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Digitization can make US$150b for Indonesia by 2025: McKinsey
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Two officers of the Radya Pustaka Museum in Surakarta, Central Java, carry out the digitization process of an old manuscript. (thejakartapost.com/Ganug Nugroho Adi)
B
y embracing digital technologies and improving the country's facilities to support digitization, Indonesia can realize an estimated Rp 1.94 quadrillion (US$150 billion) in growth, or 10 percent of GDP, by 2025, worldwide management consulting giant McKinsey & Co has said.
In a report released Tuesday, McKinsey findings suggested that within 20 world select markets, ranging from countries with similar economies such as Thailand and India to developed countries such as the UK and France, Indonesia still lags behind in utilizing its digital potential to propel employment and labor productivity.
Indonesia's internet access is, in fact, the second most affordable after India, however, it is positioned the third lowest for its poor quality of average bandwidth and speed. Overall internet penetration in the country is still very low at 34 percent and accessed by only less than 100 million citizens due to uneven connectivity infrastructure across regions.
Indonesia's online-based industry keeps growing and labor-heavy sectors such as financial as well as business services are already better digitized. However, asset-heavy sectors such as mining, manufacturing and natural resources industries--which contribute to at least 50 percent of Indonesia's GDP--still lacks digitization when compared to the 19 other countries.
"The potential of economic growth is huge if Indonesia could maximize its digital potential. It offers ways to increase the number of workforce and boost labor productivity across sectors, both in operational and developing existing assets in Indonesia," Khoon Tee Tan, a McKinsey & Co partner in the Jakarta office, said Tuesday.
The use of social and online platforms can boost labor supply, reduce unemployment and increase labor participation, Tan went on. (evi)
