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he G20 leaders will meet again this November in Buenos Aires, 10 years after the first G20 summit that was held with the global financial crisis as its backdrop. While the forum has been relatively successful in leading the global economy into more positive trends following the 2008 crisis, this year the G20 leaders are once again faced with a number of challenges, most pertinently inequality.

The G20, representing 80 percent of the global gross domestic product (GDP), more than 75 percent of global trade and about 60 percent of the world’s population, has become the most exclusive and influential global economic forum. Indonesia’s membership in this forum could serve as a vehicle to acquire economic benefits that are considered to be the chief of Indonesia’s national interests under President Joko “Jokowi” Widodo.

Furthermore, being a G20 member also represents the fulfilment of Indonesia’s constitutional mandate, which is to contribute to the creation of world peace and prosperity.

In addition, the G20 has allowed Indonesia to play a role as a bridge builder between the developed and developing countries, as well as an actor in shaping the foundation of the global economy. This is primarily due to the existence of a caucus of emerging market economies (EMEs).

The caucus serves as an avenue for Jakarta to comfortably share ideas and collect support from like-minded emerging countries before having them tabled at the plenary meeting.

The equal footing decision-making process at the G20 is also favored by Jakarta, as it would have the same opportunity as other members to channel its interests. Indonesia’s proposal of a concept that perceives digital transformation as being an opportunity (rather than a threat to the workforce) that had been adopted and subsequently included in the Digital Economy Ministers Declaration in 2017 owed much to this decision-making process. On this note, let us highlight digitalization, which has been one of Indonesia’s key priorities at the G20 since last year.

Digitalization has been one of the most prominent agenda items at the G20 for the past few years. This year, in line with one of the key priorities of Argentina’s presidency — the future of work — the G20 is looking at the impact of digitalization primarily on the workers.

For Indonesia, the discussion about the digital economy is significant and perceived as an area where the G20 could concretely contribute to addressing the key global challenge: inequality.

In 2017, under the command of Communications and Information Minister Rudiantara, Jakarta raised in the forum that income disparity and inequality have been a challenge shared by G20 members. Therefore, with a commitment of policy coordination and communication by the members on the one hand and rapid transformation of technology on the other, Indonesia saw an important modality for the G20 to develop a future policy option emphasizing digitalization as a new source of inclusive growth.

On that note, Indonesia had successfully proposed in 2017 a concept that underlines digital transformation as a practical, scalable and effective way to address inequality, which received general acknowledgement from the G20 ministers responsible for the digital economy, as the Dusseldorf Declaration indicates.

As an emerging economy with a promising growth of digital business models, this year Indonesia offers to the G20 a global platform to share and exchange the practices of innovative business models from each G20 member seen as enablers to unlock access to wealth creation sources and opportunities.

Such business models should provide sharing-economy opportunities and greater financial access (financial inclusion) and improve the digital literacy of the workforce — three areas crucial to narrowing the gap of inequality.

The initiative, called the Inclusive Digital Economy Accelerator (IDEA) Hub, was a result of intensive collaboration between the government, ecosystem players and international agencies.

The IDEA Hub would, in turn, allow for innovative business models working in one country to be growth catalysts in others while, at the same time, encouraging G20 governments to act as more than mere regulators by facilitating and accelerating the multiplicity of those business models.

What was the rationale for Jakarta to lead the G20 digital economy agenda? First, it has four out of seven unicorns that are in Southeast Asia, namely Bukalapak, Tokopedia, Traveloka and Go-Jek. They have led to increased income for workers and reduced unemployment.

The University of Indonesia and Lembaga Demografi (Demographic Institution) in 2017 estimated that Go-Jek drivers increased their income by an average of 44 percent after signing up to the application. More significantly, the application of these innovative business models also improved the workers’ digital skills and unlocked access to better sources of financing.

Second, Indonesia is an example where digitalization creates more jobs than loses them. McKinsey’s 2018 report suggests that online commerce has led to on average 4 million new jobs and by 2022 it will support about 26 million jobs.

Third, the digital economy is one of the sectors that receives continuous support from the government. In fact, it has a clear path in the extent to which the future of Indonesia’s digital economy is heading.

With a vision to become the largest digital economy in Southeast Asia with an aspired transaction value reaching US$130 million by 2020, the government has introduced supportive policies, including Presidential Regulation No. 74/2017 on an e-commerce road map, start-up license simplification at the Communications and Information Ministry and massive development of digital infrastructure, such as the Palapa Ring broadband project, to ensure internet access for all.

Lastly, global support for and investment in the fintech industry could help unlock financial access for Indonesia’s unbanked population, which — according to the 2017 Global Findex Database — currently stands at about 52 percent.

Having said that, three key messages on Indonesia’s G20 digital economy can be underlined. First, Indonesia’s rapid development of digital economy has become a modality to support economic diplomacy.

Second, it is important for the upcoming G20 summit to determine a commitment for global collaboration to tackle inequality and socio-economic disparity through digitalization. And third, in relation to that, digitalization should be used as a tool to achieve inclusive economic growth in the context of attaining the Sustainable Development Goals.
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