Information Technology

  • Indonesia has become the largest spender on Information Technology (IT) in Southeast Asia and is ranked 19th globally.
  • The internet in Indonesia will contribute 2.5 percent to its GDP in 2016, up from only 1.6 percent in 2011.
  • The domestic e-commerce market will be US$24 billion by 2016.
  • A foreign portfolio e-commerce company successfully attracts 250,000 daily visitors in Indonesia.
  • Memoranda of Understanding on bilateral scientific and technological cooperation have been signed by Indonesia and other countries

Indonesian Information Technology

Indonesia’s geography, with over 17,000 islands, makes the creation of a cable/digital infrastructure difficult and costly. Fixed line networks are concentrated in major cities, which results in low broadband Internet usage in households in remote areas.

Out of the 240 million people who live in Indonesia, around 51 percent live in urban areas and 49 percent in rural areas. Despite the difficulties, Indonesia has:

  • 24 percent internet penetration,  which equals 63 million internet users
  • 25 percent social network penetration with 42.5 million Facebook users (the 4th highest in the world)
  • 5.7 million Twitter users (3rd highest in the world) with 15% of the world’s tweets

Jakarta has 112 percent mobile penetration with a total 266 million mobile subscribers, and is the world’s 4th largest mobile market.

As a developing country, Indonesia is working to advance the  country’s economy by increasing investment in the information technology sector. Data from the Ministry of Finance shows an increase of approximately 18.24% —  equivalent to US$219 million — in Central Government ICT Expenditure in fiscal 2009-2010 for physical connectivity.

According to Cekindo Bisnis Grup, this rapid development in the information technology sector, combined with drivers like mass consumption, urbanization, a surge in mobile usage, and a tech-hungry young population, makes a positive impact on economic growth.  While it indicates promising potential for the digital market in Indonesia, it also creates a big concern for cyber security in Indonesia, which must be developed hand-in-hand with these e-commerce trends.

According to International Data Corporation, Indonesia has become the largest spender on IT in Southeast Asia and is ranked 19th globally in terms of spending. The public sector invests heavily in upgrading its internal infrastructure and the private sector does so so well to enhance customer service and gain a competitive edge in the marketplace. It is critical for both because in 2025, Indonesia will have 125 million internet users.<

Deloitte expects that the internet in Indonesia will contribute 2.5 percent to GDP in 2016, up from only 1.6 percent in 2011. This is a greater contribution than liquefied natural gas, which contributes only 1.45 percent to GDP and electronic and electrical equipment exports at 1.51 percent. It is also more than three times larger than the contribution of wood-related manufacturing. Today’s trend is to encourage Indonesians to buy smart phones, subscribe to monthly data package, and make online purchases.

Research conducted by Indonesia’s E-Commerce Association and Google found that the domestic e-commerce market will grow to US$24 billion by 2016. In 2010 e-commerce was only US$230 million, or less than 0.1 percent of GDP. The ease of finding information from home and making electronic payment is one reason for the huge growth in e-commerce. Now with Law No. 7 of 2014 on Trade (Trade Law), citizens are protected when using electronic transactions or doing  business on the internet.

Lazada, a foreign e-commerce company, successfully attracts 250,000 daily visitors in Indonesia. It launched in 2013 with a startup cost of US$100 million. Now Lazada is positioned as one of the top e-commerce businesses in Indonesia,  competing with Rakuten, Bhinneka, OLX and Zalora.

For technological development, bilateral Memoranda of Understanding were signed by Indonesia with a number of countries, including Japan, Tunisia, the United States, the Republic of Korea, and the Republic of Mozambique.

 

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Rapid growth of technology offers great opportunity in Indonesia

How to Invest and Do Business in Indonesia


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