Developing the Digital Economy in Indonesia
Jakarta. June 2023. Indonesia, being the 4th most populous country in the world, with over 270 million people certainly possesses the sheer manpower necessary to become a global power, coupled with the fact that nearly 80% of its population is actively online on a daily basis. With this in mind it’s fairly safe to say that Indonesia holds immense potential to develop its digital economy. Indonesia must use its resources and embrace the digital revolution and prioritize its digital economy moving forward.
Despite a large majority of the Indonesian population being ‘online, its low digital literacy rate amongst the significant portion of the population means that they are unable to fully participate within the digital economy as they lack skills such as using digital platforms or e-commerce. The development of a digital economy must require a robust technological foundation for it to stand on, the most important of which being internet connectivity and a strong telecommunication network. Indonesia has made some progress expanding internet access, such as the planned construction of 1000 free wifi hubs, and the recent launch of the SATRIA satellite in order to expand internet coverage in small, and remote areas of the archipelago.
Yet, Indonesia’s digital economy seems to be at a crossroads. By way of mismanagement, or exploitation, its digital economy seems to be in a state of immobility. In the book ‘The Theory of Economic Development’ Schumpeter emphasized that entrepreneurship involves dealing with uncertainty and taking risks. Entrepreneurs are willing to invest resources, time, and effort into new ventures, often facing uncertainty regarding future demand, market conditions, and technological advancements.
Indonesia, with less than 4% of its population being entrepreneurs partly explains it’s lack of risk-taking and therefore any radical developments in its economy, can be partly attributed simply to a lack of an entrepreneurship culture within the country, the regulatory and bureaucratic hoops for a new business to operate, such as obtaining licenses and permits and obviously knowing the ‘right’ people, tend to discourage potential entrepreneurs from pursuing their business idea. Schumpeter’s idea on the importance that entrepreneurs’ disruptive activities hold in the name of economic development, looking at countries like the United States, China, and Singapore, where entrepreneurial activities have thrived, it becomes evident that a vibrant entrepreneurship culture can drive radical developments and economic growth. Indonesia must learn from these examples and create an ecosystem that nurtures and supports entrepreneurs, simplifies bureaucratic procedures, and promotes a culture of innovation.
Indonesia’s journey towards becoming a global digital powerhouse requires concerted efforts in enhancing digital literacy, expanding internet connectivity, and fostering an entrepreneurship culture. By embracing the digital revolution and prioritizing its digital economy, Indonesia can harness its immense potential and pave the way for a prosperous and inclusive future.
