Who Is Digital Economy for? Toward an Inclusive Digital Economy in Indonesia

Palmira Permata Bachtiar, Rendy Adriyan Diningrat, Ahmad Zuhdi Dwi Kusuma, Ridho Al Izzati , Abella Diandra
Microfinance & Micro, Small, and Medium Enterprises, Poverty & Inequality, Social Protection
Indonesia
Research Report, December, 2020, Final

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Available in Indonesian only

ABSTRACT

Various reports project that Indonesia's economic growth will be driven by developments in digital technology. However, to what extent can the growth driven by the development of digital economy guarantee an increase in the quality of life of Indonesian society, regardless of social strata? Will the digital economy be able to reduce the currently high rate of inequality? Departing from these questions, this study intends to understand the current development of the digital economy in Indonesia and formulate corrective steps for the future. Using a mixture of quantitative and qualitative methods, this study finds that the internet in Indonesia is currently unequal by region, gender, level of welfare, level of education, and business sector. In addition, the internet is still considered as a means of communication and entertainment, and not yet as a means of business in general. In order for the development of the digital economy in Indonesia to contribute significantly to national economic growth, this study recommends an inclusive digital economy development framework which includes four aspects: (i) internet networks and their supporting infrastructure, (ii) access and utilization of the internet, (iii) digital transformation, and (iv) social security. First, the government needs to encourage equal distribution of internet networks and their supporting infrastructure, especially in the disadvantaged, frontier, and outermost (3T) regions of Indonesia. Second, the government needs to ensure that no one is left behind in accessing the internet at an affordable price and adequate network quality. Utilization of the internet also requires digital literacy, especially for those who are marginalized. Third, the government needs to encourage digital transformation that triggers the birth of new innovations through digitization and digitalization. The government also needs to ensure the confidentiality and security of data, and optimize its use in strategic decision-making to improve services. Fourth, the government needs to facilitate access to social security for businesspeople and workers in the digital economy ecosystem to ensure the sustainability of digital businesses. With this inclusive framework, the digital economic development can be felt by all levels of Indonesian society and therefore make a real contribution to the economic growth.

Keywords: digital economy, inclusive, internet, digitalization, digital transformation, social security


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