The World Bank Gives Advice For The Indonesia’s Digital Economy Progress


The Indonesian government continues to advance Indonesia’s digital economy. This effort is also supported by the existence of a pandemic that makes people inevitably use technology in all aspects. However, according to the World Bank, Indonesia still has to improve.

The research, which was compiled by the World Bank Poverty and Equity team, also states that although it is widely used, mobile internet is not sufficient compared to cable internet, both in terms of capacity and quality of service.

“Limited access to high-quality internet like this hinders people from exploring their productive abilities to fully reap the benefits of the digital economy,” the research said, quoted on Monday (27/6/2022).

Several factors influence this condition. First, the cost of subscribing to cable internet in Indonesia is still not affordable enough. This is different from the price of mobile internet data packages which are relatively affordable compared to neighboring countries.

Data from the International Telecommunication Union (ITU) in 2019, for example, placed Indonesia in 131st rank out of 200 countries and regions observed in terms of affordability of cable internet subscription fees.

Second, in addition to the high cost, the World Bank team stated that the quality of internet services in Indonesia is among the lowest compared to countries in Southeast Asia (ASEAN).

Ookla Speedtest in February 2022 noted that mobile internet download speeds in Indonesia were the second slowest (17.24 Mbps), above Cambodia (16.4 Mbps). For cable internet speed, Indonesia is the third slowest in Asean after Cambodia and Myanmar.

The World Bank explained that the high price and low quality of Indonesia’s internet connectivity were caused by two main factors. First, is the sharing of infrastructure that is commonly used in mobile internet networks, but not common in the cable network market.

Second, restrictive licensing schemes have service providers bid for specific service licenses, rather than providing a single license for all services.
This condition reduces competitiveness in the internet market by limiting the entry of new players. As a result, higher prices for low-quality services hinder internet adoption.

To overcome these challenges, the World Bank recommends that Indonesia consider two policy steps formulated in the World Bank’s Beyond Unicorn report, July 2021.

According to this research, the Indonesian government should strengthen competition along the broadband value chain by simplifying the licensing process. This is needed to encourage the entry of new players and the development of more advanced products.

In addition, public-private partnerships can accelerate investment in internet connectivity.

“For example, for fiber optic deployment, internet service providers can work closely with public service providers to use telecommunication poles and underground lines that are already available.”