Indonesia is at a turning point—a story of struggle poised to become one of triumph. Developing an ideal smart city requires striking a balance between the rapid economic growth seen in China and the democratic, participatory values of Western countries. This vision aligns with President Prabowo’s goal for Indonesia to become a high-income country by 2045. According to Finance Minister Sri Mulyani, this ambitious target will require economic growth of 6-8% annually. To reach this goal, Indonesia’s smart cities must be technologically advanced, inclusive, and democratic to uplift all its citizens.
From the ashes of rapid deindustrialization and economic challenges, a new narrative can emerge—one of transformation through technology and empowerment. Here’s how Indonesia could build a smart city model that embodies this potential ‘rags to riches’ journey:
1. Prioritize Inclusive Economic Growth
The path to success starts with uplifting all citizens. The smart city should focus on creating quality jobs, especially in the technology and innovation sectors. Incentives and infrastructure support must be provided to small and medium enterprises (SMEs) and startups to thrive. The contribution of SMEs to Indonesia’s GDP is immense. According to data from the Ministry of Cooperatives and SMEs in 2022, SMEs contributed 60.5% to the national Gross Domestic Product (GDP), and there were 65.47 million SME units across the country.
This growth is particularly crucial now, as Indonesia is experiencing rapid deindustrialization due to new technologies such as AI and automation. Ensuring better access to public services like healthcare, education, and transportation is fundamental to fostering inclusivity. Access to essential services allows individuals to improve their quality of life, participate in the economy, and contribute to overall productivity, which ultimately helps mitigate the negative effects of deindustrialization. In the pursuit of inclusive economic growth, no one should be left behind.
2. Wisely Integrate Technology
For Indonesia, adopting the right technology is a way out of the challenges that have held the nation back. Smart city initiatives must focus on practical, relevant technologies that fit Indonesia’s unique needs—avoiding the hype and embracing what works. Privacy protection should be a priority, and strong regulations must safeguard citizen data.
The government must also empower its citizens through massive digital literacy campaigns that are simple and engaging. A gamification approach could be an effective alternative, making learning fun and accessible on popular platforms like TikTok and WhatsApp. With the right tools, Indonesia can transform technological advancements into opportunities for everyone.
3. Encourage Public Participation
True success is shared success, and the road to a smart city must involve everyone. Public involvement is crucial in planning and decision-making. This means holding open consultations and making sure every voice is heard. Informal leaders—religious figures, traditional leaders, and social media influencers—should be engaged to make sure programs are effective, meet community needs, and contribute to economic growth.
To ensure high levels of public participation, popular platforms like TikTok and WhatsApp must be leveraged. With Generative AI, these platforms can facilitate personalized and scalable interactions that help connect citizens directly to smart city initiatives.
4. Balance Technological Growth with Democratic Values
Growth at any cost is not true success. Transparency and accountability must lie at the heart of every smart city initiative. The government can leverage blockchain technology, which ensures transparency, data security, and resilience against cyberattacks. This approach aligns with President Prabowo’s commitment to eradicating corruption and protecting digital rights, including freedom of expression and access to information.
Examples from around the world highlight the risks and challenges associated with surveillance technologies. In San Francisco, the city became the first in the United States to ban the use of facial recognition technology by police and government agencies due to concerns about potential misuse for mass surveillance, discrimination, and privacy violations. The lack of transparency in how data was collected, stored, and used, along with limited public control over the technology, led to public protests and demands for change.
Similarly, the Sidewalk Labs project in Toronto, proposed by Alphabet’s subsidiary, promised numerous technological innovations, including sensors for air quality and traffic monitoring, and an automated waste management system. However, the project faced significant criticism due to a lack of transparency regarding data collection and use, raising fears that personal data could be exploited for commercial purposes or abused. The project was ultimately canceled in 2020 following strong public opposition.
The risks are real—without proper management, data collection could lead to tyranny, terror, and a lack of public trust. Other potential challenges include the digital divide, which could leave segments of the population without access to smart city benefits, cybersecurity threats that could compromise sensitive data and disrupt services, and the need for a skilled workforce capable of managing and sustaining advanced technologies. Indonesia must tread carefully, ensuring that technological progress does not come at the expense of individual freedoms.
5. Local Adaptation and Innovation
Indonesia’s journey must be its own. Learning from international models is beneficial, but true success comes from adapting these models to local realities. For instance, Jakarta can learn from Singapore’s efficient transportation systems but adapt them to fit local infrastructure and cultural contexts. Reducing traffic congestion requires more than infrastructure; it requires shifting cultural perceptions—changing the mindset that owning a private vehicle is a symbol of success and social status.
Local innovation is key. In cities like Yogyakarta, integrating traditional community values like gotong royong (mutual cooperation) into smart city initiatives helps foster community involvement and ensures that growth is rooted in local culture.
6. Build Resilience Against Natural Disasters
Indonesia’s vulnerability to natural disasters makes resilience a critical part of its smart city story. From early warning systems to disaster preparedness and climate change adaptation, resilience measures are crucial for safeguarding citizens and ensuring public services continue during crises. The government needs to encourage and provide incentives for local startups and relevant foreign technologies to tackle these challenges. The biggest current threat is the potential megathrust earthquake that could trigger a tsunami, and preparing for such threats is vital.
Information related to disasters must also be communicated in innovative and relevant ways, considering the low literacy levels and limited risk mitigation capabilities among some segments of the population. This means utilizing visual and easy-to-understand formats, leveraging popular platforms, and working closely with community leaders to ensure the message reaches everyone effectively.
Incorporating these elements into smart city planning will help mitigate disaster impacts and ensure communities remain strong and united.
7. Existing Regulations and Proposed Incentives
Indonesia already has some foundational regulations to support smart city development. Presidential Regulation No. 95 of 2018 on Electronic-Based Government Systems aims to accelerate the implementation of digital governance to improve public services, while Presidential Instruction No. 3 of 2003 provides guidelines for developing e-Government to enhance government efficiency and transparency. These regulations are an important starting point, but more comprehensive frameworks are needed to make the dream of smart cities a reality.
To motivate regional leaders to develop smart cities, fiscal incentives such as grants, tax reductions, and ease of permits must be introduced. Non-fiscal incentives, including awards, capacity-building programs, and technical support, will further boost smart city initiatives.
Countries like Singapore, South Korea, and the UAE provide valuable insights into effective smart city development. Singapore has established a comprehensive regulatory framework that encourages technological innovation through its Smart Nation Initiative, regulatory sandboxes, and substantial investments in digital infrastructure. Public-private partnerships further bolster smart city projects, demonstrating how a balanced approach to regulation and collaboration can drive progress.
South Korea’s U-City Project, along with its R&D support and tax incentives, showcases the importance of government involvement in fostering technological advancement. The UAE’s Smart Dubai Initiative, Dubai Data Law, and Dubai Blockchain Strategy underline the role of ambitious visions, strong data governance, and technology integration in creating thriving smart cities.
The new capital city, IKN, could potentially serve as a sandbox and benchmark to inspire other regional leaders. IKN can demonstrate successful partnerships, funding mechanisms, and the implementation of new technologies relevant to Indonesia, and act as a proof-of-concept (POC) center for smart city startups. By building an integrated support ecosystem, IKN can be a model for how to create sustainable and innovative urban solutions. With regional autonomy, local leaders play a vital role in demonstrating commitment to smart city development. Their dedication can turn struggling regions into thriving examples of progress and innovation.
Specific regulations that are still needed include:
- Setting clear standards for smart city implementation.
- Structuring the incentive distribution mechanism.
- Ensuring privacy and data protection.
- Mandating public participation in all planning and development stages.
Conclusion
Indonesia’s journey from adversity to prosperity in smart city development could depend on thoughtful incentives, clear regulations, the right technology, and effective risk management. With strong support and a structured regulatory framework, regional leaders could be motivated to create cities that are not only advanced in technology but also sustainable, inclusive, and democratic—ultimately aiming to build a brighter future for every citizen in Indonesia.