Overview

  Unit: USD millions

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.

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.

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 for growth. Much of Indonesia’s potential is yet 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 (~29.75 billion USD), Industry 4.0 in five priority sub sectors (F&B, Textiles, Apparel, Automotive, Electronics, Chemicals, and Pharmaceuticals) (~ 16.80 billion USD) and the development of science and technology parks (~54.6 million USD). The government recently laid out Indonesia’s Digital Roadmap 2021-2024, which covered four strategic sectors,(digital infrastructure, digital government, digital economy, and digital citizens) as well as the 6 achievement targets for expediting Indonesia’s digital transformation (Development of safe digital infrastructure, development of open and integrate digital gov institutions, the third is transforming Indonesia to a tech producer through establishing 4G and 5G throughout the country, the fourth is removing legal and monetary barriers to innovations, the fifth is bolstering digital capacity to strengthen competitiveness, and the last one is building digital culture).  

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, such as investments to support government infrastructure, mobile financial services, and e-commerce. According to Fitch Solutions, software sales are predicted to grow from IDR 40.194 trillion in 2019 to IDR 137.728 trillion in 2026. Similarly, IT services sales are expected to grow from IDR 262.910 trillion in 2020 to IDR 635.504 trillion in 2026. Computer hardware sales that stood at IDR 46.747 trillion in 2020 are anticipated to reach IDR 84.635 trillion in 2026.

With approximately 355 million mobile cellular subscription as of 2020, Indonesia is ranked as the third largest cellular market in the world only behind India and China. In 2020 there were over 11.7 million fixed broadband Internet subscribers in Indonesia. According to Fitch Solutions, in 2021, the estimated number of subscribers for 4G and 3G wireless services were 258.188 million and 79.741 million, respectively. The state-owned telecommunication operator, Telkomsel, launched the first commercial 5G service in May 2021, and Fitch Solutions forecasted 191.3 million subscriptions by 2031.

The Indonesian cellular phone market is facing sharp competition with diminishing profit margins. 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. In 2020, Telkomsel had 169.5 million subscribers, Indosat had 60.3 million, and XL Axiata had 57.89 million, and when combined, they control 287.73 million subscribers, or about 81% of the country’s cellular phone market.  Other wireless operators include Hutchison 3 Indonesia and Smartfren.

According to Statista, around 69.8% of Indonesians used the Internet in 2020. Development of the fixed broadband infrastructure has been hampered by the country’s complex geography which consists heavily  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 cables.

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 connection to rural regions improve, new opportunities to provide IT devices and services to the local populace will emerge. Cellular telecommunications operator investments in base stations and backhaul infrastructure have been growing at an accelerated rate in recent years, a trend that is reflected in the number of wireless subscribers and sales 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 Yulie Tanuwidjaja at Yulie.Tanuwidjaja@trade.gov