Two sectors will become new mainstays in the future, namely technology in the health sector (healthtech) and technology in the education sector (edutech).
By
A PRASETYANTOKO
·5 minutes read
The good news of the successful testing of a potential COVID-19 vaccine by Pfizer and BioNTech with an effectiveness of 95 percent led a sharp drop in Zoom’s share price (The Economist, 21/11/2020). The news shows how we have become so dependent on technology during the COVID-19 pandemic. The discovery of a vaccine has the potential to reduce the performance of the technology sector. However, we will not return to the conditions in the pre-pandemic era. A few days later, Zoom’s shares rose again, although not to their highest level.
The “e-Conomy SEA 2020” report published by Google, Temasek and Bain & Company shows that since the COVID-19 pandemic, the use of digital services in the Southeast Asia region has jumped by 36 percent. Meanwhile in Indonesia, the growth is slightly higher, reaching 37 percent. In Singapore and Thailand, it is lower at 30 percent. Keep in mind, the population of Indonesia is 271 million people or 46 percent of the total population of the region. So, the increase has big implications in terms of the scale of the business.
In addition, in Indonesia, due to the COVID-19 pandemic, the number of new users in non-big city areas is higher, accounting for 56 percent compared with 44 percent in big cities. For a comparison, in Vietnam, the increase of the digital service users is dominated by big cities, which account for 74 percent. In Indonesia, the adoption of technology due to the pandemic is more inclusive because it involves more people outside the big cities.
The “e-Conomy SEA 2020” report also shows that 94 percent of respondents in the Southeast Asia region stated that they would still use technology services when the COVID-19 pandemic was over. A similar situation occurs in Indonesia, although the figure is slightly lower, namely 93 percent. It seems that the COVID-19 pandemic has changed the behavior of economic actors, who have adopted more technology than before the pandemic. This will certainly have implications for changes in the economic structure so that anticipation is needed in the form of policies that are oriented toward transformation.
Restoration and transformation
In his remarks at the opening of the 2020 FinTech Week on Wednesday (11/11), President Joko “Jokowi” Widodo said that the contribution of financial technology (fintech) to the distribution of financing had reached Rp 128.7 trillion (US$90.75 million), an increase of 113 percent compared with the previous year. This annual event which lasted for two weeks, was held to synergize efforts to accelerate economic recovery through technology adoption.
Previously, the Financial Services Authority (OJK) announced the results of the 2019 National Financial Literacy Survey, which showed a financial literacy index of 38.03 percent and a financial inclusion index of 76.19 percent. This figure has increased compared with the 2016 OJK survey, in which the financial literacy index, and the financial inclusion index, reached 29.7 percent, and 67.8 percent, respectively. Despite the increase, we still lag behind our neighbors. Singapore has reached 98 percent, Malaysia 85 percent and Thailand 82 percent. The government has set a target to further increase Indonesia\'s financial inclusion index in 2024 to 90 percent.
It is quite feasible that the targeted financial inclusion index can be achieved, but it is necessary to further improve financial literacy.
High inclusion rates with relatively low literacy indicates a high potential risk. This arises because even though the public has access to finance, they actually do not really understand the functions and risks.
Increasing literacy is the key so that the increase in the inclusion index can bring about a more productive impact with minimal risk. If the balance between function and risk can be achieved, the main goal of digital financial (economic) development will be optimal, namely to encourage growth with manageable risks. It is impossible to avoid an increase in risk, but we must know how to anticipate and mitigate it.
The role of technology in various economic sectors, particularly finance, has raised our hopes for an acceleration of economic recovery and its transformation. Finance Ministry data show that fintech has played an important role in the distribution of social assistance, especially in the pre-employment card program. About 670,000 pre-employment card recipients previously did not have bank accounts. Of the pre-employment card recipients who did not have access to finance, 76 percent held electronic wallets rather than bank accounts
The fintech sector is also an important distribution partner in increasing the sales of government bonds. In the sale of the ORI 16 retail bonds, the distribution conducted through fintech accounted for only 7.8 percent, but in the sales of the ORI 17 retail bonds, it increased to 11.9 percent. In general, sales through fintech were small in value so that they were more inclusive. The buyers included novice investors, who are generally millennials.
The COVID-19 pandemic has brought about many changes, from fundamental to behavioral. It seems that, in general, the technology will become more dominant in everyday life, especially in economic activities. In Indonesia, before the pandemic, people spent 3.6 hours a day surfing the internet for personal (not work) purposes. This increased to 4.7 hours per day at the time of the pandemic and to around 4.3 hours during the post-pandemic period.
The e-Conomy data also shows that in the midst of a pandemic, the digital economy in Indonesia has grown by over 11 percent, while in many other countries it has only grown by around 6 percent. Two sectors will become new mainstays in the future, namely technology in the health sector (healthtech) and technology in the education sector (edutech).
It seems that Indonesia needs to move more quickly to facilitate the development of these growing sectors along with the efforts to improve literacy. If the people’s literacy improves, the digital economy in Indonesia will achieve momentum in the post-pandemic period. That is one of the essentials of economic transformation: we are not returning to the old ways before the pandemic.
A. Prasetyantoko, Rector of Atma Jaya Catholic University (Unika Atma Jaya)