Indonesia's second digital leap must be about capability

Indonesia's next digital leap must prioritize developing the capability to use AI effectively, rather than simply democratizing access to the technology. The country has previously demonstrated its ability to quickly adopt new technologies, such as mobile connectivity, digital payments, and platforms, which have brought millions of people into the digital economy.

However, a critical lesson from Indonesia's first digital leap is that technological advancements alone do not guarantee productivity gains or widespread adoption.

The real opportunity with AI lies in its potential to democratize access to expertise, enabling even small businesses to leverage analytical and creative capabilities previously reserved for larger organizations. Yet, simply having access to AI is not enough; productive use requires skilled individuals who can frame problems, provide relevant context, challenge outputs, and translate results into better business decisions. It also necessitates reliable data, infrastructure, and often, changes to work processes.

The distinction between adoption and capability is becoming increasingly recognized in Indonesia, as evidenced by the Communications and Digital Ministry's recognition of an AI capability gap. While AI adoption is high, its depth of use remains uneven among individuals and businesses. Many frontline employees who regularly use AI report significant time savings but lack guidance on how to leverage that time more strategically.

The challenge of achieving widespread AI capability extends beyond Indonesia. A recent study by Boston Consulting Group (BCG) found that while AI can generate capacity, organizations often fail to convert that capacity into value. Successful organizations are those that redesign workflows and business models around AI-generated insights, rather than merely deploying tools.

To truly measure Indonesia's AI opportunity, it must be evaluated based on how organizations become more productive as a result of AI adoption. Large corporations may face talent shortages, but they can recruit specialists, partner with technology providers, invest in infrastructure, and reskill their workforces. However, the more significant challenge lies in bringing AI capabilities to the broader economy, where millions of micro, small, and medium enterprises (MSMEs) exist.

These MSMEs cannot realistically employ AI engineers, data scientists, or digital transformation teams. Therefore, the focus should be on making AI expertise accessible to all MSMEs, rather than attempting to turn every one into an AI expert. This change in perspective shifts the approach from individual businesses building their own AI capabilities to leveraging existing institutions that have significant economic reach.

Indonesia's banks, digital marketplaces, manufacturers, and state-owned enterprises (SOEs) are well-positioned to become channels for spreading AI capability. For example, a bank could embed AI-enabled financial management and insights into the services it provides to MSME customers. A manufacturer could assist suppliers in applying AI to quality control, maintenance, inventory management, or production planning.

The key principle is to package sophisticated AI capability in a way that allows businesses to benefit without having to build it themselves. This approach mirrors Indonesia's previous digital transformation efforts, where small businesses were able to participate in e-commerce without each developing their own infrastructure.

Government has an essential role in facilitating the diffusion of AI capability beyond simply funding more courses. In addition to training programs, the government should create pathways for participants to work on actual AI solutions at SOEs, connect young technical talent with relevant industries, and establish standards, incentives, and infrastructure that make these partnerships scalable and accessible.

Business chambers can also play a crucial role by connecting young professionals with industry challenges and providing mentors.