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The Use of Digital Technology to Improve Quality of Life

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Presented by Dr Titik Anas, Founder of Presisi Indonesia, during the High Level Seminar Project 2045: The Path to Peaceful and Prosperous Indonesia and Japan 2045 held in Jakarta on 9 December 2018 by the Economic Research Institute for ASEAN and East Asia (ERIA) and UNDP Indonesia, under the funding of the Government of Japan.

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The Use of Digital Technology to Improve Quality of Life

  1. 1. The Use of Digital Technology to Improve Quality of Life Titik Anas and Bambang Irawan High Level Seminar ‘Project 2045: The Path to Peaceful and Prosperous Indonesia 2045’ 9 December 2018
  2. 2. the age of digital technology CHOICES Brings morechoicesfor consumers GROWTH Higher productivityinduces higher economicgrowth DATATRANSFER Data transmission becoming faster and morereliable COMMUNICATION • Digital technology changesways to communicate • Connected more peopleanytime andanywhere EFFICIENCYAND PRODUCTIVITY Digital technologyimproves efficiencyandproductivity DATASTORAGE Large data can be stored in small storage shapes dailylife benefits
  3. 3. Digital technology and Firm’s Performance 1,9 0,8 0,8 1,7 1,2 1 0,9 1,3 1,4 1,4 Robotics Mobile/social media IoT Cognitive technologies Combined investments Asset-heavy Asset-light Return on Investment: Asset-Heavy vs. Asset Light Industries (2015-2016) Productivity change for average company after $1 increase in investment for each technology Source: World Economics Forum,2018 • At firm level, investment in digital technologies provided efficiency and productivity improvement • Asset-light firms benefitted from mobile/social media investment the most • While asset-heavy firms benefitted the most from robotics
  4. 4. digital technology and economic growth • Mobile Phone and internet usage proliferation gives significant increase to economic growth • In 2000 to 2014, mobile phone proliferation gives between 1.0% and 4.1% increase of GDP per capita growth • Meanwhile, internet usage proliferation increase GDP per capita growth around 0.9 to 9.9% • In absolute terms, the diffusion of digital technologies brings US$ 3,308 increase in GDP per capita on average Country Mobile Phone Change Contribution Contribution (%) (%) (US$) Internet Use Change Contribution Contribution (%) (%) (US$) 61 55.7 30.7 3.27 2.99 1.64 1,923 1,732 938 38 49.2 57.8 3.3 4.3 5 1,940 2,477 2,866 72.2 3.87 2,185 32.1 2.8 1,573 31.5 46.4 38.6 41.6 1.69 2.49 2.07 2.23 1,068 1,369 1,124 1,217 18.6 27.6 113.9 33.2 1.6 2.4 9.9 2.9 1,020 1,319 5,369 1,572 66.6 3.57 1,756 45.2 3.9 1,928 48 27.6 51 17.8 19.3 30.7 60 24.2 2.57 1.48 2.73 0.95 1.03 1.65 3.21 1.3 881 918 1,233 848 481 989 2,243 704 16 36 38.2 24 73.1 10.3 28.3 39.6 1.4 3.1 3.3 2.1 6.3 0.9 2.5 3.4 476 1,937 1,497 1,850 2,954 537 1,715 1,867 Australia Austria Belgium Canada Denmark Finland France Germany Japan Korea Netherlands New Zealand Norway Spain Sweden Switzerland United Kingdom United States 76.2 4.08 2,899 34.9 3 2,151 Source: Qu, Simes, and O’Mahony (2017); Contribution is in GDP per capita constant US dollar (2010 PPP); Year of observation is 2000 - 2014
  5. 5. Digitalization and the economy– Indonesia ICT sector growing very fast Firms using digital technology exhibit higher productivity Source. Pangestu and Dewi, 2017
  6. 6. Digital Tech and Indonesians Fast adaptation and high savviness to digital economy Strong e- commerce, sharing economy Indonesia Indonesia Source: McKinsey, 2018 $8 bn gross merchandise value 30 million shoppers Source: McKinsey, 2018 Source: iPrice Insights,2017
  7. 7. However, Indonesia has tremendeous gap across regions, reflected in the ICT development index 6,12 5,84 5,63 5,59 4,95 4,82 4,64 4,51 4,41 4,27 4,26 4,26 4,24 4,12 4,08 4 3,93 3,92 3,91 3,83 3,8 3,73 3,72 3,69 3,58 3,51 3,41 3,32 3,29 3,21 3,02 2,75 0 1 2 3 4 5 6 7 8 7,41DKI Jakarta East Kalimantan Riau Islands Banten West Java East Java South Sulawesi Central Kalimantan Bangka Belitung Jambi Maluku West Papua North Sumatera Central Sulawesi Lampung North Maluku East Nusa Tenggara 2,41 Source: Berita Resmi Statistik Pembangunan IP-TIK 2015-2016,BPS Indonesia: 4.34 • Jakarta has the highest ICT Development index score • However, we found that other regions outside Java, such as Kalimantan, also received higher than average score • The lower part of the score is dominated by Eastern Indonesian regions Classification based on quartile: • High score :Score≥ 4.49 • Medium score :3.97≤ Score< 4.49 • Low score :3.61≤ Score< 3.97 • Very low score :Score< 3.61
  8. 8. Indonesians should have access to and benefits from digital. However, the use of technology is currently limited in Indonesia Agriculture • digital platform shorten the supply chain by giving direct linkage from farmers to consumers so that it yields higher profit to farmers and lowers the cost to consumers Fishery • More efficient fishing (information sharing) Tourism, hotel, and restaurant • Digital technology can provide real time information about tourist destination • Advertise the addition of digital platforms Education • Better access to (higher) education for those in remote areas (distance learning) • Knowledge can be delivered via digital technology but human relation (social skills) still needs human delivery. focus of current study Manufacturing - digital tech improves productivity Health-care: the use of IT in health care management and delivery is limited as well telemedicine. The adoption improves efficiency and effectiveness o the delivery
  9. 9. Weaknesses ICT infrastructure still lacking Digital Divides General Digital Skills and Future Technology Skills
  10. 10. Cooperation ICT infrastructure development Human capital investment • Higher education • Cooperation in improving quality of distance learning services. • Area: content development of the online courses for distance. • Vocational education Research and Development (R&D) on future technology Application of future technology • Healthcare: integrated healthcare information system

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