Valuable lessons from the Indonesia National Database (PDN) Ransomware Attack

The Indonesia National Database (PDN) ransomware tragedy has severely shaken Indonesia's data center market, exposing critical vulnerabilities and casting a long shadow of distrust and fear over its digital landscape. While it has caused significant turmoil, the PDN ransomware tragedy has also taught valuable lessons and set forth new challenges for Indonesia, marking a turning point in attracting the international community to its digital market potential.

In the wake of the controversy surrounding Indonesia National Database ransomware attack, Indonesia stands at a crossroads in its efforts to create a better digital economic environment. In fact, the digital transformation in Indonesia has long been an agenda discussed at the governmental level. It is believed that Indonesia digital transformation still faces issues with equal accessibility to the internet. Indonesia has been struggling to catch up in terms of digital infrastructure, especially critical components such as fiber optics and electricity access that can help grow the digital market in Southeast Asia.

The latest report from the World Bank has highlighted the issues stemming from the current lack of coordination between government agencies in Indonesia, pointing out overlapping mandates and the need for leading agencies to consistently drive the digital transformation agenda.[1] The report emphasizes that these inefficiencies hinder the country's progress in digital transformation and economic development. Indonesia's tech industry has experienced rapid growth in recent years, with the digital economy projected to be worth $125 billion by 2025. Despite internet penetration exceeding 70%, there remains a need to enhance connectivity in the outer islands to support further development.

[1] World Bank Report, Beyond Unicorn: Harnessing Digital Technologies for Inclusion in Indonesia (2021)

Indonesia is also expected to become one of the biggest players in the data center industry. This trend is driven by the increasing interest of investors in Southeast Asian countries. However, there are disparities in investment between Indonesia and other SEA countries, especially with Malaysia and Singapore, which have better accessibility and ready-to-deploy fiber optic networks across several islands. The growth in these respective countries has been tremendous, while Indonesia is still lagging behind.

In recent years, Southeast Asia has emerged as a hub for the data center industry, with major investors like Google and Facebook leading the way by establishing data centers in Singapore. Meanwhile, Malaysia is becoming a significant new player, with increasing investments in Johor Bahru, which is projected to potentially overtake Singapore as the leading location for data centers. Currently, most data center projects in Indonesia are concentrated in the Greater Jakarta area (Jabodetabek). Increasing demand is driving development in other major cities such as Surabaya, Bandung, and Bali. The Java-Bali region remains dominant due to the availability of reliable fiber optic network infrastructure and electricity supply. However, the investment in data centers in Indonesia faces challenges, particularly the lack of network infrastructure and unstable power supply, especially in rural areas. This infrastructure gap needs to be addressed, considering the national vision to capture 40% of ASEAN's digital economy by 2025.[1]

[2] ASEAN Digital Masterplan 2025

Challenges Ahead for Indonesia

The growing demand in the digital industry, particularly in data centers, presents a valuable economic opportunity for Indonesia to expand its digital sector and create more digital jobs. However, this effort is challenging for Indonesia due to persistent issues with basic digital access, such as electricity and internet connectivity, especially in regions outside of Java. Despite these obstacles and ongoing governmental controversies, Indonesia has the potential to overcome these challenges and emerge as one of the leading countries. There are at least three challenges that Indonesia needs to address to get back on track with its digital industry potential:

First, the digital infrastructure in Indonesia needs to be addressed. With its current landscape, Indonesia must create wider connectivity to build more data centers and attract investors. This includes expanding the fiber optic network and ensuring consistent electricity supply throughout the country. digital economy. Access must also be meaningful and serve as a tool for the digital industry. While internet access has become more widespread in Indonesia, the quality of internet speeds remains a significant issue. Recent reports indicate that Indonesia's internet is both expensive and slow, highlighting the lack of critical infrastructure. With quality internet and robust infrastructure, Indonesia could cultivate more digital talent and create a sustainable digital industry, particularly in the data center market.

Second, the need to ensure a safe and secure environment for establishing data center businesses in Indonesia should be addressed at the government level by tackling security issues. Political stability plays a major role in the industry's growth. The recent ransomware controversies have highlighted the lack of coordination within the government and the weaknesses in regulations that need further discussion in parliament. Efforts by the government are hampered by a shortage of digital talent willing to engage in public service. These issues need to be resolved to create a more adaptable system for the government to address cybersecurity challenges effectively.

Third, Indonesia needs to develop a clear roadmap outlining its strategy to foster sustainable growth in the digital industry and attract more jobs. This roadmap should address critical infrastructure needs and outline solutions to future challenges. Malaysia and Singapore have already established detailed roadmaps focused on developing environmentally friendly and efficient data centers. Indonesia's government should embark on similar initiatives to attract the international community and demonstrate the potential of its expanding digital industry. Establishing a detailed roadmap will ensure safety and confidence for investments in Indonesia's data center market.

Indonesia faces a challenging road ahead with increasing global competition in the digital industry market. However, Indonesia has the potential to develop a sustainable system and accelerate economic growth by leveraging its digital capabilities, fueled by the rapid growth of internet users nationwide. Concurrently, the government must prioritize building critical infrastructure to expand markets beyond Java and support broader economic development. The ransomware attack on the national database has served as a critical turning point for Indonesia, prompting a reevaluation of how the government's digital initiatives impact the economy and daily life. This moment underscores the importance for the Indonesian government to regain trust within the international community.