(Last updated: 26 Sep 2011)

Trends and opportunities

The market

Indonesia's complex geographical island structure (over 16,000 islands) makes the build-up of cable/digital infrastructure difficult and costly. Fixed line networks are concentrated in major cities, which results in low broadband Internet usage in households in remote areas. With limited fixed infrastructure in place (only 14 per cent household penetration), mobile networks will drive adoption going forward in the future. Indonesia’s mobile market passed 150 million subscribers in early 2010 with penetration running at 65 per cent.

ICT business opportunities

• Mobile broadband IT 
• Web-enabled mobile VAS such as social networking apps, mobile Internet products
• Digital content
• E-commerce
• Cloud services
• Data centre
• Risk and compliance management
• Governance security
• Asset management/wealth management solutions
• Advance electronic payment solutions (E-Payment)
• Hospital Information System (HIS)

Why is this market attractive for Australian companies?

• Sustained growth owing to strong domestic market - Indonesia's economy is less affected by the global economic crisis in 2008-2009 than most other countries in the region.
• With a total population of 240 million as of 2010, and more than half of the population below age 30, young population with rising income continues to boost consumer spending.
• Australia is the nearest Western country (neighbour) to Indonesia.
• Indonesia is the fastest growing mobile telephone market in the Asia Pacific region, predicted to reach 391 million in 2015. Within nine mobile network players and 98 per cent prepaid in the mobile telecom sector, this market is one of the most attractive telco markets for foreign investors.
• The Indonesian ICT industry is booming and government commitment has been demonstrated by the creation of the Ministry of ICT.  According to the Department of Post and Telecommunication, the government has a target of providing telephone and IT services to all rural areas in Indonesia by 2015.

Marketing your products and services

Market entry

Top tips to be successful in Indonesia

• Finding a local partner is recommended as a key to market entry 
• Australian brands are recognised for their quality
• Culture adoption – understand the local business characteristics
• Need to think realistic, long term and flexible on business models

How does doing business in Indonesia differ from Australia and what do Australian companies need to do in approaching this market?

• Undertaking market research is essential prior to making any commitments, and don’t presume it will have the same market conditions of neighbouring markets such as Singapore or Malaysia.  Due to limited awareness of Australian capability and government regulations, partnering with a local firm is advisable. 
• The market is very price sensitive and be prepared to face strong competition from market leaders from the USA and China.
• Have an understanding of the difference in culture, for example ‘Yes’ does not always represent a commitment, but rather an indication that your point has been understood. For example, ‘Yes’ at the first meeting and/or correspondence does not always mean ‘a confirmed Yes’.  
• Have patience in developing partnerships and aim for a longer term commitment.  Market visits will be essential to building such relationships. 
• Media hype is not always a reality – need to closely monitor the market to identify the latest telecomm information.

Key ICT events in Indonesia

• ICT Expo Indonesia – www.ictindonesia.com
• The Indonesia Cellular Show – www.ics-expo.com

Links and industry contacts

Government, business and trade resources for Indonesia

Directorate General of Posts and Telecommunications – www.postel.go.id
Indonesia Infocomm Society – www.mastel.or.id
Indonesia ISP Association – www.apjii.or.id
Ministry of Communication and Information Technology Republic of Indonesia – www.depkominfo.go.id
National ICT Council – www.detiknas.org

Major telecommunication service providers
Indosatm2 – www.indosatm2.com
Telkom – www.telkom.co.id
XL Axiata – www.xl.co.id

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

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