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Rural and Urban Transformation in Indonesia

Dec 30, 202312 min read

Original research and draft by Andhika Giri Persada and Ryan Febriansyah — 29 October 2023

Rural Transformation: What It Looks Like

Rural digital transformation denotes the process of incorporating digital technologies and innovations into rural areas to attain economic advantages and enhance social development within a given region. This undertaking typically entails the integration of information and communication technology (ICT) into agricultural fields and small to medium enterprises (SMEs) in rural areas, in conjunction with collaborative efforts within rural communities (Wang, 2022).

In Indonesia, numerous studies indicate that certain villages or rural areas have already embraced and integrated the use of digital technology. Particularly noteworthy instances have arisen from rural agricultural regions such as West Java Province, which has undergone significant structural information changes (Fahmi & Mendrofa, 2023). The presence of ICTs since 2003, along with wired telephones, public phone booths, and extensive national television broadcasting, has elevated the likelihood of digital transformation within villages, resulting in an economic shift from agriculture to non-agricultural sectors. Additionally, improved infrastructure and facilities in these villages encourage enhanced connectivity, fostering high mobilization and expanding opportunities into non-agricultural domains (Fahmi & Mendrofa, 2023).

Conversely, cities like Surabaya and Jakarta, equipped with established internet infrastructure and better access to digital technologies, are no longer experiencing the direct effectiveness of digital transformation. Instead, they are positioned for further development of ICT, as these cities had previously adopted ICT to support and expedite their economic development (Fahmi & Mendrofa, 2023). Surprisingly, the impacts of digital transformation in these cities seem to be associated more with negative consequences.

Another illustrative example from Indonesia highlights the implications of digital transformation on people’s behavior during the COVID-19 pandemic. Individuals residing outside Jakarta, lacking accessibility to ICT platforms and online services, find themselves compelled to meet their basic needs through outdoor activities and travel (Rizki et al., 2023). Conversely, individuals with exposure to ICT tend to reduce outdoor activities, engage in remote work, and fulfill their needs online, including ordering food, purchasing groceries, seeking entertainment, and pursuing educational endeavors.

A compelling case underscoring the positive outcomes of digital transformation involves two forest communities in East Java Province. These communities successfully underwent digital transformation, resulting in positive indicators, such as a shift in individual mindset towards rationality, increased income, enhanced satisfaction, openness to new ideas facilitated by internet access, and heightened interest in technology among the younger generation, thereby bridging generational gaps (Mazya et al., 2023). The success of this digital transformation can be attributed to the significance of the internet and the community’s proficiency in leveraging social media platforms.

Development of Urban Transformation

Urban digital transformation is the process of employing digital technologies, including the Internet of Things (IoT), cloud computing, artificial intelligence, and big data analytics, in an integrated and interconnected manner to create smart cities that provide value and innovation to their residents. This transformation is recognized for its potential to bring about positive changes, enhance the quality of life, and bolster resilience in cities, enabling them to recover effectively during crises, such as the COVID-19 pandemic (Liu et al., 2022).

In Indonesia, a notable example during the COVID-19 pandemic is Jakarta, which successfully utilized ICT applications. Applications like Jaki, equipped with features such as “Jejak,” facilitated the tracing and examination of individuals affected by the disease, consolidating crucial information and data. Jakarta emerged as a pioneer for other regions in the country, illustrating effective strategies for handling and mitigating risks through the deployment of ICT applications (Rachmawati et al., 2021).

Another successful instance of digital transformation in Indonesia pertains to land services handled by the government. The digital transformation has become the primary vision to streamline manual processes into digital workflows. Through the use of mobile applications, government staff involved in land services gained new perspectives on leadership, governance, and digital skills, incorporating learning technologies, blended learning, and distance learning. While offering numerous advantages, this transformation also raises considerations about data infrastructure, particularly in managing security and data concerns, prompting future discussions on regulation and improvements in these areas (Kusmiarto et al., 2021).

Jabar Digital Service (JDS) has been identified as successfully undergoing digital transformation, creating broader job opportunities, such as roles for UX researchers and data analysts. This success is attributed to the agency’s adept use of digital technology and unique strategies, including the employment of young professionals, competitive salary offerings, fostering a less bureaucratic working environment, and adopting a more agile approach. Despite these advantages, challenges persist in ensuring transparency and effectiveness in the digital transformation process within megacities.

A significant challenge lies in formal education, where there is a need to establish curricula that equip the younger generation with advanced digital skills, a comprehensive understanding of digital literacy, and the requisite skills for the evolving digital landscape. The current education system in Indonesia does not align with prevailing digital trends and industrial needs (Smeru, 2022). Additionally, a shortage of qualified personnel to teach and guide the younger generation in digital skills is evident, with existing courses often incurring high costs for participation. Improving awareness of digital security, encompassing data privacy and protection is crucial for fostering citizens’ trust in the government and is deemed an essential element in the creation of smart cities (Wicaksono, 2023).

Comparison Between Urban and Rural Transformation

Upon thorough examination and analysis of the preceding descriptions and explanations regarding the implications of digital transformation in both rural and urban sectors, We can conclude and to present a conclusive summary and delineate the key insights, as depicted in the ensuing tabular representation:

ComponentsRural AreaUrban Area
Digital Transformation OutcomesIncrease economic advantage, nurture new skills and social developmentImprove the quality of life and their resilience, creating smart cities, risk management when there’s a disaster happens
Usage of Digital TechnologyInternet (most significances), wired telephones, broadcasting television, social mediaAdvanced digital technology such as: AI-based applications, big data analytics, integration of IoT-based for smart city
SatisfactionSatisfiedLess satisfied
SecurityThere’s no indication that people who lived on rural area have an awareness or raise a concern related to their data securityMost of the people began to aware and raise a concern regarding their security matters – especially for privatization
SocialChanges. Become more rational, embrace with new things and have a different way of thinking (experiment something to sell their products)Changes. As the people may be aware about the competitiveness of digital skills, they all have a tendency to upgrade their competencies periodically – become agile. Very sensitive and perceptive towards information since it was spreading widely
EconomyUnlocks new job opportunitiesUnlocks new job opportunities
ChallengesNeed better ICT infrastructure and supporting communities to fully leverage the benefits of digital technology. Need awareness as may people doesn’t have a digital literacyProper investments. Transparency of ICT, clear guidelines and having a same perspective about what is digital transformation

The most notable distinctions between rural and urban digital transformations lie in the key components influencing people’s behaviors and the resulting satisfaction. In both urban and rural contexts, behavioral changes in response to these transformations are evident. However, a notable difference is observed: urban dwellers exhibit a heightened perceptiveness by actively seeking information through social networks (Rouli, 2021). Conversely, individuals in rural areas undergo shifts in their thinking, becoming more rational and open to new ideas. This transformation is facilitated by the widespread usage of the internet, simplifying the process of acquiring and seeking information.

Regarding individual satisfaction, research conducted by Fahmi and Mendrofa (2023) highlights that in areas such as the Greater Yogyakarta, Jakarta, and Surabaya, the impact of digital transformation on satisfaction is less significant compared to villages undergoing transformation. While the research doesn’t definitively explain this discrepancy, a hypothesis emerges suggesting that, due to the integration of ICT into daily life in these cities, the societal impact of digital transformation may not be as keenly felt.

Furthermore, the emergence of new job opportunities is a common outcome in both rural and urban settings. However, the nature of these opportunities differs. In rural areas, economic shifts lead to the opening of new jobs and economic diversification (Mayza, 2023). Conversely, in urban areas, the dynamic changes in digital skills and the array of digital tools create new job opportunities that did not exist before.

Integration with Fully-Synchronized State

Stay Current with Updated Trends

As explained in the concept of the fully-synchronized concept, a correlation was identified between addressing risks during the fully-synchronized stage and the concepts discussed in the preceding section of this article. To remain updated, rural and urban areas undergoing digital transformation adopt different approaches. The following conclusions can be drawn:

  1. In rural areas, the approach revolves around prioritizing rural communities before integrating them into other startups. This is evident in two examples: agricultural changes and forest communities. These communities share the common goal of strengthening and benefiting their villages, promoting their products through social media. In some cases, established communities form partnerships with startups, such as Dagangan, to support and enhance their products (Dagangan, 2022).
  2. In urban areas, where the majority already fully embraces and utilizes digital technology, individuals stay updated with digital trends by independently seeking the information they need. Their perception is that they have adequate and unlimited access to information. Additionally, urban dwellers tend to upgrade their skills to remain competitive in the market or work industry, despite facing challenges such as insufficient knowledge and resources, as mentioned by Smeru (2022).

Digital Re-organization

Given that digital re-organization has evolved from serving as an enabler to becoming the foundational element of business models, this transformation is predominantly observed in urban sectors. Various phenomena indicate that almost everything can now be digitized, allowing startups that previously lacked such capabilities to envision and implement digitization.

This shift in technology’s purpose has not only impacted the purpose of technology but has also transformed the work ecosystem in the industrial world, making it more agile and flexible. This aligns with the concept explained in the previous concept regarding the development of a new generation of IT capabilities.

While comprehensive examples of digital re-organization in rural sectors are limited, research suggests that the pervasive and ubiquitous usage of technology in these communities unlocks new skill sets. Areas that were not initially connected to digital skills are gradually transforming into digital skills, prompting individuals to reskill their leadership and competencies, leading to higher income levels than before.

Conclusion

Despite significant challenges and periods of turbulence, digital transformation has been recognized as a potential solution that serves as an enabler for both rural and urban communities and their residents. With this, a new economic shift has been found, and emerging job opportunities can be seen everywhere, this initiative has the potential to expand across multiple cities in Indonesia.

For future research and recommendations, a crucial focus should be placed on prioritizing the education of individuals on data security issues, particularly for those in rural areas and early adopters who are newly exposed to internet access and technological infrastructure. Additionally, it is essential to consider government intervention, emphasizing the need to equalize perceptions regarding the benefits of digital transformation in both urban and rural locations.

Furthermore, there are additional aspects that merit further exploration in research concerning the significance of individual satisfaction in rural and urban areas regarding the influence of digital transformation. Given the absence of a conclusive explanation in this article regarding the dissatisfaction of modern society in large cities with the advent of digital transformation, it is crucial to investigate various factors, including socio-economic development and human cognitive behavior from an IT perspective.

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