In 2015 the government launched the 2020 Go Digital Vision campaign to boost the country’s digital economy. Among key targets are helping one million farmers and fishermen to go digital, creating 1,000 local tech startups valuedat a total of US $10 billion, and becoming the largest digital economy in Southeast Asia by 2020.
McKinsey in its report titled “Unlocking Indonesia’s digital opportunity” in 2016 predicted that digital economy would contribute to the national economy to the tune of $150 billion annually by 2025. Google and Temasek’s study in 2016 also revealed that Indonesia would become Asia’s digital economic powerhouse.
To unleash the digital economy potential, several initiatives have been done by the government.
For example, the national e-commerce roadmap was set up to support the development of the local e-commerce ecosystem, to fund the e-commerce startups, to protect consumers, and to double down on cybersecurity.
Further, the e-commerce entrepreneurs are being eased in processing business licenses as they just need to register their business with startup associations, such as the Indonesia E-Commerce Association (idEA), instead of applying through a government business registration office. Another initiative is to increase the broadband networks all over Indonesia.
However, despite huge potential and its government’s supportive initiatives, the country’s digital market still face challenges.
To start with, limited access to technology is still persistent. The data from the Internet Live Stats indicates that until 2016, internet penetration in Indonesia still stood at 20.4 percent. The rate is less than one-third that of Malaysia which was 68.6 percent in the same year.
Internet access is mostly enjoyed in the capital and provincial capitals such as Surabaya in East Java, Bandung in West Java, Medan in North Sumatra, Padang in West Sumatra and Makassar in South Sulawesi,. Access is still poor in smaller cities, and even worse in remote areas. Despite the government support of the digital ecosystem, such as the Palapa Ring project, we have yet to see the real outcome in far-flung parts of the archipelago.
Secondly, Indonesia still lacks digital competitiveness. The Harvard Business Review’s recent release titled “60 Countries’ Digital Competitiveness, Indexed” showed that Indonesia still has to work hard to increase its digital competitiveness.The release was based on the joint research between…