Unlocking digitalization at the G20 in Indonesia – Inforial
Inforial (The Jakarta Post)
Fri, November 11, 2022
As Indonesia prepares to host the Group of 20 (G20) summit this year, digital transformation is one of the top priorities to “recover together, recover stronger”. World leaders have recognized the important role that digitalization can play in bridging the gaps in issues with socio-economic impacts such as stagnating productivity, pressures resulting from climate change and inequality in access to work and health care preparedness, to name a few.
Digitization will also transform global economies in the short to medium term, with a projected value of US$13 trillion worldwide by 2030. Indonesia’s 202 million internet users have already contributed US$70 billion to its economy. in 2021. With G20 member economies accounting for 60% of the total world population and 75% of world trade, these global leaders are at the forefront of this global mission and must continue to lead by example.
However, several factors in the digitalization roadmap continue to prevent nations from fully realizing their digital potential. As Co-Chair of the Business 20 (B20) Digitization Task Force – a group of business leaders brought together to develop and deliver policy recommendations to G20 countries, international organizations and institutions – I had the honor to dive deep into some of these roadblocks. The working group explored how to address issues such as different levels of readiness and connectivity between regions; poor digital infrastructure and lack of relevant policy frameworks to support wider digitalisation; and the critical shortage of digital skills needed to support the digital transformation of micro, small and medium-sized enterprises (MSMEs).
Powering the heart of the digital economy: MSMEs
MSMEs are one of the most important pillars of any digital economy. In Indonesia, for example, 64.2 million MSMEs contribute 8.5 trillion Indonesian rupees to the country’s GDP. They also provide jobs for 97% of Indonesia’s total workforce, more than 60% of which are women. It is crucial to simplify the access and use of digital technologies, such as cloud computing, for these MSMEs, without regulatory complexities, because they are the companies that promote digital and financial inclusion.
During its G20 Presidency in 2022, Indonesia reaffirmed its position as a digital pioneer by declaring its commitment to an inclusive and collaborative digital transition. One of the main goals of Indonesia’s G20 Presidency in 2022 is to bridge the digital divide and foster inclusive digital transformation, to radically accelerate the integration of disadvantaged citizens into the digital economy and recover together more strong. Industry and government must continue to collaborate on these goals to increase access to digital skills and training in the region and globally.
Digital technologies have already helped create more robust and inclusive business ecosystems, even in remote parts of Indonesia. Peer-to-peer lending platform Amartha serves entrepreneurs in rural Indonesia, offering financial services to micro-enterprises and targeting working-age mothers with dependents. Without access to the cloud-based analytics it uses to identify non-performing loans, Amartha’s reach would be limited, leaving many businesses without access to financial services.
Eyes on Indonesia to facilitate this important and complex global discussion
Indonesia was among the first in the world to recognize the power of digital transformation in the sectoral economy. As the leading producer of decacorn ASEAN tech companies valued at over $10 billion, Indonesia has proudly and successfully fostered a thriving and internationally competitive tech scene.
As it enters the next stage of its development, it is essential that Indonesia remains a champion of innovation by developing holistic and interoperable solutions to promote the growth of local MSMEs. One example is the release of Government Regulation No. 71 of 2019, which made it easier for local businesses in Indonesia to access cloud computing, with less regulatory uncertainty.
Forward-thinking solutions and open stances on digital commerce must be adopted to foster the organic development and regional scalability of local champions. Exposure to international resources and best practices will strengthen MSMEs, helping them to remain resilient, agile and adaptable to society’s needs.
Beyond the G20, Indonesia is also in a unique position to continue the digitalization agenda under its ASEAN Chairmanship in 2023. In particular, we see an opportunity for Indonesia to show leadership and to accelerate the timetable for launching negotiations on a high-level and forward-looking agreement. ASEAN Digital Economy Framework Agreement.
The way forward for digitization
The Business 20 (B20) digitization task force has developed strong recommendations for leaders who will meet in Indonesia this year at the G20 and B20 summits. These include unlocking digital opportunities by promoting adoption and adoption of cloud-like digital infrastructure across the public and private sectors; ensure international regulatory consistency of digital policies, including those that preserve the free flow of data across borders; equipping MSMEs with the necessary digital and cybersecurity knowledge; and define interoperable cybersecurity standards based on international best practices.
A conducive regulatory environment is key to promoting digital infrastructure, facilitating the adoption of digital services, and encouraging digital-ready nations. November’s G20 and B20 Summits in Bali will be a key platform to discuss the way forward and set the tone for a digital transformation agenda that the G20 and B20 can pursue through India’s presidency in 2023 and beyond.