Indonesia’s digital development, marked by Information and Communication Technology (ICT) adoption, has been going rapidly, driven by the COVID-19 pandemic in the past few years. However, despite this accelerated progress, the distribution of technology adoption remains unequal, presenting various challenges for specific regions within the country. As a result, there are still numerous hurdles faced by certain areas in Indonesia due to the uneven distribution of ICT.
The country recorded a staggering 215.6 million internet users in 2023, surpassing the pre-pandemic figure of 196.7 million in 2019. The exponential growth in internet usage is further reflected in the East Ventures – Digital Competitiveness Index (EV-DCI) 2023, which indicates a consistent rise in the overall score to reach 38.5, a 3.3-point improvement from the previous year. The progress highlights the advancement of the middle and lower-ranking provinces to digital access.
In the Input sub-index, which assesses human resource readiness, digital technology usage, and the expenditure related to digital technology, the score rose notably by 3.2 points, reaching 40.1. This increase was influenced by the ICT Usage pillar, with the advancement in key indicators like the Ratio of the Population with Mobile Phone (13.9) and the Ratio of the Population with Internet Access (17.8). Consequently, the progress had a positive impact on the ICT Expenditure pillar, with increased average household spending on ICT needs and higher salaries for ICT employees.
Source: East Ventures – Digital Competitiveness Index (EV-DCI) 2023
The ICT sector plays a pivotal role in boosting EV-DCI scores across the different regions of Indonesia. Central Java, for instance, witnessed a remarkable rise, climbing from 14th to 6th place, with a score of 48.1 thanks to the provincial government’s focus on implementing the ICT Usage pillar, specifically in the smart city initiatives. Meanwhile, Bangka Belitung Islands have impressively risen by 12 ranks, now at 17th place with a score of 39.5. The ICT Expenditure pillar has increased as the government support improving the digital capacity of Micro Small Medium Enterprises (MSMEs).
Obstacles amidst the rapid growth of technology
Despite the swift progress of digital transformation, numerous challenges hamper progress towards achieving equal digital access, including:
1. Uneven network infrastructure distribution
Despite improvements in rural areas, a persistent urban-rural digital divide continues to plague Indonesia. The map below illustrates internet penetration in 2021, revealing stark disparities, with darker colors indicating greater levels of population with internet access. The concentration of internet access in western Indonesia and urban areas emphasizes the urgent need to bridge the digital divide through the improved distribution of ICT infrastructure.
Percentage of the population accessing the internet in 2021
2. Weak cybersecurity measures
The year 2022 witnessed 8,831 reported cybercrime cases handled by the Indonesian National Police Unit, Bareskrim E-MP Robinopsnal, and the data theft incident by hackers known as “Bjorka“, underscoring the urgent need for enhanced cybersecurity and data protection measures.
3. Uneven digital literacy
Insufficient digital knowledge and limited technology adoption in Indonesia are reflected in three provinces among the top 10 having EV-DCI 2023 scores, as their digital literacy index is lower than the median. This deficiency impacts technology adoption and hampers the quality of Indonesia’s digital talent pool. The statistics reveal that only 50% of the country’s digital talent possess basic and intermediate digital skills, while a mere 1% have advanced-level expertise in areas such as Artificial Intelligence (AI) and the Internet of Things (IoT).
Key focus areas for tackling digital access inequality
In addressing the issues and striving for equal digital access for all, several initiatives have been made to advance the ICT sector and bridge the gap. These key areas of focus are crucial for addressing the inequality in Indonesia’s digital development:
1. Enhancing internet infrastructure
The government actively prioritizes improving the digital infrastructure landscape to expand digital access, specifically promoting equitable internet availability. An exemplary commitment to this cause is the recent launch of the Satria Satellite, aimed at enhancing the signal quality and expanding coverage in underserved areas.
2. Fostering the digital ecosystem
Tech startups and the government can foster a digital ecosystem through collaboration to increase digital literacy and skills. For example, East Ventures’ portfolio companies, such as Mekari and Tokopedia, supported the Ministry of Communication and Informatics of the Republic of Indonesia (Kominfo) to hold the government digital literacy program “UMKM Digital Cemerlang Melaju Bersama Kementerian Kominfo”. Through the collaboration between digital startups and the government, digital startups can transfer their digital knowledge and technology directly to hundreds of MSMEs in Indonesia while the government facilitates the program. Moreover, Kominfo has introduced HUB.ID, a platform catering to local post-seed startups, fostering regional-level development and inclusivity.
3. Prioritizing cybersecurity
In the era of the digital revolution, we face numerous cybersecurity challenges. Thus, it becomes imperative to utilize advanced technologies to safeguard our digital ecosystems. Peris.ai, an Indonesian-based cybersecurity-as-a-service startup backed by East Ventures, is at the forefront of empowering organizations in Indonesia through comprehensive cybersecurity services, leveraging artificial intelligence technology to mitigate digital threats effectively.
4. Embracing Artificial Intelligence (AI)
AI can revolutionize the ICT sector and boost Indonesia’s GDP by 12% by 2030 through the digital economy and technological advancement. The government recognizes this potential and has developed the National Artificial Intelligence Strategy (STRANAS KA) 2020-2045, issued by the Ministry of Communication and Information, to harness AI opportunities. In collaboration with East Ventures-backed Nodeflux, the provincial government of DKI Jakarta has installed AI technology called VisionAIre across 278 areas in the city to monitor passing water levels. In East Java, the government has also implemented AI technology in 11 points.
Bridging the gap in Indonesia’s digital development and achieving equitable digital access requires collaborative efforts from governments, organizations, and communities. Prioritizing technology adoption, investing in robust infrastructure, and promoting digital literacy and collaborations are vital steps in empowering underserved populations and creating a more inclusive digital society. By embracing technology’s transformative potential, we can pave the way for a future where equitable digital access is the reality for all Indonesians.
Download the EV-DCI 2023 report here.