ID for Inclusive Service Delivery and Digital Transformation in Indonesia

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The ability to prove one’s legal identity, established through population and civil registration, is often a pre-requisite for access to services and economic opportunities. Hence not having appropriate legal identity documentation, such as a national ID card or birth certificate, can impact one’s access to services and opportunities provided by government and markets. Furthermore, as services and transactions move to the internet, people also need to be able to prove their legal identity online with the same amount of trust as a face-to-face transaction, while also safeguarding their privacy, which can be achieved through a well designed digital ID system. However, several gaps exist in Indonesia to undermine efforts to achieve inclusive growth and to eliminate poverty, such as to better target social assistance, as well as to growth the digital economy.According to the 2021 Susenas Survey, 93 percent of Indonesians have a national ID number (NIK). The 2021 ID4D-Findex Survey also found that 97 percent of Indonesians aged 17 and older have a KTP (national ID card). Considering the demographics and geography of Indonesia, these high rates of coverage are laudable. However, important disparities exist. For example, 27 percent of Indonesians in a household where the head is uneducated/did not complete elementary school do not have a NIK, and only 61 percent of Indonesians in Papua province have a NIK. Another challenge is that birth registration rates have not caught up. 77 percent of children nationally have a birth certificate, with the rate falling to 45 percent in and 45 percent in Papua province. No reliable data exists on marriage and death certificate coverage is available but anecdotal indications are that these are lower than birth certificate coverage.The absence of a nationally-scalable identity verification system and an official digital ID in Indonesia has meant that population and civil registration has been under-utilized to support public and private sector service delivery and inclusion and trust in the digital economy. Biometric verification, for instance, has been shown to be game-changing for financial inclusion by reducing costs and risks for financial service providers to onboard customers while also enabling the use of smartphone applications and agents to expand service provision. Similarly, better utilization of population data will enable the Ministry of Social Affairs, Ministry of Health, Minsitry of Energy, BPJS-Health, BPJS-Employment and others to better target and deliver government-to-person payments and subsidies. An official digital ID will help the Government of Indonesia and businesses to offer services end-to-end online by increasing the security of and trust in digital transactions. A digital ID will also help address cyber threats to Indonesians by reducing risks of identity theft and fraud.The Project aims to support the Government of Indonesia to harness the transformational potential of identification. It will support the Ministry of Home Affairs to close remaining population and civil registration coverage gaps, modernize its ICT infrastructure to offer better services to Indonesians and to enhance population data utilization, strengthen cybersecurity and data protection, scale up its identity verification system (including for e-KYC) to meet the needs of today and the future, introduce an official digital ID, strengthen capabilities to utilize population data, streamline business processes, and build institutional and human capacity to sustain the investments made by the Project. The Project will also support other agencies to integrate with the identity verification system and digital ID in order to make their services more efficient, innovative, and accessible.