Asia Telecommunication Industry : ICT Sector Indonesia

Indonesia is a growing potential in telecommunications and as many reviews stated, investors are becoming more and more aware of the developing market in the archipelago. The country currently holds the position of having the largest mobile subscribers in the world. With the emergence of many telecommunication operators, Telkomsel, Indosat and XL Axiata which recently bought Axis Capital Group, remain to lead the pack. In Jakarta, the number of mobile phones doubles the total number of population in the city.


Realizing Indonesia’s potential as a major ICT market is reliant on the government making headway on fundamental infrastructure projects such as increasing electricity supply and a nationwide broadband network. Indosat and XL remains to be on top of the game when it comes to broadband market. E-commerce and other ICT inclusions are already competing with international quality and service.


Public spending on ICT makes a significant contribution to overall ICT spending as state ministries and government bodies look to prepare their internal infrastructure for Indonesia’s further economic expansion.


However, to date, the sector has been held back by the lack of a trusted online payment system due to weak online security measures and widespread fraud. This is in addition to the absence of industry standards and consumer protection measures which have made potential shoppers hesitant.


According to XL’s recent studies, of Indonesia’s 50 million or so internet users, 57% have shopped online using bank transfers and cash on delivery. Multinational industry players such as Paypal have failed to establish a presence in the market leaving it open to local players. Indonesia’s largest website Kaskus developed their own online payment system in 2006 called ‘rekber’ which is essentially an escrow service whereby once the buyer and seller have agreed on a price, rekber serves as a middle man to release the funds once the buyer receives the goods. Other home-grown online payment services which are also making inroads into the market are Indomog, Kaspay and Inapay. These new services will hopefully build confidence among Indonesian consumers and provide the foundations for a new breed of online business entrepreneurs who can create concepts that give Indonesians a reason to buy online such as exclusive products and discount systems.

The outlook of Indonesia’s ICT sector remains positive though, despite the constant fraud threats. Thanks to foreign investors and Asia’s development and growth as a whole, Indonesia and its technology can still see a brighter future.