Indonesian Readiness for Digital Economy: Case on Trade Flows in ASEAN Region

Abstract

— The purpose of this study was to analyze Indonesian readiness for digital economy, case on trade flow in the ASEAN region. This study employed a quantitative approach with Gravity Model. The secondary data in the form of panel data period year 2004-2016 (annual) and includes ASEAN-10 countries. The variable digital economy readiness was a main explanatory variable interest and represented by readiness index. The all data sourced come from Comtrade, IMF, World Bank, World Economic Forum, and Indonesian Ministry of Trade. The analytical method used Poisson Pseudo Maximum Likelihood (PPML) and it was resolved with software of Stata 13. The results confirmed that Indonesian readiness for digital economy would affect positively trade flow of tangible and intangible product in the ASEAN market. In detail, fixed broadband internet tariffs and quality of educational system significantly influenced ICT trade flow in ASEAN market. While individual readiness became crucial factor effect trade in service in ASEAN market. Therefore, in order to prepare Indonesian for digital ecosystem, issue of accessibility and digital literacy by individual must be considered by the government. There are prerequisites that must be prepared when grabbing benefits of the momentum of the digitalization era.