East Ventures Co-Founder and Managing Partner Willson Cuaca (Left) with BKPM Chairman Bahlil Lahadalia
According to the freshly released East Ventures Digital Competitiveness Index (EV-DCI) 2020 Report, the rapid development of digital economy in Indonesia only occurs in urban areas and several provinces with high technology early-adopters.
This condition has led to a digital divide between Indonesia’s numerous islands as the largest archipelago in the world.
Data from the report shows that Indonesia’s overall digital competitiveness records a high competitiveness score for the communication and information tech utilisation aspect. This means that the country has a high level of tech adoption on smartphone ownership and internet access.
Indonesia also scores high for the infrastructure aspect, indicating that cellular data networks have been more evenly distributed across the country today.
Meanwhile, human resources and entrepreneurship receive the lowest score, which says a lot about tech talent scarcity issue in Indonesia. The limitations of educational institutions to produce a skilled IT workforce plays parts in the condition.
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The low entrepreneurial score itself shows that despite high penetration and distribution of network and internet, only a small number of Indonesians are opening businesses or utilising technology in their workplace.
The report also notes that provinces on the island of Java records the highest EV-DCI score in comparison to other provinces.
It highlights developmental inequality with a huge gap between the city that ranked first (Jakarta) and the city that ranked second (Bandung).
Willson Cuaca, Co-Founder and Managing Partner at East Ventures, explained that the cities with the highest EV-DCI score are the best places to start a new digital business as the likelihood of early adoption is high.
“The digital economy promises inclusivity and equal economic opportunities for all Indonesians. However, Indonesia is oftentimes only assessed from the development of certain big cities such as Jakarta, while there are still many cities untouched by the promise of the digital economy. By allowing everyone to participate in the digital economy, Indonesia could convert demographic bonuses into demographic dividends; turning potential into reality,” Cuaca said.
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Despite its disparity with Jakarta and the DKI Jakarta province, West Java sits as the province with the best source of the skilled digital workforce, students, and lecturers, as well as the availability of school programmes related to digital skills.
Mapping the market
EV-DCI was released to give a full picture of Indonesia’s digital economy, so that stakeholders can take strategic steps to equalise digital access and technological capabilities throughout the country.
Cuaca stated that digital companies founded by local and young entrepreneurs have “successfully” increased economic access and productivity in the major cities of Indonesia, especially in Jakarta.
Furthermore, issues of inequality revealed in the report might turn into a “supporting material” for companies such as gojek, Tokopedia, and Traveloka to continue expanding their wings to other parts of the country.
Some tech companies that managed to have a better distribution serving other regions in Indonesia are education platform Ruangguru, which has been used by students in all 34 provinces, and the writer community of online media IDN Media, that already has a presence in each part of Indonesia.
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Another example is Moka POS, the POS platform that has made a presence in Papua. E-commerce solution provider Sirclo has supported online sellers located in East Nusa Tenggara, while budget hotel booking platform Airy has partnered with property owners in Bitung and Samosir.
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Image Credit: East Ventures
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