Innovation through Gotong Royong: Driving Change in an Era of Software and AI in ASEAN

This article is written by Aldi Haryopratomo, Co-Founder/Commissioner of E-fishery, Halodoc, Kitabisa & Gopay for IBC.

Over the past two decades, China has been at the forefront of innovation, particularly in the digital realm. While it may be tempting to replicate China’s approach, it is crucial for Indonesia and the ASEAN region to develop a strategy that aligns with our own unique culture. Simply adopting a top-down policy is unlikely to yield the desired results.

During my previous role at Gopay, I had the opportunity to visit Shenzhen regularly, thanks to our investor Tencent. These visits provided insights into how China implements policy and drives industry changes based on three principles:

1. A top-down policy mandate outlined in the 14th release of their five-year plan.
2. A global approach involving the expansion of international cooperation in the digital economy through the digital “silk road.“
3. An inclusive approach that prevents monopolistic policies towards small and medium enterprises.

Taking inspiration from these principles, I propose the following framework for Indonesia and ASEAN:

1. Embrace a collaborative approach to policy-making, known as Gotong Royong. Instead of a top-down approach, industry changes can be driven by innovative startups and supported by both incumbents and regulators.
2. Adopt a global approach in specific sectors, recognizing and capitalizing on the natural strengths of each country, thereby positioning them as global leaders in their respective industries.
3. Foster inclusivity by encouraging large companies to support small and medium enterprises within their value chains, rather than allowing monopolistic practices to dominate.

Allow me to highlight a few examples of how this approach has brought about positive change in specific industries:

QRIS National Payment Standard and Gopay: In 2017, the central bank implemented regulations stipulating that digital payments should only be accepted through certified devices. China’s payment industry, dominated by Alipay and WeChat Pay, utilized devices that scanned users’ phones. Among the top three payment providers in Indonesia, two deployed devices for accepting payments, while one used existing EDCs with users inputting their phone numbers.

At Gopay, we made a strategic decision to adopt QR codes printed on paper as the standard. Why? Firstly, paper was a more cost-effective option compared to electronic devices, making digital payments accessible to a wider range of small businesses. Secondly, it offered a faster and more private user experience compared to inputting numbers into an EDC machine. Lastly, the paper-based standard could be adopted by multiple banks and fintech companies.

After completing our pilot program, the central bank provided us with an opportunity to explain the rationale behind paper QR codes. We also engaged with banks through ASPI, the payments association, to share our perspective on these standards. Eventually, in August 2019, the central bank took the lead in launching QRIS (Quick Response Code Indonesian Standard). Today, there are 35 million merchants who have embraced QRIS.

Telemedicine and Halodoc: Halodoc followed a similar path in the development of telemedicine. Seven years ago, telemedicine was still a relatively unfamiliar concept, and regulations surrounding it were unclear. However, by creating an ecosystem of partners including hospitals, drug stores, and labs, Halodoc demonstrated its commitment to building a collaborative healthtech industry. This, in turn, prompted insurance companies to join in.

Halodoc’s pivotal role during the COVID-19 pandemic further highlighted the importance of telemedicine. When COVID-19 vaccines became available, Halodoc collaborated with the Ministry of Health to establish 400 vaccination centers across Indonesia. Telemedicine also became an official means of obtaining medical assistance, particularly for COVID-19 patients.

By embracing a collaborative and inclusive approach, Indonesia and ASEAN can drive innovation and bring about positive change in various industries, ensuring sustainable growth in the era of digital disruption and AI.

Driving innovation across ASEAN requires a collaborative approach. The ASEAN Business Advisory Council has introduced Legacy Projects, which are initiatives initiated by the Chair of ASEAN BAC Countries and carried forward in subsequent ASEAN Meetings. Among this year’s projects is the ASEAN QR, promoting inclusive payment flows across borders. Another project, Wiki entrepreneur, consolidates programs to support SMEs in exporting and makes them easily accessible through a private GPT chatbot. These programs have been established through the joint efforts of private companies, governments, and businesses from other ASEAN countries. The foundation of ASEAN lies in the pursuit of innovation, fostering a non-intrusive collaborative principle that unifies the region despite its linguistic and cultural diversity.

By the end of the day, managing a nation and a region’s success begins with measuring its relative competitiveness. Among ASEAN Indonesia still lags behind Singapore, Malaysia and Thailand, with its position in the median of the Global Competitiveness Index but an underdog in its digital competitiveness aspect, this poses a major improvement opportunity. By 2045, Indonesia’s vision to become a developed country, reflects the potential to be a new, innovative model for sustainable, digitally driven epicentrum of growth in ASEAN and beyond that matters not only for the incumbent generation but also the next one.