Indonesia's Digitalization: Boosting Government Benefits

Published Date: 26/07/2024

Indonesia's successful digitization of government assistance programs has led to poverty reduction, offering valuable lessons for other countries.

"Indonesia has made significant strides in digitizing its government assistance programs, resulting in a remarkable reduction in poverty. According to a report by the Lowy Institute, the country's experience offers crucial lessons for other nations seeking to increase inclusion and reduce poverty. The report, 'Digitising the social safety net  Lessons from Indonesia', highlights the importance of incorporating digital ID and data analytics to improve the performance of public welfare.

In Indonesia, social assistance programs such as subsidies for energy and food have developed in tandem with the national ID program. The government required identification documents to enroll in social assistance programs, which encouraged individuals to obtain national IDs. The expansion of national IDs and digital financial services has paved the way for better digitized social safety nets.

Digital ID databases, electronic and biometric identification, and data analytics ensure that assistance reaches the intended beneficiaries of social programs while reducing the risks of fraud. Indonesia drew inspiration from India's Aadhaar system and received development support from partners like Australia and the World Bank.

Between 2018 and 2019, Indonesia piloted a biometric authentication system using fingerprint and face recognition, as well as a digital ID program to distribute cooking gas subsidies. The goal of the pilot is to transition from subsidizing goods to providing funds directly to beneficiaries. In 2023, the country began verifying beneficiary data to distribute cooking gas subsidies, and in the following year, it introduced a digital beneficiary logbook.

To allow beneficiaries to choose how to receive assistance, the government is promoting the inclusion of financial institutions such as banks and fintechs through an 'advanced digital disbursement system roadmap' – Indonesia Government-to-Person (G2P) Payment 4.0.

However, the report also warns that frequent data breaches pose a risk to beneficiaries and digitized welfare programs. Strengthening cybersecurity and data protection is crucial to mitigate these risks.

Indonesia has also launched a new platform called INA Digital, offering access to public services such as driver's licenses, healthcare, education, social aid, and more. The government plans to launch a digital ID system for accessing public services as part of its digital transformation agenda.

Recently, the Ministry of Communications announced it was working on regulating data collection for digital IDs, and the country has issued a call for companies providing consulting services in digital ID, electronic know-your-customer (e-KYC), biometrics, and data exchange to support its digital identification project.

  information 

The Lowy Institute is an independent international policy think tank based in Sydney, Australia, that conducts research and analysis on global issues.

The World Bank is an international financial institution that provides loans and other financial services to its member countries to promote economic development and reduce poverty.

Keywords tags  digital government, digital identity, financial inclusion, Indonesia, national ID, social protection"

FAQs:

"Q: What is the Lowy Institute?

A: The Lowy Institute is an independent international policy think tank based in Sydney, Australia, that conducts research and analysis on global issues.

Q: What is the purpose of Indonesia's digital ID program?

A: The purpose of Indonesia's digital ID program is to distribute government benefits directly to beneficiaries, reducing fraud and increasing efficiency.

Q: What is INA Digital?

A: INA Digital is a new platform launched by the Indonesian government, offering access to public services such as driver's licenses, healthcare, education, social aid, and more.

Q: What is the significance of Indonesia's digitalization of government benefits?

A: Indonesia's digitalization of government benefits has led to a reduction in poverty and offers valuable lessons for other countries seeking to increase inclusion and reduce poverty.

Q: What is the role of biometric authentication in Indonesia's digital ID program?

A: Biometric authentication, including fingerprint and face recognition, is used to verify the identities of beneficiaries and ensure that assistance reaches the intended recipients."

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