Indonesia - Telecommunications Indonesia - Telecommunications
Overview
Unit: USD millions
| 2016 | 2017 | 2018 | 2019(est.) | |
| Total Local Production | 3,952 | 4,259 | 4,470 | 4,693 |
| Total Exports | 3,764 | 4,056 | 4,258 | 4,470 |
| Total Imports | 7,241 | 8,374 | 9,211 | 10,132 |
| Imports from the US | 104 | 130 | 162 | 203 |
| Total Market Size | 7,429 | 8,577 | 9,423 | 10,355 |
Data Sources: Indonesian Central Bureau of Statistics, Global Trade Atlas, and unofficial estimates.
Note: U.S. imports are likely larger than the figures indicated above. The discrepancies arise from transshipments in third countries and the unrecorded imports especially in sales of satellite & launch vehicle services as well as sales of software and IT services.Leading Sub-Sectors
Indonesia’s medium-term outlook for the information and communication technology (ICT) sector is positive with strong economic growth and massive consumers. The country’s expanding middle-class has helped boost ICT spending. Business Monitor Indonesia (BMI) forecasts total IT spending in Indonesia is expected to increase by 11.4% in 2018 to a value of Rp163.7 trillion ($11.7 billion).
The growth in computer service imports including software and service will be fueled by investments in technology solutions from both private and public sectors, investment to support government infrastructure, mobile financial services, and e-commerce. According to BMI forecasts, software sales will grow from Rp20.8 trillion ($1.5 billion) in 2018 to Rp 40.6 trillion ($2.9 billion) in 2022. IT service sales is expected to grow from Rp96 trillion ($6.8 billion) in 2018 to Rp165 trillion ($11.8 billion) in 2022. The consumer market for traditional PC shipments also continued its decline due to the rapid pace of technological advancement in the smartphone market. BMI forecasts computer hardware sales to go from Rp46.39 trillion ($3.3 billion) in 2018 to Rp55.6 trillion ($4 billion) in 2022.
ICT infrastructure to connect the rural regions and the smaller islands to major cities have been deployed using various technologies including: Satellites (the first satellite launched in July 1976, and the most recent one in June 2016, totaling 25 satellites with two additional to be launched in the next 2 years, majority are U.S. satellites), microwave radios, and submarine fiber-optic cable.
Broadband internet connectivity is needed to increase internet penetration and usage in the economic activities and integrating the supply chain for domestic and international traders. As the connectivity to the rural regions improved, new opportunities to provide IT devices and services to the population, and the cellular operators’ base stations and backhauls have been growing faster which is also reflected in the number of subscribers and sales of smartphones and tablets.
Indonesia is the fourth largest cellular market in the world with around 305.8 million subscribers as of March 2018. 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. 4G and 3G services are already sizeable but 2.5G mobile market remains widespread across the country. Prepaid subscriptions account for 98% of subscribers. As of end of April 2018, the four operators control nearly 90 percent of the country’s cellular phone market with Telkomsel’s 163.01 million subscribers, followed by Indosat Ooredoo’s 103.44 million, and XL Axiata with 47.82 million. The remaining operators are Hutchison 3 Indonesia with 14.03 million subscribers, Smartfren with 7.68 million, and Sampoerna Telekomunikasi Indonesia with 14.46 million.
According to the Indonesia Internet Service Providers Association, the internet penetration rate is 54.68 or 143.26 million internet users in 2017. 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.
Local content requirements are also a significant concern. Ministry of Communications and Information (KOMINFO) Regulations 07/2009 and 19/2011 requires that equipment used in certain wireless broadband services contain local content of at least 30 percent for subscriber stations and 40 percent for base stations, and that all wireless equipment contains 50 percent local content within five years. Indonesian telecommunication operators are also required, pursuant to Decree 41/2009, to expend a minimum of 50 percent of their total capital expenditures for network development on locally sourced components or services. In 2015, KOMINFO issued Regulation 27/2015, which requires all 4G enabled devices to contain 30 percent local content, and all 4G base stations to contain 40 percent local content by January 2017. The U.S. Government continues to engage the Indonesian government on these issues.
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, OSS
• 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/PtP)
• Exchanges and data centers
Last mile:
• 3G and LTE base stations, base stations controllers
• Radio link backhauls (PtP) and broadband access (PtMP)
• Indoor and outdoor access points and clients/unlicensed and licensed
Devices:
• PC, tablets, smartphone, disposable phone
• 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/LTE
• Monitoring systems/SCADA/NMS
Web Resources
Indonesian State Ministry of Communication and Information: www.kominfo.go.id
Indonesia Infocom Society: www.mastel.id
For questions or more information, please contact Kalung Riang at
Kalung.Riang@trade.gov