If we think about Indonesia and its internet a few decades ago, the relationship between the two would be somewhat oxymoronic. In the 1990s-2000s, internet for personal uses was something extremely uncommon. We still depended on relatively “conventional”, if not ancient, means of technology. Workers waited for a taxi to come by before hailing it. Shopping required us to get off our beloved, warm beds. Young people, if not taking a toll on their parents’ phone bills, sending SMS to confess to their crushes.
Just a few decades afterwards, internet-connected smartphones in our pockets are filled with apps, which allow us to book a ride, shop, or communicate easily. In 2016, McKinsey reported that our internet usage exceeded global average, with immense engagement in social media and online shopping. Jakarta is said to be “the Twitter capital of the world”. In 2020 alone, TikTok experienced 57.5% growth, as Jakarta Post stated. Meanwhile, Indonesia’s e-commerce market size reached $12 billion in 2018. As of 2021, there are 158.6 million registered users in e-commerce.
All the data above point out to one thing: today, there are opportunities in our rapidly growing digital economy. With such immense amount of usage, revenue, and a great number of users, businesses should take this opportunity to jump into the economic bandwagon of the online world. McKinsey predicts that if we focus on digitization, by 2025 our economy will have grown by USD 10 billion – approximately 10 percent of our GDP in 2016. Nevertheless, there are still challenges on the road to optimizing digitization and working on our digital economy.
Challenges for Indonesia
While there are many challenges for Indonesia to maximize its digital economy potentials, two problems are worth-mentioning. First, our internet development has been very centralized and urban-centered. The McKinsey report states that in 2016, only 34% of Indonesia were connected to the internet, while 4G access covered 23% of our total areas in 2015. A penetration rate above 45% could only be found in big cities such as Jakarta and Yogyakarta. This means that more effort should be made to reach potential and existing users in areas with poor or non-existent internet connections.
Secondly, there is a lack of local initiatives in industries where potentials of thriving in the digital economy could be realized. Gaming industry is a good example of this. In 2019, the number of Mobile Legends users in Indonesia alone reached 31 million people. Nonetheless, popular mobile games such as PUBG Mobile and Mobile Legends are owned by foreign companies, which obviously means that the great revenue from these games eventually goes abroad. If there are more local initiatives to create digital products such as games, we can benefit from this untapped economic potential.
Seizing Opportunities in Indonesia’s Digital Economy Today
Although challenges for maximizing our digital economy remain, both the government and private businesses can work on several things to thrive and prosper in Indonesia’s digital economy. First of all, upon realizing the challenges in maximizing our digital economy, businesses can plan and invest in digital infrastructure. Digital infrastructure will allow access for more users to engage with different types of businesses’ presence in the online world.
Secondly, with the rapidly growing number of internet users for the past few years, businesses should make further innovations in user-centered approaches. Big companies nowadays are in a battle of wits to boost user engagements in their products. Digital advertisements are becoming more and more creative, and this is supported by social media communication. These customer-centered experiences will allow business to remain competitive in the online market.
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