Indonesia’s Ransomware Attack: Lessons in Digital Risk Management for Smart Cities Part 1

The National Data Center (PDN) was hit by a ransomware attack, with the Minister of Communication and Information, Budi Arie Setiadi, confirming a ransom demand of 8 million dollars from the hackers.

Authors: Tuhu Nugraha and Raine Renaldi*

In recent years, smart cities have become a major focus in many developing countries. Smart cities combine information and communication technology to improve the efficiency of public services, better manage resources, and enhance the quality of life for citizens. However, implementing smart cities in developing countries is fraught with various complex and multi-faceted risks. One example is the recent cyber-attack in Indonesia. The National Data Center (PDN) was hit by a ransomware attack, with the Minister of Communication and Information, Budi Arie Setiadi, confirming a ransom demand of 8 million dollars from the hackers. This is ironic, given that Indonesia aims to have 100 Smart Cities, with its new capital city, IKN, set to become the most advanced smart city in the country.

This attack demonstrates that cyber threats to smart cities are real and serious. The more cities adopt smart city technologies, the greater their potential vulnerabilities. The ransomware attack on Indonesia’s PDN serves as an alarm and wake-up call for developing countries to take digital risk management in smart cities more seriously, starting with identifying potential risks.

Other examples of cyber-attacks highlighting the vulnerabilities of smart cities include the ransomware attack in Atlanta, USA, in 2018, which crippled the city’s public services, and the Distributed Denial of Service (DDoS) attack in Johannesburg, South Africa, in 2019, which disrupted government and business operations. Additionally, the hacking of CCTV cameras in Washington D.C., USA, in 2017, showed how hackers could access and control thousands of CCTV cameras, raising concerns about privacy and public security.

These incidents emphasize the importance for developing countries to enhance their cybersecurity measures to protect their smart city infrastructure. Developing countries must take digital risk management in smart cities seriously, beginning with identifying potential risks.

Vulnerable Cybersecurity

The digitally connected infrastructure of smart cities is highly vulnerable to cyber-attacks such as hacking, malware, and ransomware. These attacks can lead to the theft of sensitive data, disruption of public services, and significant financial losses. In developing countries, investment in cybersecurity is often inadequate due to several factors. Firstly, limited budget allocations mean that priority is given to basic needs such as physical infrastructure and public services over advanced technologies like cybersecurity. Secondly, awareness of the importance of data protection is still low among both the government and the general public. Many parties do not yet realize the potential damage that cyber-attacks can cause and the importance of taking preventive measures.

Additionally, the lack of human resources (HR) knowledge in cybersecurity is a serious problem. Developing countries often lack experts in cybersecurity due to insufficient education and training. The absence of educational institutions offering specialized programs in this field, as well as limited training and certification opportunities, results in a shortage of competent professionals. This makes it difficult for governments and organizations in developing countries to build effective cybersecurity teams and implement adequate protection measures.

With a combination of limited investment, low awareness, and a shortage of skilled HR, developing countries face significant challenges in protecting their smart city infrastructure from cyber threats.

Threatened Data Privacy

Smart cities collect and manage large amounts of data from various sources, including sensors, IoT devices, and social media. If this data is not managed properly, the risk of misuse for unethical purposes such as mass surveillance, discrimination, or manipulation is high. These challenges are more pronounced in developing countries for several key reasons.

Firstly, strong regulations and law enforcement are often absent or ineffective. Many developing countries do not yet have comprehensive legal frameworks to regulate data collection, storage, and usage. Even if regulations are in place, law enforcement is often weak due to limited resources, corruption, or lack of institutional capacity. This makes violations of privacy and data misuse more likely to occur without significant consequences for the perpetrators.

Secondly, awareness of the importance of personal data protection is still low among governments, businesses, and the general public. Many parties do not yet understand the implications of poor data management and the associated risks. As a result, initiatives to improve data protection often lack support or priority.

Thirdly, the technological infrastructure and technical capabilities to manage data securely and efficiently are often inadequate. Developing countries frequently lack cutting-edge technology and the expertise needed to implement effective data security systems. Additionally, the cost of developing and maintaining secure technological infrastructure can be a significant barrier.

With a combination of these factors, developing countries face major challenges in ensuring that the data collected and managed in smart city initiatives is used ethically and securely. Therefore, these countries must strengthen regulations and law enforcement, raise awareness about the importance of data protection, develop adequate technological infrastructure, and build local capacity in data management.

Widening Digital Divide

The implementation of smart city technology has the potential to widen the digital divide between those who have access to technology and those who do not. This can result in social exclusion, economic inequality, and social tension. In developing countries, access to the internet and digital devices is still limited, especially in rural areas and low-income communities. One of the main factors contributing to this limitation is the affordability of internet access. High internet costs make it unaffordable for many people, meaning only certain segments of society can benefit from smart city technology.

In addition to cost issues, digital literacy and the ability to utilize technology, including artificial intelligence (AI), also present significant challenges. Many people in developing countries do not have an adequate understanding of how to use digital technology effectively. Low digital literacy means most people cannot fully leverage the potential of smart city technology, further widening the gap between those who are connected to technology and those who are not.

Furthermore, the application of AI in smart cities can exacerbate this divide through automation processes. AI can perform various tasks automatically that were previously done by human workers, particularly unskilled workers. This automation can lead to the loss of many jobs, leaving unskilled workers without livelihoods.

When these jobs are automated, workers without specialized skills will find it very difficult to find new employment. They may not have access to retraining or education needed to acquire the skills demanded in a technology-driven job market. As a result, they could become trapped in cycles of unemployment and poverty, ultimately widening social and economic disparities.

Dependence on Foreign Technology

Many developing countries rely on technology and expertise from advanced nations to build their smart city infrastructure. This dependence can create risks of exploitation and potential conflicts of interest. Foreign technology may not always align with local needs and contexts. For example, several African countries have collaborated with Chinese technology companies to build “safe city” surveillance systems using facial recognition technology and big data analysis. These projects have drawn criticism due to concerns about privacy violations, mass surveillance, and potential data misuse by authoritarian governments.

Additionally, many cities in developing countries use smart city platforms developed by foreign companies like IBM, Cisco, or Microsoft. While these platforms offer advanced features and functionality, they can also create dependence on foreign vendors, data security risks, and difficulties in customizing the platforms to local needs.

However, it is important to note that the use of foreign technology should not be entirely avoided. Foreign technology can bring many benefits and advancements to developing countries. What is crucial is how the technology is managed and integrated into the local context. Developing countries need to ensure they do not become overly reliant on a single technology provider and should strive to build strong local capacity. This way, foreign technology can be used effectively and in alignment with specific local needs without creating excessive dependence.

Unintended Social and Economic Impacts

Implementing smart city technology can lead to unintended social and economic impacts. One common impact is job loss due to automation. Many jobs previously performed by humans are now being replaced by machines and automated systems, which can increase efficiency but also reduce the need for human labour, especially for low-skilled workers. Additionally, changes in consumption patterns often occur as smart city technology encourages people to rely more on digital and online services, which in turn can reduce demand for traditional services and local businesses.

The disruption of traditional industries is also a significant impact, where sectors such as retail, transportation, and manufacturing must adapt or face decline due to competition with new technological solutions. In developing countries, where many people still rely on the informal sector, these impacts can be highly detrimental. Many individuals working in the informal sector may lack the skills or resources to transition to new jobs in a technology-based economy, potentially leading to increased unemployment and economic inequality. Furthermore, the social changes caused by smart city technology can create tensions within society, especially if there is a significant digital divide between those who have access to technology and those who do not. All of this indicates that the implementation of smart city technology needs to be carried out with careful consideration of its social and economic impacts, along with effective mitigation strategies to reduce its negative effects.


Identifying digital risks is a crucial aspect that must be considered by regional leaders and central governments. Only by understanding these risks in depth can they ensure that the implementation of smart cities does not deviate from its original goals of improving the quality of life for citizens. Comprehensive risk mitigation planning must be developed to address potential threats, whether they be cyber-attacks, data privacy, digital divide, or other social and economic impacts. With a proactive and well-planned approach, developing countries can optimally utilize smart city technology to create urban environments that are safe, inclusive, and sustainable for all layers of society.

*Raine Renaldi, President ID-Opentech Group, Chairman Indonesia Smart City Provider Alliance.

Tuhu Nugraha
Tuhu Nugraha
Digital Business & Metaverse Expert Principal of Indonesia Applied Economy & Regulatory Network (IADERN)