The recently released Government Regulation (PP) No. 71/2019 on the implementation of electronic systems and transactions, which allows firms to store data in or out of the country, is a positive step in this direction. More could be done to accelerate Indonesia’s digital transformation, which has a significant economic impact as well.

Core to this digital and economic transformation is the public cloud. In a study conducted by Boston Consulting Group (BCG) this year, commissioned by Google Cloud, we found that the financial benefits for companies that use the public cloud could add US$36 billion to Indonesia’s gross domestic product between 2019 and 2023.

The GDP impact will come from a combination of direct spending as businesses grow, along with second-order effects from supplier and employee spending. When annualized, this is equivalent to 0.5 percent of the annual GDP or about 25 percent of the palm oil industry’s annual contribution to the economy.

The growth will create significant demand for jobs — and not just tech jobs. Over the next five years, about 70,000 new jobs will be created from the direct economic impact and another 275,000 influenced from second-order effects. Contrary to the general misperception that technology eliminates jobs, companies that grow and develop new lines of business will need to hire upskilled workers in a variety of non-tech areas such as sales, marketing, human resources, finance, logistics and operations.

How does the public cloud make all of this possible? Partly by fueling productivity, but mostly because it provides easy access to innovative technologies such as artificial intelligence and machine learning, along with near-instant data analysis.

With these tools, a company can quickly engage new customers and bring new products and services to market in a matter of weeks rather than months or years. The public cloud is the not-so-secret sauce behind the rapid growth of Indonesia’s tech unicorns and their regional and global expansion.

The public cloud can be a boon to the small and medium-sized enterprises that, as a group, are Indonesia’s largest employer.

Digitally empowered businesses of any size can get financing faster. State-owned lender Bank Rakyat Indonesia (BRI) uses the public cloud to approve and disburse microloans in less than two minutes instead of the two weeks it used to take. The cloud makes it possible for traditional small businesses to embark on expansion plans with little overhead and just as digital native businesses do.

Yet the impact of the public cloud could be even greater. Indonesia could take a number of concrete steps to yield greater benefits over the next several years.

First, Indonesia needs a robust and reliable network infrastructure to support the adoption of the public cloud.

Second, there is a growing demand for cloud-savvy IT talent, and the country needs to train and certify more cloud specialists to meet the demand. We have seen a number of cloud service providers in anticipation of entering the Indonesian market, sponsor training programs, but more training is needed, especially localized programs conducted in the Indonesian language.

Organizations that use the public cloud need to combine efforts with the government and cloud service providers to develop the workforce for tomorrow.

Third, financial incentives can speed up small business transformation. Our study found that smaller businesses benefit from incentives to adopt the public cloud, for example, through subsidies or discounts to help them manage their expenses and cash flows during their transition.

A government or cloud service provider-sponsored initiative along this line could create a significant impact. Fourth, to use the public cloud to its fullest, some businesses may need to be able to transfer their data across borders. Indonesia needs clearer policies on how to classify and handle data for this purpose.

PP No. 71 is a positive step in clarifying which private sector operators can place their data across borders, although it stops short in some areas, such as defining where data from the public sector as well as banking, health care and other important industries can store their data.

If these challenges are mitigated, public cloud use could add as much as $53 billion to Indonesia’s economy over the next five years, and could be the catalyst for more than 630,000 jobs in total — close to twice the number we’ve estimated in our baseline projection.

Transformative opportunities for a digitized economy and a highly-skilled workforce lie ahead if Indonesia sets the most favorable growth conditions in motion for the public cloud.

The ascent to the cloud for Indonesia seems bright.

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The writer is managing director and partner of Boston Consulting Group

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