>> MODERATOR: Ladies and Gentlemen, Distinguished Participants, if we can have our seats and start our session. Welcome to the Indonesia Forum. My name is Mohammed. I am a counselor for economic affairs at the Permanent Mission of the Republic of Indonesia. It is always fascinating to have a meeting at the end of IGF because we may lose many audience. They already have left the conference. The Forum is organized by the Ministry of Communication and Information Technology of the Republic of Indonesia in collaboration with IGF Geneva 2017 and Foreign Affairs. The theme of this Forum is Harnessing Digital Economy Opportunities by Supporting SMEs. And I think we all agree that Digital Economy is an important trend. As the UN Secretary‑General stated in our report 2017 and I quote, "a key challenge for a policymaker in to this global economy is digital development. Digital Economy is having a major impact on the global pattern of investment."
I think we also have had a deep discussion in ‑‑ on this issue in the recent G20 meeting in Germany and APIC meeting in Vietnam. By the time I am speaking hundreds and if not thousands of SMEs, small and medium enterprises around the globe are dying and have shut down their business because of the inability to adapt or adjust with the current and massive rapid growth in the Digital Age. But in contrary what is exciting is that hundreds or thousands of SMEs are also maybe growing stronger and stronger and promising because of the ability to develop and neutralize ICTs in this Digital Age to support the development or expansion of their businesses.
Here are the figures and numbers. Three‑quarters of the population use the Internet. And the attrition rate is approaching 50% in Developing Countries. And the Digital Economy is a growing part of the people's economic life. 30 million people are online in Developed and new Developing Countries and emerging countries. The Digital Age is increasingly used by the Government to interact with our citizens to deliver surfaces according to the UN eGovernment index. 90 countries now offer one or more than one stop public portal and 1480 countries have provided one form of online transaction or services. And the Internet, four points ‑‑ 70% generate the global GDP.
But our Forum today probably would address the three questions. What are the programs and initiatives and policy of multi‑stakeholders to improve the country's economy based on well‑ adapted IT by SMEs? How do you develop a national digital ecosystem that enables SMEs to have proper position and bargaining power at the global players? And which policies would be prioritized to harness the adoption of ICT by SMEs?
We have four panelists and allow me to briefly introduce them. On my right I think is Dr. Pharm, dean of the International Internet Institute and School of Communication at Sao Paulo University and then Mr. Donny Utoyo, expert to the ministry, Minister, Ministry of Communication and Information Technology, Republic of Indonesia. He is the leading figure in the ecosystem. And also Ms. Young, the deputy director of the International Cooperation Bureau of the cyber administration of the People's Republic of China.
For the guidelines we have I think each of the panel to have five minutes speaking time. So let's start with Dr. Jovan and then followed by Ms. Young, because she has to catch her flight at 11:40. So ‑‑ it is okay. You can start.
>> PANELIST: Good morning. I will make sure I stay within the time limits otherwise I will affect your travel schedule. But it is a problem. I have to speak about Indonesia and be limited to five minutes. Whenever I go to Jakarta I criticize them for being too shy about their successes and then I take sometimes the role of being the noisy Ambassador of Indonesia. Not accredited. And the reason why I'm particularly keen to promote what Indonesia is doing is that it is based now even statistically in the latest reports of IPSA and the World Economic Forum. And I particularly advise you to consult the IPSA report on the trust in modern economy, question of trust and cybersecurity.
The Indonesian Government is the most trusted Government worldwide by its ‑‑ when it comes to digital policy. And now the latest web report reiterated the same question. We have something that is crucial for building an ecosystem. Trust in Government policy and rules and without that the trust, the whole system is much weaker. And in particular for SMEs to engage and to develop very fast. This is one problem that we faced in the developing ecosystem and I would encourage our panelist from Indonesia to tell us what is the secret in building trust because these days we naively think that trust building with a few tricks. And you have so many sessions how to build the trust. And I am always very, very skeptical about these sessions because it takes time. It takes genuine effort. And there are no management tricks to deal ‑‑ to build the trust. Trust has to be built with in a general way through the process, through engagement, through enormous empathy and through the developing proper societal and cultural context. Be careful whenever you see the session on building trust. I am cautious. Please tell us more about this.
The second point from the questions that were raised and posed here are related to yesterday's judgment of the European Court of Justice. The European Court of Justice yesterday decided the rule that Uber is not an information company. But Uber is a transport company. This is going to be the major earthquake in the Digital Economy. Because all business models of the Uber and related companies based on information has to be changed. Uber basically will have to follow the rules which exist for taxis or buses or other companies.
What's it mean in a concrete case? That the European Union is trying to curb the enormous power that big monopolies have. And this is one of the questions how to create more space for SMEs. The policy matters, policy matters in different ways. Cybersecurity, for example, can affect SMEs a lot if the requirements for cybersecurity rise. Big companies like Facebook, like Google can buffer those requests but not small companies, especially very small companies.
This is the first point. Data protection and this is very often a criticism, and I hope that the European Union will apply it with some sort of wisdom this new GDPR which will introduce general data protection rules. It is another earthquake which is coming in the digital ecosystem. I hope that they would apply it to the major companies that monopolize data. And in particular not small and medium companies from Developing Countries but if they don't do that it will create a problem. Because again Uber, Facebook and others can't afford to have a big structure to protect their data and to follow the new regulation. Small companies will face the problem.
Now the question of sort of new policies is a double‑edge sword which can help SMEs but also add the regulatory requirements. We have to handle it with care and public policy institutions, Governments and other players, international organizations should deal with these issues carefully. Otherwise we may end up with having more space, monopolies and now trigger with new policies whether it is cyber policy data protection and other fields. That would be some sort of a general mapping of developments in an ecosystem triggered by yesterday's decision. Courts are becoming ‑‑ I found we wrote in this newsletter this morning which you can get, we are discussing for four days 200 workshops on Internet Governance and then the European Court of Justice made the decision which is direct role making. There should be kept in mind that courts are becoming de facto rulers of Internet Governance all over the world. Thank you.
>> MODERATOR: Thank you. I think Ms. Young can have the floor.
>> PANELIST: Well, firstly I am so sorry because of my schedule and to interrupt your speech. I'm so sorry. And then while thank you very much to invite me here to share some information with you. As a Government official I want to ask here to briefly introduce the development plan and achievements of the Digital Economy in China. As you know the Digital Economy has become a most innovative and inclusive field in China with the most rapid development. The Chinese Government places high value on digital value in Government. Implementing the strategies for IT communication, application of Big Data and Internet plus action plan. And efforts have been accelerated and enhanced to build digital China with a focus on innovative development. A series of tasks are deployed in plan. I want to have ‑‑ to introduce about the tasks including to build an ecosystem for modern information technologies and industries.
The system for advanced information infrastructure, unified and open Big Data system. Information economy system of integration and innovation. Inclusive and convenient information system that benefits the people. And improve the cyberspace governance system and enhance the cybersecurity system. The plans as a guide for development of Digital Economy in China from 2016 to 2020. So in recent years new businesses and new models of Digital Economy such as online shopping, mobile payment, and sharing economy are becoming in China, in fact, bolster the growth of China's Digital Economy reached more than 3 trillion U.S. dollars in 2016. And let us look at the achievements from the following experts. First Internet infrastructure is increasingly popularized. As of July 2017 China has the largest number of mobile services totalling 1.37 billion of which 910 million users. And aside from more than 5 million websites are in China.
The Internet has integrated in to an economic and social development China's everyday life. Second, the economic information continues to take the lead. 2016 China's electronic and manufacturing reached about 2 trillion U.S. dollars. And that software and information service industry reached 4.9 trillion. The supply of information products continues to improve with mobile phones, computers and televisions remaining the highest in the world.
Third, the commerce enjoys rapid development in 2016. The transaction volume in commerce in China reached about 4 trillion U.S. dollars with online retail accounting for more than one trillion U.S. dollars. The penetration rate of mobile payment and electronic payment ranks top in the world. Fourth, the pace of digital transformation in manufacturing industry is ‑‑ it is becoming a more digitalized network and inter ‑‑ and intelligent. A number of smart factory and digital workshops have been built and a set ‑‑ models for smart manufacturing are explored and established. Fifth, the Internet enterprises flourished in the second quarter of this year. The total market value of China is listed reached more than 1.2 trillion U.S. dollars. And among the world's top 30 most available Internet companies nine are Chinese companies.
Six, international cooperation continues to enhance as the choir of the ‑‑ in 2016 China put forward Digital Economy high on the agenda for the first time. Cooperation initiative was adopted. In December 2017 during the World Internet Conference China and several other countries colaunched the Digital Economy international cooperation initiative, so that the fruits of the Digital Economy can benefit more people. And I'm sorry for my limited time but I have brought some best ‑‑ the output of our first WIC about the best practice we just collected. And if you want I'll give it to the organizer of this. So you can get someone. And if you have any questions or some ‑‑ want to have some communication and please give me the e‑mail or some other information. And I'm glad to communicate more with you. And thank you.
>> MODERATOR: Thank you. This is the interesting part of the discussion because we have China and then Brazil and we ‑‑ how the progress they made in terms of Digital Economy and digital penetration. I'll turn to Doctor to present his view on this. Thank you.
>> PANELIST: Hello, everyone. In Brazil we have a unique reality in which over 4,000 small and medium ISPs compete with international telecom companies. Within CGI, not BR, the Brazilian Internet is still the Committee. We have developed several initiatives that we believe are helping SMEs grow and become more competitive. We offer qualification at no cost for ISPs to be upgraded to IPv6 so that they can stop relying on legacy systems and become future proof. Brazil is going to be a leader in IPv6 adopting in Latin America. CGI also provides free training regarding accessibility on the Web. Both to promote inclusion and to reach international markets aiming for SMEs to become popular with customer base that mainly major companies do not invest resources on. We host regular courses with free or reduced costs for security, especially in order to help the smaller business keep up with the latest trades under their provision. And they make customers safer on the Internet. I am personally very involved with protection activities in Brazil and I am a member of the ICANN business constituents.
As for ‑‑ SMEs have notably poor backup procedures and do not know ‑‑ cannot deal with that kind of threat. So I promote talks in which I make then Consensus of this incredibly damaging threat to business and teach there about ways to prevent and deal. Its particular aspect CGI as an extra department aiming at protecting system networks called certain BR. It assisted SMEs protect their commercial procedures and keep these procedures secured. As for the business constituents for quite some time I was its only Brazilian member and overall of two Latin American members. By doing direct outreach on technology events we have managed to bring in two new members just this past quarter with more to come.
So as you can see there is a lot that can be done. And we do out of that with .br resource. Provide civil entity that uses users ‑‑ how ‑‑ for the benefit of the Internet in Brazil. I represent SMEs at CGI and I am speaking from my experience. I know that I must play the role of standing up and offering voice and popular opinions. I am fine with that. As our SMEs should be because it is true that a lot of decisions are made with major companies in mind while we are often left in the second plan. We actively have defined spaces within trade associations. Class entities, alliance groups and anywhere else prevents sector decisions permit.
I don't mean just that for our individual sake but are either as community. Sticking together is the only way for us to have the size and string to compete with the bigger companies. Security, a hot topic, particularly in Developing Countries where we unfortunately have right indicators of malicious hacking. While attack on a bigger company has quite negative effects, for SMEs it can be business winning because the (?) is that much harder. Investing in second cybersecurity may not show obvious results like other investments but that ‑‑ but that is the point if you are safe. There are no things to handle and to report.
>> MODERATOR: Thank you. Now we turn to Dr. Phar and Mr. Donny. They are going to ‑‑ his opening talk about regulatory and how do we build trust in the Digital Age. And I think it is quite in a post with the sense of the market where trust is not really something there because of, you know, a different calculation. So Dr. Pharm will also talk about competitiveness in China with regard to Digital Economy. So it is time for Dr. Pharm.
>> PANELIST: (Speaking in a non‑English language). Good morning. It is my pleasure to share my opinion about the development about Internet, especially the giant Internet platform in the small‑medium enterprises and the relationship between them and how we corrupt each other is kind of very wicked in China.
In the past two decades the development of Internet in China can be seen as a history of small‑medium enterprises in China. In the past 20 decades for most Chinese companies if the market can trend to 1 million U.S. dollars it has become a dream, especially the advantage of the Chinese market because we all have the one million concurrent Internet users based on the new technology applications and the new usage. So it has become an advantage of the Internet market.
Now the situation has changed because of the joint Internet platforms in China, especially the ali baba. Now this big company has become a major player to play, to provide Internet infrastructures for the small‑medium enterprises.
And now the small and medium Enterprises including a new initiative and also the traditional companies, now they are closely related under service and structures provided by the three big giant Internet platforms company.
Now they are the major player in the market. So they know that the policymaker and they decide the rules that people have to follow. So it has also caused some power abuse in the market.
Now the problem is not only faced by China but also has a global problem. And now the major problems because of the how to do the governance of the giant Internet platforms and on one side we have to negotiate to each other to make this platform to be used collectively and effectively, but also in other ways we have to provide a kind of governance to prevent these companies to have kind of power builds.
Now the power abuse can be reflected in some cases especially under ‑‑ online payment, especially in China. This ‑‑ the case of Dr. Pharsing mentioned about pick one of the two. If you use the online payment that means you have to skip we chip online payment. In the most situation consumers only can pick one platform to do the online payment.
Although on‑time monopoly law exists for ten years but there is no effect of reinforcement in such cases. So the low ‑‑ the enforcements are quite poor and very weak in China currently.
If the governance of the Internet performed could not be effectively governance it means that could ‑‑ not a good environment for the small‑medium enterprises to provide the kind of competition and also in native environment for them to develop.
Okay. The monopoly of the big giant, the giant Internet platform, the situation is not faced only in China but also a global problem. So this problem should be negotiated from the kind of ‑‑ negotiated from a perspective of the global perspective to be negotiated from kind of a broad view. And this is my point of view. Thank you very much.
>> MODERATOR: Thank you Dr. Pharm for the presentations. So now I wish to go to Donny.
>> DONNY UTOYO: Good morning, Ladies and Gentlemen. First thank you to Mr. Kubali to keep promoting and telling the good news about Indonesia. And we believe when it comes to the global leader this is not fake news. This is the real news. Once the consulting mechanism from conducting research and analysis of 20 selected markets around the world and they found a paradox in Indonesia. On the one hand medicine in Indonesia is the most active on social media compared to other countries. And Indonesia also has an ecosystem, but on the other hand, Indonesia also faces challenges at least in two aspects regarding the small‑medium enterprise, ICT infrastructures. And two aspects is one of development of its telecommunication infrastructure that as we know Indonesia is a country with thousands of islands and with so so many challenges in the natural ecosystem aspect.
And the second aspect is about the digitalization of its business sector, especially for the small and medium enterprise or SMEs. Since the first challenge about the infrastructure already discussed by our head of Delegation and for the decision please allow me to deliver the second one. This is about small‑medium enterprises and there are 3.79 million of small‑medium enterprises in Indonesia that have taken advantage of the online platform in promoting or marketing its product. This amounts to around 8% of the total numbers of small‑medium enterprise in Indonesia which the total number of small and medium enterprise is around 59.2. Sorry, 59.2 million small‑medium enterprise. It has grown to 97.2% of the working population. 97.2% of the working population is work for the small and medium enterprise. Indonesia also contributed around 60.3% of the GDP. Therefore Indonesia started growing at least ‑‑ total 8 million small‑medium enterprise in 2019.
The challenge that exists in growing the number of small‑medium enterprises by encouraging them to adopt information technology, challenge not only on how to increase the accessibility to go online but also how to increase the capability of them. When talking about accessibility, of course, we should also recognize that most of the SMEs reside in the rural or village areas with limited connection as well as lack digital literacy.
On the capacity side, the key is on how to compete with foreign products that have floated in to the Indonesia marketplace. The fact is that the Chinese products make up more or less than 90% of the products that are sold or both in the Indonesian marketplace. 90% come from the Chinese product. 5% or 3% is from other countries and the other 5% comes from the national products. It is only very few of the national products being circulated in the marketplace in Indonesia. And that's why Indonesia is prioritizing the national product quality as well as human resource capacity.
So address the issues of SMS and e‑commerce, Indonesia has a roadmap. Our president last year just released the e‑commerce roadmap with the following five key points. One is about funding. The second is taxations. That is what Consumer Protections. Four is about education and human resources. Five, logistics. Six, communication infrastructures. Seven is about cybersecurity. And eight is about roadmap implementation management. And to strengthen the roadmap the coordinating ministry for economic affairs recently has formed three Working Groups. The three Working Groups include the trade ministry to focus on trade. The second the MCIT ministry, their focus on infrastructure for e‑commerce including the developing and ICT. And the Working Group on payments that include the Central Bank and the finance ministry who will focus on the payment system and tax.
And what about the potential of the online buyers in Indonesia? So before we try to delete first the potential of players of the small‑medium enterprise go to a market ‑‑ go to online, now what about online Indonesia. According to the last professor by the Indonesian ISP associations in 2016 there are 172.7 million users. If we consider e‑commerce as a technological innovation, then we try to employ the numbers with the innovation inventory, inventory of innovation division to understand how a new idea can be easily spread and adopted by society. If we target the segment of those who are in the early majority segment category which is 32% plus let me generate a segment which is also subject to percents. Then we will have a total target of potential online shopping customer is about 64% times 172.7 million, which is around 85 million people. 85 Internet users, Indonesia is potential numbers who will do online shopping.
Interestingly these calculated numbers is almost the same with the number of real online shoppers according to the Indonesia association. Based on a survey we have 84.2 million people that will already do the online shopping. But based on the survey also if the numbers of Internet users who shop online are quite large, but frequency remains small. Only 34.8% of online users have conducted with little frequency, maximum only one month. Or maybe once in two months. Why do they ‑‑ perception of flexibility and don't know how to deal with Internet matters. There are some challenges. Hopefully we can bring it up for discussion after this. Thank you.
>> MODERATOR: Thank you. We have the presentation by the panelists. Now I'd like to open question‑and‑answer sessions to be shared. Please state your name and organizations and to pose your questions among the panelists. Yes, sir.
>> PARTICIPANT: Thank you. My name is Juan. I'm with the telecom regulator in Colombia. Looking at the numbers that you were presenting awhile ago, we have some similarities. We are a Developing Country also. Out of four people we have one of them who doesn't have an Internet connection. So they cannot purchase online. The other three have an Internet connection but only one of them is purchasing online. The other two are not doing any e‑commerce transactions. One of the main reasons that we found out in a report that we have concluded this year is that the lack of trust of citizens on online purchase is refraining them from doing ‑‑ getting there. I heard Jovan talk about the trust and how Indonesia has worked in trust within the country. So I wanted to know if there is anything in particular that could be an example from Indonesia about how Government has promoted trust in the digital environment both for SMEs and also citizens so that probably we can take a look at it. Thank you.
>> MODERATOR: Thank you. Other two before going back to the panelists. None? I'd personally like to push my own questions and I invite any panelist that may respond to this. I think the irony of the progress of digital economies also means that potential expansion of automation where you are rendering all the jobs in economic sectors to promote or to digitalizations and you ‑‑ and you lose the jobs that are probably really needed by our people.
So I think, I quote here the report that was published by OACD, PricewaterhouseCoopers reported that 30% of jobs in OACD countries are at risk due to automations. So is this really what we do need for the digitalization of all sector of economies or there is an option either to defend the right and the interest of our own people rather than the machine? I think it goes to Jovan who want to push his point. And I think the others also can respond to that. Let's get to the first question to Mr. Donny.
>> DONNY UTOYO: Thank you for the question. Yes, the Indonesian Government actually noticed that in a ‑‑ among the Internet users Indonesia, the main challenges I don't want to say it is a problem but the main challenges, of course, always trust, doing online shopping, lack of security aspects or something like that. So actually the MCIT we now try to do at least two majors what we call the umbrella program. One is we, of course, try to promote using mainstream media, using the ‑‑ we call it public service announcements using televisions and radio. Now ongoing to develop and produce the promotion campaigns and material. So we will put it on the televisions, in radio, in magazine. And it is ‑‑ try to educate, try to advocate the peoples on what is the benefit of using the online shop and how to minimize the negative impact. And during the preparation of the content for promotions, actually we divided in to several what we call it the age. So for the younger, so the content will be like this. For the people with older, all the others they will meet several content, different content. So it is very segmented and content delivered to the public through the mainstream media.
But in the others, in the others way is we had a ‑‑ we call it a traditional performance. So in Indonesia there is thousands of traditional performance like using a puppet. And also international drama. So when we went to the village or the rural, we didn't use the mainstream media. We don't use the ‑‑ like the way that you can see in the big city. But we are using the traditional media with the puppet, with the ‑‑ with that traditional drama and something ‑‑ what we call it ‑‑ the funny performance. And when people enjoy the performance and actually they will invite representatives from the Government, from the MCIT to be in a performance. And they will ask what do you think about the organization, is it safe, is it good for the people. Then they deliver the method using the way that maybe it can be an example for others on this. So that's the way that we try to ensure people can absorb so much information with their way. Thank you.
>> MODERATOR: Thank you. Jovan.
>> PANELIST: Let me just add to this excellent story, I learned something new. Three years ago I was in Jakarta coming from Europe and there was unfortunately tragic terrorist attacks. And it was like a military zone and I came to Jakarta and unfortunately at that time there was a terrorist attack. Some people warned me not, don't go there. And there was no military forces on the states like you had in Paris. And then I heard one interesting anecdote which is really unique which impressed me so much that I wrote a blog post on that. That the point of the terrorist attack that basically the Minister called leading bloggers and social media people, he called them in the cafe and he said listen, you can write whatever you want. We have freedom of expression but try not to spread fear. Try to find something which is normal. Apparently the most trended at that time was especially among ladies about some special forces guide to standing on the corner on the street and about his shoes, something like this. And it was amazing how, first of all, you can do it with common sense. You don't need to impose and say okay, we will filter the excess. Just gather the people and engage them and call to their sense. Well, nowadays not so common sense and probably those small things can make a whole difference.
We always look for the grand policy, grand solution but small things especially coming from the high officials like Ministers and the other high officials.
Now under your question on jobs, well, this is ‑‑ this is the major, major issue. There are some estimates from 30 to 50% of jobs that may be disappearing. It is a big issue because the so‑called circle cycle where the jobs disappear and others reappear it is not working anymore because reappearance of the jobs is slower. People will get the money regardless of the fact that they work or not, which is a big issue because a job is an essential part of defining us as a human. It is not just we are getting income. In Developing Countries will create enough challenges like latest closure of the Addis factories which move their production in Germany to completely robize that industry. That based on cheap labor is now challenged by the robization of industry. And this is one of the issues which is so‑called known/unknown. We know that something is coming but we know very little how it is going to ‑‑ how it is going to develop. And I know as you know, Mohammed, we are based in Geneva and they are using this as their tag line of 100 years.
>> MODERATOR: Thank you. Would you like to respond to that on the issue of automations and what is happening in Brazil is truly affecting the online market or offline market actually certainly?
>> PANELIST: Okay. I will speak in Portuguese and Marc will make a translation for English. (Speaking in a non‑English language).
The keynote in Brazil is that a set of these different approaches were implemented to create trust within the market. So there is not only a burning tradition of relying on providers of security for websites of all kinds of all sizes but we have a legal framework which regulates how users interact on the Internet. On top of that several actions are carried out for this need for security. So by investing within the sector it has been created a culture that allowed Internet commercial to grow and particularly in the past Thanksgiving during the Black Friday we had a particularly expressive surge of e‑commerce that rivals that of Christmas. And so it is something that has been certainly working. So our advice in terms of how to proceed is to very much invest in security because that has been very trustworthy for Brazil.
>> MODERATOR: Thank you. Dr. Pharm, if you would like to respond to automation is digitalization.
>> PANELIST: I have found kind of a more optimistic, perspective view. Because I am from the development of the Digital Economy, it provides a more open aggressive opportunity in China. So especially in the Big Data and also the cloud ‑‑ cloud computing, it is also in the same time, in one hand ‑‑ on one hand if they reduce some job opportunity for some people but in the other way it opened more and more opportunities for the potential people. So the quick appointments from my point of view is that and now the potential problems governance from the monopoly and also this governance not only from the business sectors but also included from the Government's perspective.
>> MODERATOR: Thank you, Dr. Pharm. I think if we don't have any more questions, then we have reached the end of the session. I actually invite all panelists to say that personally I think that the ‑‑ to have another point of view. On behalf of the Ministry of Communication I would like to thank all the panelists for their interesting insight and meaningful contribution to the discussions and thanks for to the participants. Thank you very much.