Indonesia's Position in the Digitalization Race

Indonesia, as the largest economy in Southeast Asia and home to over 270 million people, is well-positioned to leverage the benefits of digitalization. The Indonesian government has recognized the importance of digital transformation and has implemented several policies and initiatives to accelerate the country’s digital journey.

One of the key initiatives is the Digital Roadmap, which outlines the government’s vision and strategy for digital development between 2021 and 2024. The roadmap focuses on four strategic sectors: Digital Infrastructure, Digital Government, Digital Economy, and Digital Society.

Digital Infrastructure

The Indonesian Internet Service Providers Association (APJII) reported that internet penetration in Indonesia has risen from 78.1 percent in 2023 to 79.5 percent in 2024. This high reach has been enabled due to multiple initiatives mentioned below that has built the Indonesian digital infrastructure:

  1. The Palapa Ring project, worth 1.5 billion USD, completed in 2019, has laid over 35,000 kilometers (about 21747.99 mi) of fiber-optic cables under sea, and 21,000 kilometers (about 13048.8 mi) of Land cables to connect districts and cities across Indonesia and being better connectivity to the region. Through this project, the government allowed network coverage of 100 Gbps through even the farthest regions of the country.
  2. Kominfo, the Ministry of Communication and Technology, plans to establish the National Data Center, to improve the efficiency of radio frequency spectrum allocation and develop 5G network, and develop a telecommunication monitoring center to monitor the quality of experience (QoE) and quality of services (QoS) in 514 cities and regions throughout Indonesia. Kominfo deployed Asia’s largest satellite, SATIRA-1 in 2022, worth almost 550 million USD, launched by SpaceX.
  3. Simplification of tax regulations and improvements in logistics are being implemented to support e-commerce growth. The Online Single Submission (OSS) system streamlines business licensing processes.

Digital Government

The Indonesian government is not only working to improve connectivity but also to establish digital central systems. In 2018, the government released Presidential Regulation 95/2018, which outlines the establishment of an eGovernment system (Sistem Pemerintahan Berbasis Elektronik/SPBE). This regulation calls for the creation of a master plan for the eGovernment system, covering various topics such as business processes, data and information, budget planning, eGovernment infrastructure, eGovernment applications, eGovernment security, and eGovernment services.

Digital Economy

A study by Google, Temasek, and Bain & Company projects Indonesia’s digital economy to surpass USD 124 billion by 2025. With nearly 11% growth last year, Indonesia is on track to become a significant global player. The government aims to digitize over 64 million MSMEs, targeting 30 million by 2024. Initiatives like the #1000StartupDigital movement are fostering a robust start-up ecosystem, making Indonesia a leader in unicorns and home to one decacorn. The GoTo Group, a merger of GoJek and Tokopedia, is developing a super app for various sectors. President Jokowi supports the growth of startups in financial services, industry, digital media, agriculture, education, health, and digital cities.

Digital Society

To encourage a more digital Society, the government’s “Digital Talent Scholarship” program which was instated to train youths and talents in the digital sector, aims to train 9 million talents by 2030. The government has also initiated several other programs to encourage a more digital society under the DTS, which are – Fresh Graduate Academy (FGA), Vocational School Graduate Academy (VSGA), Thematic Academy (TA), Professional Academy (ProA), Government Transformation Academy (GTA), Digital Entrepreneurship Academy (DEA), Digital Leadership Academy (DLA), and Talent Scouting Academy (TSA), alongside another program known as the National Movement on Digital Literacy.

Indonesia’s digital roadmap is a strategic blueprint designed to position the country as a digital leader in Southeast Asia. With initiatives like the “Digital Talent Scholarship” and other programs, the government is creating a favorable environment for digital transformation. However, companies must consider the disparities in digital infrastructure and ensure compliance with local regulations.

ASEAN Business Partners can provide the necessary expertise, local insights, and strategic support to help international companies leverage these opportunities, tap into Indonesia’s burgeoning digital economy, and contribute to the country’s digital transformation journey. By partnering with ASEAN Business Partners, businesses can ensure a successful market entry and sustainable growth in Indonesia.

About the Author

Caramia Whardana

Caramia Whardana is Country Manager of our Indonesian subsidiary, Indonesia Business Partners. Caramia has over 30 years of experience in Indonesia’s banking sector, wherein she held multiple senior management positions in HSBC Indonesia, across various functions.