Digital Economic Opportunity in Indonesia amid COVID-19 Pandemic

29 May 2020

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15 May 2020 | JAKARTA – Responding to the current pandemic condition and emergence of various online platforms, UCLG ASPAC created a space for cities and local governments to virtually discuss the innovative practices applied in their respective areas. The goal is for cities to use the information as insights for their future local development.

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The Web-Share #8 “Potential of Digital Economy in the Midst of COVID-19 Pandemic” addressed the importance of digital economy for Indonesian cities. Joined by more than 120 representatives of cities, local and national government and private companies in Indonesia, this virtual meeting was opened by Mayor Tri Rismaharini of Surabaya, President of UCLG ASPAC and moderated by Dr. Bernadia Irawati Tjandradewi, Secretary General of UCLG ASPAC.

Mayor Tri Rismaharini of Surabaya shared that initiatives developed in Surabaya include Pahlawan Ekonomi (Economic Heroes) programme that helps mothers from poor families to improve family welfare. In addition, there is also Young Fighters programme that specifically provides training for dropouts to start businesses. In the beginning, there were only 89 Micro, Small and Medium Enterprises (MSMEs) involved. At present, there are 11,000 MSMEs with a monthly turnover of up to IDR 1 billion (approximately USD 68,278)

Mr. M. Neil El Himam, the Director of Application and Digital Economic Governance of Indonesian Ministry of Tourism and Creative Economy shared that the biggest problem faced by MSMEs in Indonesia is marketing. He shared that although the 17 sub-sectors of creative economy in Indonesia have switched to digital systems, only 9% of MSMEs use information and communication technology optimally. Therefore, the government is trying to include MSMEs products in the Government Goods/Services Procurement Policy Institute e-catalog (shorten as LKPP in Bahasa Indonesia). There is also a national movement to encourage 2 million MSMEs to be connected to digital platforms. For the tourism sector, the government is working to promote virtual tourism so that students can join virtual study tour.

Vice Mayor Heroe Poerwadi of Yogyakarta shared that one of government’s efforts to deal with the current situation is to encourage traditional markets to sell their products online. The local government of Yogyakarta has cooperated with an online platform Go-JEK to realise this plan through Go-SHOP application. Six out of 30 markets in Yogyakarta have been registered and become partners of GO-Shop. There is also a Hand-Held Joint Group that has been contracted to provide snacks for the meetings of Yogyakarta city government, with allocation of around IDR 40 billion. There is also initiative to do selling on Instagram @nglarisi_gg that has involved 100 groups of entrepreneurs. The government has also developed an e-warung (e-stall/store) application to accommodate sellers of vegetables and catfish.

Mayor Neni Moerniaeni of Bontang shared that during the pandemic, the government is trying to provide incentives in the health, economic, and social fields. In the health sector, the government has prepared IDR 27,066,183,350 (approximately USD 1,848,025.62) which is allocated to the provision of health facilities and infrastructure, health personnel incentives, and health services. In the economic sector, Rp. 20,534,000,000 (approx. USD 1,402,021.03) is allocated for the empowerment of groceries traders for food security and handling other economic impacts. Finally, in the social sector, the government provides IDR 20,750,000,000 (approx. USD 1,416,769.08) for social assistance and subsidy for clean water.

Mr. Abbas, representing the Economic and Financial Bureau of Jakarta Province, shared that local government of Jakarta develops the digital economy and synergises with start-ups to develop the ecosystem. The result is positive as MSMEs in Jakarta receive higher turnover after partnering with online platform GO-Food. At present, local government of Jakarta involves MSMEs in the distribution of social assistances, such as basic needs and masks to the needy.

Mr. Wahyudi, from Telkom’s Smart City Development, shared that the important aspect of digital economy is a good ecosystem. Telkom, a state-owned enterprise, supports 20 million MSMEs. Telkom also built Digital Village Ecosystems such as the Smart Village Nusantara. In fisheries areas, Telkom has built Gerai Fish Mart to help fishermen sell their catch.

Mr. Emmiryzan, representing the online platform Tokopedia, conveyed the potential of e-commerce in Indonesia considering the fact that 143 million of Indonesians are connected to the internet; 1, of 5 internet users, shops online; and that 70% of the population shop online more often than offline. He shared that with the mission on “digital economic equality,” Tokopedia has reached 97% of the districts in Indonesia and is currently supporting the “Buy Local Product” campaign of Indonesia National Government. In the midst of this pandemic, Tokopedia makes shipping costs for MSMEs customers free of charge. In addition, Tokopedia provides MSMEs with special feature. It is used, for example, when Tokopedia works with the Sonjo Community in Yogyakarta to sell staples locally.