Unlocking Business Opportunities in Indonesia’s Smart Cities

As Indonesia aims to develop 100 smart cities by 2045, the country is expected to generate an influx of business opportunities to bolster ongoing efforts.

November 2021 , by YCPS Marketing & Communication Group

In line with the trend of rapid technological advancement, many countries within Asia have begun to develop smart cities – a process which refers to cities’ integration of Internet of Things (IoT) devices or information and communications technology (ICT) for overall improvement in terms of efficiency, cost, quality, etc. One such country which has proactively advocated for this type of development is Indonesia. As early as 2013, Indonesia piloted a Smart City program. In 2017, the government officially launched the “Movement Towards 100 Smart Cities,” an initiative that aims to fully develop 100 Indonesian smart cities by 2045. While this venture is largely for the benefit of Indonesian citizens, it also presents equally beneficial opportunities for businesses situated within the country.  

To understand further how the development of smart cities are benefitting citizens and businesses alike, read this excerpt from our latest white paper, Can Indonesia Achieve ‘100 Smart Cities’ by 2045?, which you can read and access in full here

Ideal Collaboration in Smart Cities 
When attempting to fully utilize the potential that smart cities can bring about, collaboration in must be the foremost priority among involved parties. Multifaceted collaboration in several regards, namely, the following has been essential in Indonesia implementation: 

Role of Technological Advancement  
Synonymous with the term ‘connective cities,’ smart cities naturally entail a substantial dependence on technology and related digital solutions to improve a city’s overall well-being. Further, by relying on technological advancement, smart cities will also be able to tackle problems relating to urbanization. 

The adoption of technology for smart cities are predicted to generate significant impact in three primary methods, specifically, integrated sensors, security and public safety, and data collection and IoT. The implementation of digital solution in these areas may result in these advantages: 

Placing an emphasis on the role of technological advancement in the development of smart cities will create an influx of activity from foreign and domestic enterprises who are keen to capitalize on the promising business opportunities. More importantly, the public’s day-to-day living and quality of life will improve drastically both in the present and future. 

Drivers and Barriers for Smart City Development  
To sustain the mission of developing smart cities, Indonesia have identified several primary areas that will drive growth. Indonesia will look to leverage its technology engaged population and high volume of start-ups, while further bolstering efforts through national to municipal government initiatives.  

As it stands, Indonesia’s emerging economy currently has 2,209 start-ups operating within the country, and by 2024 the Indonesia Ministry of Research Technology is forecasting a total of 4,500. Moreover, the Indonesian government is planning to invest heavily in infrastructure wherein a budget of approximately 400 billion USD will be spent across several projects. Examples of national to municipal governmental expenditure and support can already be seen in initiatives such as the Strategic National Project (SNP), and West Java’s provincial government adoption of the smart cities developmental plan. 

While these figures are promising indicators that Indonesia is well on its way to achieving the goals set forth in the “Movement Towards 100 Smart Cities” initiative, the country is proceeding cautiously as there are still barriers to development. Specifically, in terms of governmental planning, issues such as surface level regulation for smart city plans and inadequate social coordination (e.g., educating the public on practical and direct benefits) must be addressed. In addition, close attention should also be paid to execution, especially in maintaining sustainable implementation and addressing possible data security concerns amid transitions toward smart cities.  

Building on Successful Smart City Development 
Indonesia will hope to replicate and use the successful transitions of Jakarta and Bandung toward smart cities as a blueprint. As Indonesia’s capital city, smart city development in Jakarta has manifested in several ways. For example, the city has created a mobile application named JAKI wherein citizens can freely access public information and service. Other initiatives include the installation of CCTVs and traffic lights with ACTS capability across main roads, integration of e-commerce and unicorn startups to boost Smart Economy, and the creation of Jakarta Smart City, a body dedicated to ensuring successful implementation of the smart city.  

In Bandung, smart cities technology can be seen in the creation of a command center which monitors major city operations, or even in the improvement of public infrastructure via the implementation of smart parking and a bike-sharing system. Projects aimed at empowering citizens have also been initiated as evidenced by the construction of a creative hub and MSMEs (Micro, Small and Medium Enterprise) center. 

Moving forward, as Indonesia continues to push for the development of smart cities throughout the country, business opportunities across a variety of markets and sectors will arise. As the goal of successfully transitioning concerns the government, citizens, and private enterprises, these business opportunities will be widely available to many. In the coming years, it is precisely this collaborative effort among stakeholders which will determine the success of smart city development in Indonesia. 

Read other insights

See All Insights

Stay ahead in the rapidly changing Asia. Subscribe to our latest insights.