Innovate Indonesia: Unlocking growth through technological transformation

This study, developed by the IfM’s Policy Links Unit for Indonesia’s Ministry of Finance and the Asian Development Bank, explores policy options to facilitate Indonesia’s technological transformation and unlock its economic growth potential.

Indonesia is the world’s tenth-largest economy, and the largest in the Association of Southeast Asian Nations (ASEAN). It has sustained average economic growth rates above 5% since 2000 and made significant strides in reducing poverty.

Yet economic analyses point to a number of factors constraining Indonesia’s growth potential, notably tepid productivity growth and slowing expansion in the labour force and manufacturing industries.

Technological transformation could add $2.8 trillion to the Indonesian economy by 2040

Technology has a key role to play in overcoming these constraints and boosting future growth. Adopting new technologies allows industry to become more productive by enabling more efficient resource use, new product development, and entry into new markets.

Technology adoption could add up to $2.8 trillion to the Indonesian economy by 2040, spurring growth in gross domestic product (GDP) by an additional 0.55 percentage points annually over the next 2 decades. This was one conclusion of the study, which explored the impact of new technologies across major economic sectors in Indonesia and identified policy options with the potential to support technological transformation.

Explore the study

The study explores the critical role of technology transformation in boosting Indonesia’s economic development, builds an in-depth understanding of technology and sector-specific opportunities and challenges, plots Indonesia’s position in the technological transformation journey, takes a “deep dive” into Industry 4.0 in Indonesia, and concludes by recommending five key pillars for policy action.

Webinar

Report authors Michele Palladino and Carlos López-Gómez join a discussion with the British Chamber of Commerce in Indonesia on the findings of the report and the importance of Industry 4.0 for Indonesia.

ADB Southeast Asia Development Symposium

Report author Carlos López-Gómez presents the findings as part of a discussion on the role of new technolgies in Southeast Asia’s development in the wake of COVID-19. (Full session)

Policy Briefs

Outputs from the project included five policy briefs analysing the impact of disruptive technologies on selected sectors – namely manufacturing, financial services, e-commerce, urban planning, energy – prepared by technology experts based at the University of Cambridge, in the framework of the project Supporting Technological Transformation in Indonesia – International Research Institute – TA-9450 INO.

You can access the policy briefs below:

• The digitalization of manufacturing – implications for developing countries

Jaime Bonnín Roca, CSTI, University of Cambridge

• Transformation of the financial services by fintech

Kieran Garvey, Independent expert in FinTech regulation and policy

• Last mile delivery – e-commerce retail revolution

Dr J. S. Srai, Centre for International Manufacturing, IfM, University of Cambridge

• IfM_ECS_Policy_briefs_combined_smartcities

A. Parlikad, L. Wan and T. Nochta, Department of Engineering, University of Cambridge

• The impact of disruptive technologies on the energy sector

André Cabrera Serrenho, Department of Engineering, University of Cambridge