Digital Divide Institute Activates New Partnership with Indonesia

After 10 years as an advisor for Indonesia, Digital Divide Institute has inked a formal agreement that went into effect July 1, 2017. Funded by the government’s ICT ministry, it activates DDI’s role in recommending financial innovations and partnership arrangements tied to legal and regulatory reforms. “The aim of our new partnership with DDI chairman Prof. Craig Warren Smith is to jump-start ‘meaningful broadband ecosystems’ for those who are likely to remain unserved by market forces unless we adopt this innovative approach to finance,” says Ilham A Habibie, Executive Lead of the National ICT Coordinating Council (“Wantiknas”). DDI’s upcoming report submitted to the government will produce the financial modeling for 2018 through 2030 that shows how multiple instruments of finance – domestic and foreign investments, loan guarantees, budgetary and extra budgetary funding by government agencies at national, provincial and district levels can be combined for the first time. DDI will add to this mix other unusual sources of finance such as venture philanthropy, social venture capital and a role for intergovernmental agencies such as World Bank, Islamic Development Bank and China’s new “Belt and Road Intiative,” also called New Silk Road. When joined with regulatory and legal incentives and sources of subsidy, DDI will reveal choices that can be made by the Republic of Indonesia to catch up with China and India as revved up digital economies.

Moreover, DDI will add to this mix a role for the $200 million-a-year Universal Services Obligation (USO) Fund, which is designed to augment the social impact of the nation’s telecommunications sector. Rather than view this fund as a stand-alone pot of money, DDI will show how USO could serve have an economic multiplier impact which drive investments to low income zones.

Here’s the most important point that so far China and India have missed:

Rather than focusing on serving urban markets first and then eventually “trickling down” to Indonesia low income population later, the agreement for broadband development aims to produce financial arrangements that jump-starts fixed and mobile supply and app-development for the nation’s “lower middle class” of 160 million citizens who earn less than $10 per day and who mostly live outside the crowded urban corridors of the vast Indonesian archipelago of 17,000 islands.

The agreement will result in a series of policy recommendations and specific project proposals by the end of 2017. A series of finance-related seminars, to be sponsored by the government’s State Owned Telecommunications operating company, Telkom, and other agencies will announce these new recommendations to stakeholders gathered by Wantiknas in coming months.

“We see our partnership with DDI as not merely focused on Indonesia, but as a ‘proof of concept’ for Meaningful Broadband that will apply to other developing nations as well,” says Mr. Habibie. “With DDI’s help we aim to produce the financial modeling that can show that, with a minimum of subsidy, the nation can bring ‘meaningful broadband’ swiftly to the entire nation’s people in a way that fits three criteria: “usable, affordable and empowering, he said.

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