Indonesia’s technology sector is falling behind its Southeast Asian neighbors despite efforts to boost digitalization and technological advancements. The country, known for its growing digital frequency, has surprisingly become the region’s laggard in technology investment. It trails not only behind Singapore but also countries like Vietnam and the Philippines, raising concerns about its future competitiveness in the digital economy.
IBM Indonesia has recently underscored the critical need for increased investment in the information technology (IT) sector, which they believe is essential for Indonesia to realize its ambitious “Indonesia Emas 2045” vision. This vision aims to position Indonesia among the world’s leading economies by 2045, but the current level of IT investment paints a worrying picture.
According to Roy Kosasih, President Director of IBM Indonesia, Indonesia’s technology investment is a mere 0.2% of its gross domestic product (GDP). This figure is alarmingly low compared to other ASEAN countries, making Indonesia the lowest investor in industrial technology across the region.
Kosasih expressed his concern during a Media Briefing titled “IBM Impact for Adult Learners, Academia, and Women in Workforce” held in Jakarta on August 26, 2024.
“Indonesia is currently the country that invests the least in industrial technology, the lowest among all ASEAN nations,” Kosasih stated. His comments reflect a deep concern that Indonesia’s current trajectory could hinder its ability to compete on the global stage.
The gap becomes even more pronounced when comparing Indonesia to other nations. Singapore, for instance, allocates 2% of its GDP to technology investments, while the United States dedicates 4%. Even Vietnam and the Philippines, which are often considered emerging markets, invest 0.4% of their GDP in IT. These comparisons highlight Indonesia’s significant underinvestment and the potential risks it poses to the country’s economic future.
“Our investment is very, very small, very low,” Kosasih added, emphasizing the urgency of the situation.
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He suggested that for Indonesia to achieve its goal of becoming the world’s fourth-largest economy by 2045, it must significantly increase its technology investments. To reach this ambitious target, Indonesia would require a GDP of approximately US$9.5 million to US$10 million by 2045. Although matching Singapore’s level of IT investment might be challenging, Kosasih believes Indonesia could realistically aim to boost its investment to 1% of GDP.
Kosasih proposed that this increased investment should be strategically allocated to key areas such as hybrid cloud technology, artificial intelligence (AI), and cybersecurity. These areas are critical for modernizing Indonesia’s industrial base and ensuring it remains competitive in an increasingly digital global economy.
“If we allocate 1% of our GDP annually to the growth of the industrial technology sector, it will greatly help,” Kosasih explained. His vision suggests that with the right level of investment, Indonesia could significantly enhance its technological infrastructure and capabilities.
On a broader note, Kosasih also highlighted the transformative potential of technology, particularly digitalization, in improving work efficiency and productivity. He pointed to AI adoption as a prime example of how technology can streamline processes, reduce production times, and lower costs.
“Digitalization and automation are integral parts of the entire production chain, making work significantly shorter, more efficient, and reducing production costs,” he elaborated. Kosasih’s remarks underline the importance of embracing technological advancements not just to stay competitive but to drive growth and innovation across Indonesia’s industries.
As Indonesia looks towards its future, the message is clear: greater Indonesia’s technology investment is not just a necessity but a critical component of the country’s long-term economic strategy. Without it, the vision of Indonesia Emas 2045 may remain out of reach.
