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Jakarta Post

Digital reformation: A struggle far from finished

  • Amir Karimuddin

    -

Jakarta   /   Mon, June 18, 2018   /   09:59 am
Digital reformation: A struggle far from finished Digital reformation is doable in a number of aspects, including the government, manufacturing, education, law enforcement and the economy. (shutterstock/-)

The year 1998 was part of the country’s dark history. Riots and demonstrations took place alongside the declining economy and monetary state, as Southeast Asia was hit by its worst ever financial crisis. It also marked the demise of the nation’s authoritarian leader Soeharto who had been in power for more than 30 years. 

However, history also noted that Indonesia’s economy survived with the growth of micro, small and medium enterprises (UKM), especially those in the creative sector.

The millennials, who in 1998 were still in school or were barely 5 years old, are now leading a different kind of reformation. Shall we say that it is a digital reformation? 

Twenty years later, the ever-changing world brought us to the “new reformation”. Although it lacks the normative description, a digital reformation can be seen as a shift from conventional ways to digital. Digital reformation is doable in a number of aspects, including the government, manufacturing, education, law enforcement and the economy.

Digital reformation is every nation’s capital in marching towards the future. Through digital technology, the economy is no longer based on transactions where sellers and buyers are in the same place. They can live in different cities or even countries, with logistical means and digital payment bridging the transactions.

The 21st century is marked with technology companies flourishing. Data is suddenly deemed as “the new gold or oil”, and jargon such as “big data, artificial intelligence, blockchain, internet of things and connected device” are no longer foreign in our everyday lingo. 

In the early 2000s, the world’s biggest valued companies came from the oil and retail industries. This year, the hegemony is filled with technology companies based in Silicon Valley in the United States such as Apple, Google/Alphabet, Microsoft and Facebook. In China, Tencent and Alibaba are in competition to become the market leader. 

Companies in Indonesia are starting to join the race, though less in scale compared to those in the US or China. The country’s population of more than 260 million, the world’s fourth-biggest, is the main capital of Indonesia to succeed in the digital world. 

Not to mention that Indonesians are very adoptive to technology development. More than half of the population, or around 143 million people, according to Indonesian Internet Service Providers Association (APJII) data, have access to the internet. This can be viewed as a very ideal market. In Asia, we are the third biggest market after China and India.

The creative industry and UKM are also evolving. From real-life stalls, they shifted to the digital sector. The digital economy has become a popular credo, spoken by the government, digital economy entities and the public.

Crafters in Jepara may have customers in Sabang, while small-scale toy sellers send their products to Merauke. All can now be done with handheld devices. Data from the E-Commerce Association of Indonesia (idEA) stated that almost 25 million people or 9 percent of the total population made online purchases in 2016.

Online-based services have started emerging since 2009, only booming in 2014, accelerated by Rocket Internet. Indonesia’s digital industry was also stirred when Tokopedia, one of the local e-commerce giants built by William Tanuwijaya and Leontinus Alpha Edison, received US$100 million in funds from two renowned investors, Softbank and Sequoia Capital. The industry has never been the same since then.

Millions of dollars have been invested in local startup businesses. Around $3 million were spent in 2017 alone. Every year, each startup is built by idealistic youngsters with goals of solving the nation’s problems.

Indonesia with problems in every aspect is an ideal laboratory for startups to test their ideas. President Joko “Jokowi” Widodo at the 2015 World Economic Forum said, “When we see challenges, I see opportunities. Indonesia’s challenges are your opportunities.” We were not surprised when Go-Jek sought billions of dollars to stay relevant. Every party tries to have a bite of the delectable pie buzzed all over the world.

Indonesia now has four startup companies worth over $1 billion. They are Go-Jek, Tokopedia, Traveloka and Bukalapak. One is in the service and logistic sector, and the rest are related to commerce. The number of unicorn startups in Indonesia is bigger than the total number of unicorns in other Southeast Asian countries. Even more surprising, the values were attained in a short amount of time.

As an illustration, Go-Jek is valued at $4 billion, higher than any transportation company on the Indonesian Stock Exchange. In addition, around two million Indonesian UKMs are now depending on their business performance on digital company leadership. There are also millions of partners who joined the app-based transportation services. 

According to Industry Minister Airlangga Hartarto, in the last six years the digital industry had reached 9.8 to 10.7 percent, or twice the national economy’s growth. He expressed confidence that the figures would be more than 11 percent in 2019, seeing that the whole nation was connected to the internet.

Currently, the digital economy is said to contribute around 1 to 2 percent of the total gross domestic product (GDP), but every party is optimistic that the number will rise. Communications and Information Minister Rudiantara even stated that in 2020 the digital economy would contribute 11 percent (worth $130 billion) to Indonesia’s total GDP, although in my view the timeline is hardly realistic. 

“If we really want to be a great nation, we must not merely talk; we must act big.” (Theodore Roosevelt, the 26th president of the United States)

The 1998 reformation will always be a reminder that Indonesia has had its high and low moments. Indonesia is still a young country. And like other countries with longer histories, the reformation could be a milestone for us to become a better nation.

The rapid development of time is unavoidable and adopting technology becomes a must. Aside from its side effects, the digital economy will forge on and contribute to the country’s economic growth. Financial inclusion, which is also a government program, will be easier with a number of digital services, including loans, financing, investments, and so on.

Digital reformation is far from finished, and it is our duty to keep it on the right track. It is a crucial one to reach Indonesia’s goal to be equal to other powerful nations by 2030.

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The writer is the editor-in-chief of DailySocial business and IT news portal. The views expressed are his own.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.