Up the Game: Issues, risks and challenges in Indonesia’s e-commerce cybersecurity

Indonesia’s digital economy is massively important, but without reliable cybersecurity systems, 150 million users remain exposed to security threats.

The digital economy is important for Indonesia and is projected to grow to US$120 billion by 2020, comprising about 12 per cent of its GDP. But Indonesia’s policies and regulations will need some strengthening in order to build a stronger and more robust environment for a thriving e-commerce scene.

Read or download the full backgrounder: Up the Game

Indonesia faces two challenges to its future digital growth and integration into the global digital economy. First, ensuring the integrity of the security of online business transactions and exchanges. Second, tackling the critical shortage of skilled cybersecurity professionals, which is impeding competitiveness and growth.

This backgrounder by Professor Caroline Chan, Dr Eugene Sebastian, and Professor Matthew Warren takes a look at these challenges in depth, and identifies opportunities for Indonesia to accelerate the growth of its digital economy.

Key takeaways from this backgrounder:

• Indonesia has the largest online commerce market in Southeast Asia, with revenues predicted to grow to $20 billion by 2022.
• A significant driver to Indonesia’s e-commerce growth is the increasing number of Micro, Small, and Medium Enterprises (MSMEs) participating online.
• The number of online sellers in Indonesia has doubled each of the past three years to reach 4.5 million active sellers in 2017. About 99 per cent are micro enterprises selling their own products, resellers or distributors.
• The existence of a robust cybersecurity system is crucial for Indonesia’s rapidly expanding digital economy and to fully realise its financial and non-financial benefits – from enterprise growth, international trade, to employment and digital social inclusion.
• Three human capital and capacity challenges potentially impedes the growth of e-commerce in Indonesia: perceptions, culture and skills.
• McKinsey (2016) predicted that the data traffic would increase six-fold in 2020, although Indonesia’s IT spending lags behind that of many of its peer countries. In e-commerce, a major obstacle that inhibits the progress of e-commerce is network infrastructure (internet is cheap, but the quality is poor).
• While there has been rapid advancement of internet use in urban areas, the country’s internet penetration remains low – around 25–35 per cent – which is one of the lowest rates in South East Asia.