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Exploring the Potential of Digitalization for Inclusive Socio-Economic Development in Eastern Indonesia Report by Centre for Strategic and International Studies

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Exploring the Potential of Digitalization for Inclusive Socio-Economic Development in Eastern Indonesia Report by Centre for Strategic and International Studies Exploring the Potential of Digitalization for Inclusive Socio-Economic Development in Eastern Indonesia Report by Centre for Strategic and International Studies 2018 Centre for Strategic and (c) 2018 Centre for Strategic and For any questions regarding this International Studies (CSIS) International Studies (CSIS) & report, please contact: Facebook Indonesia. All rights Jl Tanah Abang III No 23-27 reserved. Ira Setiati Jakarta 10160. Indonesia ([email protected]) www.csis.or.id Facebook Indonesia http://indonesia.fb.com/ Authors And Information Authors : Dandy Rafitrandi, Fajar B Hirawan, Medelina K Hendytio, Vidhyandika D Perkasa, Yose Rizal Damuri Assisted by : Arya Fernandes, David Christian and Ira Setiati Table of Contents page IV Executive Summary page VI Life in EI, as shown by the indicators page VII Life in EI, as perceived by local residents page IX How information & digital technology shapes the life of EI society page X MSME behavior and attitude toward digital technology ES page XII Recommendations for assistance programs page 01 1 Introduction page 02 1.1 Background 01 page 03 1.2 Methodology page 07 2 Socio-Economic Conditions in EI page 08 2.1 Socio-Economic Indicators page 11 2.2 Socio-Political Situation page 14 2.3 Socio-Economic Situation in EI (Findings from the survey) page 14 2.3.1 Public Service Consultation and Administration 02 page 15 2.3.2 Public Service in Education and Health in EI page 16 2.3.3 Security Situation page 17 2.3.4 Economic Situation page 18 2.3.5 MSME Characteristics page 21 3 Information and Digital Technology in EI page 22 3.1 General Conditions page 23 3.2 The Use of Information and Digital Technology page 23 3.2.1 Governance page 27 3.2.2 Education 03 page 29 3.2.3 Economic and SMEs page 35 4 Summary and Considerations for Assistance Programs page 36 Some Considerations for Assistance Programs page 38 Possible Assistance Programs page 38 Capacity Building page 40 Technical Assistance for Platform Development 04 page 40 Assistance for Facility Development IV Exploring the Potential of Digitalization for Inclusive Socio-Economic Development in Eastern Indonesia V P. IV ExecutiveExecutive SummarySummary P. VI Life in EI, as shown by the indicators P. VII Life in EI, as perceived by local residents P. IX How information & digital technology shapes the life of EI society P. X MSME behavior and attitude toward digital technology P. XII Recommendations for assistance programs Eastern Indonesia (EI)1 is a region rich currently utilized within five spheres in natural resources and untapped of civic life: governance, education, potential in tourism sector.However, health, security & conflict management there has been a well-documented gap and business activities of MSMEs. between EI’s economic development We also offer a number of specific from the rest of Indonesia, as average and targeted recommendations for per capita income of EI is significantly future assistance programs to support lagged behind that of the national digitalization in EI. average. One of the main contributors is the digital divide due to the inequality In this study, we use a combination of access and ability to productively use of desk studies, field surveys, ICT facilities. Therefore, digitalization in-depth interviews and focus- is an important key in bridging this gap group discussions (FGD), as well as and promoting equitable and inclusive secondary data analysis. Our field 1 In a general sense, Eastern Indonesia (EI) growth, as it can lower entry barriers to surveys covered 2,000 respondents usually covers Sulawesi, Nusa Tenggara, economic activities. in 10 EI cities. Furthermore, we also Maluku and Papua. In this report, EI specifically refers to the ten cities located conducted another survey to 1,000 in the EI, in which we conducted the Under this context, we have conducted Micro, Small, Medium Enterprises field survey for our study. They include a study to identify the current situation (MSME) businesses to capture the Makassar, Palu, Kendari, Manado, of economic and socio-political MSME profile in EI, particularly with Gorontalo, Mataram, Kupang, Ambon, development of EI. Particularly, we regard to their behaviors and attitudes Manokwari and Jayapura. examine how digital technology is toward digital technology. VI Exploring the Potential of Digitalization for Inclusive Socio-Economic Development in Eastern Indonesia Life in EI, as shown by the indicators Economic development situations. Most infrastructure, such as road and electrification indicators seem to confirm the generally-held (Table 2). Furthermore, EI is still suffering from belief in public that EI is still lagged behind the rest relatively underdeveloped health sector, compared of Indonesia in term of the development condition. to the national average (Table 3). Economic structure of EI is characterized by an underdeveloped manufacturing sector and a Socio-political situations. EI does show some dependency on natural resource-based sectors. encouraging signs with respect to the quality of EI’s income per capita in 2017 is only about two governance and public institutions. According to third of the national level, while EI’s average KPPOD (2016), six out of ten Indonesian cities with poverty rate is more than 1.5 percentage points the highest Local Economic Governance index are above the national average (Table 1). Compared located in EI (Table 5). However, due to the religious to the rest of Indonesia, EI is still falling behind and ethnic diversity of the region, EI is particularly in term of the availability and quality of physical prone to conflicts and violence (Table 6). VII Life in EI, as perceived by local residents Public governance. In areas of public governance, due to the insufficient medical specialists, lack of our survey reveals that the general public in EI modern equipment, lack of opportunity for medical is calling for significant improvement in areas of professionals to improve their capacity and knowledge poverty reduction, job creation and corruption and their limited skills in using the technology. eradication. Digital technology, in particular, has large potential to provide a more efficient public Micro, Small, Medium Enterprises (MSME). Our complaints mechanism, as most of our respondents survey also captures the characteristics of MSME consider chat applications to be useful for in EI. The majority of MSME can be found in retail expressing public opinion or complaints. and trade sector, followed by the food and beverage sector. About 62% of MSME are micro enterprises Health services. Most respondents are fairly that only employ as many as 1-4 persons. Finally, the satisfied with the quality of basic public health most frequently cited obstacle for MSME to expand services, in term of building infrastructure, medical their activities is limited access to finance, as more staff and supporting facilities. However, more than 80% of respondents rely on personal and family sophisticated health services are difficult to perform funding sources. VIII Exploring the Potential of Digitalization for Inclusive Socio-Economic Development in Eastern Indonesia How information & digital technology shapes the life of EI society Online behavior in EI. According to APJII (2017), Entertainments (music and videos) closely follow only 15% of 143 million Indonesian internet users behind, while commerce-related activities such as are located in EI. In our survey, about half of our shopping and trading are among the least frequently EI respondents are internet users, while the performed activities. other half are not. Our survey reveals that 88% of respondents access the internet from their Lack of public awareness remains an issue. The smartphones. Furthermore, more than 40% of our utilization of digital technology for public services respondents find issues with internet stability, delivery in EI has already existed in one form or another. speed, price and coverage in EI. Social networking The main issue here, however, is about the lack of and news consumption are the two most frequently public awareness that certain public services can be performed online activities by our EI respondents. accessed online. Only about 42% of respondents are IX aware of the online presence of such services. Another issue is the lack of innovation by local governments, who lack the digital knowhow to adjust various existing online systems to serve local needs. The necessity for further development of public online % system. Most of our respondents have a favorable perception toward the use of digital technology in 88of our survey respondents access government institutions for it makes their civic lives the internet from their smartphones easier. However, plenty of respondents (about 60%) are also calling for a more comprehensive system, as the current state of online system still inconveniently requires them to physically go to public offices for some other parts of the online application. Most of our The main challenges of public services digitalization respondents in EI. Furthermore, as many as about 40% of respondents are not even aware of the existence have a favorable of online platforms to communicate with local perception toward government, such as 24/7 Call Center, government website or social media. For the purpose of effective the use of digital public communication and feedbacks, both local technology in government websites and social media have massive room for improvement as many of them have not government been updated for years. Our various findings imply the three most pressing challenges facing EI local institutions for it government regarding public services digitalization, makes their civic which include (a) lack of capacity and competence of local human resources, (b) lack of dedicated lives easier. personnel in charge of updating the contents and (c) lack of sustainable financial resources. The use of digital technology for supporting public More than services in education and health. Public and government services would not only benefit from more intensive use of digital technology in administration and community participation, but also from the % application in education and health.
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