While the smartphone sector is contributing to increased internet penetration in Indonesia, the figure remains low at 21% with those 50 million or so users heavily concentrated in Jakarta and the country’s secondary cities in Java and Sumatra (Ministry of Communication and Information Technology). Fixed broadband connections accounted for just 2.2% of total internet usage with DSL connections and mobile internet making up the remainder. Poor broadband internet infrastructure is due to lack of investment and also the obstacles faced when laying the necessary submarine cables due to Indonesia’s geography as an archipelago.
The Palapa Ring Program aims to answer the country’s IT infrastructure problems by creating a nationwide fiber optic network which will form the backbone of the country’s ICT system, increase broadband speed significantly as well as lowering costs for communication and online access. The program which is also known as the Nusantara Superhighway Project was formulated by the Ministry of Communication and Information Technology and is part of the Indonesian Government MP3EI Masterplan. The system will consist of seven interconnected rings covering 33 provinces and 440 regencies with a total of 57,087 km of both undersea optical fiber and underground fiber optics that link into existing networks. As per February 2012, the project was 80% completed with a total of 46,000 km already laid out while the remaining 20% may well be fully completed by the end of 2012. The Ministry hopes that this will have an immediate impact on internet pentration with the aim of 30% by 2014. Following on from the completion of this program, the Ministry will move on with implementing further internet related initiatives such as the Indonesia Informative 2014, Indonesia Broadband 2015 and Indonesia Digital 2018 agendas.
In addition to the Palapa Ring Program, the government has also embarked on the Desa Berdering Program aimed at establishing basic telephony services in each of the country’s 72,000 villages. Further to this, the Pusat Informasi Masyarakat (PIM) or the Community Access Point (CAP) scheme aims to extend ICT access across Indonesia by setting up numerous Internet Community Centers which is also due to be completed by 2014. Such programs will have a far reaching impact on people’s everyday lives by opening up access to education and information in a way that was previously out of reach for the majority of Indonesia’s rural population. In addition, hardware such as telephones and computers will become essential items for millions of people that previously regarded them as out of reach luxuries. Local and international brands such as Acer, Panasonic and Lenovo have already been quick to position themselves by offering low end and low cost models to this market, the majority of which will be first time purchasers of such products.
Indonesia’s youthful population has meant the fast adoption of new technologies, the country has therefore leapfrogged straight to smartphones and mobile internet access thereby bypassing the age of the landline and fixed line internet connection that other developed markets experienced (See An Overview of Indonesia’s Telecommunication Sector). This presents its own set of challenges and opportunities given the need for developing wholesale ICT infrastructure and the investment that entails; however the country’s youthful population and fast adaptation to new technologies means that such investments will pay off quickly for the government and telecom companies. The result of greater connectivity be it through voice and internet communication will be felt acutely in areas such as education, civil bureaucracy and of course in business whereby the connection serves to bridge Indonesia’s geographical obstacles and radically improve efficiency. The ICT sector in Indonesia therefore has an even more greater role to play than in other markets in accelerating the country’s growth not only through increased personal consumption of mobile phones and laptops but also through fundamentally changing how people socially interact, obtain information and engage in commercial activities in this vast and rapidly changing market.
Global Business Guide Indonesia - 2013
Contribution to GDP: 4.94% (Information and Communications, Q4 2016)
Fixed Telephone Line Penetration: 16% (2016)
Mobile Phone Penetration: 40.4% (Statista 2016)
Unique Mobile Phone Subscribers: 47% (2016)
Smartphone Penetration: 43% Statista, 2016)
Internet Penetration: 37% (2016)
Fixed Line Broadband Penetration: ±2% (2016)
Main Operators: Telkom, Indosat Ooredoo, XL Axiata, Axis Telekom, Hutchison 3 Indonesia, Bakrie Telecom, First Media, Smartfren Telecom.
Transport in Indonesia: Roads & Railways
Indonesia’s Commercial Airline Industry
The Rise of Modern Retail Outlets
Indonesia’s Creative Industries
Tourism: Untapping the Potential
Overview of Fibre, Textiles & Garments
Challenges in Indonesia’s FTG Industry
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