7 Key to Digital Economic Growth that Can Make Indonesia the 4th Largest Country in the World

Dream - PT Indosat Ooredoo Hutchison (IOH) celebrates one year of the company's merger by releasing a research titled 'Empowering Indonesia 2023'. In collaboration with Twimbit, the research shows that Indonesia has seven sources of digital economic growth that can bring the country to achieve its 2045 vision.

“Digital technology is believed to support Indonesia's GDP growth, where internet penetration is also increasing with the projection that the digital economy will contribute about 14% to GDP in 2027," said President Director and CEO of Indosat Ooredoo Hutchison, Vikram Sinha, in Jakarta, Thursday, January 4, 2023.

According to Vikram, the company and all stakeholders are committed to playing a crucial role in accelerating the national digital transformation agenda, which will contribute to the growth of Indonesia's digital economy.

Indonesia's digital economy, Vikram continued, requires collaboration from various parties. IOH itself has affirmed its position as the main collaborator agent at present and in the future.

“Let's work together to realize the dreams and aspirations of every Indonesian,” he said.

The Empowering Indonesia 2023 research, a collaboration between IOH and Twimbit research institute, is expected to serve as a reference for exploring various potentials to accelerate Indonesia's digital transformation.

Furthermore, this research is also expected to serve as a reference for all digital telecommunications industry players to work together to realize Indonesia's 2045 vision.

The research's results include descriptions of Indonesia's digital economic landscape, drivers of digital economic growth, pillars of the digital economy, technologies that accelerate transformation, and IOH's steps in empowering the Indonesian society. 

One interesting finding from the research is that Indonesia currently has seven key drivers of digital economic growth. These seven keys are untapped rural potential, middle-class growth due to increased economic benefits, the great revolution of MSMEs, and bringing medium and large businesses into the future. 

The other three driving keys are inspiring widespread digital innovation with technology startups, changing the national digitalization landscape, and building a stronger digital economy foundation with digital talents. 

For the main key of untapped rural potential, the research's results report that around 60 million rural residents currently do not have access to banking or financial institutions. Meanwhile, new internet users are estimated to reach 21 million people in 2023. This number will drive the demand for data connectivity services.

Rural residents are also considered as a key to Indonesia's digital economic growth because non-food expenditure is estimated to grow 1.1 times the national average growth.

A significant finding from this research is that the number of middle-class people in 2027 will reach 98 million with consumption expenditure growing 1.5 times the economic growth.

Indonesia's middle class is also reported to have savings totaling Rp1,566 trillion. However, only 9 percent invest their money in the financial market. "This indicates untapped opportunities," the research stated.

In the MSME sector, IOH and Twimbot also estimate that 64 percent of small and medium-sized entrepreneurs will enter the digital world. This digitalization step will drive IT spending to grow 9 percent (CAGR) to Rp74 trillion.

Digital marketing spending by MSME players is also reported to increase by 10 percent (CAGR) in the next five years, reaching Rp47 trillion.