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As Indonesia gears up to host this year’s Group of 20 (G20) Summit, digital transformation is one top-of-mind priority to “Recover Together, Recover Stronger”. World leaders have acknowledged the significant role digitalization can play in closing gaps in issues with socioeconomic impacts such as stagnating productivity, pressures resulting from climate change and inequality in access to work and healthcare readiness, to name a few.
Digitalization also will transform global economies in the short- to medium-term, delivering a projected US$13 trillion in value across the world by 2030. Indonesia’s 202 million internet users already contributed $70 billion to its digital economy in 2021. With G20 member economies accounting for 60 percent of the world’s total population and 75 percent of global trade, these world leaders are at the forefront of this global mission and need to continue leading by example.
However, several factors in the roadmap to digitalization continue to impede nations from realizing their full digital potential. As co-chair of the Business 20 (B20) Digitalization Task Force — a group of business leaders assembled to develop and deliver policy recommendations to the G20 countries, international organizations and institutions — I have had the honor of diving deep into some of these roadblocks. The taskforce has explored how to tackle issues such as differing levels of readiness and connectivity across regions; poor digital infrastructure and the lack of relevant policy frameworks to support wider digitalization; and the critical shortage of digital skills needed to support digital transformation of Micro, Small and Medium 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 are contributing 8.5 trillion Indonesian rupiah to the nation’s GDP. They also provide employment for 97 percent of Indonesia’s total workforce, of which more than 60 percent are women-owned. Making it simpler for these MSMEs to access and utilize digital technologies, such as cloud computing, without regulatory complexities, is crucial, as these are the businesses driving digital and financial inclusion.
In its 2022 G20 Presidency, Indonesia has reaffirmed its position as a digital trailblazer by declaring its commitment to an inclusive and collaborative digital transition. A key objective of Indonesia’s 2022 G20 Presidency is bridging the digital divide and fostering inclusive digital transformation, to radically accelerate the integration of underprivileged citizens into the digital economy and recover stronger, together. Industry and government need to continue to collaborate on these objectives to increase access to digital skills and training across the region and around the world.
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 Indonesia’s rural areas, offering financial services to microbusinesses and targeting working-age mothers with dependents. Without access to the cloud-based analytics it uses to identify nonperforming 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 sectoral economics. As ASEAN’s leading producer of decacorn tech firms, valued at over $10 billion, Indonesia has proudly and successfully fostered a thriving, internationally competitive tech scene.
As it enters the next stage in its development, it is vital that Indonesia remains a champion of innovation by developing global and interoperable solutions to promoting the growth of local MSMEs. One example of this was the issuing of Government Regulation No.71 of 2019, which allowed local companies in Indonesia to access cloud computing more easily, with less regulatory uncertainty.
Forward-thinking solutions and open stances on digital trade should be adopted to promote the organic development and regional scalability of local champions. The exposure to international resources and best practices will bolster MSMEs, helping them remain resilient, agile and adaptive to societal needs.
Beyond G20, Indonesia is also in a unique position of continuing the digitalization agenda into its ASEAN Chairmanship in 2023. In particular, we see an opportunity for Indonesia to demonstrate leadership and accelerate the timeline to launch negotiations on a high-standard and forward-leaning ASEAN Digital Economy Framework Agreement.
The way forward for digitalization
The Business 20 (B20) Digitalization Task Force has developed robust recommendations for leaders meeting in Indonesia this year at the G20 and B20 Summits. These include unlocking digital opportunities by promoting the adoption and uptake of digital infrastructure-like cloud across both public and private sectors; ensuring international regulatory coherence for digital policies including those that preserve free flow of data across borders; upskilling MSMEs with necessary digital and cybersecurity literacy; and defining interoperable cybersecurity standards based on international best practices.
A supportive 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 critical platform for discussing the path forward and setting the tone on a digital transformation agenda that the G20 and B20 can carry forward into India’s presidency in 2023, and beyond.
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