The research, which spanned from Jan. 5 to Feb. 24, 2024, involved 19 stakeholders as respondents. They involved academics, government officials, AI community leaders and business professionals at managerial and top-level positions and IT specialists, as well as data and marketing specialists and project managers in the financial services and manufacturing sectors.

Conducted jointly by Advisia Group on behalf of IBM and KORIKA, the research found that 62 percent of local corporate respondents were investing in piloting AI in their companies.

The study also indicated that 23 percent of enterprises were already in the AI investment stage, adopting AI capabilities that interoperate with companies’ business functions.

The study is of paramount importance considering the growing belief that AI technology is highly expected to spur digital economic growth.

Today, Indonesia leads Southeast Asia with US$366 billion in projected AI contributions to the national GDP¹, and increased economic output expected to be driven by the integration and utilization of AI technologies in various sectors across the country.

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However, key challenges remain, with the digital proficiency gap accounting for 48 percent, lack of internal data governance (40 percent) and lack of visibility of business outcome (12 percent).

“This has prevented surveyed companies from advancing to the next stage,” the study said.

Advantages of embracing AI

“There is a great potential for AI to advance Indonesia's digital economy. I believe AI technology will be crucial in driving substantial growth,” said KORIKA President Prof. Hammam Riza.

Hamman ensured that AI technology would not reduce the number of jobs, but would instead benefit the workforce. “Instead of replacing human jobs, individuals who embrace AI tools are positioned to excel beyond those who do not, and that is the importance of integrating AI for enhanced performance and success.”

Meanwhile, IBM Indonesia President Director Roy Kosasih pointed out that “Generative AI will have a multiplier impact on businesses, from decision-making to customer experience and revenue growth. But anchoring human talent is essential to embracing AI.”

"We believe an interdisciplinary approach, a model that demonstrates a mutual relationship between societies, users and AI development, will emphasize the value proposition it offers, via a human-AI partnership.”

This study, commissioned by IBM, further revealed that polled companies in the financial services and manufacturing industries will gain value from AI adoption. ‘The respondents’ opinions that the technology is ready still varies,” it said.

Companies have taken unique approaches to adopting AI technology, according to the study. “23 of the companies in the FSI and manufacturing sectors at the enterprise level focus on leveraging AI capabilities that work seamlessly across the majority of divisions,” it revealed.

The study also found that 62 percent of the companies surveyed said they frequently streamline the foundation of use cases, such as improving data security when using AI capabilities in chatbots, virtual assistants, dashboards and language translation.

During the pre-AI investment stage, 15 percent of companies conducted extensive assessments of functions or divisions that can benefit from AI, including information security assessments, sales and marketing, virtual assistance, financial planning and audit functions.

The report found that some of the most critical obstacles lie in effectively managing big data to make informed decisions, mitigate risks and address real-time inquiries.

Financial services appear to embrace AI in more organizational functions, such as customer experience (100 percent), fraud detection (23 percent) and loan processing (10 percent), using chatbots, dashboards and electronic know-your-customer applications.

Respondents in the manufacturing industry focus more on dashboards for their shared services, as well as unlocking potential to optimize manufacturing through inventory management (100 percent), demand prediction (33 percent) and data processing (33 percent).

In terms of challenges, almost half of the Indonesian businesses surveyed (47 percent) noted the need to improve digital skills, especially when it comes to managing teams, utilizing specialized expertise and fostering meaningful communication.

“Lack of internal data governance (40 percent) can often lead to missed targets and objectives due to data being scattered across various systems like multiple ERPs, warehouse management systems, etc,” the study said.

Underscoring governance as key to the responsible and successful adoption of AI, the report found that the Communications and Information Ministry Circular Letter No. 9 of 2023 on AI Ethical Guidelines marked a significant milestone for Indonesia, outlining the ethical principles for AI business conduct, including three policies on ethical values, ethical execution and responsible usage in the development of AI.

"At IBM, we believe AI’s purpose is to augment human intelligence and that the benefits of the AI era should touch the many, not just a few. Data and insights should belong to their creator, and the technology must be transparent and explainable, along with a clear understanding of who trains the AI systems, what data was used and, most importantly, what went into their algorithms’ recommendations," Kosasih said.

"IBM believes in AI governance, a set of guardrails that ensure AI tools and systems are safe and ethical. Frameworks, rules and standards that direct AI research, development and application will ensure safety, fairness and respect for human rights. And we are proud to be part of Indonesia’s journey into this new technology era of governance, helping businesses go to the next level,” concluded Kosasih.

1 Furnished by Advisia Group from Racing toward the future: artificial intelligence in Southeast Asia, Kearney, October 07, 2020.

This article is published in collaboration with IBM

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