Building a Connected Indonesia Through Digital Infrastructure and Connectivity

Indonesia is rapidly advancing toward a digital future, but 57 million of its citizens remain disconnected from the internet, according to Asosiasi Penyelenggara Jasa Internet Indonesia (APJII). That’s nearly 20% of the country’s population—people predominantly in regions like Sulawesi, Maluku, and Papua. This digital exclusion prevents millions from accessing vital services such as online education, telemedicine, and economic opportunities, compounding the gap between rural and urban areas. So, what factors contribute to this divide, and more importantly, how can Indonesia bridge it effectively? 

Indonesia’s digital landscape reveals a notable divide between urban and rural areas. Major cities like Jakarta and Surabaya are equipped to effectively leverage essential technologies such as e-commerce, telemedicine, and fintech. In contrast, rural areas face significant obstacles. According to data from Badan Pusat Statistik (BPS), around 5,000 villages in Indonesia lack any digital signal. Papua is the most severely impacted, with 38.12% of its territories identified as “blank spots” without internet access. In comparison, Java and Sumatra, the country’s most densely populated islands, experience minimal issues, with only 0.04% to 1.39% of their areas lacking digital infrastructure.  

This urban-rural gap is not only an issue of access but also one of inequality. Without digital connectivity, remote regions are disadvantaged in accessing essential services, from education to healthcare, while urban areas continue to thrive in a rapidly evolving digital economy. According to McKinsey, countries that close the digital divide can expect an annual GDP growth boost of up to 1.38%. For Indonesia, this means that closing this gap is not just a matter of infrastructure but a strategic imperative for national economic growth. 

A core solution to bridging the digital divide lies in expanding the physical infrastructure, particularly Base Transceiver Stations (BTS) and fiber optic (FO) networks. BTS towers are crucial for providing wireless communication, while fiber optics enable high-speed broadband. However, Indonesia’s geographic complexities, characterized by over 17,000 islands and diverse terrains, make the expansion of these networks costly and logistically challenging. 

Currently, fiber optic cables stretch across Indonesia’s major urban centers, but vast portions of rural Indonesia remain disconnected. Recognizing this, the government’s Palapa Ring project aimed to bring fiber optic networks to 514 districts and cities, but logistical and financial challenges have slowed its progress in the eastern regions of Indonesia. Utilization rates highlight these challenges: Palapa Ring West operates at 69%, while Central and East lag behind at 37.67% and 37.38%, respectively. With overall utilization averaging 50-60%, there is a clear need for strategies to optimize infrastructure and overcome barriers in remote areas. 

Further exacerbating these challenges is the high cost of building traditional infrastructure in remote areas. In 2015, the Ministry of Communication and Information Technology estimated that the Sulawesi, Maluku, Papua Cable System (SMPCS) project would cost approximately IDR 3.6 trillion to extend fiber optic coverage to these regions. The combination of difficult terrain and low population density makes such investments financially unsustainable for private telecom companies without significant government support.

Low-Earth Orbit (LEO) satellites present a viable alternative to traditional infrastructure for connecting Indonesia’s remote regions. LEO satellites orbit closer to the Earth than traditional geostationary satellites, providing faster and more reliable internet services. This technology can be particularly valuable for archipelagic countries like Indonesia, where the costs of laying fiber optic cables or building BTS towers across thousands of islands are costly and extremely difficult. 

Global player like SpaceX, with its Starlink project, have already demonstrated the feasibility of LEO satellites in connecting isolated areas. The Indonesian government has recognized this potential, collaborating with international satellite companies to deploy LEO satellites that could provide broadband coverage to regions currently inaccessible by terrestrial networks. According to the Ministry of Communication and Information, LEO satellites could reduce the digital gap in remote areas over the next decade, offering hope for millions who remain disconnected. 

The Indonesian government has enacted critical policy changes to accelerate digital infrastructure development, with Law No. 6 of 2023 focusing on optimizing existing infrastructure to enhance efficiency and reduce redundancies in network deployment. Rather than duplicating network assets, the law promotes collaboration between Internet Service Providers (ISPs) to leverage shared infrastructure such as towers, fiber optic cables, and data centers. 

This collaborative approach is especially crucial in regions like Papua and Maluku, where the high cost of building new infrastructure has historically impeded development. By prioritizing resource-sharing, the policy aims to make network expansion more financially feasible, lowering costs by up to 40%, according to government estimates. This saving can be redirected to further investments in extending digital connectivity, ensuring more inclusive and widespread access across the archipelago. 

Indonesia’s digital future hinges on a multi-faceted approach that combines infrastructure investment to expand BTS and fiber optic networks, innovative technologies like LEO satellites, and forward-thinking policies like Law No. 6 of 2023. By leveraging these recommendations, by leveraging these recommendations, Indonesia can bridge its digital divide and ensure that all citizens, from Jakarta to the most remote islands of Papua, are part of the country’s digital transformation, unlocking billions in economic growth and positioning itself as a leader in Southeast Asia’s digital economy. 

However, without decisive action, rural populations could fall further behind, exacerbating existing social and economic disparities. This would not only impact individuals and communities but could also hinder Indonesia’s long-term development goals, particularly its aspirations to become a digital economic powerhouse by 2045. 

This article is shorter and partial version of IBC’s “15 Rekomendasi Paket Kebijakan untuk Mendukung Agenda Pembangunan Presiden dan Wakil Presiden Indonesia 2024 – 2029”