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Challenges & Opportunities: Indonesia’s Big Data & AI Transformation Journey

1 Apr 2019 | Rudi Rusdiah, ABDI (Association Big Data & AI) – KOMITE.ID magazine & News Portal

While diversity and geographical divide have proven to be a challenge in digital transformation for Indonesian businesses, the use of Big Data and AI seems to be a viable solution.

As the fourth most populous countries in the world and the largest archipelago with 17,000 islands to its name, Indonesia faces a challenge globally when talking about Big Data & AI transformation in the Industrial Revolution (IR) 4.0 era. Indonesia is very diverse and can be in all stages of the IR simultaneously. Some tribes in rural islands like Papua and Kalimantan, with their nomadic lifestyles, can still be at the first stage of IR. Other suburban towns and villages could be at the second or third stage, while metropolitan and capital cities have advanced on to the fourth stage.

The growth of Indonesian e-commerce is fast and promising, from $ 6.5B (2016) to $ 6.96B (2017) to $8.5B (2018) – 65% of Asean’s$13B share (2018), according to Statista. This is largely due to the influence of 4 unicorns — 1 in the travel sector (Traveloka), 2 in e-marketplace (Tokopedia & Bukalapak) and 1 in Public Transportation ride-hailing sector (Go-Jek). Unfortunately, this has created a trade deficit due to de-industrial sectors that are unable to follow the fast pace progress of e-commerce, even though the Ministry of Industry has launched Industrial 4.0.

Although unicorn Go-Jek does not own any vehicles, it boasts the largest database of supply & demand ride-hailing clients in Indonesia. Its use of Big Data, AI routing and GPS tracking systems have disrupted the traditional Metre and Paging Taxi industry. Tokopedia and Bukalapak may not own their own merchandise, but they have become one of the largest online shops, disrupting traditional brick-and-mortar stores. Many new digital transformation logistics companies disrupting the PT Pos, the state-owned postal service. Small fintech startups utilising e-wallets and QR codes have also disrupted traditional financial services, big and small. Big Data and AI will be strategic to many of these enterprises in Indonesia and have proven to disrupt larger competitors that have not prioritised digital transformation.

Although Indonesia has recently rolled out 5G, it’s still in the trial stage before the 5G Frequency auction. Many locals are still accessing the Internet via traditional GPRS, as opposed to LTE & 5G technology.

According to IDC, Business Data Analytics (BDA) Asia Pacific countries grew 14.4% from $ 14.7B (2018) to $22.2B (2021) leads by leading sectors, i.e. Bank, Logistics, Government, Profesional Service and Telecommunication, which contributed 55% of BDA business– approximately $12.6B. China still boasted the highest growth with BDA $5.5B (2018), followed by Indonesia, which recorded the highest growth in Asean (2018) at 19.7%, mainly due to businesses adopting digital transformation, facilitated by Government Industry 4.0 initiative, the 4 Indonesian unicorns and many other business enterprises. Even though neighbouring countries such as Australia, Singapore and Malaysia may face challenges in their digital transformation journey as well, Indonesia has additional geographical challenges on its plate, with more than 60% of its territory comprising water separating thousand of islands, and the need for sea and air toll roads and fibre optics.

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