February 23, 2024

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The Palapa Ring Connects Indonesia to the World and to Each Other

Palapa Ring Indonesia

The recent launch of the Palapa Ring’s eastern package completes the overall IDR 21.63 trillion (US$ 1.5 billion) broadband infrastructure development project across the Indonesian archipelago, with coverage up to the outermost parts of the country.

As reported, the Palapa Ring Indonesia is expected to answer several issues in order for Indonesia’s success in the digital economy and Industry 4.0 be felt in major cities as well as in westernmost Sabang, easternmost Merauke, northernmost Miangas and southernmost Rote, and thoroughly across the archipelago.

The Problem

As Indonesia inches closer to becoming Southeast Asia’s largest digital economy with a market value tripling to US $130 billion by 2025 from the current value, growth is still centred on urban cities with burgeoning demand for e-commerce products and ride-hailing services.

In remote areas, and sometimes not so remote, the internet connection remains patchy and even non-existent.

This has caused a digital divide that has become a new source of inequality in Southeast Asia’s largest economy.

In 2018, around 65% of the country’s 264 million people were connected to the Internet, which is among the lowest penetration rates in Southeast Asia.

While people have been connected, the internet speed in Indonesia, which is at 200 megabits per second (Mbps), discourages users from exploring online.

The Solution

Studies have shown how an increase in broadband take-up can result in higher gross domestic product (GDP) growth.

A universal, fast and reliable internet connection will lay the foundation for the overall productivity of the economy through more connected market participants.

Beyond the economic angle, the world now regards access to the internet as a basic human right.

Having an internet provides basic knowledge on social issues such as health and education and is necessary to advance research and innovation.

Aside from providing hard infrastructure, the Indonesian government should follow through with digital literacy programs.

This is critical as greater internet connectivity post higher risk of misuse, particularly through hoax news and misinformation.

Balancing freedom of speech and the nation’s security should be high on the government’s agenda following the broadband rollout, so as to avoid blocking the internet to prevent negative content.

A Streamlined and Simplified Process

In other news, six Indonesian governmental bodies have launched an application for oil and gas companies so that they can apply for duty exemptions on imported exploration equipment.

The app is called the Single Submission Fiscal Facility on Importing Items for Upstream Oil and Gas Activities.

The Finance Ministry explained that the purpose of the app was to streamline and simplify the application process for the Finance Ministry Exemption Letter (SKEP).

Most importantly, the app will slash the approval waiting time from 42 working days to only 15 working days, thereby reducing the waiting time by 50%.

The Finance Ministry issued the tax exemptions through regulations No. 177/2007, No. 178/2007 and No. 179/2007 to incentivise oil and gas exploration in the country.

The prior regulation exempted exploration equipment from import duties on the condition that the equipment was neither produced in Indonesia nor produced in sufficient quantities.


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