In a recent public statement, Airlangga Hartarto, Indonesia’s Coordinating Minister for Economic Affairs, drew attention to a stark reality: Indonesia hosts only 25 artificial intelligence startups, a number dwarfed by nearly 300 AI startups in Singapore. This huge discrepancy, widely seen as the AI startup gap Indonesia, reflects deeper structural challenges in Indonesia’s digital economy and raises questions about the country’s readiness to compete in an AI-driven future.

As Southeast Asia surges forward in AI innovation, the gap threatens to leave Indonesia behind unless policymakers, investors, and entrepreneurs mobilize quickly to strengthen the country’s AI ecosystem.

The Numbers: 25 Versus 300, A Widening Divide

The comparison is stark: only 25 AI startups have been formally identified in Indonesia, compared with almost 300 in Singapore. Such a wide gap is alarming for a nation of more than 270 million people, especially as global AI adoption accelerates.

That discrepancy is particularly striking given Indonesia’s ambitions. The government projects that Indonesia’s digital economy will grow rapidly in the coming years, driven by digital finance, e commerce, and technology adoption.

But a small number of AI startups suggests Indonesia may lack the innovative core needed to fully harness AI opportunities such as automation, data analysis, fintech, health tech, or enterprise solutions. As a result, Indonesia risks being a follower rather than a leader in the regional AI wave.

Why the AI Startup Gap Indonesia Persists

Understanding why Indonesia lags requires unpacking multiple intertwined factors.

Limited Ecosystem Support and Funding Landscape

Unlike Singapore, which benefits from concentrated capital, robust regulatory support, and investor confidence, Indonesia’s startup ecosystem still faces constraints. Raising venture capital for AI ventures remains challenging. Without sufficient funding and institutional support, promising ideas often stall before they scale.

Infrastructure gaps, including uneven data access, limited AI ready data centers, and insufficient digital infrastructure in many regions, also hinder the birth and growth of AI startups.

Skills Gap and Human Capital Constraints

AI requires specialized talent: data scientists, machine learning engineers, AI researchers. Many Indonesian businesses that have adopted AI use it only for basic tasks rather than building AI-driven products or services, reflecting limits in human capacity to create advanced AI solutions.

With technical talent concentrated in major cities, startups outside those hubs face difficulty recruiting qualified staff. This restricts the spread of AI innovation and reduces overall startup numbers.

Regulatory, Data Governance, and Policy Challenges

Regulations around data privacy, data usage, and AI development remain unclear in several areas. For AI startups, data access and legal certainty are essential. Without a clear regulatory roadmap, founders hesitate to scale AI based solutions.

Government officials have acknowledged these challenges and expressed commitment to strengthening governance frameworks for fair and responsible AI development.

Market Incentives and Business Readiness

Even as the broader digital economy expands, many Indonesian companies remain conservative in adopting advanced AI solutions. Uncertainty about return on investment discourages businesses from adopting AI tools. As a result, demand for sophisticated AI offerings remains limited, reducing incentives for new startups to emerge.

In contrast, Singapore’s business environment provides stronger demand for AI solutions, creating a virtuous cycle of supply, innovation, and adoption.

The Consequences of Not Closing the Gap

The AI startup gap Indonesia has implications that stretch far beyond the technology sector.

Risk of Falling Behind in Digital Economy Growth

Southeast Asia is experiencing rapid AI driven digital expansion. Countries that successfully integrate AI will attract investment, talent, and global partnerships. If Indonesia fails to shrink the gap, it risks losing competitiveness in key sectors, from fintech and logistics to health tech and enterprise software.

This could slow down Indonesia’s digital economy growth and reduce foreign investor interest.

Brain Drain and Talent Flight

Without a strong domestic AI ecosystem offering competitive opportunities, skilled Indonesian engineers and data scientists may seek opportunities abroad or in more mature tech hubs like Singapore. This brain drain weakens domestic innovation capacity and long term competitiveness.

Missed Opportunities for SMEs and Regional Development

AI can enable smaller businesses to scale quickly and compete globally. However, with limited AI startup supply and uneven adoption, many SMEs may continue relying on outdated systems. This widens gaps between major urban centers and provincial regions.

What Needs to Happen to Close the AI Startup Gap Indonesia

Closing the gap requires coordinated action from government, investors, academia, and industry.

Boost Investment and Funding for AI Ventures

Indonesia needs dedicated funding programs for AI startups. Grants, tax incentives, and matching funds could encourage founders to innovate. Venture capital availability must also expand beyond Jakarta to reach regional talent pools.

Build Talent and Capacity Through Education and Training

To reduce the skills gap, AI related curricula in universities and training institutions must expand. Programs in machine learning, data science, AI engineering, and AI ethics should be strengthened. Reskilling programs for workers and partnerships between industry and academia can help build long term talent pipelines.

Strengthen Regulatory Framework and Data Infrastructure

Indonesia needs clear regulations for data governance, AI development, and digital infrastructure. A transparent framework will boost investor confidence. The development of regional data centers, cloud infrastructure, and nationwide connectivity is essential to support startup scalability.

Encourage Demand for AI Applications

Beyond supply, demand must increase. Government procurement of AI solutions can create early markets for local startups. Corporations and SMEs should also be encouraged to adopt AI, helping grow a domestic customer base for AI products.

Promoting success stories in healthcare, logistics, or fintech can inspire confidence and demonstrate value for early adopters.

Promote Regional Inclusion and Innovation

AI ecosystem growth should not be exclusive to Jakarta. Supporting incubators and innovation hubs in secondary cities can help tap talent across Indonesia and ensure equitable access to digital opportunities.

A Window of Opportunity Remains, But Time is Running Out

Despite the concerning statistics, Indonesia still holds considerable potential. With a large population, expanding digital economy, abundant data, and rapidly growing internet penetration, conditions exist for Indonesia to leapfrog in AI adoption.

Southeast Asia’s digital economy continues to expand, presenting Indonesia with substantial opportunities to strengthen its AI foundation.

But time is limited. To bridge the AI startup gap Indonesia, the nation must act quickly and decisively. Strategic investment, regulatory clarity, workforce development, and ecosystem support will determine whether Indonesia becomes an AI leader or remains a regional follower.