Mapping competitiveness, the key to embracing Indonesia's digital economic excellence | Techsauce

Mapping competitiveness, the key to embracing Indonesia's digital economic excellence

Over the past few years, Indonesia's digital sector has been steadily growing. Despite ongoing infrastructure development efforts by the government, stakeholders have also been proactive in promoting digital literacy and the economy. These endeavors lay the groundwork for advancing Indonesia's digital sector.

According to the Google e-Conomy SEA Report 2023, the gross merchandise value (GMV) of Indonesia's digital economy reached US$82 billion in 2023, and is projected to grow to US$109 billion by 2025 and reach US$360 billion by 2030. E-commerce, transportation and online food delivery services, online media, and online travel agents / OTAs are major contributors to this growth.

Despite positive projections, harnessing this potential requires preparation. With geographical differences, Indonesia faces challenges in ensuring digital readiness across its diverse provinces. Hence, mapping digital competitiveness is essential to understand the digital landscape in each province and formulate policies and programs accordingly.

East Ventures conducts digital competitiveness mapping annually through the East Ventures – Digital Competitiveness Index (EV-DCI) report, aiming to foster digital equality, which has been published for the past four years.

"East Ventures believes that every stakeholder has a role to play in creating an equitable digital nation. The use of digital technology must be inclusive because the digital economy is the right of all Indonesian citizens. With sustainable digital economic development, we hope that Indonesia will foster millions of digital talents from various provinces, cities, and regions," said Willson Cuaca, Co-Founder and Managing Partner at East Ventures.

The report provides insights, conclusions, and recommendations for policymakers to bridge the digital divide. Achieving digital equality in Indonesia will serve as a gateway to maximizing the potential of the digital economy.

Over the past four years, EV-DCI findings have shown a consistent decrease in digital competitiveness gaps, with median index scores steadily increasing. In 2020, EV-DCI recorded a median index score of 27.9. This figure continued to rise to 32.1 in 2021, 35.2 in 2022, and 38.5 in 2023. This median increase indicates improvements in digital competitiveness in middle- and lower-ranked provinces.

Additionally, the spread value, which indicates the disparity of digital competitiveness between provinces, has decreased over time. The spread value was recorded at 62 in 2020, then decreased to 55.6 (2021) and 48.3 (2022). In 2023, there was an increase in the spread value to 53.2, but this was due to the increase in the number of provinces accounted for.

Spread is the difference between the highest and lowest values between provinces. The higher the spread value, the higher the disparity in digital competitiveness among provinces. It means that the decreasing spread values in the EV-DCI report show a positive trend where the differences in digital competitiveness between provinces are narrowing.

Based on the EV-DCI report from 2020 to 2023, DKI Jakarta consistently holds the top position in the digital competitiveness index. Across the last four reports, DKI Jakarta's digital competitiveness scored as follows: 73.2 (2022), 77.6 (2021), 79.7 (2020), and 76.6 (2023).

Following DKI Jakarta, West Java secured the second position, showing consistent score improvements annually. Yogyakarta, Banten, and East Java are in the top five positions, albeit with fluctuations in rankings. Java Island still dominates in digital competitiveness, due to robust digital infrastructure and the substantial contribution of the digital economy to these regions.

Government infrastructure projects and digital literacy programs are crucial in ensuring equal distribution of digital competitiveness in Indonesia. These initiatives include the construction of 4G and 5G BTS infrastructure, the launch of the SATRIA-1 satellite, the Palapa Ring project, and the establishment of a national fiber optic network. Additionally, efforts such as the UMKM go-digital program and startup incentives contribute significantly to digital adoption and literacy.

While progress has been made, challenges persist. East Ventures aims to provide stakeholders with recommendations and frameworks through the EV-DCI report to achieve digital equity nationwide.

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