Updated: Nov 16, 2022
First published in The Jakarta Post (30/06/2022)
As chair of this year’s Group of 20, Indonesia is highlighting the potential of digital technologies for economic growth and social inclusion by making digital transformation one of its presidency’s three priorities. But the country itself is still grappling with the persistent issue of digital accessibility.
Without accessibility for all segments of society, digital transformation will only widen the digital divide that leaves the most vulnerable behind. Uneven internet access has been a fundamental challenge in Indonesia’s inclusive digital transformation, but digital accessibility goes beyond that, and access to services and markets is also required.
First and foremost, reliable and affordable internet access is the foundation of digital transformation. As of January 2022, about 73.7 million people in Indonesia, 26.3 percent of the total population, do not use the internet. More than 12,500 villages and 104,000 schools across Indonesia still have no internet access.
The internet penetration rate is also lower for women than men. Unequal internet access means those without the internet are excluded from the digital sphere and unable to tap into the social and economic opportunities it opens up.
For those with internet access, an overwhelming 95 percent use mobile data on their smartphones, an Indonesian Internet Providers Association (APJII) survey shows. The median mobile internet speed in Indonesia is 16.52 megabits per second (Mbps), slower than its neighbors, like the Philippines (19.26 Mbps), Malaysia (29.36 Mbps), Thailand (33.68 Mbps) and Singapore (64.01 Mbps). Indonesia sits 105th out of 141 countries in the Speedtest Global Index ranking.
The need to expand and improve internet access is well recognized by the Indonesian government, as shown by the Communications and Information Ministry’s plan to build more than 7,900 base transceiver stations by 2022.
Internet access is necessary but not sufficient. The more meaningful indicator to examine digital access is how well people use the internet and how safe they are when conducting digital activities.
On one hand, the internet provides services including information, education, financial, public administration and entertainment. On the other, it presents the risks of negative content, misinformation and fraud.
Hence, digital literacy and safety play a crucial role to support digital transformation. Electronic systems operators are thus responsible for creating a safe online environment, while users have to have the capabilities to navigate that online environment wisely.
Yet, Indonesia’s digital literacy rates remain relatively low – 61st out of 100 countries for its level of education and preparedness to use the internet, according to The Economist Intelligence Unit. The Ministry of Communications and Information's Digital Literacy Index scores Indonesia at 3.49 (on a scale of 1 to 5) in 2021, with the digital safety indicator getting the lowest mark.
Consumer safety and privacy, particularly concerning their data, have been a challenge in Indonesia. In 2020, there were 182 reported data breach cases, the highest rate within the last five years and an 810 percent jump from just 20 reported cases in 2016.
In the absence of a comprehensive personal data protection law that is still pending, and with the outdated Consumer Protection Law, digital consumers lack regulatory protection and means of redress when their digital rights are being violated.
Digital access also pertains to how Indonesians can participate not just as consumers, but as players in the digital sphere. Indonesians can participate actively by starting and growing a business online or working in high-skilled high-tech jobs.
Through the digital space, Indonesian businesses and players can access global markets and be part of global value chains. In 2021, only around 12 million out of 64 million micro, small and medium enterprises (MSMEs) in Indonesia were connected to digital platforms, still far from President Joko “Jokowi” Widodo’s target of 30 million MSMEs going digital by 2024.
A 2019 Statistics Indonesia survey found that 22 percent of offline businesses cite lack of knowledge and skills as reasons for staying offline, while around 7 percent cite security, privacy or trust concerns. Complicated bureaucracy to register a business, now required by Government Regulation No. 80/2019 for online sellers, is another reason micro-entrepreneurs hesitate to digitize and formalize their businesses, according to a study by the Center for Indonesian Policy Studies. Women are more affected by this, as they tend to have less time and capital to deal with the registration process.
Efforts to strengthen digital skills are therefore needed to boost the number of Indonesian entrepreneurs and for workers to thrive in the digital market. At the same time, improvements in cybersecurity, privacy and raising trust in the digital landscape are also needed to entice businesses and consumers to go online.
Indonesia has shown tremendous growth in the digital economy but data show significant gaps in digital accessibility, namely on internet access, utilization of internet services and digital market access.
The Indonesian government must ensure more equitable digital access for all segments of society to prevent a widening digital divide. This entails not just providing internet service across Indonesia, but also equipping citizens with digital literacy and skills to participate and compete in the digital economy.
Digital literacy and skills can be taught early in schools, as well as through cooperation with the private sector and civil society for programs targeting adults and the less educated population.
The Indonesian government specifically through the Trade Ministry must also ensure ease of doing business by simplifying the business registration process. The ministry can consider exempting micro-enterprises from the business registration requirements to remove the market barrier for going digital.
Last but not least, the Indonesian government and the private sector must continue to build a safe and trustworthy digital economy landscape through personal data protection and consumer protection. This can be done by passing the personal data protection bill into law and updating the Consumer Protection Law to better reflect recent digital trends.
Are you interested to join an in-depth discussion on the digital economy with the key stakeholders? Join the CIPS' annual event DigiWeek 2022 "Transforming Indonesia:
Creating a Safe and Inclusive Digital Ecosystem" on 27 - 28 July 2022! Sign up now here.