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Indonesia’s digital drive is receiving support from major technology companies

Two American technology moguls and a British political mogul made separate visits to Jakarta in April, meeting Joko “Jokowi” Widodo at the presidential palace and presenting projects in line with Jokowi’s digital transformation agenda.

Indonesia’s digital economy is expected to reach US$125 billion by 2025, the largest share in ASEAN.

First, Apple CEO Tim Cook met with Jokowi on April 17, announcing a $74 million investment to create an Apple Developer Academy for digital talent. Apple already has three such academies in Indonesia, on the island of Batam, an hour’s ferry ride south of Singapore; South Tangerang, a city west of Jakarta; and Surabaya, the capital of East Java province with bustling industrial estates. Apple plans to build its fourth academy in Bali.

The idea of ​​the Apple academies isn’t just to train product engineers. They are also set up to allow the import of finished iPhones and iPads assembled in China and Vietnam. Jokowi has called on Cook to produce Apple hardware domestically, making Indonesia not just a market but also a link in the global supply chain. “We talked about the president’s desire to see manufacturing in the country and that’s something we’ll look at,” Cook said, without making any commitments.

The president also wants Apple to invest in the new national capital Nusantara, which is under construction in the jungles of Borneo. Minister of Communications and Information Technology Budi Arie Setiadi said Apple is considering investing in smart city technology for the new capital. “The details are still being discussed, including possible incentives for Apple,” Budi said.

The tech mogul also met with President-elect Prabowo Subianto, who will take the oath of office on October 20. Cook promised Prabowo to boost skills development, with Apple academies in Indonesia having already handed out almost 2,000 graduates.

On April 30, it was Microsoft CEO Satya Nadella’s turn to consult with Jokowi. He plans to invest $1.7 billion over the next four years to build cloud infrastructure and artificial intelligence (AI) capacity in Indonesia. This involves the training of 840,000 AI operators. “The investment we are announcing today, which includes digital infrastructure, capacity and support for developers, will help Indonesia move forward in this new era,” Nadella said at a “Microsoft Build: AI Day” event. US chip giant Nvidia is also reportedly planning to invest $200 million in Solo in Central Java province to build an AI center.

Meanwhile, another profound world figure spoke to Jokowi. Tony Blair, executive chairman of the Tony Blair Institute for Global Change, came to the palace on April 18 to discuss how Indonesia can accelerate the digital transformation of the bureaucracy. One of the focuses of Jokowi’s meeting with the former British Prime Minister was GovTech, designed to integrate different public service systems.

Indonesia faces stiff competition from its ASEAN partners. What does the digital landscape of the broader ASEAN region look like?

The Jokowi government hopes that all these major technology investments will encourage digitalization, one of the four pillars of Jokowi’s major national development program. Jokowi appointed Luhut Binsar Panjaitan, Coordinating Minister of Maritime Affairs and Investments, to coordinate all digital investments involving the private sector, state-owned enterprises and government agencies. Luhut is Jokowi’s trusted jack-of-all-trades across numerous sectors.

Indonesia faces stiff competition from its ASEAN partners. What does the digital landscape of the broader ASEAN region look like?

According to a 2022 report by the Singapore Institute of International Affairs, ASEAN’s 10 member states have an internet penetration rate of 75 percent and rising. In 2020 alone, the region gained 60 million new users of digital services. Over the next decade, ASEAN’s digital economy is expected to add as much as $1 trillion to regional GDP.

To boost the digital economy, ASEAN inaugurated its ASEAN Digital Master Plan 2025 in 2021. The goal is to make ASEAN “a leading digital community and economic bloc, powered by secure and transformative digital services, technologies and ecosystem.”

According to the IMD World Digital Competitiveness Ranking, Singapore is the fifth most digitally competitive country in the world. 80 percent of the top 100 tech giants have a presence in the city-state. Digitization started in 1981 with Singapore’s National Computerization Programme. In 2014, the Smart Nation Initiative further increased its digital capacity, embedded in the daily lives of its people.

Thailand has the fastest fixed internet connection in the world and the second fastest mobile connectivity in Southeast Asia. To provide internet access to lower income and rural residents, the Thai government has the “Village Broadcast Internet” program, which provides broadband access to remote areas. Fiber optic cable networks have been installed in more than 24,000 Thai villages.

With the National Digital Transformation Program to be introduced in 2021, Vietnam aims to bring the majority of government services online, with 50 percent of the country having a digital bank account and 70 percent of consumer transactions done digitally, all by 2025. Vietnam is the highest ranked ASEAN country in creating, maintaining and scaling computer systems and software.

Indonesia’s digital economy is expected to reach US$125 billion by 2025, the largest share in ASEAN. Internet penetration stands at over 70 percent for the country’s 275 million residents. But Indonesia still needs to expand connectivity to the smaller outer islands, where digital infrastructure is lacking. Incoming President Prabowo faces the challenge of solving this, with the help of the big technology companies.