Galvanizing Cloud Adoption to Power Indonesia’s Digital Economy

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Despite the economic uncertainty caused by the Covid-19 pandemic, Indonesia continues to be one of the fastest growing digital economies in Southeast Asia. By 2025, Indonesia’s gross value of digital goods (GMV) will reach $ 124 billion, against 44 billion dollars in 2020.

Cloud technology, which enables the provision of various IT services such as data storage, servers and databases through the internet, has catalyzed Indonesia’s digital economic growth. In 2019, the Indonesian public cloud market is expected to grow from $ 0.2 billion in 2018 to $ 0.8 billion in 2023.

It has supported the advancement of small and medium-sized enterprises (SMEs) by democratizing access to technologies and services that were previously only available to large companies. It has also enabled the government to provide better services such as the Cash-for-Training (Kartu Prakerja) program of the Coordinating Ministry of Economic Affairs and the e-learning initiatives of the Ministry of Education.

As more Indonesians go online and local businesses switch to cloud solutions, the demand for cloud services is growing exponentially. The private sector is driving a significant portion of this growth in cloud adoption. Grab, for example, used cloud computing technology to rapidly accelerate the digitization of SMEs by helping merchants without an online presence integrate with the platform, implement digital payment and delivery systems, and to access business analysis tools.

While the private sector has been the primary driver of cloud adoption in the economy, there is a tremendous opportunity for digital transformation in the public sector. The Covid-19 pandemic has helped governments realize the potential of cloud solutions, especially as they are forced to rapidly deploy digital services to meet the needs of citizens.

A recent Alibaba Cloud survey found that 83% of executives in Indonesia believe cloud-based tools are helping them meet their needs during Covid-19, highlighting the slight increase in
adoption of cloud services in the country.

To truly leverage the cloud to drive the growth of Indonesia’s digital economy, it is imperative that the digital economy is empowered to adopt the cloud quickly and scale easily. The government’s cloud-centric policy must translate into forward-looking regulations that promote, not hinder, cloud adoption.

To ensure Indonesia’s digital economy takes full advantage of cloud computing solutions, the government needs to address critical aspects of existing policies that may hamper the digital economy’s ability to rapidly adopt cloud solutions, hampering the innovation and impact investments. that stimulate growth in this space.

A 2020 ministerial regulation on operators of private electronic systems (MR 5), a 2018 government regulation on eGovernment (GR 95) and the draft law on the protection of personal data all contain welcome improvements to the framework. existing legal system. However, some of these provisions create an uncertain and fragmented regulatory environment.

MR5, for example, defines Electronic Systems Operators (ESOs) very broadly, essentially encompassing most types of electronic system providers who may not pose a risk to Indonesia’s national security, causing unrest. social and political or personal data breaches.

Cloud service providers are equated with other ESOs, including social media and search engines. This creates confusion over the responsibility of the cloud, especially personal data, and grants excessive access for law enforcement and regulatory purposes. The potential inclusion of offshore entities is also a concern, as is the onerous registration.
processes involved, details of which are unclear.

The Personal Data Protection Bill (RUU PDP), which regulates the processing of personal data in Indonesia, exempts the rights of data owners if their data is necessary for national defense and security purposes, from application law, public administration, supervision of the financial or monetary sector. , payment systems or the stability of the financial system. These exemptions are of concern because they give the government unrestricted access to personal data.

In addition to RUU PDP, Indonesia also has restrictive data location policies that make the Internet less accessible and secure, more expensive and complicated, and less innovative. A recent study on cross-border data flows carried out by IITIF notes that in five years Indonesia’s gross economic output fell 7.8% while experiencing declining productivity and rising prices due to tighter data restrictions from 2013 to 2018.

Specifically, for cloud service providers, localization of data prevents them from using best cybersecurity practices, such as “sharding,” in which data is spread across multiple data centers. This is especially useful for SMBs that do not have the means to implement a robust security program.

The National Data Center initiative, which is part of the e-government services legal framework – GR 95, is an ambitious project intended to be a shared infrastructure / managed service to ensure efficiency between central and central governments. local. In preparation for the National Data Center, which is slated for completion in 2024, Kominfo issued two circulars that appear to be antithetical to supporting a holistic cloud computing environment for public agencies.

First, Circular 5/2020 requires all public agencies to seek authorization from Kominfo before procuring data centers, including the “data center lease” of cloud or disaster recovery centers. A second circular – 3/2021 on using the cloud for the public sector – indicated that cloud provisioning does not require authorization. This contradicts Circular 5/2020, as cloud services can be considered a “data center lease” and would therefore require approval from Kominfo.

However, Kominfo’s position for use beyond 2021 is also unclear. Additionally, Circular 3/2021 states that if ministries and agencies “need to prioritize integration into a national data center, they can” use their own data centers to increase service availability and capacity. cloud computing ”. This implies that the cloud is the second preferred option after the National Data Center, which contradicts the goal of leveraging cloud services to strengthen e-government service delivery.

Unlocking the True Potential of the Cloud to Power Indonesia’s Digital Economy As policymakers and regulators seek to harness the benefits of cloud technology while managing its risks, it is
It is important to recognize that the legal and regulatory landscape of the cloud is very complex and as vast as the reach of the technology itself, spanning multiple industries and geographies.

Implementing a data classification policy that adheres to a risk-based data classification framework is fundamental to helping governments adopt cloud solutions. Recognizing the inherent security of cloud architecture and the scalable nature of this technology will be critical to responsibly unleashing the potential of cloud services for the public sector, enterprises and organizations.
company.

Coherent, cloud-responsive policies that recognize the unique cloud model, are aligned with industry best practices, and are aligned with other cloud-related policies can be put in place by working closely with industry to develop regulatory frameworks that can effectively support national efforts to boost the country’s cloud ecosystem and build confidence and participation of all stakeholders. Only then will the government be able to fully maximize the potential of cloud computing to stimulate the growth of the economy of the country as a whole.

Jeff Paine is Managing Director of Asia Internet Coalition, a trade association co-founded by eBay, Google, Nokia, Skype and Yahoo! in 2010 to promote Internet public policy issues in the Asia-Pacific region.


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