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11 August 2022

Indonesia's Digital Economy in the Next Level

The Asia-Pacific region has been experiencing spontaneous digital economic growth. Indonesia is one of the countries that has had this growth. Indonesia's development aims to get more technological solutions and better internet connections. Currently, the Indonesian government is focused on digital transformation, with most of its services being more digital. 

It is now projected that by 2025, Indonesia's digital economy will account for about $146 billion. In this article, you will learn more about the digital transformation in Indonesia, the challenges they are facing, and strategies for better digital connectivity. 

Growth in the Indonesian Digital Economy 

Several favorable circumstances have contributed to the tremendous expansion of Indonesia's digital economy. The increasing Indonesian middle class, a super tech-savvy portion of the population, has been the most significant contributor. In addition to a massive number of Internet users, Indonesia has a substantial percentage of smartphone users, as per recent research done by GlobalWebIndex. The study found that 79% of the people aged 16 to 64 had made at least one online transaction using a smartphone.

Interestingly, Internet adoption is widespread in Indonesia - with 202.6 million active users expected in July 2022. From 2020 to 2022, the number has expanded by 27 million, a 17% rise. In January 2022, Indonesia had a 75.7 percent internet connection.

Similarly, there has been spontaneous growth in the e-commerce sector – all thanks to the high online purchases. Indonesia's digital transformation and internet user penetration are projected to rise and reach 114 million users. This means that more people are adopting the internet, and the entire digital economy is growing daily.  

Challenges in Indonesia's Digital Transformation

Even with the enormous steps that Indonesia has taken toward attaining a good digital economy, many challenges need to be addressed. Below are some of Indonesia's most significant barriers to achieving better digital transformation. 

1. Employee Pushback

Acceptance of new digital formulations is a critical problem in Indonesian digital transformation. As new digital technologies are used in the country, certain workers may feel worried about their job security, resulting in a pushback to digital transformation.

2. Security Threats

Companies that hurry to embrace digital solutions in Indonesia may compromise their businesses to increased cyberattacks as more people adopt digital transformation. A business may engage with dozens of SaaS providers, and checking their security levels can be difficult. According to a report by get.cybergrx, 82% of employees said their firms were breached during digital transformation. Managing a safe digital transition has become a vital issue for enterprises worldwide. Another factor contributing to this heightened threat is the growing usage of shadow IT.

3. Limited funding 

This is another challenge that is hindering digital transformation in Indonesia. While the government is trying its best to enable better connectivity, there is still insufficient funding. 

Transformation Strategy 

The best way for Indonesia to attain its dream of being the digital hub of the Asia-pacific region is by getting good strategies. For example, companies may overcome challenges like employee pushback by developing a corporate culture. This enables employees to welcome digital transformation rather than resist change, which must begin at the top.

The government can also support private investors to get funds for more projects geared towards better digital transformation. 

In summary, Indonesia has come a long way to be the digital hub it is today. While there are a few challenges, better strategies can boost the digital economy. 

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