Four ingredients for a thriving digital economy

Indonesia’s rise in the digital economy can be seen in the number of its unicorn tech companies and the prolific use of smartphones by its people.


However, its fast rise has also revealed the gaps that are holding back a more equitable and safer move to online and digital solutions. These include a general lack of understanding around the importance of safeguarding data (privacy), and a low level of digital literacy.

“There are probably six unicorns now in Indonesia … but unfortunately, they are not quite accompanied by cybersecurity awareness [among consumers],” observes Professor Caroline Chan, AIC Industry Fellow for Skills Futures.

She joined e-commerce giant Bukalapak’s Head of Public Policy Alex Chandra for an AIC In Conversation webinar recently to discuss what’s needed for Indonesia’s digital economy to thrive.

Her short answer: digital literacy, internet coverage, market inclusivity and good regulation.

“In any digital transformation, we need to remember that we must put people in the centre … and provide knowledge and skills for them to participate,” said Professor Chan who is also the head of accreditation at the Australian Computer Society (ACS).

This transformation needs to include citizens learning of the dangers of sharing credit card PIN codes and of not checking what private identity information is being used for.

“People in Indonesia have a very low digital literacy,” said Alex Chandra.

“What we really need is to actually educate the people in Indonesia to have a better digital knowledge. That’s our biggest problem.”

“And of course there is also attack from the hacker, tracker, or sniffer basically, which the country has on a daily basis,” he said.

As a giant e-commerce company Bukalapak has been the target of hacking attempts, and has asked its users to use more preventative measures to help it ward off such attacks.

Professor Caroline Chan (Image: AIC). Top image by Bernard Hermant on Unsplash.

The AIC’s Caroline Chan has developed a short course in cybersecurity for one hundred micro and small enterprises in Indonesia to give them the capability to protect their own information and that of their customers.

The program is funded by the Australian government’s e-Commerce for Trade initiative to train business owners in the cyber skills needed to expand their operations into regional and global markets.

Women make up more than 60 per cent of the small business owners taking part.

“If you’re looking at batik artists,” said Professor Chan, “they are mainly women and in a very small family business, with very little literacy, let alone digital literacy.”

She hopes there will be a ripple effect as the new skills improve the confidence of these small businesses, and that they can become an example for others.

The Indonesian government has been encouraging a digital transformation, especially as it attempts to minimise the impact of the coronavirus pandemic.

The government aims to see “two million MSMEs [micro-, small- and medium-enterprises] online by the end of this year” reports Alex Chandra. “They are giving a lot of incentives for both buyers and sellers.”

The AIC In Conversation Webinar where the discussion took place, featuring the two panelists and moderator, the AIC’s Helen Brown. (Image: AIC)

Bukalapak (meaning to “open a stall”) provides a shopfront for tens of millions of small and medium businesses in Indonesia, and by default is part of this measure.

According to Alex Chandra the company has seen not just an uptake in buyers and sellers, but also clear monthly evolutions in the kinds of products trending.

“More people are actually going online. That’s the first thing. And this leads to the second thing: There are more products [now] being sold by the merchants. And there are some items that we normally don’t see online that are now also being sold online. [For example] a few months back people were not thinking of selling frozen food online.”

Australian education providers should be paying close attention to these trends says Caroline Chan as “our vocational training, for example, is an area that is very much needed in Indonesia.”

“Using analytics, artificial intelligence, data sharing, cloud computing, and of course cybersecurity in the supply chain, is all becoming more critical.”

In terms of the governance and regulation needed to support Indonesia’s digital transformation, she notes there has been some welcome progress: “The data protection law is getting there, but needs to be accelerated.”

Professor Chan said the government is also aware of the need to make the internet more widely and fairly available.

Communication and Information Minister Johnny Plat admits that currently more than ten thousand villages and sub districts do not have reliable access, but declared in 2019 that “by the end of 2022 at the latest, 4G services will be available across the country.”

Download speeds are also holding back the digital economy, averaging only 13.79 Mbps across Indonesia (and 9.82 Mbps for mobile). Australia has the fourth-slowest internet in the OECD but still averages 41.78 Mbps.

Watch or listen to the full webinar: What’s next for the digital economy?

Browse all AIC In Conversation Webinars

Picture of Helen Brown

Head of Communications and Outreach
The Australia-Indonesia Centre

Picture of Tim Fitzgerald

Digital Communications Manager
The Australia-Indonesia Centre