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: 2020-10-11

Overview

                                                                                             Unit: USD millions

 

2017

2018

2019

2020 (est.)

Total Local Production

2,752

2,627

2,758

2,895

Total Exports

2,621

2,502

2,627

2,758

Total Imports

5,074

5,765

6,341

6,975

Imports from the U.S.

     130

162

203

253

Total Market Size

5,205

5,890

6,472

7,112

Exchange Rate

13,548

14,481

13,901

N.A.

Data Sources: Indonesian Central Bureau of Statistics, Global Trade Atlas, and unofficial estimates. Average exchange rate of Indonesian rupiahs to U.S. dollars from Statista.com.

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 the sales of satellite & launch vehicle services as well as sales of software and IT services.

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

Indonesia’s expanding middle-class has helped boost ICT spending in recent years. The research firm International Data Corporation Indonesia previously estimated that the country’s ICT spending would increase 16% to U.S. $29.5 billion in 2020.[2]  The short-term forecast for Indonesia’s ICT spending in 2020 has since decreased due to an unexpected global economic slowdown but is expected to rebound in 2021 in line with a broader economy recovery.

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 a Fitch Solutions forecast, software sales are predicted to grow from Rp 24.24 trillion ($1.66 billion) in 2019 to Rp. 47.16 trillion ($3.23 billion) in 2023. Similarly, IT services sales are expected to grow from Rp. 108.90 trillion ($7.53 billion) in 2019 to Rp. 176.27 trillion ($12.07 billion) in 2023. And computer hardware sales that stood at Rp. 52.61 trillion ($3.60 billion) in 2019 are anticipated to reach Rp. 61.41 trillion ($4.21 billion) in 2023.

With approximately 338.75 million subscribers as of 2019, Indonesia is ranked as the fourth largest cellular market in the world.  In the third quarter of 2019, the number of fixed broadband internet subscribers in Indonesia was reported to be 9.66 million, and the number of mobile broadband subscribers was reported to be 248.2 million, according to the World Bank “Indonesia’s Connectivity Challenge” report. The number of subscribers for 4G and 3G wireless services were 178.28 million and 127.50 million, respectively.  2G mobile services remain widespread across the country with 35.33 million subscribers.

The Indonesian cellular phone market is facing sharp competition, slowing profit margins and a saturated voice and SMS service market, but the country’s telecommunications industry retains lucrative prospects for growth in data and value-added services. Prepaid wireless subscriptions account for 97.5% of subscribers, making it relatively easy for customers to switch from one provider to another. The three largest wireless operators control nearly 80 percent of the country’s cellular phone market, with Telkomsel having 171.10 million subscribers, Indosat Ooredoo having 59.30 million, and XL Axiata having 56.70 million. The remaining wireless operators are Hutchison 3 Indonesia, Smartfren, and Sampoerna Telekomunikasi Indonesia.

The internet penetration rate was 68%, or 184.94 million internet users, in 2019, with many users having fixed and 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 the 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 and in the 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 investment 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

Web Resources

  • Indonesian State Ministry of Communication and Information: www.kominfo.go.id
  • Indonesia Infocom Society: www.master.id
  • Informatics and Computer Science University Association: www.aptikom.or.id
  • Association of Indonesian Computer Software Industries: www.aspiluki.or.id

For questions or more information, please contact Commercial Specialist Kalung Riang at Kalung.Riang@trade.gov

 

[1] IDC Global ICT Spending Forecast 2020-2023

[2] Digital News Asia, Indonesia’s ICT spending to hit U.S. $29.5 billion in 2020. https://www.digitalnewsasia.com/digital-economy/indonesia%E2%80%99s-ict-spending-hit-us295bil-2020-idc