Information and communications technology to Indonesia

(Last updated: 21 Aug 2008)

Trends and opportunities

The market

The archipelagic structure of Indonesia creates unique and heavy demands on the development of an integrated national telecommunication network. The Indonesian telecommunications industry will expand in line with the economic recovery and opportunities for foreign investment will continue to increase, following the big investment of SingTel (Singapore) in Telkomsel, Singapore Technologies Telemedia in Indosat, Telekom MalaysiaTM International (L) Ltd (Malaysia) in Excelcomindo, Hutchinson (Hong Kong) in PT Hutchinson CP Telecommunications, and recently, Saudi Telecom and Maxis (Malaysia) attained the majority share of the new cellular operator Natrindo Telepon Seluler and UAE’s Etisalat poured resources into Excelcomindo.

These opportunities are likely to emerge due to the aggressive expansion of the cellular mobile services due to the double digit growth of the subscribers.

Opportunities

A large population of around 235 million, continuous liberation and deregulation of the Indonesian telecommunication sector, growing trend towards technology adoption, and a large youth population (aged less than 25 years) represent both long-term opportunities and short-term challenge of highly competitive business in this market.

The recent establishment of copyright protection laws, the Internet subscriber growth, and the increase of IT expenditure in corporate sectors will lead to a new chapter of IT development in Indonesia challenging the low wage condition.

The trend for Indonesia is focusing on telecommunications infrastructure and solutions. There is also growing demand for mobile phone-related applications/contents, and for niche/creative solutions including banking and finance IT.

Some sub-sectors with considerable potential include:

• Telecommunication infrastructure and solutions
• WiMAX related technologies and solutions
• Mobile contents
• Banking and finance solutions
• Radio communication
• e-Passport solutions including biometric, RFID, card, fingerprint, etc

The culture differences will require more attention in addition to pricing strategy, full support from principals, and good relationship with the telecommunication operators. Therefore, partnership with a reputable local company is suggested.

Competitive environment

The very impressive growth of the telecommunication sector attracts an increase of foreign direct investors into the mobile sector regardless of the tougher competition between mobile carriers, risky investment climate, geographical nature issues and pricing issues. 

The low penetration rates, economic growth and continuous deregulation from government in Indonesia will ensure more business potential in this country. 

Tariffs, regulations and customs

IT product tariffs comprise of 10 per cent Value Added Tax (VAT) and zero to 10 per cent import duty. Software attracts no import duty. Local partners can usually assist in import procedures, hence lowering the import duties.

Telecommunications equipment in Indonesia attracts import duties ranging from five per cent to 30 per cent plus 10 per cent Value Added Tax (VAT). Local partners can usually assist in import procedures, hence lowering the import duties. In addition, there is a 20 per cent luxury goods tax.

To boost the development of the telecommunications sector, the Indonesian Government has extended a facility exempting the import duty of basic materials and components for Indonesian Digital Telephone Central (STDI), car telephone networks and terminals. The exemption covers import duties on 438 products of STDI and 471 types of components for car telephones.

Indonesia’s visa and labour regulations restrict the ability of foreigners to work in IT sectors. However, provisions are made for specialists and senior management.

Industry standards

In 2001, Presidential decree No. 6/2001 was announced. This set the guidelines in the development of the legal framework, telecommunication infrastructure, human resources and content for the ICT industry. This decree is expected to foster more involvement from the private players in Indonesia in ICT development.

Any telecommunication equipment for use in Indonesia is subject to Type Approval from the Directorate General of Posts and Telecommunications. Products must meet technical standards in regards to quality, reliability and safety. A written application should be submitted.

Marketing your products and services

Market entry

Indonesia is a unique market in which access to government officials is difficult to achieve. A high proportion of market data is not publicly available and is obtainable only through personal contact and established networks. Where data is available it is not always reliable and requires validation through other sources.

Direct contact with the key players via in-market visits is often the best strategy. However, it has to be noted that many projects in Indonesia have a long gestation period. It is often necessary to have some in-market representation to maintain an awareness of project priorities, follow issues driving the decision making process and consult with interested parties on a regular basis.

The e-business sector in Indonesia is heavily dependent on intermediaries such as software integrators; therefore a well established partner is advisable.

The telecommunication sector is similar to the e-business sector in that intermediaries (with experience in government projects) can often provide the best direct marketing.

For consumer related products, traditional marketing strategies such as advertising, promotions and product launches still apply.

Be aware of a certain level of support that your Indonesian partner expects. This support may be in the form of:

• Providing your partner with comprehensive information packs, profiling your company and its products.
• Participating in major trade exhibitions, such as The Asia Pacific Telecommunication Show, and the Indonesian International Telecommunication, Media and Information Technology Conference and Exhibition.
• Providing some sample products and training to assist your agent in carrying out a product demonstration.

Distribution channels

High-end IT products are usually distributed and promoted by local partners. Low-end IT products are distributed at the retail level.

Links and industry contacts

Events

The following events may be of interest.  Please note that Austrade is not involved in these events.

ICT Expo Indonesia 2009 – www.ictindonesia.com
The PC Show – www.thepcshow.com.sg/Post.htm
IT Asia Congress – www.itasia-jakarta.com  

ICT-related resources

APJII – www.apjii.or.id
Association of Indonesian Internet Service Provider is an association that comprises of ISPs established on 15 May 1996.

MASTEL – www.mastel.or.id
A non-profit organisation that also functions to serve as a bridge between government and players and those who observe the telecommunications sector.

PT IBM Indonesia – www.ibm.com/id
IBM Indonesia is responsible for the sales and marketing activities for IBM hardware, software products and services in the country.

Mincom Indoservices – www.mincom.co.id
A systems integrator providing comprehensive IT solutions and services in telecommunications, finance, utilities and mining, oil and gas sectors.

Indonesian Computer Software Association (ASPILUKI)
Jl. Taman Gandaria A 7
Jakarta 12130
Indonesia
Tel: +61 21 7279 2201
Fax: +61 21 7279 2203

Association of National Informatics Corporation (APNI)
C/- PT USI-IBM
Landmark Tower, 30th Floor
J1. Jen Sudirman No 1
Jakarta 12910
Indonesia
Tel: +61 21 251 2922
Fax: +61 21 251 2933

Association of Computer Traders of Indonesia (APKOMINDO)
Mangga Dua Plaza, Blok R No 19
Mangga Dua
Jakarta 10730
Indonesia
Tel: +61 21 601 4731
Fax: +61 21 601 4732

Indonesian Internet Service Provider Association (APJII)
Elektrindo Building, 9th Floor
Jl. Kuningan Barat No. 8
Jakarta 12710
Tel: +61 21 526 8777 or 526 8789
Fax: +61 21 37 4321

Government, business and trade resources for Indonesia

Ministry of Communication and Information Technology Republic of Indonesia (MCI) – www.kominfo.go.id
Directorate General Customs and Excise - Indonesia – www.beacukai.go.id
Kadin Indonesia – www.kadinnet.com
Indobiz– www.indobiz.com
IndoExchange – www.IndoExchange.com
Indonesian Yellow Pages – www.yellowpages.co.id
Global Sources – www.globalsources.com
Infomedia – www.asianvendors.com

Department of Industry and Trade
Jl. Jend Gatot Subroto Kav. 52-53 Lt II
Jakarta 12950
Tel: +61 21 525 0954 or 525 5509
Fax: +61 21 525 0906
Email: sj-indag@dprin.go.id

Directorate General of Post and Telecommunication – www.postel.go.id
Jl. Medan Merdeka Barat No. 17
Jakarta Pusat 10110
Tel: +61 21 315 6000, 383 8501 or 315 7000
Fax: +61 21 386 0754, 386 0746 or 384 0172

Service providers

PT Citra Buana Masindo (AJM Resources Publishing and Gold Group Asia/Pacific Pty Ltd)
Gedung Masindo
Jl. Cikajang No.56, Kebayoran Baru
Jakarta 12170
Indonesia
Tel: +61 21 723 3444
Fax: +61 21 723 3555
Email: masindo@rad.net.id

AAJ Associates/RSM International (Bird Cameron)
Samudera Indonesia Building 3 and 3 A Floor
Jalan Letjen S Parman Kav 35
Jakarta 11480
Indonesia
Tel: +61 21 530 7889
Fax: +61 21 566 3569
Email: aaj@aaj.co.id

PT Taylor Nelson Sofres Indonesia (Frank Small and Associates)
Menara Thamrin Suite 1401
Jl MH Thamrin Kav 3
Jakarta 10250
Indonesia
Tel: +61 21 230 2788
Fax: +61 21 230 2794
Email: jakarta.office@id.tnsofres.com

Financial

Jakarta Stock Exchange – www.jsx.co.id
Surabaya Stock Exchange – www.bes.co.id
Wright Investors' Service – www.wisi.com

Australian resources

The Department of Foreign Affairs and Trade (DFAT) – www.dfat.gov.au/geo/indonesia/index.html

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

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