The document identifies the top five issues faced by Indonesia's ICT ecosystem that impact economic growth: ICT infrastructure gap, data residency regulations, data privacy concerns, lack of standard information exchange, and talent gaps in the workforce. Each issue has significant implications for businesses, including inefficiencies, high operational costs, and missed opportunities for digital transformation. Recommendations for addressing these challenges within the next 3 to 5 years are necessary for Indonesia to progress toward becoming a digitally empowered nation.

1. Top 5 Issues of ICT Ecosystem
Association of
Indonesia Chief
Information Officers
Indonesia to address to maintain economic growth
www.ciocommunity.org
https://www.linkedin.com/groups/6662272
iCIO Community
Agus Wicaksono
Chairman

2. Executive Summary
Talent Gap
Data
Residency
The identified Top 5 (Five) Issues are considered to having relatively profound impacts
to the overall business and commercial transactions to support economic development
and growth. The implications to the business are clearly outlined with a significant lost of
opportunities.
Focused Group Discussions (FGD) were conducted among CIOs facilitated by University
of Indonesia (Dept. Electrical Engineering) to come up with a set of recommendations.
These should be adequately addressed to and resolved within the next 3-5 years time for
Indonesia to lay out a solid foundational strength toward becoming a digitally
empowered nation.

3. Technology Readiness
‘I’ Before ‘e’
The Global Competitiveness Report 2016-2017
Strength of
Auditing &
Reporting
Standard
Technological
Readiness
LaborMarket
Efficiency
108
Healthand
PrimaryEducation
100
Institutions
56
80
Availability
of latest
technologies
Internet bandwidth k/s/user 112
91
108Fixed-broadband internet subscriptions / 100 pop.
107Internet users % pop.
Mobile-
broadband
subs. / 100 pop.
79
73
50
39
Firm-level
technology
absorption
FDI and
technology
transfer
111
Inflation
annual %
change
MarketSize
Macro-
economic
Innovation
10
30 31
Inst
Infra
Macro
eco.
Health
p-Edu.
H-
Edu
Trn
g.Goods
Mkt
eff
Labor Mkt
eff.
Fin Mkt
dev.
Tech
ready
Mkt size
Biz
Soph.
Innov.

4. #1 ICT Infrastructure Gap
Overall access to computers and internet connections remains low at 20% and 21% respectively.*
Fixed broadband connections accounted for just 2.2% of total internet usage in light of relatively poor
broadband internet infrastructure.** Connectivity Index is low at the category of starters, with 4G
coverage under 10%, International bandwidth less than 100 kbps, and download speeds don’t reach
10 Mbps.*** Palapa Ring project is promising to wire eastern part of Indonesia, yet much need to be
done to go to the last mile.
* http://www.gbgindonesia.com/en/services/article/2012/the_outlook_for_indonesia_s_ict_sector.php
** http://www.gbgindonesia.com/en/services/article/2012/improving_internet_access_in_indonesia.php
*** Huawei’s Global Connectivity Index
Loss of Opportunities
Implications
Commercial business, public services, and government administration are at relatively modest to slow
speed in embracing digital transformation to achieve optimum business efficiency. Branch offices and
transaction points outside Java and Sumatra, not to mention remote places and offshore operations,
face a high cost of doing business to overcome reliability, relatively costly of connectivity, and a reality
check for maximum commercial expansion.
New business investments to potential growth areas and digital commerce, especially outside Java
(and Sumatra), could be at a slower rate than they should be. A large number of SMB (small, medium
business) spreading across the archipelago could not optimally reap the digital dividend to grow the
business and expand the market that would induce local economic activities.

5. #2 Data Residency
Physical location(s) of business entities’ data is bound to the regulations of the country where they
operate. It relates to data sovereignty that a country need to have access assurance and exercise
some controls as required. PP 82/2012 mandates data center(s) to be in country, and PP 35/2004
regulates oil and gas data shall also reside in country. Cloud technology, offering cost efficiency and
reduced complexity, is in contrast to the regulations. Likewise, data transfer across country boundaries
is happening at high speed as part of business necessity in email and various information exchanges.
Loss of Opportunities
Implications
Data residency laws have a huge impact on existing and future users of cloud and other hosted
technologies, losing the opportunity to enjoy an efficient cost of operations By dictating where
certain data is to be held and processed, the requirements fundamentally counteract many of the
benefits of cloud technologies which inherently involve the sharing, processing and centralizing of
data across borders. Building infrastructure and deploying applications on their owns take much
longer time and costly as compared to utilizing the cloud. In-country clouds might not exist and are
yet to mature to have a complete offering.
Data Residency consequently mandates business entities to store all data, and to some degrees to
have data centers, in the country. To some companies, it incurs an additional high cost burden to
build their data centers as opposed to using the existing ones at their centers or head quarters outside
the country. It also limits or hinder the free and fast exchange and flow of information that could be
critical to sustain the business.

6. #3 Data Privacy
Implications
The advance of digital technology entails a collection and dissemination of data at large volumes and
at high speed. It includes data that describes details about individuals and personal related
information. Data Privacy addresses this relationship and determines what data in a computer system
can be shared with third parties. Awareness of data privacy in the society at large and service
providers are relatively significantly low. It is becoming great concerns as data, especially personal
related ones, is floating around without prior consent or authorized to do so,. This is used for
commercial purposes and has potentials for abuse leading to further cyber security aspects. There are
also concerns for having the right to be forgotten to remove one’s digital footprint when not required.
Without respect and legal enforcement on data privacy, trust would be low for people conducting
commercial digital transactions. Potentials for misuse are high, leading eventually to disputes and
probable legal lawsuit. Compounded to a large volume of data, it could slow down the rise of digital
businesses to drive economic growth.
Loss of Opportunities
Business and moreover e-commerce transactions are proceeding with trust and underlying legal
basis to thrive and grow. With lack of clear regulation and low respect on data privacy, there could
be a reduction in potential investments coming in to the country.

7. #4 Standard Information Exchange
Loss of Opportunities
Implications
Within particular industries (eg. insurance, health care, financial services), there are clear necessities
for information exchanges with growing volumes of transactions. It has been creating costly
administrative burden. Information exchanges for cross industries, including involving consumers and
public, are not efficient. For start-ups and new businesses, it could become a kind of another entry
barrier.
The electronic exchange of transaction documents has had a significant impact on business
practices, particularly in the sales and purchase/merchandising functions of organizations. it
brings in many benefits to the organization such as reduced costs, faster turnaround. better
customer service, and in some firms strategic advantage over their competitors. As Indonesian
economy is growing expansively and digitally, there are surging needs for a sort of standard
information exchange to ease and smooth out e-commerce, digital transaction, and overall public
services. It encompasses technical standards at the low level to the business application layer for
automated information sharing.
The absence of information exchange framework would make business transactions harder and
collaborative environment not well-established. It could be either business-to-business, general
public services, or consumers to service providers. It turns out to be quite costly for participating
domains and parties to interact and transact under various formats and multiple platforms of
information exchanges.

8. #5 Talent Gap
Implications
By 2030 Indonesia is expected be the world’s seventh-largest economy, according to the McKinsey
Global Institute. Its huge source of youthful human capital has the potential to be one of the country’s
most powerful economic levers. In 2012 almost 47% of the Indonesian workforce was categorized as
low-skilled labor, according to World Bank data.* As the Indonesian economy returns to higher
growth and intends unto becoming a digitally empowered nation, there are potential of skills
mismatches. Growth areas to support higher productivity and long-term ability to innovate are in-
depth technical programming-developments, executive e-leadership, digital marketers, and big data
analytics. The widest gaps across professional profiles are for English and computer skills.**
Technopreneurs, digital start-up, technology-driven companies, and big firms undergoing digital
transformation would be relatively slower than expected, on the rise and growth when face with
required skills shortage. All is expected to fuel digital economy and drive significant growth. On the
other hand, as Indonesia enters ASEAN Economic Community, there would be skilled labor in-flow
from ASEAN countries, potentially displacing Indonesian workforce that could create social tensions.
Loss of Opportunities
Without a re-skill on digital space, workforce participation to join the growing digital economy is
less, burdening unemployment rate due to skill mismatch. On the other hand, out-flow of highly
skilled technical workforce to highly-paying countries would leave a big gap for companies to fill in,
slowing business opportunities and growth.
• https://www.oxfordbusinessgroup.com/overview/addressing-indonesias-skills-gap
** World Bank, 2010: Indonesia Skills Report, Trends in Skills Demand, Gaps, and Supply in Indonesia