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Digital transformation: Safeguarding the future through risk mitigation
The evolution of technology adoption in the insurance industry, or insurtech, has led to a paradigm shift from protection to prevention, and should be built into the national digital strategy so it addresses real-life cases in a disaster-prone country.
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Delegates attend the Dialogue for ASEAN Central Bank Governors Meeting and Financial Institution CEOs on March 30, 2023 in Nusa Dua, Bali, as part of the ASEAN Finance Ministers and Central Bank Governors Meeting aiming to achieve the three priorities of recovery-rebuilding, digital economy and sustainability. (Antara/Nyoman Hendra Wibowo)
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s we approach the end of 2023, the government has presented the country with a noteworthy gift: a comprehensive road map for the digital economy strategy.
The unveiling on Dec. 14 of the Vision of Digital Indonesia 2045 (VID2045), spearheaded by the Communications and Information Ministry and involving the National Development Planning Ministry, also marked a historic moment.
The conceptualization of VID2045 involved policy scenarios with a holistic focus on ecosystem, sectoral and regional perspectives, and addresses critical aspects such as digital infrastructure, security and data, research and innovation, human resources and regulation and policy. From a sectoral standpoint, VID2045 advocates leveraging technology to fortify the national economy.
While the white paper is commendable as a crucial step toward enhanced digital adoption, further details are imperative to meet our ultimate goals. Specifically, the digitalization policy should extend beyond narratives, such as by providing strategies to mitigate risks, considering Indonesia's vulnerability to natural disasters.
Indonesia's history of natural disasters reveals frequent and severe impacts that threaten lives and economic development. The 2004 Aceh earthquake and tsunami alone resulted in economic losses of Rp 51.4 trillion (US$3.5 billion), far surpassing the Rp 3-10 trillion available in the state budget’s disaster reserve fund.
In response, the Finance Ministry devised a disaster risk financing strategy, featuring the Disaster Pooling Fund. This strategy aims to protect state finances, government assets and the community. Furthermore, projections estimate in the long run that economic losses due to natural disasters could range from 0.66 to 3.45 percent of our gross domestic product by 2030, if they are not taken seriously.
Data from the 2018 Village Potential Census conducted by Statistics Indonesia (BPS) illustrates the alarming frequency of natural disasters nationwide. With 3,597 flooding and 2,651 drought events, natural disasters have a significant impact. Landslides alone caused 12,044 fatalities, while fires claimed almost 900 lives across the country in the same period.
