East Ventures launched the East Ventures – Digital Competitiveness Index 2023

Digital competitiveness is becoming more equal, realizing an equitable digital nation

East Ventures, a pioneering sector-agnostic venture capital firm that has supported over 300 tech companies across Southeast Asia, together with Katadata Insight Center and PwC Indonesia launched the East Ventures – Digital Competitiveness Index (EV-DCI) 2023, which is the 4th edition since it was first launched in 2020. The EV-DCI 2023 report presents the measurement of Indonesia’s digital competitiveness with the theme “Equitable digital nation”.

“In general, digital adoption has been more equal in all provinces (except the new provinces) that East Ventures has mapped for four years in a row. It will be a strong foundation for Indonesia’s digital infrastructure in the future and will foster new innovations throughout Indonesia. We express the highest appreciation for the government of Indonesia, where rapid and equal digital development occurred under President Joko Widodo’s leadership along with all levels of government involved. With a strong and equitable digital infrastructure, the growth of new innovations in all sectors that are inclusive and sustainable, and the support of all stakeholders, from investors, founders, startups, consumers, private companies to Indonesian State Owned Enterprises (SOEs), we are moving faster and closer in achieving an equitable digital nation,” said Willson Cuaca, Co-Founder and Managing Partner at East Ventures.

EV-DCI 2023 provides data on digital competitiveness across 38 provinces and 157 cities/regencies in Indonesia. Digital competitiveness across regions in Indonesia continues to show a positive trend. This can be seen by the EV-DCI 2023 score of 38.5 which has increased compared to the previous year, which was 35.2 (2022) and the previous 2 years, which was 32.1 (2021).

Director of Katadata Insight Center, Adek Media Roza, said that increased digital competitiveness was also experienced in provinces outside the top 10. “The improvement in the median value for 4 consecutive years illustrates an increase in digital competitiveness, especially in middle and lower ranking provinces,” said Adek.

The spread value or the gap between the highest provincial score (DKI Jakarta – 76.6) and the lowest (Central Papua – 23.3) for EV-DCI 2023 is 53.2, down from the previous year, which was 48.3 in 2022. However, this increase in spread was not due to the worsening equity of digitalization, but the division of the Provinces of Papua and West Papua.

The EV-DCI report is also complemented with the results of a survey towards 39 digital companies, analysis of 8 sectors, as well as perspectives from 22 figures. This perspective includes policy makers of the government, including the Vice President of the Republic of Indonesia, Coordinating Minister for Economic Affairs, Coordinating Minister for Maritime Affairs and Investment, Minister of Cooperatives and SMEs, Minister of Health, and others. In addition, it also includes the perspective from the startup founders such as the President of Traveloka, CEO of KoinWorks, CEO of Nusantics, and so on.

These figures provided perspectives in strengthening efforts to improve the digital economy towards an equitable digital nation. The figures emphasized the steps and strategies they were taking to achieve these goals.

Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan said that the government continues to encourage telecommunication players to actively build network infrastructure to remote areas. Through the Palapa Ring project and the Satria multifunctional satellite, the government is also involved in providing a backbone network. On the downstream side, the government is collaborating with a number of partners to provide digital technology skill training.

The government also conducts literacy training and business coaching so MSMEs are literate in digital marketing through the Proudly Made in Indonesia (Bangga Buatan Indonesia) program. And the most important thing, the government needs policies related to coordination issues between the Central and Regional governments, which are often not aligned.

Coordinating Minister for the Economy, Airlangga Hartarto hopes that digital growth can be enjoyed by all Indonesian people. “The digital economy is expected to have an inclusive, agile, sustainable economy, and can ensure that the Indonesians can take advantage of this digital growth. Within the framework of developing the 2022-2030 digital economy, of course this can contribute to achieving the vision of Indonesia in 2045,”

Collaboration towards equitable digital nation

Indonesia’s digital economy is experiencing growth supported by strong consumption and increasingly widespread digitalization. This cannot be separated from the collaboration of various stakeholders in various sectors. The government and the private sector are working together in maintaining the development of digitalization in essential sectors such as fintech, logistics, edtech and healthtech.

Collaboration with the private sector as a commitment to realizing digital justice was explained through several interviews conducted in the preparation of this report. Minister of Cooperatives and SMEs, Teten Masduki who encourages the digital transformation of MSMEs through collaboration with e-commerce. In addition, the Coordinating Minister for the Economy, Airlangga Hartarto, encourages an environment for innovation for startup players. Meanwhile, for the Minister of Tourism and Creative Economy, Sandiaga Uno, collaboration with startups is a necessity.

The growth of the digital economy continues to show a positive trend, where to face 2023, the right strategy to maintain the development of the digital economy in Indonesia is: (1) equal distribution of digitalization, (2) strengthening business fundamentals, (3) increasing collaboration, and (4) implementation of Environmental, Social, and Governance (ESG). 

“Indonesia’s efforts to achieve equitable digital require collaboration from all stakeholders. Stakeholders in the digital economy ecosystem include startup and conventional companies, governments, investors, and the public. Forms of collaboration can be directed at equalizing digitization efforts, strengthening business fundamentals, and implementing sustainability strategies through ESG. These actions are expected to increase efficiency in creating added value that supports the occurrence of digital economic equality which will lead to an increase in the national economy as a whole,” said Radju Munusamy, Partner and NextLevel Leader PwC Indonesia.

Willson added, “There is still a lot of ‘homework’ to complete and challenges that all stakeholders must address. We will continue to support equal distribution of digital competitiveness in Indonesia and participate in developing Indonesia’s digital economy through various investments and our initiatives or programs,”

About East Ventures – Digital Competitiveness Index 2023 score

EV-DCI is a mapping of regional digital competitiveness formed from three sub-indexes, nine pillars, and 50 indicators. Its constituent sub-indexes are input, output, and support, with the pillars of human resources, ICT usage, ICT expenditure, economy, entrepreneurship and productivity, manpower, infrastructure, finance, and regulation and capacity of the regional government.

The province with the highest EV-DCI 2022 score is still held by DKI Jakarta, with a score of 76.6. Meanwhile, the second and third positions were occupied by West Java and DI Yogyakarta with scores of 62.2 and 54.2. In addition, Central Java is back in the top 10 at rank 6 with a score increase of 10.1, with an EV-DCI 2023 score of 48.1. Meanwhile, North Sumatra also entered the top 10 with an increase in score of 5.7.

Several provinces outside Java have also experienced a fairly good increase in digital competitiveness. For example, Jambi experienced the highest increase in its EV-DCI 2023 rating compared to the previous year, moving up from 30th to 14th. Jambi experienced an increase in its score of 8.0 to 39.8. The Bangka Belitung Islands and West Kalimantan also showed significant increases in digital competitiveness; each increased by 12 ranks.

The EV-DCI 2023 report can be downloaded at east.vc/DCI.

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If you missed the launching event, you could watch it below.