Provided these Indonesian smartphone users use their device "productively", rising smartphone penetration can boost the overall Indonesian economy, and specifically the nation's digital economy. The e-commerce industry of Indonesia is targeted to be worth USD $130 billion by 2020.

Meanwhile, the Indonesian Internet Service Providers Association (Asosiasi Penyelenggara Jasa Internet Indonesia, abbreviated APJII) said there are currently 132.7 million Internet users in Indonesia, consisting of 63.1 million (47.6 percent) smartphone users, 67.2 million (50.7 percent) people who use both smartphone or the desktop computer to access the Internet, and 2.2 million (1.7 percent) desktop computer users. The APJII added that of all Internet users in Indonesia, 97.4 percent indicate that they use Internet for social media such as Facebook, Twitter, Instagram and YouTube.

Smartphone Users in Indonesia:

 2013 2014 2015 2016 2017F 2018F
Smartphone Users
(in million)
 27.4  38.3  52.2  69.4  86.6 103.0

Source: eMarketer

One of the reasons why smartphone penetration in Indonesia rises rapidly is because global and local vendors are offering attractive prices for their devices. With only IDR 1 million, or roughly USD $75, people can already purchase a smartphone that is equipped with 4G technology.

For the economy, rising smartphone and Internet penetration is an important asset. By making it easy for people to purchase products and service online, the flow of goods (trade) and services within the country grows and quickens. Therefore, the Indonesian government targets to see the local e-commerce industry grow from USD $18.5 billion in 2015 to USD $130 billion by 2020. The government's Palapa Ring project is a key project that will contribute to rising Internet penetration. This project, involving an undersea fiber-optic cable network that stretches across 13,000 kilometers and an onshore network of nearly 22,000 kilometers, aims to provide fast broadband Internet to Indonesians in both the urban and rural areas all across the Archipelago.

The government hopes to encourage a multiplier effect by boosting Internet penetration across the Archipelago. For example, the small and medium sized companies in Indonesia can benefit of a growing e-commerce industry as they can boost sales (implying they may need more staff hence employment opportunities rise). This effect will not occur if domestic demand is met by imported goods through for example from China.

It is estimated that 57 percent of all smartphone users in Indonesia purchase goods and services online (online shopping). Hengky Prihatna, Industry Head at Google Indonesia, says Indonesians are not just using their devices for calling, text messaging, or social media but are increasingly buying things online. He added that research shows Indonesians spend an average of 136 minutes (just over two hours) per day on their mobile devices.

Number of Social Media Users (in million):

World Indonesia
Facebook 1,788     88.0
WhatsApp 1,000     12.3
 500     28.0
Line  220     30.0
Twitter  313     16.8

Source: Investor Daily