Digital Economy in Indonesia
Digital landscape of Indonesia, including emerging trends and projections for the digital economy. Gain insights into the impact of the digital economy, Indonesia's digital profile, and the country's vision for digital growth. Discover key drivers such as price wars, smartphone adoption, infrastructure development, and the rise of social media platforms.
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Digital Economy in Indonesia Prospect, Challenges, and Research Agenda Wirawan Agahari Leonardus Kristianto Nugraha DIODE Workshop Yogyakarta, 25-26 May 2017
About this presentation Data is taken from a forthcoming report Innovation Outlook Identification of trends, projection, and agenda for change in the field of ICT and media in Indonesia Some findings are highly relevant with DIODE topic Mainly about emerging trends and projection of the digital economy in Indonesia This presentation draws on the findings from the research Aims to provide understanding about digital economy landscape in Indonesia Researching innovation cipg.or.id 3 advancing policy improving governance
Agenda How Emerging Trends in Indonesia Digitized is Indonesia? The Impact of Digital Economy in Indonesia Looking Forward Researching innovation cipg.or.id 4 advancing policy improving governance
How Digitized is Indonesia? Indonesia Digital Profile: An Overview Researching innovation cipg.or.id 5 advancing policy improving governance
Digital Economy Vision of Indonesia The biggest digital economy in ASEAN by 2020 US$ 130 billion E-Commerce transaction in 2020 > Source: MCIT (2016) Researching innovation cipg.or.id 6 advancing policy improving governance
Indonesia is a digital country MOBILE CONNECTIONS 371.4 Million ACTIVE TOTAL INTERNET USERS 132.7 Million POPULATION 256.2 Million SMARTPHONE USERS ACTIVE MOBILE INTERNET USERS 123.3 Million AVERAGE DAILY USAGE OF MOBILE INTERNET ~4 Hours 95.87 Million Source: APJII (2016), We Are Social (2017) Researching innovation cipg.or.id 7 advancing policy improving governance
What are the drivers? Price war Smartphone become necessary goods Massive infrastructure deployment Social media booming Facebook, Twitter Introduction of Android OS Open source, easy to develop new apps Chat apps that drives data penetration Cheap and affordable smartphone Researching innovation cipg.or.id 8 advancing policy improving governance
However, the infrastructure was not yet equally developed Source: opensignal.com (2017) Researching innovation cipg.or.id 9 advancing policy improving governance
which makes internet users become centered in Java island Source: APJII (2015) Researching innovation cipg.or.id 10 advancing policy improving governance
Some Comparison Indonesia vs Other ASEAN Countries Global ICT Development Index 2016 (Rank) GSMA Mobile Connectivity Index (Score) Network Readiness Index 2016 (Rank) Singapore (1) Malaysia (31) Thailand (62) Indonesia (73) Philippines (77) Vietnam (79) Cambodia (109) Myanmar (133) Singapore (20) Malaysia (61) Brunei (77) Thailand (82) Vietnam (105) Philippines (107) Indonesia (115) Cambodia (125) Timor Leste (128) Myanmar (140) Laos (144) Singapore (80.8) Malaysia (65.4) Thailand (63) Brunei (61.6) Philippines (59.2) Vietnam (54.4) Indonesia (53.9) Laos (38.4) Cambodia (37.9) Myanmar (28.6) Researching innovation cipg.or.id 11 advancing policy improving governance
Emerging Trends in Indonesia Researching innovation cipg.or.id 12 advancing policy improving governance
The Digital Economy Hype in Indonesia ON-DEMAND (TRANSPORTATION) SERVICES E-COMMERCE FINTECH Researching innovation cipg.or.id 13 advancing policy improving governance
The Go-Jek Effect The first on-demand transportation services in Indonesia Established since 2010, app launched in 2015 an app for every need , facilitate (almost) anything on- demand First official startup unicorn in Indonesia One of the major drivers of digital economy hype in Indonesia Researching innovation cipg.or.id advancing policy improving governance
The Go-Jek Effect Creating new job market > 20.000 self-employed driver Higher income than conventional driver Facilitate mobility More people using public transport Disruptive effect Conventional vs App- based Unsupportive regulation Treated as conventional transport provider Researching innovation cipg.or.id advancing policy improving governance
FinTech Important enabler for the digital economy Unbanked population in Indonesia Only 36% of adults have a bank account FinTech players are growing rapidly 78% in the past two years Mainly focus in payment sector Promoting financial inclusion Carrier billing, payment agents, branchless banking Government is supporting FinTech Regulation on P2P FinTech lending in Indonesia Bank Indonesia FinTech Office (BI FTO) Source: DailySocial Indonesia Tech Startup Report 2016 Researching innovation cipg.or.id 16 advancing policy improving governance
E-Commerce 8 million people shop online and keeps increasing Driven by the increasing market coverage and middle class Consumptive + Digital behavior of Indonesians Still only 0.8% of total retail sales China at 11%, USA at 8% Priority of the government! Targeting US$ 130 billion by 2020 Issuing several supportive policies Economic Policy Package: Roadmap of E-Commerce Data Source: Statista, MCIT Researching innovation cipg.or.id 17 advancing policy improving governance
E-Commerce New job creation in SMEs Enabling everyone to start their own business through internet Trade expansion, reach wider audience Allow SMEs to sell products & services online Disruptive effect Omni channel by major retailers Researching innovation cipg.or.id 18 advancing policy improving governance
The Impact of Digital Economy in Indonesia Researching innovation cipg.or.id 19 advancing policy improving governance
Digital Economy promotes Efficiency ICT capital replacing labor and non-ICT capital Innovation New type of economy, disruption Inclusion Trade expansion, financial inclusion, jobs creation Source: World Bank (2016) Researching innovation cipg.or.id 20 advancing policy improving governance
ICT Contributes to GDP and Employment in Indonesia 1% increase in mobile penetration 10.700 extra formal jobs in 2020 $ 640 million to GDP in 2020 Source: Oxford Economics (2016) Researching innovation cipg.or.id 21 advancing policy improving governance
ICT Contributes to GDP and Employment in Indonesia 7.2% of total GDP came from ICT sector Largest growth in comparison to other sectors (~10%) Well above average national GDP growth(~5%) Source: Statistics Indonesia (BPS) Researching innovation cipg.or.id 22 advancing policy improving governance
Digital Economy and Sociopreneurship Trends in Indonesia Digital start-ups are growing rapidly in Indonesia 1463 start-ups in Indonesia 3rd highest in the world behind USA and India Most of them have a common goal solving societal problems giving significant impact to the society Data Source: startupranking.com (2017) Researching innovation cipg.or.id 23 advancing policy improving governance
Looking Forward Government Support, Barriers, and Future Agenda Researching innovation cipg.or.id 24 advancing policy improving governance
Indonesia Broadband Plan 2014-2019 Economic Policy Package: Roadmap of E-commerce Finishing of Palapa Ring Project in Eastern Indonesia Government Support for the Digital Economy in Indonesia expected to be done in 2019 All capital city of regency / municipality (514) will be connected with fiber optic 1 million domain names 50 million SME s to go digital 1000 tech start-up entrepreneurs in 2020 Digicoop smartphone: made in Indonesia! Source: MCIT (2016) Researching innovation cipg.or.id 25 advancing policy improving governance
Finding qualified digital talents Bridging the digital divide in Indonesia * But the government is working on it * Digital savvy professional across function with specific Knowledge still hard to find Talent war: common practice among startups *The root of problem lies in the academic sector * Challenges * Poor connectivity in rural area Adaptive Regulation Regulation always behind of technology *Do not let regulation kills innovation *The government have different layers in responding to digital innovation (On-demand transportation vs FinTech) * Researching innovation cipg.or.id 26 advancing policy improving governance
Some Research Agenda How inclusive is digital economy in Indonesia? Digital economy and sociopreneurship movement in Indonesia Exploring the dark side of digital economy: non- user, the impacted Policy framework for digital economy in Indonesia Consumer protection and data security: ensuring trust for online transaction How to balance interest between various stakeholders? Researching innovation cipg.or.id 27 advancing policy improving governance
Thank you! CENTRE FOR INNOVATION POLICY AND GOVERNANCE Indonesia Sustainability Centre Komp. Harmoni Plaza Blok B-5 Jl. Suryopranoto No. 2, Harmoni Jakarta Pusat, INDONESIA office@cipg.or.id twitter.com/icipg facebook.com/ICIPG cipg.or.id
