Jakarta.  Indonesia’s adoption of artificial intelligence (AI) surged 47 percent in 2024, but most companies are still using the technology for basic operational tasks rather than transformative business innovation, according to a joint study by Amazon Web Services (AWS) and London-based consultancy Strand Partners.

The report, Unlocking Indonesia’s AI Potential, found that of the 18 million businesses already using AI, 76 percent rely on it mainly for boosting operational efficiency and automating processes. Only 10 percent have integrated AI into strategic decision-making or the development of new business models.

“Most corporations still view AI as a support tool rather than a core part of their business strategy,” AWS Indonesia Country Manager Anthony Amni said Friday.

The study highlights a clear gap between startups and large corporations. While 34 percent of startups have launched new products or services powered by AI, only 21 percent of larger companies have done so. Similarly, 52 percent of startups use AI across multiple aspects of their operations, compared with just 22 percent of big firms that have a comprehensive AI strategy.

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

AWS warned that this divergence could lead to a “two-speed economy,” where tech-driven companies grow rapidly while traditional corporations fall further behind. A shortage of skilled workers is a major constraint, with 57 percent of surveyed businesses citing it as their top challenge.

The report notes that 48 percent of future jobs in Indonesia are expected to require AI literacy, yet only 21 percent of businesses believe their workforce is adequately prepared. Access to funding is another key concern, particularly for startups, with 41 percent citing the need for venture capital to scale AI-driven ventures.

“Indonesia has huge potential to become a regional AI hub, but it requires strategic interventions, especially in skills development and regulatory support,” Anthony said.

Since 2021, AWS has invested $5 billion in its Asia Pacific (Jakarta) Region, a move expected to create 24,700 jobs annually and contribute $10.9 billion to Indonesia’s GDP by 2036. The company has also trained more than 1 million Indonesians through programs such as AWS Skill Builder, AWS Educate, AWS re/Start, and “Terampil di Awan,” which targets vocational students, people with disabilities, and small business owners in remote areas.

The AWS-Strand Partners report recommends three priorities to prevent Indonesia from falling behind in digital transformation: investing in industry-relevant human capital, enacting pro-innovation regulations, and ensuring government leadership in AI adoption for the public sector.

“High AI adoption rates are a positive sign, but the challenges facing businesses, especially large corporations, need to be addressed quickly to fully unlock Indonesia’s digital economy,” Anthony said.

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