Jakarta among top 10 in digital environment business confidence: EIU report
By Yunnie Marzuki January 26, 2018
- Demonstrates the confidence level of Jakarta-based executives pursuing digital endeavours
- Support from local city governments help in the journey to digitalisation
LONDON-based media company, The Economist Intelligence Unit (EIU) has released the results of a global research project entitled Connecting Commerce commissioned by Australian-based telecommunications and technology organisation Telstra.
Telstra is a parent company of Indonesia’s telkomtelstra.
The report assessed the confidence of business executives in their city’s environment and its conduciveness to supporting the digital ambitions of companies.
This report ranks Jakarta eighth out of 45 cities for overall business confidence.
The report includes the first ever Digital Cities Barometer, a ranking of 45 cities around the world across five key categories relevant to business performance: innovation and entrepreneurship; the financial environment; people and skills; development of new technologies; and ICT infrastructure.
telkomtelstra president director Erik Meijer, said the report reveals high levels of confidence in the world’s emerging economies, with Jakarta scoring in the top 10 across four out of the five research categories.
Of the top 10 cities for overall confidence, seven are from developing Asian countries including Bangalore, Mumbai, New Delhi, Beijing, Manila and Shanghai.
Conversely, lower confidence was recorded in developed cities such as Hong Kong and Tokyo.
According to Meijer, for digital transformation to be successful, it requires strong external support.
“It is therefore promising to see that business leaders in Jakarta are optimistic about their city’s ability to help unlock their organisation’s digital potential.
“Some of this optimism likely derives from the visible growth of Jakarta’s digital ecosystems, as well as the business-friendly national government that is serious about fostering digital entrepreneurship.
“Over the past 10 years, Indonesia, and Jakarta in particular, has seen good progress in the development of the digital business sector.”
As for other big cities such as Tokyo, Hong Kong, and Singapore which have a lower confidence index, Meijer explains that these cities have already achieved great progress so their expectations and excitement in digitalisation are decreasing.
“The results of this report show that Jakarta’s position as the centre of the digital business ecosystem in Indonesia should not be underestimated, and we need to leverage on this position to further accelerate Indonesia’s drive to reach its target of becoming a global digital economic hub by 2020.”
This report shows that 54% of respondents in Jakarta agree that companies are willing to relocate to a favourable environment.
“However, most of those that are willing to relocate are mid-sized companies with 100 to 249 employees,” said The Economist Intelligence Unit Asia editorial director Charles Ross.
Jakarta’s executives are the world’s most complimentary of their government’s support, with 95% believing its municipal government will play a more positive role in developing the digital ecosystem over the next three years.
However, more than half also think there is a current disconnect between the national and city governments when it comes to support for innovation.
“The government’s role is necessary in recognising businesses so it will be able to provide suitable support and it can give companies opportunities,” explains Ross.
He further says that a city has to provide connectivity that will create availability for a business to develop and city governments need to work closely with business, and help maintain ICT infrastructure.
Lack of talent remains a challenge
Jakarta is also seen as a city that is facing a shortage of talent. Ross says that competition within big cities in the region affect this factor, and, “aside from that, cultural barriers make it challenging for talent to adapt in a new place.”
Digital security is the skill most in demand by businesses, with 41% of Jakarta-based executives listing it as the skill most needed to support digital transformation.
At 25%, change management was named the second most important skill.
Investment firm Ideosource managing partner Andi Boediman says that Indonesia needs to encourage local talent who have been working overseas to return to their home country, improve local universities by partnering with international ones, and add computer-based skills into high school curricula.
The digital ecosystem in Jakarta is important to the respondents. While 32% of Jakarta-based executives believe that traditional structures such as business associations are a useful source of assistance, informal communities, networks and innovation labs are also highly valued by businesses (both cited by 24%).
They also feel that the most valuable input obtained from external associations are new ideas for product and services (58%), advice on technology (41%), referrals to sources of data and potential sources of talents (31%), and sources of funding (17%).
This report showed that the qualities digital and other businesses consider when deciding on which cities to set down their roots are global connectivity, liveability, and an entrepreneurial spirit.
Ross concludes, “The excitement in terms of entrepreneurship in Indonesia has helped to drive the confidence level.”