Indonesia turns to AI to shrink the bloated civil service

Indonesia Immigration Officer stamps a passport at an airportPhoto: Feddy Pasyra

Indonesia’s infamous red tape has been a persistent barrier to foreign investment into the country. Jokowi is embracing artificial intelligence (AI) as a potential solution.


In a bid to cut red tape and strengthen the flow of foreign investment into Indonesia, President Joko Widodo, affectionately known as Jokowi, has ordered its government agencies to flatten the civil service from four tiers to two and adopt artificial intelligence (AI) to replace jobs where possible.

The move is part of the president’s strategy to push for investment and bureaucratic reform. Jokowi, whose second five-year term began in October, has found gross domestic product (GDP) growth stubborn, hovering around 5% since he took office.  Efforts to inject life into the Indonesian economy have floundered in part due to the lack of foreign investment.

The country has big plans to transition to higher-end manufacturing, such as electric cars, and use its raw materials to build industries. Such a transformation would require extensive foreign investment. Streamlining bureaucratic processes through AI implementation is expected to improve the country’s business climate, which in return, would lure in more foreign investors to the country.

AI can trim an inflated public sector

Jokowi is confident that the move will speed up government functions and streamline complex bureaucratic processes. At the Kompas 100 CEO Forum last month, Jokowi told business leaders, “I have instructed my ministers to replace echelon III and IV officials with AI because our bureaucracy will be faster with AI, but it will depend on the omnibus bill.”

The omnibus law, which needs parliament’s approval, would synchronize more than 70 overlapping regulations that are seen as unfavourable for investors.

According to data from the National Civil Service Agency, there are currently 440,029 officials employed in echelon III, IV, and V. Jokowi wants to replace those in echelon III and IV with AI. The president did not give any further details on which specific roles would be removed.

Graph depicting the breakdown of the Indonesian civil service by echelon and the percentage of the nation's workforce in the civil service and its cost.

The Coordinating Economic Minister, Airlangga Hartarto, however, hinted that the building permit application process was an early contender for reform. He suggested maximising the online single submission (OSS) system, which administers several key business permits, and the single map policy using AI to simplify building permits and licensing processes and reduce human intervention.

There are areas primed for AI implementation. According to Subianto, the co-leader of Indonesian digital services for Pricewaterhouse Coopers, AI could bolster governmental services such as subsidy approvals and warning systems for natural disasters.

AI could also lend a hand in battling corruption. A report by the Anti-Corruption Resource Centre explained how AI applications could work with datasets that are too large for manual handling to reveal and even predict levels of corruption and fraud that were previously indetectable.

There are also major risks

An expanded role for AI in government processes poses some dangers. Cybersecurity, data security, and user privacy will be of heightened importance as the government ushers in a new digital bureaucratic era.

To be effective, any effort to streamline processes must be carried out in conjunction with efforts to bolster cybersecurity.  

There are also concerns over whether Indonesia is ready to make a significant shift to AI-driven solutions. A pre-requisite to implementing AI solutions is the availability of quality data, which Indonesia is currently lacking. The country is at a very early stage of applying technology to platforms to capture data. Until sufficient data has been harvested, AI solutions will lack precision and accuracy.

Indonesian President Joko Widodo
Indonesian President Joko Widodo.
Photo: Kremlin

While the potential of AI looks promising, going all-in too quickly without adequate preparation poses more dangers than opportunities.

Observers have also expressed concerns over the readiness of Indonesia’s workforce. According to a report carried out by McKinsey & Company, a consultancy firm, 23 million jobs could be displaced by automation. However, at the same time, 27 million to 46 million new jobs could be created.

But these new jobs will require machine learning and IT skills. Without significant investment in training and educational programs, Indonesia’s workforce will be unable to meet the demand for skilled workers. Allowing an influx of skilled foreign workers into the public sector poses further security risks.   

Indonesia needs to build a solid foundation before fully embracing AI

The key to the successful implementation of AI solutions lies in building an AI-ready infrastructure. A report by Oxford Insights entitled ‘Government Artificial Intelligence Readiness Index 2019’ puts Indonesia fifth in the ASEAN region and 57th in the world for AI-readiness. The result is based on several aspects: the countries’ infrastructure, quality of data, governance, skills, and education.

Using AI in the public sector will bring many benefits to the country, but it needs to do so when the country is ready for it. It needs to build a strong base by increasing investment in research and development as well as preparing its workforce for using the new administrative tools through upskilling education programs. Working together with the private sector will also be essential in furthering the development of AI infrastructure that will serve both the people and the country. Failing to adequately prepare for the age of machines could put the safety of the Indonesian public at risk have a sabotage modernisation efforts.