Subianto, Partner and Digital Services Co-Leader, PwC Indonesia: Viewpoint

Viewpoint: Subianto

Indonesia has a young and vibrant population that is also tech savvy, energetic and full of new business ideas. Indonesia has become well known in South-east Asia for the frequency at which we produce new tech unicorns – start-ups valued at $1bn and above – and other dynamic business enterprises. Indeed, an Indonesian company became the region’s second decacorn, crossing the $10bn valuation threshold in April 2019. In Indonesia we have created an environment that enables entrepreneurs to pursue their business dreams. More, however, remains to be done to enable these individuals, as well as to advance overall education with regard to digital talent and entrepreneurship.

The government has recognised that, in order to grow at 6-7% per year, a healthy, educated and competitive workforce is a prerequisite. According to the World Bank, the Human Capital Index of Indonesia is 53. That is to say, a child born in Indonesia today will be 53% as productive when she grows up as she could have been if she had enjoyed a complete education and full health. This is a statistic that the government is aiming to improve in the next 10-20 years.

The fuel required for any digital economy is talented human capital. Over the last few years, as tech start-ups have begun to mushroom in Indonesia, there has been a lack of quality technology talent, forcing companies to look to other countries to meet demand. Current work permit regulations for bringing in foreign talent are onerous, which makes it difficult for companies to hire talent for innovation. The government is working to address this issue with the proposed Omnibus Law on Job Creation by allowing foreign talent at start-ups to work in certain roles without a work permit for a defined period of time. This is a welcome step which, in the short term, will help to plug the talent gap.

In the long term, however, a sustained effort will be required to improve the quality of educational institutions in the country by focusing on science, technology, engineering and mathematics (STEM) courses. Some strides have already been made towards this. For instance, Nadiem Makarim, the new minister of education and culture, came from the region’s largest tech start-up and has already initiated reforms in the education sector with respect to the autonomy of educational institutions. The government has also recently allowed international universities to open branches in the country. All of these developments are very positive. However, between 2020 and 2025 there needs to be an enhanced focus on developing technical as well as creative talent in order to further support the digital economy, as well as enhance the Human Capital Index standing of Indonesia.

With the appointment of a young tech entrepreneur as the country’s education minister, expectations have risen regarding the usage of digital technologies to enhance the quality of education. With around 170,000 primary schools, 40,000 junior high schools and 26,000 high schools in Indonesia, and more than 45m students enrolled, digital technologies can provide a great platform to reach students and teachers across the archipelago. The recent Covid-19 pandemic has highlighted that progress in this area is more urgent than ever.

Digital start-ups like Ruangguru, HarukaEDU, Zenius Education and Quipper have developed solutions to support students and teachers from primary to higher education. The time has come for the government to leverage these platforms to enhance the quality of education in government-run schools by working with these start-ups to develop digital content aligned to the immediate skill set needs of the country, particularly for STEM-related courses.

Within the financial sector government-owned banks are leveraging financial technology lending platforms to disburse loans to small and medium-sized enterprises in order to meet country-wide financial inclusion targets. Similar collaborations should be developed in the education sector to enable equal access to quality education for all children in Indonesia.