Indonesia’s East Ventures – Digital Competitiveness Index (EV-DCI) has increased for four consecutive years with the median score of 38.5 in 2023, said Singapore-based venture capital firm East Ventures Wednesday.

The firm said in its EV-DCI 2023 report done together with Katadata Insight Center and PwC Indonesia that the increase in the median score indicates improvement in digital competitiveness for middle and lower ranking provinces in Indonesia.

The EV-DCI 2023 score of 38.5 increased compared to the previous year, which was 35.2 (2022) and the previous two years, which was 32.1 (2021).

The spread or gap between the index scores for the largest and smallest provinces increased to 53.2 from 48.3 in the previous year, due to the division of the provinces of Papua and West Papua from 34 to 38 provinces, said the report.

According to the report, the province with the highest EV-DCI 2022 score is still held by DKI Jakarta, with a score of 76.6.

Meanwhile, the second and third positions were occupied by West Java and DI Yogyakarta with scores of 62.2 and 54.2.

Out of the ten provinces with the highest index scores, six are from Java Island. Central Java province ranked 6th, up from 14th in the previous year.

Meanwhile, for the first time North Sumatra entered the top ten after previously ranking 13th.

Jambi became the province with the largest improvement, by an increase of 16 ranks. One of the supporting factors is the Financial Pillar.

The Jambi provincial government has improved digital services through the implementation of the ElectronicBased Government System (SPBE) and encouraged micro, small and medium enterprises (MSMEs) to implement cashless payments.

Meanwhile, Southeast Sulawesi declined by 13 ranks due to the low growth of gross regional domestic Product GRDP in the digitalization sector.

According to the report, the increase in the 2023 EV-DCI score reflects various developments in 2022.

Numerous achievements in information and communication technology (ICT) infrastructure development, government digitization, digital business transformation, digital society enhancement, and the application of sustainability aspects can be the foundation for the journey toward Indonesia’s digital golden era.

The report said the ICT sector is the foundation of the digital economy as it enables online economic activities.

Currently, ICT infrastructure has been enjoyed by various layers of society, with internet penetration reaching 77 percent.

However, some challenges remain, including internet quality and speed, digital literacy, and cybersecurity.

Meanwhile, the e-commerce, logistics, and fintech sectors are growing due to the rise of disposable income, easy access to digital payments, and the establishment of online shopping habits.

However, there are challenges, including e-commerce players’ profitability, high logistics costs, and low financial technology literacy.

The report also noted the health, education, tourism, and climate sectors have significant growth opportunities supported by various policies that lead to public sector digitization efforts and improvements toward a sustainable economy.

Meanwhile, the report said that in 2022, Indonesia’s digital economy faced various challenges originating from within and outside the country.

However, Indonesia’s demographic potential still presents an opportunity to reach the golden era of digital economy, which value is predicted to reach US$ 360 billion by 2030.

It also said the key factors to enhance Indonesia’s digital economy ecosystem are (1) equal distribution of the digital economy ecosystem, (2) strengthening the business fundamentals of startup companies, (3) increase collaboration between stakeholders, and (4) sustainable development based on ESG approach.

These four things would not only maximize the potential value of Indonesia’s digital economy, but would also foster an equitable digital nation.

“In general, digital adoption has been more equal in all provinces (except the new provinces) that East Ventures has mapped for four years in a row,” said Willson Cuaca, Co-Founder and Managing Partner at East Venture.

According to him, the digital adoption will be a strong foundation for Indonesia’s digital infrastructure in the future and will foster new innovations throughout Indonesia.

“We express the highest appreciation for the government of Indonesia, where rapid and equal digital development occurred under President Joko Widodo’s leadership along with all levels of government involved,

“With a strong and equitable digital infrastructure, the growth of new innovations in all sectors that are inclusive and sustainable, and the support of all stakeholders, from investors, founders, startups, consumers, private companies to Indonesian State Owned Enterprises (SOEs), we are moving faster and closer in achieving an equitable digital nation,” he said.

He also said there is still a lot of ‘homework’ to complete and challenges that all stakeholders must address.

“We will continue to support equal distribution of digital competitiveness in Indonesia and participate in developing Indonesia’s digital economy through various investments and our initiatives or programs,” he added.

Katadata Insight Center Director Adek Media Roza said that increased digital competitiveness was also experienced in provinces outside the top ten.

“The improvement in the median value for four consecutive years illustrates an increase in digital competitiveness, especially in middle and lower ranking provinces,” he added.

Radju Munusamy, Partner and NextLevel Leader PwC Indonesia, said that Indonesia’s efforts to achieve equitable digital require collaboration from all stakeholders.

According to him, the stakeholders in the digital economy ecosystem include startup and conventional companies, governments, investors, and the public.

“Forms of collaboration can be directed at equalizing digitization efforts, strengthening business fundamentals, and implementing sustainability strategies through environmental, social and governance (ESG).

“These actions are expected to increase efficiency in creating added value that supports the occurrence of digital economic equality which will lead to an increase in the national economy as a whole,” he added.

EV-DCI is a mapping of regional digital competitiveness formed from three sub-indexes, nine pillars, and 50 indicators.

Its constituent sub-indexes are input, output, and support, with the pillars of human resources, ICT usage, ICT expenditure, economy, entrepreneurship and productivity, manpower, infrastructure, finance, and regulation and capacity of the regional government.

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