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Building Digital Ecosystem in Indonesia

Most people are compelled to remain indoors and work from home in the wake of enforced quarantines and lockdowns due to the COVID-19 pandemic. In no other time in modern history has access to the internet been as crucial a form of communication to the average person as it is now.

Governments worldwide are turning to digital technology for required policy work, even as businesses are maximising their digital tools to assist online operations. Such a condition demonstrates that digital technology is at the forefront of the so-called new normal.

Digital tools will shape the global economy following the pandemic. The impact of digital tools transcends households. This has left policymakers with many lessons to learn, as well as much work to do, and propelled people and businesses to adapt and accelerate the adoption of digital technologies.

Following these developments, the Indonesian government and business circles certainly cannot remain still and left behind. For this reason, it is necessary to develop a digital ecosystem to encourage digital transformation in the country. Some efforts to develop a digital ecosystem have been carried out by the Ministry of State-Owned Enterprises (SOE) and among SOEs in Indonesia.

SOEs continue to prepare infrastructure, funding, and aggregators to develop Indonesia’s digital ecosystem and to build self-sufficiency for the digital transformation. The government will offer massive investment in the nation’s digital infrastructure. SOEs are currently implementing and will continue to carry out, various initiatives in developing Indonesia’s digital ecosystem.

Indonesia should create its own digital ecosystem and not be complacent with the abundance of natural resources and the large market, which has often been a source of economic growth for other countries. Strengthening the digital ecosystem was not only about the issue of digital infrastructure development, but also the transformation of human resources.

In fact, hiring workers with digital skills has grown substantially in the last three years across the Asia-Pacific region, highlighting the gap between workforce supply and demand and emphasising the urgent need for governments and businesses to invest in digital upskilling and reskilling of their workforces. The research finds that the digital hiring rate across the region increased three-fold between 2016 and 2019.

Digitalisation offers many opportunities and challenges, the most pressing one is to address and manage the discrepancy between industry and education and training systems, where the former moves and innovates a lot faster than the latter.

Indonesia aims to take advantage of the momentum of digital disruptions, whose presence not only provides challenges but also provides opportunities to increase Indonesia’s competitiveness in the global arena. It is estimated that the size of Indonesia’s digital economy will continue to grow to Rp1.73 quadrillion (US$120.68 billion) in 2025. To date, it has grown significantly to reach Rp560 trillion (US$39.07 billion) in 2019 and Rp616 trillion (US$42.97 billion) in 2020.

As reported by OpenGov Asia, digital technology has the potential to create new jobs for 20-45 million workers in Indonesia, according to the Indonesian National Development Planning Minister and Head of the National Planning and Development Agency (Bappenas) Suharso Monoarfa. Addressing the Statistical Society Forum, Monoarfa said Indonesia has experienced digitalisation which is projected to create new types of jobs for 20-45 million vacancies.

Indonesia must conduct economic transformation in the post-COVID-19 period, such as by improving the skills of Indonesian workers so that the national economy will not only recover but also grow higher beyond 5% per year.

While Indonesia has one of the fastest-growing digital economies in South East Asia, action is needed to ensure that all Indonesians, especially the most vulnerable, can access various digital technologies and services and realise the benefits. Although the accelerated adoption of internet-enabled services during the pandemic is likely to boost the growth of the digital economy, the benefits of such development could be unequal.

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