Indonesia boasts the largest economy in Southeast Asia, and its startup ecosystem is both diverse and thriving. While fintech and health tech companies have been present for years, the potential of homegrown AI startups has been highlighted today.
Kearney’s Senior Associate, Soon Ghee Chua, has observed promising growth in the logistics and supply chain sector, as financial services and retail have been the early adopters of AI in Indonesia.
The Indonesian government recently introduced a national strategy, spanning from 2020 to 2045, aimed at developing AI in education and research, health services, food security, mobility, smart cities, and public sector reform. This initiative aligns with the country’s projected economic growth from AI, with an anticipated US$366 billion added to its gross domestic product by 2030, according to new research from EDBI and Kearney.
Despite the nascent stages of AI adoption across Southeast Asia, more than 70% of AI users, providers, and investors view it as crucial to the region’s future, according to the same research.
AI allows machines to exhibit human-like intelligence by analyzing extensive data sets and learning to perform tasks such as recognizing speech, identifying relevant information, synthesizing information, and forecasting.
In the current perspective, the government of Jakarta has turned to AI to solve issues such as traffic gridlocks, flooding, and waste management, launching the Jakarta Smart City (JSC) initiative.
Despite these promising developments, Indonesia lacks regulatory provisions and an official agency to oversee AI development, leading to concerns regarding data misuse. Moreover, there is considerable room for improvement in algorithms and computing power, critical components for effective AI use.