Digital Technology Brings Prosperity to Rural Areas
Despite the devastating impact of COVID-19, telecommunications and agriculture sectors continued to grow positively. Moreover, telecommunications related to information technology has even skyrocketed. COVID-19 forces humans to interact non-physically (contactless) or maintain a distance. Almost all economic and social activities instantly turn digital. The world has changed, the changes are so fast it's like blink of an eye.
The prophecy of futurist Alvin Toffler in 1980s came true. Toffler predicted roaring wave of change due to information technology revolution triggering a future shock (The Third Wave). Through affordable smartphones and internet connections, the world is now in our hands. Whether rich or poor, big or small, everyone will bow equally in front of information technology. The amount of information that used to take 50 years to be obtained, can now be accessed in less than a year. Awesomeness of lecturer or teacher suddenly collapses in front of student who holds internet. The old-fashioned academic textbook thinking can't fight against today's tough online learners, as it is called "death of expertise."
E-conomy has broken conventional economic structure and grip on society. Digital technology has disrupted the business of giant malls and supermarkets, hotels, banking, television and transportation which are worth trillions. With no other choice, business giants are forced to carry out digital transformation faster. As a result of revolutionary change, the choice is now not changing or dying, but too late and extinct.
Without hassle of renting a kiosk, shop house, paying for electricity, maintenance or many employees, just go up a stall on the marketplace platform or create a blog, then take advantage of free social media promotions, everything can be sold all over the world. In Indonesia, digital economy in 2020 is worth more than 600 trillion and is expected to at least triple by 2025.
There are future surprises according to Toffler. The First Wave is the period of agricultural revolution, then enters the Second Wave which is period of industrial revolution. Toffler said, there is no need to faithfully copy the Second Wave which has forced millions of people out of village into industrialized mass production, experiencing culture shock and damaging environment to enter the Third Wave. And apparently, this phenomenon can be seen from agricultural statistics which continue to progress positively even though most other sectors experience negative growth during pandemic.
If previously the phenomenon of urbanization was known, now ruralization has also emerged. Urbanization in this context is defined as the movement of people from villages to cities to get a better life. On the other hand, ruralization is the return of population from city to village or at least there is no urbanization because village is a decent source of livelihood. And through information technology, this is possible.
Digital technology cuts the "middleman economy" by connecting agricultural production directly to consumers. Producers get higher prices that were previously enjoyed by middlemen through long distribution chains, while consumers get lower prices and fresher products. It is amazing that we are seeing the exponential growth of digital platforms like TaniHub, SayurBox, KedaiSayur, TukangSayur, etc, which facilitate relationship between agricultural producers and consumers.
An extraordinary rural phenomenon has occurred in China because of Alibaba's digital platform. Raw materials are available in the village, lower labor costs, cheaper production and more affordable living costs, of course this is an attractive option. If you don't have to be a victim of traffic jams, air pollution, but you can live decently in a village, why go to the city?
The digital village happened in China when internet was widely available to rural population. This has helped many people from rural areas start selling products online and earn income. This trend has led to proliferation of many online services, such as digital e-commerce “Taobao Village”, which helps people in rural areas carry out their online commerce. Taobao Village is a village that generates RMB10 million (approximately IDR 2.2 billion) or more per year from sales on e-commerce and has 100 or more active online shops operated by local residents, it is a place to sell agricultural and plantation products, handicrafts, and other products online.
After 10 years, in August 2019 there were a total of 4,310 Taobao Villages where 250 million of China's 564 million villagers lived. Taobao Village leverages e-commerce to promote more inclusive economic growth in rural China. Immediate result of Taobao Village boom was improved economic conditions and job creation in the poorest areas of China. A World Bank and AliResearch study showed that household incomes in Taobao Village were nearly three times the average income of rural households in China, leading to higher household consumption, reduced income inequality, and better job opportunities for woman and young people. Indonesia needs to learn from China's experience.
Digital platforms definitely play a key role, but logistics and transportation are also important. Without efficient, fast and affordable logistics and transportation, village e-commerce will be difficult to develop. Apart from infrastructure issues, the challenge to create efficient and inexpensive logistics and transportation is economies of scale. The delivery costs could be expensive if we don't send goods in large quantities or without a system. In this case, as village now has a Village-Owned Enterprise (BUMDes) which can be used to increase scale of economy, through increasing scale of production or cooperation of producers, so that village products can be sent at lower cost because they reach economies of scale. This is an alternate path for building prosperity, through ruralization.***
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