The growth of Indonesia’s economy has to factor in regulating the digital economy, which has already proven to be a resilient and growing sector during the pandemic
A report by Google, Temasek, and Bain & Company (2021) stated that Southeast Asia has entered the digital decade, and it is estimated that the internet economy in the region can reach US $1 trillion in value by 2030. An interesting finding of the study also revealed that the growth of the internet economy in Southeast Asia was driven by e-commerce and food delivery. Gross Merchandise Value (GMV) from e-commerce is forecasted to reach US $234 billion in 2025. In the context of Indonesia, Indonesia’s digital economy’s potential is predicted to reach US $146 billion in 2025 and is projected to rise eightfold in 2030. This trend clearly needs to be supported by a robust digital payment system and the acceleration of digital banking to optimise the digital economy's potential in Indonesia. The digital economy and finance development in Indonesia has prompted policymakers, particularly Bank Indonesia and the Coordinating Ministry for Economic Affairs, to emphasise the importance of building synergy among stakeholders to accelerate national economic recovery, especially in the post-pandemic period. The discussion around the governance of the digital economy and finance is also necessary and urgent to optimise digital trade and payment so that Indonesia's payment system expansion and digital banking acceleration can be realised.
An interesting finding of the study also revealed that the growth of the internet economy in Southeast Asia was driven by e-commerce and food delivery.
As the public stakeholder, the government plays a role in influencing and operating the digital economy and finance through regulation, policy, and government spending. Bank Indonesia, in this regard, also holds an essential part, particularly concerning the implementation of the digital payment system. Consequently, the private sector, which includes firms, start-ups, and e-commerce, is the most vital stakeholder in shaping the digital economy ecosystem, as it is the initiator and executor of the digital economic system. Accordingly, merchants who are derivatives of the private sector act as the seller of goods or services—they have businesses, both physical and online stores, which cooperate with banks or other payment system service providers in executing payment transactions. Additionally, business associations that show partiality towards the digital economy industry can support the running of businesses by becoming hubs or connectors between consumers, firms, and business partners on an ongoing basis. NGOs, both local and international, also play a role in the digital economy ecosystem. They typically encourage the empowerment of local communities through policy advocacy and strengthening the capacity of local communities. No less important are investors, who are the parties that provide capital to firms and start-ups.
The private sector, which includes firms, start-ups, and e-commerce, is the most vital stakeholder in shaping the digital economy ecosystem, as it is the initiator and executor of the digital economic system.
Changes in the payment system industry in the digital era, along with the various challenges faced particularly on digital economy governance, have been responded to by Bank Indonesia through the Indonesian Payment System Blueprint 2025. The blueprint’s realisation includes a realignment of the payment system industry’s structure and forming a payment system implementation ecosystem that can adapt to the digital economy and finance developments. The enactment of Government Regulation (GR) No. 71/2019 on Implementation of Electronic Systems and Transactions and GR No. 80/2019 on Trading through Electronic System needs to be harmonised with Bank Indonesia Regulation (Peraturan Bank Indonesia (PBI)) No. 22/23/PBI/2020 on Payment System, PBI No. 23/6/PBI/2021 on Payment Service Providers, and PBI No. 23/7/PBI/2021 on Payment System Infrastructure Operators). This initiative could at least minimise the complexity of regulatory frameworks, which is a trademark of the sector that seems to be dealing with dynamic changes/trends, including the digital economy and finance. Digital economy and finance will continue to play a significant role in the Indonesian economy. Its contribution to Gross Domestic Product (GDP) and employment are estimated to continue to rise. It also can encourage small and medium-sized enterprises (SMEs) to recover from the pandemic slump or even grow and upgrade. However, these estimates or predictions must be accompanied by consistent recovery efforts from all stakeholders. Even more massive digital infrastructure development throughout all regions in Indonesia, accompanied by the spirit of equitable development, must continue to be made a national development priority. Additionally, digital literacy and skills, along with regulatory tools or regulations that can encourage innovation, should be a priority for the Government so that the potential of the digital economy in Indonesia can be appropriately utilised.
Business associations that show partiality towards the digital economy industry can support the running of businesses by becoming hubs or connectors between consumers, firms, and business partners on an ongoing basis.
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Fajar B Hirawan is a Head Department of Economics at CSIS and Faculty Member at Indonesian International Islamic University (UIII)Read More +