Indonesia is focusing on three areas during its G20 Presidency: building a stronger global health architecture, fostering energy transition, and conducting digital transformation.
Digitalization is considered important since it has helped many people survive amid the COVID-19 pandemic.
A large number of micro, small, and medium enterprises (MSMEs) have migrated their businesses to digital platforms to keep on track despite public activity restrictions.
Students have been learning online from home whenever face-to-face learning has been temporarily suspended to prevent virus transmission at schools.
Hundreds of events and meetings have been organized amid the pandemic with the help of virtual platforms.
Digital transformation has now seeped into almost every area, such as finance, economy, transportation, infrastructure, health, and education.
President Joko Widodo has urged all industries in the country to utilize digital technology to ensure efficiency and competitiveness.
“I think, like it or not, we will migrate to digitalization. All industries must get into this. Government, education, health (sectors) must get into digitalization, so they can be more efficient and competitive. We can compete with other countries,” he remarked.
The nation will be better prepared to meet future challenges if it can transform and become a new, stronger, and more advanced economy, according to the President.
Meanwhile, Communication and Informatics Minister Johnny G. Plate has spoken of his intention to encourage more citizens to migrate to digital spaces amid the pandemic.
The government is keen on enhancing digital skills and literacy of citizens and hoping for smooth public activity migration to the digital space.
To this end, bringing the digital transformation issue to G20 is aimed at optimizing inclusive digital technology utilization by boosting digitalization in various sectors, including the economic sector.
“Digitalization is important, especially in the financial sector, since there are still many citizens who have not had bank accounts, and thereby do not have access to complete banking facilities and services. To this end, digital bank and currency are critical nowadays,” he said.
Expediting economic recovery
According to Bank Indonesia Governor Perry Warjiyo, digital transformation, global health cooperation, as well as the development of a green economy and green financing can support faster and stronger recovery.
"These three aspects are the response we need take together to overcome the pandemic," he affirmed.
Digital transformation, including the digitalization of payment systems, was one of the six main agendas at the G20 Finance Track Meeting, he noted.
The digitization of the payment system includes cross-border payment transactions, Open API (application programming interface), cross-border Quick Response (QR), and Central Bank Digital Currency (CBDC), the central bank governor said.
In addition to digital transformation, cooperation in global health, for vaccination programs, in particular, can also accelerate recovery, he said. Vaccinations can help ensure that the COVID-19 pandemic is contained soon, he added.
The development of a green economy and green financing also needs to be strengthened through sustainable energy transition, Warjiyo said
These three aspects require synergy and collaboration from various parties so countries can script a faster and stronger recovery, in keeping with the theme of Indonesia's G20 Presidency of "recover together, recover stronger," he added.
"These are the three areas for recovering together, recovering stronger that our President Joko Widodo has ordered us to be successful in during the Indonesian (G20) Presidency," he stressed.
Digital MSMEs
MSMEs are expected to revive Indonesia’s economy amid the unemployment caused by the pandemic
By 2018-end, the number of MSMEs reached 64.2 million, accounting for 99.9 percent of all businesses in Indonesia, and contributed 60.3 percent to the country’s gross domestic product (GDP).
In other words, the sector absorbed 97 percent of the total workers and accounted for 99 percent of the total employment.
According to Statistics Indonesia (BPS), at least 47,75 percent of businesses utilized information technology (IT) for online marketing pre-pandemic.
Meanwhile, the businesses that utilized the Internet and IT only touched 5.76 percent. The enterprises that conducted online marketing pre-pandemic saw their revenues increase 1.14 times compared to those starting marketing their products after the pandemic.
A total of 6.5 million MSMEs migrated to the digital ecosystem from July 2020 to June 2021, Cooperation and MSMEs Minister Teten Masduki informed.
The number rose significantly compared to 10 years ago when only physical marketplaces existed in Indonesia, he added.
Vice President Ma'ruf Amin had earlier said that digitalization has improved the national economy.
This is evidenced by predictions that Indonesia's digital economy will emerge as the strongest in the Southeast Asian region with a value of Rp1,700 trillion, he added.
"There were around 21 million new digital consumers during this pandemic, from early 2020 to mid-2021," he noted.
The accumulated purchase value of Internet users in Indonesia was also predicted to increase by 49 percent from US$47 billion to US$70 billion by the end of 2021, Amin said.
"As digital transactions increase, global capital flows are also projected to continue to enter Indonesia and this country will become the most popular investment destination in Southeast Asia, surpassing Singapore," he added.
Supporting policies
To this end, Indonesia must use its G20 leadership to accelerate digital transformation to bring about a positive impact in the form of a more inclusive digital economy, the Center for Indonesian Policy Studies (CIPS) researcher Pingkan Audrine Kosijungan said.
"The G20 Presidency must accelerate Indonesia's domestic policies related to digital transformation by accelerating the discussion on the (ratification of the) Personal Data Protection Bill into law and implementing the co-regulation process," she said.
The rapid development of the digital economy in Indonesia has contributed to the extensive use of electronic means to distribute, store, and utilize the personal data of domestic users of digital facilities and applications, she noted.
Meanwhile, the massive data leakage cases that occurred nationally have sparked confusion with regards to the parties who manage and are responsible for the data, thus the Personal Data Protection Bill could become a solution for that issue, she said.
"As a country that has benefited from digitalization during the pandemic, digital economy innovation needs to be supported by sufficient regulations," she added.
A collaborative or co-regulation approach would encourage the digital economy to develop in a more innovative, inclusive, and secure direction, by involving various stakeholders in the process of policy formulation, implementation, and monitoring, she said.
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