In one of the debates prior to the 2019 Indonesian General Election, the then vice-presidential candidate and the current Vice President of Indonesia Ma'aruf Amin, conveyed that Indonesia has developed highways on land, sea, and air. This sky highway refers to the ambitious Palapa Ring project. Palapa Ring is a network of fiber-optic cables, which spans 21,807 kilometers on land and 35,280 kilometers underwater[i]. This sky highway serves all 34 provinces of Indonesia. The sky highway is expected to increase internet coverage and speed all across the archipelago, especially in less-developed areas.
This sky highway is just one of the various projects that the Indonesian government has developed to improve Indonesia's infrastructure to serve the growing digital economy better. President Joko "Jokowi" Widodo himself has, on numerous occasions, stressed the importance of developing infrastructure to serve Indonesia's growing digital needs. Hence, this article will discuss what has been developed as of 2019, the importance of developing digital infrastructure in Indonesia and its prospects.
Q1: Why Is this important?
A1: Developing the necessary infrastructure is unquestionably essential. The infrastructure itself is the backbone that allows the internet to be operational[ii]. Hence, objects such as fiber-optic cables, base transceiver station towers, and many others are obligatory to increase internet penetration and service quality in Indonesia. Indonesia still behind when it comes to internet usage. In 2018, only around 40% of the Indonesian population uses the internet[iii]. Meanwhile, the world average was 49.7%[iv].
Another vital aspect is Indonesia's average internet connection speed. The average internet connection speed in Indonesia in the first quarter of 2017 was 7.2 Mbps, while the average global internet connection speed in the same period was also 7.2 Mbps[v]. However, Indonesia lagged behind several fellow Southeast Asian states, such as Singapore (20.3 Mbps), Thailand (16 Mbps), Vietnam (9.5 Mbps) and Malaysia (8.9 Mbps) in the same period[vi]. That was before the completion of the Palapa Ring.
Meanwhile, in October 2019, Indonesia’s average internet connection speed was 20.15 Mbps[vii]. Despite Indonesia’s growth, Indonesia still lags behind other Southeast Asian states. This includes Singapore (194.09 Mbps), Thailand (97.11 Mbps), Malaysia (78.82 Mbps), Vietnam (42.32 Mbps) and Indonesia was even surpassed by the Philippines (26.14 Mbps)[viii]. Indonesia’s average internet connection speed did grow, but its growth was not as significant as many other states, even after the Palapa Ring.
Hence, developing the required infrastructure, such as the Palapa Ring or the sky highway, is essential. Internet penetration, as well as internet connection speed, is necessary for the growth of Indonesia's digital economy. The completion of the sky highway is expected to boost Indonesia's internet penetration and connection speed. Of course, this will significantly impact Indonesia's digital economy massively. In 2015, Indonesia's digital economy was estimated to be only $ 5 billion, which jumped to $ 40 billion in 2019 and is expected to reach $ 133 billion in 2025[ix].
Q2: What has been achieved in 2019?
A2: President Jokowi’s presidency is known for its numerous infrastructure projects. In terms of infrastructure for Indonesia’s internet, the completion of the eastern section of the Palapa Ring is the most well-known example. The sky highway itself consists of 3 parts: western, central, and eastern. The west and central section of the Palapa Ring were launched on the 20th of March 2019, while the east section was completed later on in the same year[x]. Overall, this project costs around Rp 7.7 trillion (around $ 546 million.)[xi]
Today, Indonesia already has the largest digital economy in Southeast Asia, owing to a large number of internet users in Indonesia. The most dramatic increase can be seen in the e-commerce sector. In 2019, the estimated value of e-commerce activity in Indonesia was $ 21 billion and is projected to rise to $ 82 billion in 2025.[xii] In the online travel sector, the current estimated value as of 2019 is $ 10 billion and is expected to reach $25 billion in 2025.[xiii] In the ride-hailing business, the total estimated value in 2019 is $ 6 billion and is predicted to skyrocket to $ 18 billion in 2025.[xiv] Meanwhile, for online media, the increase is relatively more modest. The 2019 estimation of the total valuation is $ 4 billion and is projected to be worth $ 9 billion in 2025.[xv]
Q3: What is Next?
A3: The Indonesian government takes the development of the digital world very seriously. In the "Rencana Pembangunan Jangka Menengah Nasional 2020-2024" (The 2020-2024 Intermediate National Development Plan), there are various plans on how the government plans to harness digital technology for national development. The government plans to conduct a "digital transformation[xvi] This includes integrating digital aspects in all sectors of the government, such as digitalizing all medical records in the health sector, providing e-learning services for schools in the education sector, using e-votes for elections in the future, and many others.[xvii] The Network Readiness Index and the ICT Development Index will be used as indicators of this program's success.[xviii] These goals are ambitious and will require further infrastructure developments in order to achieve them.
In conclusion, it can be said that developing the necessary infrastructure to sustain Indonesia's digital economy growth is essential. The growth potential for Indonesia's digital economy is massive, as it is expected to grow more than threefold during the 2019-2025 timespan. Harnessing this enormous potential is a must, and building the required infrastructure, such as the sky highway, is mandatory.
[i] CNBC Indonesia, 2019. Tol Langit Palapa Ring Diresmikan, Bye-bye Internet Lemot. [Online]
Available at: https://www.cnbcindonesia.com/tech/20191015185411-37-107253/tol-langit-palapa-ring-diresmikan-bye-bye-internet-lemot
[Accessed 20 November 2020].
[ii] Musiani, F., 2016. Alternative Technologies as Alternative Institutions: The Case of the Domain Name System. In: D. L. C. L. D. N. S. L. Francesca Musiani, ed. The Turn to Infrastructure in Internet Governance. Hampshire: Palgrave Macmillan, p. 85.
[iii] The World Bank, 2019. Individuals Using the Internet (% of Population). [Online]
Available at: https://data.worldbank.org/indicator/IT.NET.USER.ZS
[Accessed 27 November 2019].
[v] Akamai Technologies, 2017. Akamai's State of the Internet Q1 2017 Report, s.l.: Akamai Technologies.
[vii] Global Speeds October 2019, 2019. Speedtest. [Online]
Available at: https://www.speedtest.net/about
[Accessed 5 December 2019].
[x] Komite Percepatan Penyediaan Infrastruktur Prioritas , 2019. Palapa Ring Broadband. [Online]
Available at: https://kppip.go.id/proyek-prioritas/teknologi-informasi/palapa-ring-broadband/
[Accessed 27 November 2019].
[xii] Google, Temasek, Bain & Company, 2019. e-Conomy SEA 2019, s.l.: Google, Temasek, Bain & Company.
[xvi]." Kementerian Perencanaan Pembangunan Nasional Republik Indonesia/Badan Perencanaan Pembangunan Nasional, 2019. Rencana Pembangunan Jangka Menengah Nasional 2020-2024, Jakarta: Kementerian Perencanaan Pembangunan Nasional Republik Indonesia/Badan Perencanaan Pembangunan Nasional.