The main challenge of digital development in Indonesia is product innovation, such as designing the most advanced technology. From the startup point of view, this challenge is related to the operational aspect. Indonesia has a huge market, but the challenge is the technology creators and its users are not yet well-literated with technological advancement.
Research by the IMD World Digital Competitiveness Ranking 2021 showed that Indonesia is ranked 53rd of 63 countries. Another index, Global Innovation Index which measures a country’s innovation capability, reported that Indonesia has remained in the same position from 2018 to 2020, which was the 85th rank.
The development of digitalization is not always about shifting from offline to online; it is also the integration of many things. Although Indonesia’s income per capita is not yet the biggest in Asia, digital adoption in our country is relatively successful. Also, mobile phone ownership grows more exponentially in Indonesia compared to other countries. The pandemic has accelerated the demand to shift from offline to online.
First, we need to foster quality human resources. Indonesia has more than 2,200 startups companies, and will continue to grow. This demonstrates the favorable regulatory which encourage the growth of the startup ecosystem. However, there remains a lack of workforce for the digital economy industry.
With Indonesia’s big population, there is a high demand for logistics. However, the logistic costs are equally high. One of the causes is that Indonesia has many islands, yet infrastructure is concentrated only on a few of them.
First is the infrastructure issue. Although infrastructure is now progressing in a positive trajectory, some blind spots remain unaddressed. The second issue is productive utilization of technology. Social media usage is already quite good, but the conversion level from usage into economic transactions is not yet sufficient.
Recently, we did collaborative studies with LPEM FEB UI at the end of 2021 to demonstrate the development of Eastern Indonesia in relation to the existence of Grab. This study focused on two areas: Kupang and Jayapura.
Digital infrastructure and physical infrastructure were really lacking when we first began. It is changing but it remains as the main issue. There is still a long way for us to achieve global standards. Over the last couple of years, Indonesia has catapulted past other parts of the region. As the infrastructure improves, you can see the proliferation and the number of start-ups booming and growing quickly, which could not have been done with the infrastructure that existed a few years ago.
When the pandemic hit, we first sorted out the logistical issues since 80% of Aruna business revolves around exporting commodities. We used to face grave difficulties in overseas shipping that led us to launch our products in the domestic market in March.