Indonesia's Digital Economy Transformation: Embracing AI and Innovation

Jakarta, INTI – The digital economy in Indonesia is rapidly evolving into a significant sector, driven by an increasing commitment to research and development and the fostering of an innovation culture. According to the World Intellectual Property Organization (WIPO), Indonesia ranked 75th out of 130 countries in the Global Innovation Index (GII) for 2022, a notable improvement of 10 places from 2020.

One of the key innovations in the digital economy sector is the adoption of Artificial Intelligence (AI). The growth of AI in Indonesia is supported by widespread internet usage and the rise of startups leveraging technology to enhance business activities. However, automation through AI also presents challenges, particularly the potential reduction in employment opportunities. The World Economic Forum (WEF) estimates in its "The Future of Jobs" report that by 2025, 43% of industry players will reduce their workforce as a consequence of technology integration.

"While this is a challenge, not everything about AI is negative as it appears. Most jobs and industries will only be partially affected by automation and are more likely to be complemented rather than replaced by AI. Therefore, the biggest impact of AI technology is likely to be on the quality of jobs, particularly job intensity and autonomy," said Coordinating Minister Airlangga Hartarto, speaking virtually at the National Forum on Artificial Intelligence and Indonesian Labour Markets on Thursday (June 20).

Alongside the adoption of AI technology, the Government has prepared several policies to address potential risks associated with AI use, including the launch of the National Digital Economy Strategy. This framework consists of six pillars: Infrastructure, Human Resources, Business Climate and Cybersecurity, Research, Innovation and Business Development, Funding and Investment, and Policy or Regulation.

Further, the fourth pillar, focusing on Research, Innovation, and Business Development, aims to improve the AI ecosystem in Indonesia. The primary goal is to enhance research and development capabilities and innovative processes to accelerate digital transformation in the country. One of the government's initiatives in this area includes establishing and launching dedicated innovation zones in several districts, concentrating on the development of futuristic technologies.

In addition to finalizing this national strategy, in 2023 the Government issued regulations on the ethical use of artificial intelligence as a foundational step for AI deployment in the public sector. Moving forward, the Government will continue to develop best practices for AI utilization.

"Let us harness the potential of AI to reshape our labor market for the better. Together, we can build a labor market that is not only resilient but also adaptive, innovative, and inclusive. In the future, AI will enhance our economic landscape, create new opportunities for our workforce, and help us achieve sustainable growth and development," concluded Minister Airlangga.