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Indonesia Country Commercial Guide

Indonesia - Telecommunications
This is a best prospect industry sector for this country. Includes a market overview and

trade data.

Last Published: 2/4/2019

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
unof cial estimates.
 
Note: U.S. imports are likely larger than the gures 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 
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sectors, investment to support government infrastructure, mobile nancial

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
rst 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 ber-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 re ected 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 pro t 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.
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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 xed 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 signi cant 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 ve 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 ber optic cable network
•           Microwave communication equipment
•           LTE network
•           Cloud technology
•           Broadband solutions
•           eGovernment, eHealth, eProcurement, OSS
•           Police and security communications
•           Maritime and shery monitoring system
•           Value-added services

Opportunities

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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 (http://www.master.id)
Indonesia Infocom Society: www.mastel.id (http://www.mastel.id/)
For questions or more information, please contact Kalung Riang at
Kalung.Riang@trade.gov (mailto:Kalung.Riang@trade.gov)
 

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