digital services throughout the archipelago.

The fourth strategy focuses on strengthening the impact of digitalisation on the domestic economy by encouraging more corporations, as well as micro and small businesses, to leverage digital platforms for expanding their market reach. Finally, Anies-Muhaimin commits to promoting the digital innovation capacity among policymakers. They propose prioritising digital governance in the administration of government at both central and regional levels.

 

Prabowo-Gibran’s Vision for a Knowledge-Based Economy

Budiman Sudjatmiko, formerly associated with the PDI-P and currently a member of the Gerindra party, represented the National Campaign Team of Prabowo Subianto-Gibran Rakabuming Raka (Prabowo-Gibran). He articulated their commitment to fostering a knowledge-based economy by cultivating a community-driven digital ecosystem, envisioning a future where this ecosystem prioritises higher economic value, data security, fair access, and technological mastery.

Illustrating their approach, Budiman cited the digitisation of the production chain as a means to enhance labour productivity, achieve cost efficiency, reduce production time, and optimise logistics distribution—a plan that Prabowo-Gibran aims to implement. The duo also pledges to emphasise collaboration among diverse stakeholders and policymakers in integrating digital technology into the job market. If elected, Prabowo-Gibran aims to create 2.85 million jobs related to national digital programs in their first year, supported by the development of IKN (Nusantara Capital City) as a focal point for digital innovation.

 

Ganjar-Mahfud’s Commitment to Universal Digital Literacy

Representing the Ganjar Pranowo-Mahfud MD (Ganjar-Mahfud) National Campaign Team, Andreas Renard Widarto, a millennial entrepreneur in the technology sector, outlined key aspects of the candidates’ digital economy vision. Central to their agenda is an emphasis on human resource development, particularly in enhancing digital literacy and improving the overall quality of education. Ganjar-Mahfud aims to implement a comprehensive educational strategy, providing free early childhood education up to high school and introducing a ‘one-poor family, one university graduate’ initiative.

The campaign team also pledges to empower school-aged children with proficiency in digital and information technology. Additionally, Ganjar-Mahfud commits to increasing the research budget to approximately one percent of GDP, a significant boost from the current 0.22%, and aligning the number of researchers with that of neighbouring countries.

In addressing digital infrastructure, Ganjar-Mahfud promises to enhance accessibility, affordability, and speed of internet services. They plan to upgrade data centre infrastructure to meet the escalating demands of the industry. Furthermore, the campaign envisions fostering advanced manufacturing through the integration of digital technologies such as IoT, AI, blockchain, with the goal of actively engaging Indonesian human resources in the digital economic value chains.

 

Final Thoughts

In evaluating all candidates’ presentations, a common theme emerges—a continuation of Jokowi’s policies to foster the digital economy and attract global investors. However, some candidates lack clear strategies for achieving their goals, raising concerns about the feasibility of their proposals.

For instance, Prabowo-Gibran’s pledge to build ten innovative digital cities across Indonesia appears ambitious, with a total investment estimated at Rp 125 trillion (US$10.8 billion). Budiman’s similar Algorithm Hill project in Sukabumi, West Java, raised doubts about the capacity of state-owned construction company PT Amarta Karya (AMKA), especially given their recent management arrests for a fictitious project causing state financial losses.

Moreover, relying on the government or state companies, as seen in both projects, instead of fostering private sector involvement raises questions about the feasibility of developing a digital ecosystem. Encouraging private investments and outlining clear incentives for the private sector’s engagement in the Ten Digital-Innovative Cities project remain unspecified. This reliance on the public sector may hinder the successful implementation of these ambitious digital city projects.

In summary, the Summit underscores a crucial message: beyond the candidates’ pledges, it signals a collective call from business stakeholders urging the upcoming government to champion digital industry development. Critical challenges, such as unclear regulations, insufficient digital infrastructure, and a shortage of talent, demand serious policy implementation. Given Indonesia’s youthful population, unlocking its potential as a global digital talent hub becomes imperative amid heightened international competition. Realising this vision necessitates robust collaboration between the government and the business sector.

 

About the Writer

Siwage Dharma Negara is a Senior Fellow and Co-Coordinator of the Indonesia Studies Programme at the ISEAS Yusof Ishak Institute.

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.

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Mouna Aouri

Programme Fellow

Mouna Aouri is an Institute Fellow at the Tech For Good Institute. As a social entrepreneur, impact investor, and engineer, her experience spans over two decades in the MENA region, South East Asia, and Japan. She is founder of Woomentum, a Singapore-based platform dedicated to supporting women entrepreneurs in APAC through skill development and access to growth capital through strategic collaborations with corporate entities, investors and government partners.

Dr Ming Tan

Founding Executive Director

Dr Ming Tan is founding Executive Director for the Tech for Good Institute, a non-profit founded to catalyse research and collaboration on social, economic and policy trends accelerated by the digital economy in Southeast Asia. She is concurrently a Senior Fellow at the Centre for Governance and Sustainability at the National University of Singapore and Advisor to the Founder of the COMO Group, a Singaporean portfolio of lifestyle companies operating in 15 countries worldwide.  Her research interests lie at the intersection of technology, business and society, including sustainability and innovation.

 

Ming was previously Managing Director of IPOS International, part of the Intellectual Property Office of Singapore, which supports Singapore’s future growth as a global innovation hub for intellectual property creation, commercialisation and management. Prior to joining the public sector, she was Head of Stewardship of the COMO Group and the founding Executive Director of COMO Foundation, a grantmaker focused on gender equity that has served over 47 million women and girls since 2003.

 

As a company director, she lends brand and strategic guidance to several companies within the COMO Group. Ming also serves as a Council Member of the Council for Board Diversity, on the boards of COMO Foundation and Singapore Network Information Centre (SGNIC), and on the Digital and Technology Advisory Panel for Esplanade–Theatres on the Bay, Singapore’s national performing arts centre.

 

In the non-profit, educational and government spheres, Ming is a director of COMO Foundation and Singapore Network Information Centre (SGNIC) and chairs the Asia Advisory board for Swiss hospitality business and management school EHL. She also serves on  the Council for Board Diversity and the Digital and Technology Advisory Panel for Esplanade–Theatres on the Bay, Singapore’s national performing arts centre.

 

Ming was educated in Singapore, the United States, and England. She obtained her bachelor’s and master’s degrees from Stanford University and her doctorate from Oxford.