Indonesia is Southeast Asia’s largest digital economy and one of the largest in the Asia Pacific region. The country is expected to continue to grow thanks to aggressive investment in the infrastructures for the digital services, regulatory support from the government, and a concerted push in developing local digital talents.
Even with the Covid-19 pandemic, the country with 270 million people will generate $146 billion in the digital economy in 2025 from just $70 billion last year (Google, Temasek, and Bain & Company, 2021). Many argue that the pandemic has even accelerated digital adoption in the country. Today three in four Indonesians use the internet. That is roughly equal to the country’s entire adult population. There will be 196 million Indonesian internet users in 2020, or 73 percent of the people, growing from 171 million in 2018 (APJII, 2020). That translates to roughly 1.400 new people going online for the first time every hour.
Indonesia has invested in digital “hard” infrastructure in the past few years and managed to cover most country areas with mobile and fixed-broadband networks. Today, 98 percent of the country’s population is covered by mobile-cellular networks and at least 3G mobile internet networks. In addition, 96 percent of the population live in areas with 4G networks available to them. All the 514 cities and districts in Indonesia are now connected to a high-speed fixed broadband network, thanks to the government investment in marine cables to fill the gaps in the country’s most remote areas.
Indonesia is a mobile-first country as many people connect to the internet for the first time through the smartphone. Today, 63 percent of the country’s population own mobile phones compared to just 19 percent own a computer at home. The mobile-cellular subscription was 130 per 100 inhabitants, as it’s not unusual for a person to have more than one subscription. Thanks to the low cost of mobile-broadband subscriptions — among the lowest in the Asia Pacific — 89 percent of the country’s population subscribed to mobile broadband services.
Fixed-broadband adoption is growing but faces challenges, particularly in terms of costs. The subscriptions have doubled to more than 10.7 million in 2020, from just over 5.3 million in 2016. Most of the subscribers, 89 percent, enjoy a speed of more than 10 Mbps on their service. Still, relative to the population, Indonesia only has four fixed-broadband subscriptions per 100 people, compared to 14 in the Asia Pacific region. The fixed-broadband subscription costs almost 11 percent of GNI per capita in Indonesia. In comparison, the global median cost is just above 3 percent.
Indonesia relies on satellites to cover areas unreachable by mobile or fixed broadband services. Today, eight satellites provide telecommunication, broadcasting, internet and enable financial services to remote locations across the countries. The government is building a new satellite, Satria, for launch in 2023, dedicated to providing broadband services to schools and public offices across the archipelago.
The data centers industry is booming in Indonesia, partly because of growing e-commerce and digital platforms demand and the government’s data localization requirement. The country now has 1,878 internet servers per one million people, increasing by 100 hundred times from 2015. According to one estimate, the country’s data center market would grow to $3.1 billion in 2026 from $1.5 billion last year.
The country also realizes that it may lack the digital talents it needs to develop its digital economy. Indonesia is estimated to have a shortage of around 9 million digital talent by 2035. The government is pushing a concerted effort by several ministries and the private sector in providing digital education for the masses.
Indonesia strives to ensure that it has an up-to-date regulatory framework that is in line with the growing trend of digital development. The government discusses the Personal Data Protection Bill to address the private sector’s massive take-up of personal information. The bill stipulates the rights of personal data owners and obligations of parties that control or process the data.
