Promoting the digital economy towards development

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Jakarta(ANTARA) –
To realize the Golden Indonesia Vision 2045 and become a developed country, Indonesia needs to optimize new sources of growth, including the digital economy.

With the rapid development of technology and the spread of the internet, Indonesia has the potential to benefit greatly from the digital economy.

However, several challenges still need to be overcome to develop and strengthen the country’s digital financial ecosystem, namely infrastructure gaps, low levels of financial literacy and education, and cybersecurity threats. This will require greater collaboration among stakeholders.

In this regard, the government is continuing its efforts to further develop the digital economy, as outlined in the National Strategy for the Development of Indonesia’s Digital Economy 2030, especially by building the six pillars of digital economic development.

The six pillars are strengthening infrastructure, human resources, business environment and cybersecurity, innovation and business development research, financing and investment, and promoting sound policies and regulations.

The government is continuing its digital infrastructure development, with a budget of IDR 75 trillion (USD 4.6 billion) for digital infrastructure between 2019 and 2022.

Adi Budyaso, director of the Financial Sector Policy Center of the Fiscal Policy Directorate of the Indonesian Ministry of Finance, said that Indonesia is committed to continuing to invest in digital infrastructure in the future.

One of its major digital infrastructure projects is the development of the Palapa Ring fiber optic project to prepare and strengthen internet connectivity across Indonesia.

In 2024-2025, the Indonesian government will continue its efforts to connect the Palapa Ring network to the last mile.

Digital Talent

The development of the digital economy cannot be separated from high-quality talents, so it is necessary to continuously cultivate digital talents, including improving the quality of basic education and higher education, developing inclusive digital education and training programs, and improving financial and digital economic literacy.

The development of the digital economy is inseparable from creating a good business environment, which is also consistent with the government’s efforts in various structural reforms.

To develop the digital economy, the Government continues to encourage the digitalization of micro, small and medium enterprises (MSMEs), promote the presence of new technology start-ups, and accelerate the application of digital technologies in key sectors of the economy.

Innovation can accelerate the development of the digital economy. To this end, the government strongly encourages R&D work, especially in the public and private sectors, for example through incentives such as the R&D super tax break.

The digital economy is an industry that requires a lot of capital. Therefore, it is necessary to promote investment in this field, both domestically and abroad.

The government is working to develop incentives to attract more investment in the digital sector.

It also continues to develop policies and regulations that encourage innovation while focusing on consumer and community protection.

Financial sector reforms and development of digital finance are also needed to encourage policy strengthening in this area.

In order to realize the vision of “Advanced Indonesia 2045”, the financial sector also needs to progress. Therefore, it is necessary to guide the intermediary function of the financial sector to become a deep, innovative, efficient, stable and inclusive source of financing to support the realization of the vision of “Golden Indonesia”.

Financial technology support

The Fourth Industrial Revolution has brought about major advances in digital technologies, including the emergence of digital financial technologies (fintech).

Inano Jajadi, CEO of capital markets regulation at the Financial Services Authority of India (OJK), said the innovative financial solutions provided by fintech have changed the way people manage their finances.

By leveraging technologies such as the Internet, mobile computing, cloud computing, big data, blockchain and artificial intelligence, FinTech companies can provide better, faster and more affordable financial services.

This can undoubtedly improve the efficiency, effectiveness and coverage of services, and help create financial products and services that are more inclusive and better suited to community needs. In Indonesia, the development of FinTech has gained increasing support as the community’s use of digital technology increases.

According to the 2024 survey results released by the Indonesian Internet Service Providers Association (APJII), Indonesia’s Internet penetration rate has reached 79.5%, with a total population of 278.7 million and the number of Internet users reaching 221.5 million.

This progress is reflected in the value of Indonesia’s digital economy, which is expected to reach US$77 billion in 2022 and is expected to reach US$130 billion in 2025.

Specifically, crypto assets have been growing exponentially since their emergence in 2008.

As of April 2024, the transaction volume of crypto assets reached 211.10 trillion rupiah (about 12.94 billion U.S. dollars), and the number of users reached 20.16 million. The highest transaction volume was in 2021, reaching 859.4 trillion rupiah (about 52.71 billion U.S. dollars).

With this progress, the Indonesian government has demonstrated its strong determination to support the development of fintech by developing and strengthening the country’s digital financial ecosystem.

This is outlined in the Digital Indonesia Vision 2045, which has three pillars – digital government, digital economy and digital community, supported by a strong digital infrastructure and digital ecosystem.

The government, OJK and stakeholders are also continuously improving financial literacy and education to support the development of the digital economy.

It is very necessary to carry out financial education to improve people’s financial literacy because according to a survey conducted by OJK in 2022, the financial literacy level index of Indonesians was 49.68%, an increase compared to 2013, 2016 and 2019, when the levels were 21.84%, 29.70% and 38.03% respectively.

Financial knowledge and education aims to help the general public choose financial products and services that suit their needs, enable the public to correctly understand the benefits and risks involved, know their rights and obligations, and believe that the financial products and services they choose can enhance public welfare.

Indonesia can comprehensively accelerate the development of the digital economy by optimizing digital development and demographic dividends and synergies among stakeholders, strengthening infrastructure, improving investment attractiveness, supporting human resource development and credible policies, and promoting financial literacy and education.

This will enable it to reap greater benefits from the development of the digital economy and realize its vision of becoming a developed and prosperous country.

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