Fri, 23 Apr 2010
From: The Jakarta Post
By Craig Warren Smith, Gianyar, Bali
SBY’s “Tampaksiring Strategy”, announced from Bali this week, is the most significant initiative so far in the President’s five-year tenure.

The plan is a new game-changer in two ways: First, it departs from the dreadful GDP boosterism of Indonesia’s past, in which few looked closely at who was benefitting from the growth.

This plan would not just bring wealth to the already-wealthy, but spread wealth for the benefit of the mass Indonesian population which has been sidetracked in recent years as the number of Indonesian billionaires kept doubling.

The new economic model would not only reverse widening gaps between rich and non-rich, it would lighten the country’s harsh carbon footprint and empower the entire archipelago, not just those in the Jakarta-Bandung corridor.

Second, it is not another vapid governmental “Declaration” that is quickly forgotten after the photographers leave the photo op. Tampaksiring Strategy would move markets with public-private partnerships, not just rely on sluggish government bureaucracies for its implementation. If it works, it would define SBY’s legacy as a nation-builder as significant as Sukarno himself.

But, there is a flaw in this plan. The Bali economic team forgot to incorporate a necessary enabler of its own success: Broadband. If the economic reform strategy could be deployed in parallel with a corresponding effort to build a massive meaningful “broadband ecosystem”, its ambitious goals could not only be met, but exceeded.

A new body of economic studies, including those being prepared by Indonesia Group Against Digital Divide (IGADD), shows that broadband has become an overall driver of macroeconomic change, particularly in Asia.

The most oft-quoted new finding, based on a new World Bank econometric study, is this: For every 10 percent of broadband penetration, developing nations will get a boost of 1.39 percent added to their GDP, all other things being equal.

But the most significant data shows that broadband is needed to do what Indonesia’s educational system cannot: produce new ways for low-income citizens to enter into a pattern of lifelong learning and economic security, triggered by broadband mobile services.

These studies have influenced a number of countries to bring broadband into their economic stimulus plans.

From China to Singapore, Indonesia’s economic competitors race forward with plans that make “next generation [broadband] networks” into drivers of competitive advantage.

But not Indonesia. Here businesses and consumers still sputter along with maddeningly slow Internet – or no Internet at all. No wonder Indonesia scores at the bottom of international indexes of productivity. While Malaysia is on track to connect 50 percent of its households to broadband this year, only 2 percent of Indonesian homes have it.

Forget cloud computing as a way of driving investment to Indonesia’s weak domestic economy. Forget plans to turn Indonesia into a technology-driven “knowledge society”. Forget the idea that Indonesia could be an R&D hub which replaces silly apps like Twitter with meaningful mobile “killer apps” of its own.

Though mobile phones have suddenly reached more than half (120 million) of all Indonesians, the government has so far failed to take advantage of the opportunity to leverage the wireless revolution to bring broadband to the masses. Without broadband, the country seems destined to become an economic colony of its more broadband-penetrated neighbors.

There is no space here to produce the data that will show how the social and economic benefits of broadband.

Let me make the point by telling you about my friend Deni, a young man from an impoverished village near Sukabumi in West Java.

After finishing school, he did what all his classmates did: headed for Jakarta. He got a job as a waiter at the Grand Kemang Hotel, where I met him two years ago. Miserable and in debt after two years of struggling to send home money to an ill mother, he concluded he could not survive on his US$100 monthly salary. With no other option, he headed back to Sukabumi to become a micro entrepreneur.

By putting his family home up as collateral for a $1,000 microcredit loan at 17 percent interest, he was able to open a tiny Warnet (Internet Café) with just five computers. No money to buy chairs so kids after school clustered on the bare floor. Forced to be a quick learner in the English dominated cyber world, his English skills have improved amazingly, and he uses his slack time to upgrade his own skills.

Deni isn’t sure he can make a go of it. Earning just Rp 3,000 per hour per computer, he cannot charge more. But he must pay Southeast Asia’s highest cost for Internet access. (The cost of bandwidth to ISPs in Indonesia is five times more expensive than it is in, say, Singapore.)

He worries that he will cave in and become forced by the harsh economics of Warnets to become a mere online gaming parlor, where teenaged boys play Point Blank violent games and smoke cigarettes in defiance of their parents. “I’d like to have an educational Warnet to help kids with their school work,” he says. “But I’m not sure I can survive that way.”

But he loves his new role, and the fresh clean smell of the morning village air. His Warnet makes him a hero.

His mom makes $30 net profit monthly selling drinks to the customers, enough to get by. His father, after just returning from a disappointing contract job in Dubai, now helps out.

Deni has gained some weight and become a confident swagger. He managed to find a used BlackBerry and is testing the device to see if it has any apps could work for his village.

I have learned a lot from Deni. Self-taught, he is part of Indonesia’s “tinkering economy”, where young learners keep pace with the digital revolution. When given a chance, he will grab every opportunity.

But just imagine how Deni and his family could flourish if government would embrace him, and millions like him, and ease his path towards full status as an SME.

In fact his Warnet could become an SME incubator, spawning new businesses in his village. The government could coax young villages’ émigrés, to return to their villages, creating a new kind of domestic economy that brings lifelong learning to low-income youth.

Just imagine what would happen if the Palapa Ring brought the full power of fiber optic undersea cable Deni’s Warnet at affordable rates. What would happen if BRTI, the government telecommunications regulator, would give preference to 3G or Wimax licensees if they would agree to shift their strategies to create local content for enterprises and consumers to open new markets villages like Sukabumi.

Just imagine if all of Deni’s customers were given smart phones by the government and set them free to create apps that save them money and create new sources of income.

So this is an appeal to the brilliant economics team who has taken on the task of implementing the 10 points in SBY’s new plan: Consider if you can achieve your reforms better, faster and quicker with broadband? Consider whether your reforms are even achievable without bringing broadband to the masses. Can you make Deni and people like him into drivers of a new kind of Indonesian economy?



The writer is founder of Digital Divide Institute. He can be reached at craigwarrensmith@hotmail.com



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