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Towards a more digitized Indonesia
26 Nov 2019
Towards a more digitized Indonesia

The Indonesian government has completed the long-awaited Palapa Ring project – a trans-island submarine cable and Broadcast Tower Station (BTS) network that is expected to reduce the cost of internet in the country’s outlying region, propelling its digital economy even further upward.

On October 14, Indonesian President Joko Widodo, also known as Jokowi, launched the operational start of the Palapa Ring project. The project, which was jumpstarted over a decade ago, on July 5, 2007, mainly comprised of the construction of a 36,000km long fiber optic cable network that would span the entire archipelago, which would, in turn, improve Internet access to the nation’s most remote regions.

The launching in October celebrated the integration of a newly built network located in the eastern part of Indonesia with the country’s existing network. The newly established 3,850km submarine and a 600km land fiber optic network have been connected to 15 landing points located in 21 cities or regencies across the country, according to the Indonesian Ministry of Telecommunication and Information.

The operational launch of Palapa Ring marks another significant achievement under the Jokowi administration. Having been delayed several times since the project’s inception due to problems with its financing, the launch should at least ensure that Indonesia would be able to keep up with its Southeast Asian neighbors in terms of connectivity. This is important because Indonesia’s potential in the digital economy sector is widely recognized as being substantial.

Being the fourth most populous nation in the world, Indonesia is already the third-highest user of the Internet globally. Out of 265 million Indonesians, about 64.8% or 171 million have an Internet connection, according to a March 2019 data supplied by the local Internet provider association (APJII).

Indonesia's market size contributes significantly to the rise of the country’s digital economy. According to data compiled by Google and Temasek, the Indonesian Internet economy reached $27 billion as of the end of 2018 and is poised to grow to $100 billion in the next 5 to 6 years. In fact, according to the same research, for every 2 dollars, spent by Southeast Asians for e-commerce, half of that is Indonesian money. This claim is further supported by recent research done by HootSuite, a Vancouver based social media management company, which states that 86% of Indonesians use the internet for e-commerce, the highest in the world.

In terms of productivity, with its current network infrastructure, the country has already produced five unicorns (startups with an estimated value above US$1 billion), the fourth-highest number of unicorns in the Asia Pacific region, just below China, India and South Korea. These unicorns operate in the fields of ride-hailing (Go-Jek), e-commerce (Tokopedia and Bukalapak), digital payments (OVO) and travel bookings (Traveloka).

The development goes on
While the undersea cables across the archipelago have been installed, there remains work to be done before Indonesians living outside of the main cities can truly have broadband access. As mentioned in a previous paragraph, some 35.2% of Indonesians are still not connected to the Internet. To improve the situation, the Indonesian government has announced that it is planning to build 4,000 BTS (Broadcast Tower Station) across the country to ensure that those living in the outskirts no longer need to travel far to be connected. Having said that, the government must still be able to work together with Internet service providers, such as state-owned PT Telkom, to create an internet access scheme that is beneficial for the public.

Another pronounced challenge comes from the security side of things. The rapid rise of digitalization has raised concerns over the use of personal data and the spread of misinformation or hoaxes. In terms of the former, the new inaugurated Minister of Communication and Information, Johnny G. Plate, has announced that he is working with the Indonesian parliament to issue a law to protect personal information, though he has not mentioned any clear deadline as to when the government will introduce the bill. As for the latter, the government has not introduced any clear plan to combat hoaxes. In this regard, the government maintains its reliance on the revised law on electronic information and transaction introduced three years ago – which is generally regarded as so omniscient that it encroaches upon consumer’s rights – as well as the public’s own digital literacy.


Source: EKONID (AHK Indonesien) 


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