Artificial Intelligence (AI) adoption in Indonesia surged by 47% year-over-year, according to a new study by Amazon Web Services (AWS) in collaboration with Strand Partners.

Despite this rapid growth, most large corporations remain at the basic stages of AI usage.

The study, Unlocking Indonesia’s AI Potential, reveals that out of approximately 18 million businesses that adopted AI by 2024, only a fraction are using it in a transformative manner.

Majority of Businesses Still Use AI for Basic Functions

While AI adoption is on the rise, 76% of surveyed businesses reported that their usage is limited to operational efficiency and process automation.

Only 10% of enterprises have embedded AI deeply into decision-making or new business model development.

“Most corporations still view AI as a supporting tool, not as a core part of their business strategy,” said Anthony Amni, Country Manager of AWS Indonesia, during a media gathering in Jakarta.

Startups Outpace Corporations in Strategic AI Use

The study highlights a stark contrast between startups and established corporations. About 34% of startups have launched new products or services using AI, compared to only 21% of large firms.

Furthermore, 52% of startups are applying AI across various business areas, whereas just 22% of major companies report having a comprehensive AI strategy.

“Startups are the main engine of innovation in the AI sector because they can experiment more rapidly and respond to market needs more nimbly,” said Nick Bonstow, Director of Strand Partners.

AWS warns that this widening gap may result in a “two-tier” economic risk, where only tech-based companies thrive while traditional corporations fall behind in competitiveness.

Talent Shortage and Funding Hurdles Hamper Broader AI Integration

Human capital remains the biggest barrier to deeper AI integration. Around 57% of business respondents identified the lack of skilled labor as the top challenge.

Only 21% believe their current workforce is adequately prepared for the AI era, despite projections that 48% of future jobs will require AI literacy.

Startups also emphasize majorityize the importance of access to funding, with 41% citing venture capital and financial support as critical to scaling AI-driven businesses.

AWS Urges Strategic Action to Unlock Indonesia’s AI Potential

Anthony Amni emphasized that Indonesia has the potential to become a regional AI hub.

However, he stressed the need for strategic interventions in skill development and growth-oriented regulation.

Since 2021, AWS has invested US$5 billion to develop its Asia Pacific (Jakarta) Region, expected to create 24,700 jobs annually and contribute US$10.9 billion to Indonesia’s GDP by 2036.

To date, AWS has trained over one million Indonesians through cloud upskilling programs like AWS Skill Builder, AWS Educate, and AWS re/Start.

These initiatives also reach vocational students, persons with disabilities, and small businesses in remote areas.

The report recommends three national priorities to accelerate digital transformation: industry-aligned human capital investment, innovation-friendly regulation, and government leadership in AI adoption within the public sector.

“The high rate of AI adoption is a positive signal. However, the challenges facing businesses, especially large corporations, must be addressed promptly to maximize Indonesia’s digital economic potential,” Anthony concluded.

PHOTO: FREEPIK

This article was created with AI assistance.