How Indonesia is overcoming challenges to become a leading digital nation

Leadership and organisational management are key factors behind successful digital transformation journey for government agencies, according to Indonesia’s Ministry of Health's Staff Expert for Technology, Setiaji.

“Digital transformation must start with the leaders. Without leaders who are fully committed and able to navigate the organisation, digital transformation will not work,” he added. 

Setiaji was speaking during a panel session titled Policy Coordination and the Path to Becoming a Leading Digital Nation, at the GovInsider Live Indonesia 2024 conference, November 14 in Jakarta. 

He was among various public sector leaders who shared key ideas to address the pressing challenges of digital transformation to realise Indonesia's ambition to become a leading digital nation at the event. 

Other speakers on this panel were the Ministry of Economic Affairs' Assistant Deputy for Digital Affairs, Theo Sutarto, Indonesia Municipalities Association’s (Apeksi) Executive Director, Alwis Rustam and Ministry of Communication and Digital's Expert Staff for Law and Regulation, Rieke Caroline. The panel was moderated by Indonesia ICT Institute's Executive Director, Heru Sutadi.  

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A transformative leader 

How should public sector leaders navigate digital transformation?  

Transformative leaders, according to Setiaji, must be adaptive and follow global trends. For example, by establishing a digital transformation unit or office to advance digitalisation efforts. 

However, not all leaders are heading down the same path, either because they don't have the budget or consider the setting up of a new unit as “not urgent".

“This is why many organisations do digital transformation half-heartedly because their leaders see it as a cost, even though the technology team is passionate and comes with a brilliant plan,” he said.

Another barrier is rigid bureaucracy. According to Setiaji, many organisational leaders still apply the old bureaucratic style in interacting with other institutions. When it comes to government data sharing, they still ask for a formal letter or manage a cooperation agreement, which causes the integration process to run slower. 

"Bureaucracy should be agile, as well as the interaction process within the body. If each sectoral [leader] has the same commitment, then the integration of our digital services can run faster," he added. 

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No cybersecurity, no investment  

The Ministry of Economic Affairs' Theo Sutarto said cybersecurity is one of the most important things to focus on if Indonesia wants to become a leading digital nation.  

In National Strategy for Digital Economy Development whitepaper, the Ministry of Economic Affairs aims to have Indonesia's digital economy reach US$109 billion (S$145 billion) by 2025, contributing 40 per cent of Southeast Asia's digital economy market share.   

"Achieving this target requires large investments in infrastructure. But investment is hard to come in without cybersecurity," he said.  

Besides the certainty of physical security, digital security is also one of the concerns of investors before entering Indonesia. The number of cases of data breaches or system hacking have an impact on investor confidence. Not to mention the threat of ransomware that could trigger extra costs, he added.   

The cyberattack on the National Data Centre in June caused economic losses of 1 trillion rupiah (S$84.5 million), according to the Centre for Economic and Law Studies as quoted by Media Indonesia. 

Strengthening the cyber resilience posture and increasing the number of human resources who understand cybersecurity are key to driving digital economic growth, he added.  

Involving local governments  

Talking about digital transformation, Apeksi's Alwis Rustam said local governments, especially district and city governments, must be involved in the policy-making process and should not just be expected to do as ordered by the central government.   

Explaining why, he said it was because the capacity of local governments in terms of managing digital transformation is different, both in terms of fiscal capability and the quality of human resources.   

"There is a huge gap between the central government and local governments in their ability to encourage digitalisation. There is even a gap between cities and regencies," Alwis said.  

He suggested that cooperation schemes between local governments and the private sector should not only focus on tangible aspects of technology but also contribute to improving the quality of technology human resources in the regions.  

Ministry of Communication and Digital's Rieke Caroline added that digital transformation should leave no one behind. It will be crucial for the state to protect local micro, small and medium enterprises (MSMEs), local startups, and local content creators, ensuring they do not lose their competitiveness in the global digital landscape. 

Accelerating AI adoption with collaboration  

At the opening keynote of the GovInsider Live Indonesia 2024 conference, the Ministry of Communications and Digital's Director of Government Informatics Application Services, Aris Kurniawan, said that one of the government's strategies in achieving the goal of a leading digital nation was to increase the adoption of artificial intelligence (AI).  

"AI is a strong catalyst in Indonesia's digital transformation process. According to data, AI provides a huge opportunity with a potential contribution to GDP estimated at US$360 billion by 2030." 

We have seen how the private sector and industries have adopted AI at a faster pace, both to maximise production and enhance services. The question is how to accelerate AI adoption in the public sector?  

So far, AI adoption in government has been limited, both in terms of research and application development.  

We invite government agencies, the private sector, practitioners and researchers to work together to improve AI research and development for the public sector so that AI implementation becomes more meaningful and useful for the public, he added.  

Despite its enormous potential, the Ministry of Communications and Technology warns that AI has the potential to be used for negative purposes such as the spread of misinformation and disinformation.  

Therefore, the government has issued a Circular Letter of the Minister of Communication and Information Technology Number 9 of 2023 on Ethics of Artificial Intelligence.  This letter contains guidelines on how AI can support human activities, the use of AI that ensures data security and privacy, and oversight mechanisms to prevent misuse. 

"This regulation does not intend to inhibit innovation or creativity, but to reduce the risk of negative impacts from the use of AI," said Aris. 

GovInsider Live Indonesia also featured other panel sessions such as Bridging Digital Integration and Citizen Engagement: Strategies for a Unified Public Sector, Digital Leadership vs Employee Skills, Maximising Data's Value in Indonesia's Public Sector, How GenAI is Shaping the Future of Public Sector and Navigating the Future of Cyber Threats. 

This article was originally published in Bahasa Indonesia.