East Ventures Digital Competitiveness Index 2022: Towards Indonesia’s Digital Golden Era

This year marks the third East Ventures Digital Competitiveness Index (EV-DCI) report. East Ventures collaborated with Katadata Insight Center and PwC Indonesia in providing an even more comprehensive report. Not only did they map the digital competitiveness index, they also did a survey of companies’ perspectives about Indonesia’s digital competitiveness. Moreover, this latest edition also provides the perspective and growth potential of each sector, where business players and other stakeholders can further explore and enhance their business potential in the future. In this 2022 report, they also invited the stakeholders within the digital economy sector to give their perspectives, whether from the government, regulators, big corporations, and even start-ups.

Executive Summary

The Progress of Indonesia’s Digitalization

After being hit by the COVID-19 pandemic for almost two years, Indonesia’s economy has started to recover with the support of digital adoption and transformation in various business sectors. Economic recovery started to be shown in mid-2021, with a growth of 7.1% compared to the previous year (YoY). The positive trend continued in the fourth quarter with a recorded 5.0% growth. Inevitably, the COVID-19 pandemic period will be recorded as a digital transformation acceleration era in Indonesia. The digital economy has vastly grown, endorsed by the internet infrastructure that was accessed by over 200 million people in 2021 (Kominfo, 2021).

Mapping the Condition and Needs of Regional Digital Competitiveness

For the third time, East Ventures – Digital Competitiveness Index (EV-DCI) maps the digital economy growth across 34 provinces and cities/regencies in the form of index disclosure. The EV-DCI comprises digital infrastructure readiness, human resources, digital economic activities, and provincial government policies. The median of EV-DCI 2022 for 34 provinces is 35.2, increasing from last year’s score of 32.1 (2021). It shows that the digital competitiveness in some provinces within the mid to low category are improving and closing the gap from provinces within the higher category.

The Potential of Regional Digital Competitiveness to Promote Digital Economy

Consistent with previous two reports, provinces in Java still dominate the top rankings. Yogyakarta soared, from the sixth position in the previous year to the top three. Other provinces outside Java start to show improvement in their digital competitiveness. East Kalimantan has climbed up three places to the seventh position. Meanwhile, West Sumatra, ranked ninth, became the best province in Sumatra and climbed to the top 10.

Yogyakarta and East Kalimantan jumped to the top 10 due to a significant increase in scores of the Input sub-index, such as human resources. Additionally, Yogyakarta shows growth in the Output sub-index, particularly in the entrepreneurship and productivity pillars. Meanwhile, West Sumatera is supported by the infrastructure pillars improvement and ICT usage. Decline in the ranking of some provinces does not reflect a setback. Instead, it shows a high acceleration in provinces that are leveling up.

Digital Technology Development Across Sectors

To continue digital economy growth during the pandemic, each business sector supporting the digital economy has a different priority development strategy.
• E-commerce sector can design an approach that emphasizes the customer’s priorities (customer-centric) and create an inclusive ecosystem for MSMEs, while also supporting the growth of the business-to-business (B2B) segment.
• Logistics and transportation sectors can build a connected, autonomous and easy-to-analyze logistics ecosystem, to achieve end-toend efficiency and integration.
• Collaborations among platforms, health information unification, and data analysis acceleration in the healthtech sector will improve the quality and access to healthcare services.
• Partnerships among stakeholders are vital to build education systems and digitally skilled educators that will increase workforce absorption from various educational levels following the technology development and changing eras.
• Recovering people’s confidence becomes the priority of the tourism sector. It can be achieved by implementing Cleanliness, Health, Safety, and Environment Sustainability (CHSE) and health protocols, as well as improving the attractiveness of medical tourism.
• The FinTech sector needs to prioritize financial literation for all populations of Indonesia to encourage growth in numerous sector. Digital ID implementation can also encourage financial inclusion for society.
• Stakeholders also need to understand and implement sustainability principles to solve environmental, social, and governance issues that will impact the development of the sectors.

Recommendation

EV-DCI 2022 is a reference for the stakeholders (the government, investors, academics, and business players) to map and set strategies towards Indonesia’s digital golden era. These strategies are depicted in the form of a house where ICT infrastructure becomes the foundation that will facilitate the equitable growth of the digital economy in Indonesia. The house is supported by three digital pillars: digital government, digital society, and digital business sectors. First, the digital government pillar needs to focus on efficiency and transparency. Furthermore, in building the digital society, it needs to be supported by the education system improvement and upskilling digital talent while focusing on the growth of digital technology adoption in various economic sectors. Subsequently, these aspects need to be strengthened by implementing sustainability principles through Environmental, Social, and Governance (ESG) to maintain the digital economy growth in the long run.

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Source: East Ventures