Encouraging digitalization of MSME to support economic growth

From the perspective of Drs. H. Benyamin Davnie, the Mayor of South Tangerang

South Tangerang achieves one of the best digital economies in Banten. What are the strategies to encourage digital competitiveness in South Tangerang?

South Tangerang has high potential in two aspects: population growth and more educated populations. The captive market is already established, the local people are attentive to digital development, especially because the economic players are those performing in tertiary sectors, mainly trade and services. 

The use of digital apps was introduced gradually in 2011. It was initially intended for internal affairs of local government, but it has evolved to aid the society in public services. For example, the Civil Registry Office provides 3O services (online, offline, and ojek online/online courier) in which people can select to access service via walk-in, online app, or represented by online courier. The other support from the government to go digital is the installment of Wi-Fi in public facilities, e.g., mosques, schools, city hall, and others with funding resources from APBD (Regional Expenditure Budget) or other donations.

Indonesia will take advantage of the demographic bonus in 2030. How do you encourage the readiness of digital talents in South Tangerang to help boost digital economy growth?

Education infrastructure in South Tangerang is quite complete, and we are currently delivering digital learning. We also encourage collaborations between campus and pesantren (Islamic boarding school) that introduce ICT in their system. 

The city government has fulfilled the demand for WiFi installation at school. The central government has also contributed in providing internet data for learning activity. In educational programs, some campuses dedicate particular study programs to enhance students’ knowledge in technology. Besides that, junior high schools also incorporate digitalization as a local content in the curriculum. A bigger portion of learning should be dedicated to attitude in harnessing the benefits of technology. The role of the government is to stimulate the introduction of technology to the community. 

How has the City Government of South Tangerang provided initiatives and policy for entrepreneurs to consistently apply digital transformation in their company?

There are not many companies in South Tangerang because we are not an industrial city, but there are some tech-based industries. What we encourage at the moment is the small-scale and the household industries to keep digitizing their production and marketing process. We strongly encourage digitalization among MSME, though it may be slow, so that MSMEs can reap the benefits. In addition, we plan to partner with the Ministry of Communication and Informatics (Kemenkominfo) to develop digital talents, for example through training and coaching for MSMEs.  

What has the City Government of South Tangerang prepared regarding the funding scheme and payment for digital transformation?

In an effort of digitalization, we must first ‘digitize’ paper files before we start utilizing digital technology. It is indeed costly because the cost of technology is high, and it also changes very rapidly. We have to avoid stagnation of digital transformation as if it happens only if there is funding and will stop if there is lack of funding. 

In our office, we keep increasing our budget for digitalization, such as operator fees, new app development, Wi-Fi supply, and others. The source of funding is mainly APBD and additionally from aids such as Wi-Fi supply from the third party for 100 locations from mosques to other public facilities. Besides, a fraction of the budget is dedicated to coaching and training programs.

How accelerated digital transformation could contribute to regional economic recovery from COVID-19 pandemic impacts?

The pandemic has mostly affected two groups of business actors. The first are middle-to-upper-income businesses that tend to hesitate when it comes to migrating online. When they have to migrate to online, they are quite slow to catch up and eventually have to cut their employees or close down. The second group is the MSMEs that are continuously provided with digitalization training for the whole business process starting from production, packing and marketing. Eventually, they are the ones who have proven to be the most resilient. If we saw declining economic growth in South Tangerang, it does not mean that the economy has recessed. The ones seeing a drastic decrease are the upper middle class economic actors, while the lower middle class economic players continue to live, adapting to the pandemic.