February 29, 2024

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Driving Digital Transformation in Indonesia’s Priority Regions

Image credits: kominfo.go.id

I Nyoman Adhiarna, the Director of Digital Economy at the Directorate General of Informatics Applications of the Ministry of Communication and Information Technology, emphasised that this year, the Ministry aims to provide guidance and support to a total of 20,000 micro, small, and medium enterprises (UMKM) across 15 priority regions.

The Ministry of Communication and Information Technology, known as Kementerian Kominfo, is dedicated to facilitating the growth and development of UMKM in these areas, thereby fostering economic empowerment and regional progress.

“Micro, small, and medium enterprises (UMKM) have the opportunity to elevate their status and level up in terms of digital technology adoption and business capabilities, particularly contributing to the national economic recovery programme,” he said.

UMKM refers to businesses within the micro, small, and medium-sized categories based on their scale of operations, employee count, and annual revenue. These enterprises play a significant economic role, contributing to employment, income, and overall Indonesia’s economic development.

According to Director I Nyoman Adhiarna, in the endeavour to support micro, small, and medium enterprises (UMKM) through business incubation programmes, the Ministry of Communication and Information Technology (Kementerian Kominfo) will provide intensive guidance to 100 UMKM players who have already demonstrated digital marketing capabilities.

The landscape of micro, small, and medium enterprises (UMKM) in Indonesia has witnessed a remarkable digital transformation. By December 2022, 20.76 million UMKM had embraced digitalisation, setting a strong foundation for the future.

In 2023, the goal is to further expand this digital footprint, with a target of 24 million UMKM actively participating in the digital transformation. This surge in digital adoption within the UMKM sector has significant implications for Indonesia’s economy.

UMKM’s pivotal role in Indonesia’s economic growth is undeniable. Reports cited that UMKM can reach 61% of the country’s Gross Domestic Product (GDP), and UMKM is the driving force behind economic resilience and productivity. Moreover, these enterprises have become the primary source of employment for 97% of the workforce, contributing to income generation and livelihoods.

Additionally, UMKM’s international presence is important, with 16.65% of UMKM contributing to the non-oil and gas export sector. It showcases their ability to compete globally and underscores their potential to drive economic growth through market diversification and foreign exchange earnings.

The continued support and nurturing of UMKM are vital to sustain its growth and maximise its positive impact on the Indonesian economy. By providing the necessary infrastructure, policies, and resources, stakeholders can create a stronger enabling environment for UMKM. It will uplift further innovation, job creation, and regional development, propelling Indonesia’s economic progress and fostering a vibrant and inclusive business ecosystem.

Observing the resurgence of micro, small, and medium enterprises (UMKM) following the COVID-19 period, the government holds an optimistic outlook for Indonesia’s economic resurgence over the next years, with the potential to even achieve rapid progress in the economy, particularly the digital technology has emerged as a tangible and concrete solution in Indonesia. As a result, the government prioritises UMKM support for digital inclusivity as a key driver in the movement toward economic revitalisation in Indonesia.


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