Addressing the Challenges in Indonesia Tech Industry towards Golden Indonesia 2045

 Theodore Great Sifra Aipassa

In August 2020, we celebrate Indonesian 75^th Independence. Compared with the age of a human being, Indonesia has reached the stage of the elderly. However, Indonesia’s growth is not yet over; in fact, great momentums are waiting for Indonesia. For instance, between 2030 to 2045, Indonesia will experience a bonus in its demography, whereas young people will dominate the population[i]. Specifically, in 2045, in its 100^th years of independence, the government has announced four pillars to achieve golden Indonesia[ii]. Besides, even before 2045, in 2030, Indonesia is also projected to be the 4th largest economy just below the U.S.[iii]. One of the contributing industries to achieve this scope in the economy is the internet. Indonesian internet economy in 2018 is already valued at $27B, and in 2025, the Indonesian internet economy is predicted to reach $100B in value[iv]. This article aims to discuss the present challenges in the tech and startup industries that must be addressed by Indonesia to optimize the future opportunities which are already come knocking at the door.

One of the pillars that supported the Indonesian internet economy is the startup ecosystem. According to Indonesian Body of Creative Economy, there are 992 registered startups in 2018 with more than fifty percent reside in Jabodetabek area[v]. Among these startups, they face five similar common problems which are the quality of human resource, facility, law and regulation, capital, and market[vi]. This article will only discuss the three initial issues mentioned earlier, as they are in line with the four pillars of Indonesian 2045. Moreover, in terms of capital, more than 70 startups gain massive funding each year[vii]. Meanwhile, the market of Indonesia is so vast with 200 million citizens. In terms of the receptiveness towards technology, it will continue to grow as more and more people are using technology.

Firstly, to increase human resource quality, we must first identify Indonesia tech talent’s current state. According to the World Bank, Indonesian ICT graduates are often below the industry standard, and between 2015-2030, there is a deficit of 9 million ICT workers[viii]. To meet this challenge, there must be an increase in training and education for ICT skills both from the formal and informal institutions. Not only for the future workforce but most importantly for the current existing workforce. One example that can be taken from abroad is the Singapore skills future program which aims to equip job seekers with workforce-ready skills with 6 to 12 months training that also collaborate with reputable institutions[ix]. The issue of human development also coincides with the 1^st pillar for golden Indonesia 2045.

Secondly, the issue of facilities for the internet and technology industry in Indonesia should be improved in quantity and quality. Currently, there are still a gap in terms of internet and even electricity infrastructure across Indonesia. It is understandable with the vast area of the Indonesian landscape. However, to achieve golden Indonesia for every citizen, infrastructure must be an integral focus. During the first era of Jokowi as president, major infrastructure projects are being pursued, and some are still on the way to be realized in the 2^nd semester[x]. In terms of ICT, the Ministry of Communication and Information Technology also has the palapa ring project which provides 36.000 km fiber optics across Indonesia[xi].

At last, in terms of law and regulations, the government should create rules to manage the issue of privacy in the tech industry and reduce bureaucracy when it comes to establishing startups or tech companies. The issue of privacy is crucial in the era of 4.0 as the industry’s basis is on data, and if the data is not used properly, it can harm society. Meanwhile, the Indonesian administration system is still filled with many requirements that need more time and resources.

All in all, Indonesia’s government should address at least the three issues discussed in this article. Furthermore, in doing so, the government should collaborate with the tech industry actors in the domestic, the Southeast Asia ecosystem, and even the global world to become the regional technology hub in the region. All of this will then strengthen Indonesia position to embrace the golden Indonesia 2045.

[i] Bappenas, 2017. Bonus Demografi 2030-2040: Strategi Indonesia terkait Ketenagakerjaan dan Pendidikan. Available at: <https://www.bappenas.go.id/files/9215/0397/6050/Siaran_Pers_-_Peer_Learning_and_Knowledge_Sharing_Workshop.pdf> [Accessed 21 Apr. 2019].

[ii] Kementerian PPN/Bappenas, 2019. Untuk Menjadi Indonesia Emas 2045, Indonesia Harus Tinggalkan Struktur Ekonomi Kolonial. [online] Available at: <https://www.bappenas.go.id/id/berita-dan-siaran-pers/untuk-menjadi-indonesia-emas-2045-indonesia-harus-tinggalkan-struktur-ekonomi-kolonial/> [Accessed 19 Aug. 2020].

[iii] Curran, E., 2019. These Could Be the World’s Biggest Economies by 2030. [online] Available at: <https://www.bloomberg.com/news/articles/2019-01-08/world-s-biggest-economies-seen-dominated-by-asian-ems-by-2030>.

[iv] Anandan, R., Sipahimalani, R., Saini, S., Aryasomayajula, S. and Smittinet, W., 2018. e-Conomy SEA 2018: Southeast Asia’s internet economy hits an inflection point. [online] Available at: <https://www.thinkwithgoogle.com/intl/en-apac/tools-resources/research-studies/e-conomy-sea-2018-southeast-asias-internet-economy-hits-inflection-point/> [Accessed 10 May 2019].

[v] BEKRAF, BEKI-, 2018. Mapping & Database Startup Indonesia 2018. [online] Available at: <https://www.bekraf.go.id/downloadable/pdf_file/1812634-mapping-database-startup-indonesia-2018.pdf>.

[vi] Ibid.

[vii] Tech in Asia, 2020. Tech in Asia Indonesia – Komunitas Online Startup di Asia. [online] Available at: <https://id.techinasia.com/data-investasi-startup-indonesia-2019-2020> [Accessed 19 Aug. 2020].

[viii] The World Bank, 2018. Preparing ICT Skills for Digital Economy: Indonesia within the ASEAN context. [online] Available at: <https://blogs.worldbank.org/sites/default/files/preparing_ict_skills_for_digital_economy-revised_7mar2018.pdf> [Accessed 19 Aug. 2020].

[ix] Anon 2020. SkillsFuture – AboutSkillsFuture. [online] Available at: <https://www.skillsfuture.sg/AboutSkillsFuture> [Accessed 19 Aug. 2020].

[x] Choirul, M., 2020. Deretan Proyek Infrastruktur Fantastis Rp 400 T Jokowi 2020. [online] news. Available at: <https://www.cnbcindonesia.com/news/20190817114500-4-92714/deretan-proyek-infrastruktur-fantastis-rp-400-t-jokowi-2020> [Accessed 19 Aug. 2020].

[xi] KOMINFO, P., 2019. Sekilas Palapa Ring. [online] Website Resmi Kementerian Komunikasi dan Informatika RI. Available at: <//kominfo.go.id:443/content/detail/3298/sekilas-palapa-ring/0/palapa_ring> [Accessed 31 Aug. 2019].