Indonesia - Country Commercial Guide
Information and Telecommunications Technology

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-09-09

Overview

  Unit: USD millions

 

2018

2019

2020

2021 (est.)

Total Exports

5,193

4,634

5,438

5,601

Total Imports

14,459

13,506

13,399

14,337

Imports from the U.S.

189

204

206

208

Exchange Rate

14,236

14,147

14,582

N.A


Note: Imports from the U.S. may be larger than indicated by the figures above due to the difficulty in tracking transshipments via third countries and the existence of some unrecorded imports, such as sales of software and IT services.Data Sources:  Indonesian Central Bureau of Statistics, Global Trade Atlas, UN Comtrade Analytics and unofficial estimates. Average exchange rate of Indonesian rupiahs to U.S. dollars from the World Bank.

Looking to the future, Indonesia’s information and communication technology (ICT) sector has a bright outlook  as the country is starting from a relatively low level of IT solutions adoption, allowing plenty of room to grow. Much of Indonesia’s potential is still to be unleashed, giving the country the potential to be one of the most promising ICT markets in the coming years. Growth in traditional tech spending is expected to be driven by four platforms: cloud, mobile, social media and big data/analytics.[1]

Indonesia’s expanding middle-class and the recognition of the role that ICT plays in accelerating economic growth have helped boost ICT spending in recent years. Indonesia’s five year national medium-term development plan (RPJMN 2020-2024) identified several ICT related strategic programs, including the estimated spending required. These include ICT Infrastructure, to support digital transformation (~$31.1 Billion), Industry 4.0 in five sub-sectors (~$17.6 Billion), and the development of science and technology industrial parks (~$57.1 Million). The government is currently preparing Indonesia’s Digital Roadmap 2021-2024, which will cover four strategic sectors: Infrastructure, Government, Economy, and Digital Society.

The growth in computer service imports, including software and services, will be fueled by investments in technology solutions in both the private and public sectors. Including investments to support government infrastructure, mobile financial services, and e-commerce. According to Fitch Solutions, software sales are predicted to grow from Rp 24.24 trillion ($1.66 billion) in 2019 to Rp. 70.50 trillion ($4.82 billion) in2025. Similarly, IT services sales are expected to grow from Rp. 108.90 trillion ($7.53 billion) in 2019 to Rp 232.81 trillion ($15.94 billion) in 2025. And computer hardware sales that stood at Rp. 52.61 trillion ($3.60 billion) in 2019 are anticipated to reach Rp 78.01 trillion ($5.34 billion) in2025.

With approximately 341 million mobile cellular subscription as of 2019[2], Indonesia is ranked as the fourth largest cellular market in the world. In 2019 the number of fixed broadband internet subscribers in Indonesia was reported to be 10.28 million[3]. According to Fitch Solutions, in 2020, the estimated number of subscribers for 4G and 3G wireless services were 217.67 million and 99.32 million, respectively. The state-owned telecommunication operator, Telkomsel, launched the first commercial 5G in May 2021, and Fitch Solutions forecasted 44.8 million 5G subscription by 2025.

The Indonesian cellular phone market is facing sharp competition, slowing profit margins, saturated voice and SMS service market. However, the country’s telecommunications industry retains lucrative prospects for growth in data and value-added services. Prepaid wireless subscriptions account for 97% of subscribers, making it relatively easy for customers to switch from one provider to another. The three largest wireless operators control nearly 80% of the country’s cellular phone market, with Telkomsel having 171.10 million subscribers, Indosat Ooredoo having 59.40 million, and XL Axiata having 56.67 million.  Other wireless operators include Hutchison 3 Indonesia and Smartfren

The internet penetration rate in Indonesia was 73.7% or 196.71 million internet users in 2019[4], with many users having a fixed and/or multiple mobile subscriptions. Development of the fixed broadband infrastructure has been hampered by the country’s complex geography consisting of islands and remote rural regions. As a result, many cellular operators are offering wireless broadband services to provide affordable access to internet. ICT infrastructure to connect the rural regions and the smaller islands to major cities has been deployed using various technologies, including satellites, microwave radios, and undersea fiber-optic cable.

Broadband internet connectivity is needed to increase internet penetration and usage in economic activity as well as integration of the supply chains of domestic and international traders. As the connectivity to the rural regions improves, new opportunities to provide IT devices and services to the population will emerge. Cellular telecommunications operator investments in base stations and backhaul infrastructure has been growing at an accelerated pace in recent years, a trend that is reflected in the number of wireless subscribers and the sale volume of smartphones and tablets.

Leading Sub-Sectors

  • Satellites and ground equipment
  • Submarine and land fiber optic cable network
  • Microwave communication equipment
  • LTE network
  • Cloud technology
  • Broadband solutions
  • eGovernment, eHealth, eProcurement, including for Open-Source Software
  • Police and security communications
  • Maritime and fishery monitoring system
  • Value-added services

Opportunities

Infrastructure:

  • Satellites and ground stations
  • Fiber optic cables and accessories (land and submarine)
  • Radio links (microwave radio point-to-point access)
  • Exchanges and data centers

Last Mile:

  • 3G, 4G LTE and LTE+, 5G base stations, base stations controllers
  • Radio link backhauls (Point to Point) and broadband access (Point to Multi-Point)
  • Indoor and outdoor access points and clients/unlicensed and licensed

Devices:

  • PCs, tablets, smartphones, disposable phones
  • Satellite phones
  • Navigations and geolocation devices
  • IT networks devices (routers, gateways, load balancers, storage, cloud services)
  • Cryptographic devices

Integration devices or Enablers:

  • IoT
  • Telecom modules/GSM/3G/4G LTE/5G
  • Monitoring systems/SCADA/NMS

Resources

  • Indonesian State Ministry of Communication and Information
  • Indonesia Infocom Society
  • Informatics and Computer Science University Association
  • Association of Indonesian Computer Software Industries

Interested parties may contact Commercial Specialist Yanssen Tandy at Yanssen.Tandy@trade.gov

 

[1] IDC Global ICT Spending Forecast 2020-2023

[2] The World Bank Data Mobile Cellular Subscriptions - Indonesia. https://data.worldbank.org/indicator/IT.CEL.SETS?locations=ID

[3] The World Bank Data Fixed Broadband Subscriptions – Indonesia.  https://data.worldbank.org/indicator/IT.NET.BBND?locations=ID

[4] APJII