East Ventures, a pioneering sector-agnostic venture capital firm of investment in technology startups and the most active in Indonesia, together with Katadata Insight Center and PwC Indonesia launched the East Ventures – Digital Competitiveness Index 2022 (EV-DCI 2022). The EV-DCI 2022 research report presents the measurement of Indonesia’s digital competitiveness with the theme “Towards Indonesia Digital Golden Era”.
“We are elated to again present EV-DCI 2022. This year, Indonesia is experiencing a growing digital economy and increasing digital competitiveness. We hope that through the EV-DCI annual report, East Ventures has provided in-depth information for all stakeholders in strengthening the digital sector so that digital competitiveness can be more evenly distributed in Indonesia,” said Willson Cuaca, Co-Founder and Managing Partner of East Ventures.
EV-DCI 2022 presents data on digital competitiveness in 34 provinces and 25 cities/districts in Indonesia. Digital competitiveness in regions in Indonesia continues to show a positive trend. This can be seen by the EV-DCI 2022 score of 35.2 which has increased compared to the previous year, which was 32.1 (2021) and the previous 2 years, which was 27.9 (2020).
A panel of experts from the Katadata Insight Center, Mulya Amri, said that increasing digital competitiveness was also experienced in many provinces outside Java. “Although the top 10 rankings with the highest EV-DCI scores are still occupied by the provinces in Java and Bali, other provinces continue to show a fairly good increase in digital competitiveness,” said Mulya Amri.
The decrease in the digital competitiveness gap is also seen from the smaller spread value. The spread value or the difference between the highest province scores (DKI Jakarta 73.2) and the lowest (Papua 24.9) for EV-DCI 2022 is 48.3, while in 2021 and 2020 they were 55.6 and 61.9, respectively. “The smaller spread value indicates an increase in the digital competitiveness of the provinces in the middle and lower ranks,” said Mulya.
The EV-DCI 2022 report is also complemented with the results of a survey towards 71 digital companies, analysis of 8 sectors, as well as perspectives from 18 figures. This perspective includes policy makers in the government including the Coordinating Minister for Economic Affairs, Coordinating Minister for Maritime Affairs and Investment, Minister for State-Owned Enterprises (BUMN), Minister of Health, and others. In addition, the perspective also includes startup founders such as the CEO of GoTo, CEO of Xendit, President of Traveloka, and so on.
In the special interview, a number of perspectives strengthen Indonesia’s potential towards a digital golden era. These figures emphasized the steps and strategies they were taking in relation to the improvement of the digital economy.
The Coordinating Minister for Economic Affairs, Airlangga Hartarto, said that digitalization could provide its own added value in various fields. “Acceleration of economic digitization, creates equitable and diverse opportunities, and encourages opportunities and productivity to generate added value,” said Airlangga.
Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan said that efficiency can be achieved by digitizing the government system. “The government is aiming for a more efficient system and one of the ways to achieve this is by implementing digitalization. With digitalization, everything will be connected, corruption will be reduced, efficiency will be better, and we will be more competitive,” said Luhut.
Minister of Health, Budi Gunadi Sadikin said that data standardization carried out by digitalization could encourage the creation of a digital economy in the health sector. “By standardizing health data, it can be integrated into the platform, be it in medicine, vaccination, hospitals, laboratories. Our hope is that startups can develop and use the platform,” said Budi.
TOWARDS INDONESIA’S DIGITAL GOLDEN ERA
The growth of the digital economy cannot be separated from the role of stakeholders in the sectors. Digital transformation is developing and contributing to essential sectors related to daily activities, such as logistics, fintech, edtech, and healthtech. Digital transformation has also occurred earlier, such as in the tourism and e-commerce sectors.
The government’s commitment to supporting the growth and equity of the digital economy was also explained through several interviews conducted in the preparation of this report. Luhut, said that digitalization has begun to be widely applied in the government, one example being the procurement of government goods and services with the e-catalog system.
In addition, Budi also explained that the handling and monitoring of COVID-19 in Indonesia has also adopted digitalization. PeduliLindungi application and various health services from the Ministry of Health that can be accessed via telemedicine and online based.
The right strategy to achieve the digital golden era in Indonesia can be described by the shape of a house. The infrastructure of Technology, Information, and Communication (ICT) is a fundamental foundation that is needed across sectors and institutions. Strengthening ICT infrastructure enables digitalization in various aspects, thereby accelerating the creation of digital government, digital society, and digital business. These aspects also need to be strengthened by the application of sustainable principles or Environmental, Social, and Governance (ESG) to maintain long-term digital economic growth.
“Towards Indonesia’s Digital Golden Era, there are five aspects that need to be considered. Accelerating the development of ICT infrastructure can facilitate more equitable digital economic growth, creating digital governance that focuses on efficiency and transparency, developing digital talent capabilities through improving the education system and skills, focusing on increasing digital technology adoption in various sectors, and applying sustainability principles to achieve the golden era of the digital economy,” said Radju Munusamy, PwC Indonesia Partner.
“East Ventures believes that accelerating the adoption of digitalization is crucial in building a more robust digital ecosystem. However, this can only be achieved when all stakeholders work together to achieve it. East Ventures is committed to continue in supporting the development of the digital economy and paving the way for a digital golden era in Indonesia,” added Willson Cuaca.
INCREASING INFRASTRUCTURE PILLAR SCORES AS THE DIGITAL COMPETITIVENESS GAP DROPPING
EV-DCI is a mapping of regional digital competitiveness formed from three sub-indices, nine pillars, and 50 indicators. Its constituent sub-indices are input, output, and support, with the pillars of human resources, use of ICT, ICT expenditure, economy, entrepreneurship and productivity, employment, infrastructure, finance, and local government regulations and capacities.
The province with the highest EV-DCI 2022 score is still held by DKI Jakarta, with a score of 73.2. Meanwhile, the second and third positions were occupied by West Java and DI Yogyakarta with scores of 58.5 and 49.2. In addition, East Kalimantan is one of the provinces outside Java that made it into the top 10 at 7th place with an increase in score of 4.5, with an EV-DCI 2022 score of 44.0.
Apart from East Kalimantan, several provinces outside Java experienced a fairly good increase in digital competitiveness. For example, Bengkulu experienced the highest increase in the 2022 EV-DCI score compared to the previous year, which was 7.8 points, to 39.1. The increase of the score made Bengkulu’s ranking also rose 7 places to the 12th. West Papua and Lampung also experienced a significant increase of digital competitiveness, which rose 11 places to 19th and six places to 20th, respectively.
The infrastructure pillar, which was the highest pillar in the previous year, also experienced an increase in the score for EV-DCI 2022. In EV-DCI 2022, this pillar increased by 10.5 points to 64.8. The spread on the infrastructure pillar also narrowed by 8.3 points or reached 79.0 this year, compared to the previous year’s spread of 87.3 points.
The decrease in the digital competitiveness gap in these areas is also shown by the increase in scores on the entrepreneurship and productivity pillars. This pillar increased by 10.1 points to a score of 23.6 in the EV-DCI 2022. In addition, the regulation and local government capacity pillar also increased by 19.1 points to 54.6 this year.