ICT to Indonesia

Trends and opportunities

The market

Indonesia’s digital innovation sector is rapidly evolving. Seventy per cent of Indonesia’s 252 million people are aged 39 or younger and they are relatively tech savvy. One third of Indonesian have internet access and this rate is growing. Smartphones are the key platform for accessing the net, with more than 280 million SIM cards in use across the archipelago.

The Indonesian Ministry of ICT announced an e-commerce roadmap, which aims to support the creation of 1,000 new ‘technopreneurs’ by 2020. In recent years, there has been strong growth in the local start-up sector. Incubators and co-working spaces are appearing across big cities to facilitate the growth and development of start-ups. Many of these apps technology are built into eco-systems provided by giants like Google, Instagram, Facebook, and Twitter and enable local businesses to provide services over the internet, bypassing high cost traditional distribution.

New technology innovation entrepreneurs in the market include:

  • Gojek - The first start-up of Indonesian origin to be classified as a Unicorn after closing a funding round in August 2016 which valued the company at least $US1billion. GoJek began as an uber style aggregator for motor-cycle taxis, before expanding into multiple sectors including F&B delivery and courier services.
  • Tokopedia - a leading online marketplace that enables individuals and small business owners in Indonesia to quickly and easily open and maintain their online store. Softbank and Sequoia Capital have both recently invested $US 100 million.
  • Traveloka - an Indonesian flight booking website with a mission to make travel simpler and more compelling. These innovative start-ups are improving the lives of Indonesians by connecting them to value-added services which were previously only accessible to the rich.

The challenge now lies in internet connectivity. The cellular signals generally has reached 91 percent of villages across Indonesia, but the quality of the internet connection is not evenly distributed. In Java Island, the speed can reach up to 7Mbps, but in Maluku and Papua (Eastern Indonesia) speeds are regularly still under 1Mbps for each download.

Indonesia's complex geography (over 17,000 islands) makes the build-up of cable infrastructure difficult and costly. In addition, there is a high interconnection rate because of the high call cost between operators. Consumers tend to use more than one subscriber identity module (SIM) card in order to avoid inter-operator calls. The interconnection rates also lead to low competition between operators, thereby reducing innovation for a better service.



E-commerce is growing rapidly in Indonesia, with the e-market projected to be worth $US130 billion by 2020, making Indonesia one of Asia’s more attractive destinations for digital investment. This opens the door to firms ready to bring in capital, technology and security solutions who are willing to work with local companies to launch their own e-commerce arm.

Big data

Based on the Government Regulation No.82/2012, Indonesian businesses and others conducting electronic transactions in the country are mandated set up datacentre sites in Indonesia, although still raise some arguments up to the present. Some Australian players have established their presence in this market:

  • Equinix - Australian Data centre provider set a Joint Venture with PT DCI, to build a 65,000 square feet data centre company in Indonesia, to meet market demand from cloud and financial sectors.
  • Telkomtelstra - a joint venture between PT. Telekomunikasi Indonesia (Telkom Indonesia), Indonesia’s largest telecommunications operator, and Telstra Corporation Limited (Telstra). They provide managed solutions include: Managed Network Services (MNS), Managed Cloud Services (MCS), and Unified Communication & Collaboration (UC & C) Services.


Fintech continues to develop rapidly in Indonesia. Total Fintech transactions in Indonesia are estimated to reach US$14.5 billion in 2016. The Indonesian Government has identified close to 100 local Fintech companies with the potential to help Indonesia's banks, Small Medium Enterprises, Non-Banking Financial Institutions, Capital Markets at the cutting edge of technology and services. The Financial Services Authority of Indonesia (OJK) will introduce new guidelines to encourage fintechs to operate in Indonesia.

Cyber Security

Despite e-commerce and fintech developments, Indonesia had the highest percentage of Cybercrime of a malware attack in the world (China was second with 21.26 per cent). Malware is a particular problem in Indonesia along with spam and other types of email-based scams.

Indonesia will follow in the footsteps of other ASEAN countries by stepping up its cyber defence in critical infrastructures through a number of initiatives to tackle cyber threats. There are opportunities for Australian cyber security to contribute to this ecosystem growth. To name a few, an Australian Cyber Security Provider, Dtex System, has started their business in Indonesia since the year of 2006, delivering User Behaviour Analytic/UBA software to detect and predict insider threat, while prioritising employee privacy mainly in the financial services sector.

Competitive environment

The Indonesian Ministry of Communication drafted regulations to impose the local industrial content (TKDN) for 4G LTE devices. The government was finalising a scheme that offers vendors five possible options to calculate the percentage of local content for 4G-ready smartphones ahead of the implementation of the mandatory 30 per cent local content rule early 2017. To meet the local content requirement, smartphone makers will be allowed to choose one of five calculation scenarios:

  • The calculation is fully based on the hardware.
  • The calculation is 75 per cent based on hardware and 25 per cent based on software.
  • The calculation is 25 per cent based on hardware and 75 per cent based on software.
  • The calculation is based evenly on hardware and software.
  • The calculation is based fully on software.
  • The government currently applies a mandatory 20 per cent local content requirement for 4G-enabled smartphones, the content calculation is solely based on the hardware. The minimum local content requirement for 4G smartphones will be raised to 30 per cent in 2017 as an attempt to boost the local component industry and make Indonesia a production base. Both the Industry Ministry and the Communications and Information Ministry have said both software and hardware will be taken into account to determine the local content percentage.

    For the foreign players, Indonesian ICT market features intense competition from Korean, Chinese and United States players. Alibaba is one big foreign player building its foot print in Indonesia through a JV partnership. US-based e-commerce giant eBay has confirmed that it is setting up a ‘representative office’ in Indonesia. The e-commerce major is already running a joint venture called Blanja with state-owned telecommunications operator Telkom. American business accelerator Plug and Play will form a joint venture with an Indonesian company to create a business incubator in support of new small and medium enterprises in the technology sector. Earlier this year, President Joko ‘Jokowi’ Widodo visited the Plug and Play headquarters in Silicon Valley, California, when the tech firm signed an agreement with Telkom to establish a start-up-coaching program. The collaboration is part of the government's plan to develop 1,000 entrepreneurs in the tech sector by 2020.

    Tariffs, regulations and customs

    Content Providing Services Operation

    The regulation of Minister of Communications and Information Technology No. 21/2013 was designed to respond to issues of premium mobile subscription package providers overcharging customers in the year of 2012-2013, and was amended by Minister of Communications and Information Technology Regulation No. 6 of 2015.

    The Information and Electronic Transactions

    On 28 November 2016, the revision on Indonesian Minister of Communication Law Number 11 Year 2008 on Information and Electronic Transactions (ITE) came into force, which required people to be more careful in the social media. The regulation prohibited for people in creating and disseminating information that invited accusation, defamation, and hatred of ethnicity, race and religion.

    Marketing your products and services

    Market entry

    • A local partner is recommended for market entry.
    • Culture adoption - understand the local business characteristics, think long-term and be flexible on business models.
    • It is imperative that Australian principals provide full support and commitment to local partners.
    • The market is very price sensitive.
    • Media hype is not always a reflection of reality – regular market visits are therefore recommended to identify the latest ICT developments.

    Links and industry contacts

    Indonesia FinTech Association
    Indonesian E-Commerce Association (idEA)
    Indonesian ICT Society (MASTEL)
    Indonesian Internet Service Provider Association (APJII)
    Indonesian Software Association (ASPILUKI)
    Ministry of Communication and Information Technology Republic of Indonesia (in Bahasa)

    Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

    Contact details

    The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

    • develop international markets
    • win productive foreign direct investment
    • promote international education
    • strengthen Australia's tourism industry
    • seek consular and passport services.

    Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.