AI in Business: Challenges and Considerations

The Future Landscape of AI in Business

  • InCorp Editorial Team
  • 19 June 2024
  • 5 minute reading time

The rapid progress of Artificial Intelligence (AI) is poised to transform the business environment in the near future. Utilizing AI in business offers the potential for improved efficiency, productivity, and innovation. However, companies should find solutions to challenges and make thoughtful decisions to achieve them.

How is AI Used in Business?

Investing in AI is essential for achieving success and preparing your business for the future. AI offers significant advantages in predictive analytics and data processing capabilities to assist in making informed decisions.

AI-driven data analysis can reveal insights into customer behavior, market trends, and risks, enhancing efficiency and streamlining operations. However, businesses must use AI responsibly, considering risks like data breaches and implementing robust security measures. 

Strategic investment in AI is crucial for unlocking its full potential and maintaining competitiveness. Furthermore, AI will remain essential for business success as companies innovate to enhance efficiency and customer experiences.

How to Implement AI in Business?

Singapore can serve as a great example of implementing new technology in business. Businesses in Singapore are actively integrating AI into their development plans, allocating nearly USD 751 million over the next five years.

The investment aims to foster AI initiatives and establish itself as a regional and global AI hub. AI adoption is prevalent, with notable transformations observed, particularly in the financial sector.

The Monetary Authority of Singapore (MAS), the country’s financial regulator, closely monitors the rapid advancement of AI in finance. It notes significant changes in operational efficiency, risk management, and customer experience within financial institutions.

Challenges such as ethical concerns, decision-making biases, and potential financial instability persist as AI progresses. Regulators and financial entities must effectively balance innovation with risk mitigation.

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Practical Applications of AI in Indonesia

AI-based technology is being implemented in the public sector in Indonesia to enhance the speed and quality of public services through a citizen-centric approach. 

For instance, the Jakarta Smart City (JSC) initiative by the Jakarta provincial government has pioneered using AI-based technology to realize innovative governance, integrating public services and data-driven policy-making since 2014.

Meanwhile, in the business sector, Indonesia has emerged as the most significant potential market for AI investment in Southeast Asia. According to OECD reports, as of Q3 2023, Indonesia has recorded the highest average value of venture capital funding for AI development.

Furthermore, Indonesia is also leading in research. Based on the latest OECD report, there have been 124,251 scientific publications on AI published by academics and researchers in Indonesia until 2022, positioning Indonesia at the forefront of AI research publications.

Current AI regulations in Indonesia

AI in Business: Challenges and Considerations

Until now, Indonesia lacks specific regulations regarding AI. However, the government has made several efforts to regulate AI. Those are:

Stranas AI

In 2020, the Indonesian government released the National Strategy for Artificial Intelligence (Stranas AI), covering ethics, AI policy, talent development, and AI ecosystem infrastructure. However, Stranas AI is not legally binding but is a national policy direction.

Regulations under the Ministry of Communication and Informatics 

Nevertheless, the Indonesian government has been involved in regulating AI technology. Several regulations related to AI utilization exist, such as Minister of Communication and Informatics Regulation No. 3 of 2021, which addresses licensing aspects for businesses utilizing AI.

The ITE Law and its derivative regulations regulate AI under “electronic agents.” The Personal Data Protection Law governs AI utilization involving personal data processing. 

Furthermore, the Ministry of Communication and Informatics (Kemenkominfo) has issued ethical guidelines for AI utilization in business, outlined in Circular Letter No. 9 of 2023 regarding Artificial Intelligence Ethics.

OJK Regulations 

The Financial Services Authority (OJK) has also undertaken efforts to regulate AI utilization.

OJK appointed the Indonesian Financial Technology Association (AFTECH) along with other industry associations such as AFSI, AFPI, and ALUDI to develop and establish the Responsible and Trustworthy Artificial Intelligence (AI) Code of Ethics in the Financial Technology Industry, which was launched in early December 2023.

Additionally, OJK is drafting regulations on digital services by commercial banks, which include principles of responsible innovation in utilizing new technologies, including AI.

Challenges and Considerations

AI can influence employment, significantly presenting challenges and opportunities. While it may result in job displacement, it also holds promise for creating new job roles.

To adapt to this evolving landscape, workers should acquire skills that complement AI technology. Investing in resources to equip the workforce with the necessary skills is crucial for leveraging AI effectively and responsibly. 

Additionally, organizations must develop a well-defined AI strategy tailored to address specific challenges rather than simply following trends and applying AI indiscriminately.

Establishing a robust AI governance and risk management framework is also essential. This framework should delineate how AI will be utilized, provide steps to address issues, and assign accountability for ensuring ethical and safe AI usage. 

Clear guidelines are essential for companies seeking to harness AI’s benefits successfully.

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Regulatory compliance is essential for your business to enhance its performance through AI adoption. 

InCorp Indonesia offers a comprehensive suite of services to support your AI journey:

  • Expert Legal Consultation: Get clear guidance on how Indonesian regulations apply to your AI project.
  • Tailored Business License Services: We assist you in obtaining the necessary licenses and permits to use AI technologies in your business.
  • Streamlined Regulatory Compliance: We navigate the legalities for you, allowing you to focus on maximizing the potential of AI for your business.

Don’t let legal uncertainties hinder your AI journey. Contact InCorp Indonesia and unlock the full potential of AI for your business.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Frequent Asked Questions

For the past several years, the Indonesian government has actively issued regulatory reforms to encourage foreign direct investment in the country. These regulation updates have presented both opportunities and challenges in doing business, and investors need help navigating these ever-changing situations. InCorp’s compliance and secretarial services can assist you in mitigating the risks of non-compliance. Years of professional experience on our team help reduce administrative burdens that are both time-consuming and stressful.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.