Jakarta, December 5, 2024 – Indonesia has a significant opportunity to lead Southeast Asia’s digital economy, with a strong foundation in digital infrastructure and technology adoption. This was stated by economist and Executive Director of Segara Institute, Piter Abdullah, during a discussion with the media on Wednesday, December 4.

Referring to the e-Conomy SEA 2024 report by Google, Temasek, and Bain & Company, Piter explained that Indonesia’s digital economy has been growing rapidly and is projected to reach USD 90 billion by the end of 2024. This growth is largely driven by sectors such as e-commerce, digital financial services, and technological innovations like artificial intelligence (AI). However, to ensure sustainability and inclusivity, Indonesia faces challenges that need to be addressed.

“When we talk about the digital economy in Indonesia, we can see that its growth rate year-on-year is significant. Especially when we look at 2030, according to the e-Conomy SEA 2024 data from Google, Temasek, and Bain & Company, it could reach between USD 200 to 360 billion. When it comes to sectors, e-commerce truly dominates, as it is highly relevant to our daily lives,” said Piter Abdullah in Jakarta on December 5.

He explained that internet penetration reached 77.02% in 2022, connecting around 210 million people to the digital ecosystem. This aligns with the projected Gross Transaction Value (GTV) for digital payments, which is expected to reach USD 450 billion by 2025, according to the e-Conomy SEA 2024 report.

Piter further emphasized the growing focus on artificial intelligence (AI), with its usage and demand increasing significantly across various sectors such as education, healthcare, and transportation. Additionally, according to the e-Conomy SEA 2024 report, Indonesia’s data center capacity has expanded by 268% from its previous capacity, indicating a commitment to stronger digital infrastructure.

Despite this, greater commitment is needed to bridge the digital divide. “According to data from the Central Statistics Agency, only 47% of households in rural areas have internet access, significantly lagging behind the 78% in urban areas. Furthermore, digital literacy remains a major challenge. A survey by APJII shows that only 40% of Indonesians have adequate digital literacy, which limits the potential to fully leverage technology,” Piter added.

To address these challenges, strategic steps are needed, including:

• Digital Penetration Outside Java: The government needs to allocate a larger budget to build and expand digital infrastructure, especially in underdeveloped areas. High-speed internet networks must be made available evenly across Indonesia to support digital activities.
• Enhanced Cybersecurity: The government should invest more in cybersecurity to protect personal data and critical infrastructure from cyberattacks. This can be achieved by building a robust cybersecurity system, raising public awareness about the importance of cybersecurity, and collaborating with the private sector to share information and best practices.
• Active Multi-Stakeholder Collaboration: The government, private sector, academia, and civil society need to collaborate synergistically to drive the growth of the digital economy. This collaboration can take the form of discussion forums, joint project development, and the creation of consensus-based policies.

“Digital economy is the future for an inclusive and sustainable economy, but it requires a strong foundation in regulations, infrastructure, and trust. A collective commitment from Bank Indonesia, research institutions, and industry players is key to success,” concluded Piter. (*)