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Improving digital competitiveness key to Indonesia's sustainability
MSMEs are Indonesia's economic backbone, and improving their digital competitiveness is the catalyst that will launch the country into sustainability, for MSMEs, the economy and the environment.
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A micro, small and medium enterprise (MSME) displays terracotta products in the 2020 Group of 20 Summit media center at the Bali International Convention Center (BICC). (Photo: Kemenko Marves)
I
ndonesia has a large population of over 280 million and a rapidly growing middle class. However, it faces numerous challenges in sustaining economic growth and improving living standards. One crucial area where Indonesia needs to improve is digital competitiveness.
The East Ventures-Digital Competitiveness Index (EV-DCI) 2022 shows that Indonesia's digital competitiveness has become even more distributed each year, marked by yearly increases in the EV-DCI median score. EV-DCI is a measurement created by East Ventures to calculate digital competitiveness among provinces in the country. Nevertheless, regions in Java still dominate the top positions, leaving the eastern regions behind.
Improving digital competitiveness and closing the gap among provinces is essential for the country's economic and environmental sustainability.
According to the e-Conomy SEA 2022 report by Google, Temasek and Bain & Company, Indonesia's digital economy has surged significantly from US$41 billion in 2019 to $77 billion in 2022. In 2025, the figure is estimated to increase to $130 billion, which is achievable if we can optimize our resources appropriately.
The digital economy cannot be separated from the role of micro, small and medium enterprises (MSMEs), which hold the key to bringing Indonesia to sustainability.
The country is home to 65 million MSMEs that account for over 60 percent of gross domestic product (GDP) and employ around 110 million people. Despite this, only a third of these MSMEs are on digital platforms and even fewer are based in regions outside major cities.
Many MSMEs need help in terms of access to capital, financing, market access and most importantly, technology utilization. Improving the digital competitiveness of MSMEs is therefore crucial if Indonesia is to achieve sustainability and continue to grow its economy.
