Indonesia’s Digital Economy Is Maturing. The Next Opportunity Lies Beyond Connectivity

East Ventures’ Digital Competitiveness Index 2026 shows digital readiness improving across Indonesia, but argues the country’s next phase of growth will depend on AI talent, MSME digitalization, and turning infrastructure into economic value.

Indonesia’s digital transformation is entering a new phase. After years of expanding internet access, mobile connectivity, and digital infrastructure, the country’s next challenge is no longer simply getting more people online. Instead, it is ensuring that digital readiness translates into higher productivity, stronger entrepreneurship, quality employment, and broader economic growth.

That is the central finding of the East Ventures–Digital Competitiveness Index (EV-DCI) 2026, released by venture capital firm East Ventures in collaboration with Katadata Insight Center. The report, which measures digital competitiveness across Indonesia’s 38 provinces and 157 cities and regencies, shows that the country’s digital capabilities continue to improve, even as significant regional disparities remain.

Indonesia’s national EV-DCI score rose to 42.2 in 2026, up from 38.8 in 2025, extending a steady upward trajectory from 38.1 in 2024, 37.8 in 2023, and 35.2 in 2022. Since the index was first introduced in 2020, the average provincial score has increased by more than 50%, highlighting sustained progress in the country’s digital development. The report also found that 37 of Indonesia’s 38 provinces improved their scores this year, reflecting continued expansion of digital infrastructure and adoption across the archipelago. Yet the report argues that digital connectivity alone is no longer the defining measure of competitiveness.

From digital adoption to digital value creation

The EV-DCI 2026 marks a shift in emphasis from measuring digital access to evaluating how digital capabilities contribute to national development. According to the report, digital technologies are becoming increasingly embedded in Indonesia’s economy and public services, with National Priority Programs integrating digital platforms into their implementation. As these initiatives expand, the challenge is evolving from expanding digital adoption to ensuring digital infrastructure generates measurable economic and social outcomes.

Willson Cuaca, Co-Founder and Managing Partner at East Ventures, told AsiaTechDaily that Indonesia has reached a stage where digital infrastructure should begin delivering broader economic returns.

“With our digital access now well distributed, Indonesia’s competitive advantage lies in our willingness to drive efficiency across data collection, an integrated platform to process the data, and trustworthy information distribution. By integrating these capabilities with national programs, we can seamlessly execute well-planned national programs, monitor in real time, and iterate quickly to adapt to bottom-up issues. This will turn digital infrastructure into a tangible, digital dividend for all.”

His comments reflect the report’s broader argument that infrastructure investments must increasingly support productivity, entrepreneurship, and better public service delivery rather than simply improving connectivity.

The latest index suggests Indonesia’s digital competitiveness continues to improve geographically, although progress remains uneven. DKI Jakarta retained its position as the country’s most digitally competitive province for the sixth consecutive year, followed by West Java. They were joined in the top ten by East Java, Banten, DI Yogyakarta, East Kalimantan, Bali, Central Java, Riau Islands, and South Sulawesi.

One of the report’s notable developments was Southwest Papua, which recorded the largest improvement, climbing 15 places in the provincial rankings. According to the report, the improvement was largely driven by stronger digital infrastructure, particularly the expansion of 4G-connected villages, alongside gains in entrepreneurship and productivity indicators such as internet usage for social commerce.

Despite these improvements, the report cautions that Indonesia’s regional digital divide remains substantial. The gap between the highest-ranked and lowest-ranked provinces still approaches 60 points, suggesting that while digital infrastructure is expanding nationwide, regions continue to differ significantly in their ability to translate digital readiness into economic competitiveness.

AI talent is emerging as the next competitive advantage

Beyond connectivity, EV-DCI 2026 identifies digital talent as one of Indonesia’s most pressing priorities. The report notes that although digital skills have improved over recent years, the pace of talent development has begun to moderate just as artificial intelligence is reshaping workforce requirements. Rather than focusing solely on basic digital literacy, businesses increasingly require professionals capable of integrating AI into products, business processes, and public services.

The report also highlights Indonesia’s expanding digital infrastructure, including projected growth in data center capacity. However, it argues that infrastructure alone will not determine competitiveness. Realizing the full economic value of these investments will require AI-ready talent, stronger data governance, and regulatory frameworks that encourage innovation while supporting productivity growth.

This reflects a broader trend across Southeast Asia, where governments and businesses are increasingly investing in AI capabilities as digital transformation enters a more advanced stage.

A new benchmark for Indonesia’s digital economy

Based on its findings, the EV-DCI 2026 identifies four areas that should shape Indonesia’s digital development agenda:

• Strengthening collaboration among government, industry, startups, academia, and local communities to accelerate digital transformation.
• Expanding high-quality and affordable connectivity to reduce regional disparities and improve digital inclusion.
• Accelerating MSME digitalization by improving access to technology, financing, and digital markets.
• Building an AI-ready workforce through upskilling, workforce development, and stronger AI competencies.

Together, these priorities reflect a shift from expanding digital infrastructure toward improving how digital technologies contribute to economic competitiveness and inclusive growth.

Since its inaugural edition in 2020, the EV-DCI has tracked Indonesia’s progress in building a digitally competitive economy. The 2026 edition suggests the country has moved beyond the initial phase of expanding access and is entering a more complex stage where productivity, innovation, and human capital will increasingly determine long-term success.

For Indonesia’s startup ecosystem, the findings reinforce that future opportunities may lie less in expanding digital access itself and more in helping businesses, governments, and communities derive greater value from existing digital infrastructure. As AI adoption accelerates and investments in digital infrastructure continue, the country’s competitive advantage will likely depend not only on how well connected it is, but on how effectively it converts that connectivity into innovation, entrepreneurship, and sustainable economic growth.

Quick Takeaways

• Indonesia’s digital competitiveness continues to improve. The EV-DCI 2026 score increased to 42.2, up from 38.8 in 2025, with 37 of 38 provinces recording year-on-year improvements.
• The country’s digital priorities are evolving. According to the report, Indonesia’s next phase of digital transformation is less about expanding connectivity and more about translating digital readiness into productivity, entrepreneurship, and economic value.
• Regional disparities remain a challenge. While DKI Jakarta and West Java continue to lead the rankings, the nearly 60-point gap between the highest- and lowest-ranked provinces highlights persistent inequalities in digital competitiveness.
• AI-ready talent is emerging as a strategic priority. The report emphasizes that developing advanced digital and AI skills will be essential to maximize the benefits of expanding digital infrastructure and growing data center investments.
• MSME digitalization remains central to inclusive growth. Accelerating the adoption of digital technologies among Indonesia’s small businesses is seen as a key driver of financial inclusion, productivity, and regional economic development.
• Collaboration will shape the next phase of digital growth. The report calls for stronger cooperation between government, the private sector, startups, academia, and local communities to build a more competitive and inclusive digital economy.