Indonesia Investments wishes all Muslims a happy & generous Ramadan
25 May 2018 (closed)
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Audit, assurance, tax & consulting services firm PricewaterhouseCoopers (PwC) estimates that the world population will number 7.4 billion by 2020. Nearly 52 percent of this population - 3.84 billion - is expected to be connected to the Internet through a smartphone or portable tablet with around half of this Internet audience expected to be able to access high-speed broadband (at least 30 Mbps). PwC added that most of these Internet users - some 92 percent - live outside the United States. Meanwhile, market research company eMarketer expects to see 4.1 billion Internet users by 2020, up from 3.21 billion in 2015.
One of the key reasons why smartphone and tablet users are to grow rapidly in the years ahead - particularly in emerging markets such as Indonesia, India, South Africa, Nigeria, Turkey, Brazil, the Philippines, Peru and Mexico - is because prices of these devices have become more affordable. Smartphone usage in the Asia-Pacific region has already reached one billion users in 2015, according to eMarketer, and is estimated to grow to 1.45 billion by 2019. The number of Indonesian smartphone users is expected to grow from 55.4 million in 2015 to 92.0 million by 2019.
Although smartphone penetration is still relatively low in Indonesia (less than 40 percent of the population owns a smartphone), the nation has already become the third-largest smartphone market in the Asia-Pacific region (after China and India). Due to the low penetration rate, there remains ample room for further growth.
Smartphone Growth in the Asia Pacific:
|Number of Smartphone Users
The government's Palapa Ring project, one of Indonesia's key infrastructure projects for the period 2016-2019, also plays a crucial role. By developing an undersea fiber-optic cable network that stretches across 13,000 kilometers as well as an onshore network of nearly 22,000 kilometers, the Palapa Ring project aims to provide fast broadband Internet to Indonesians in both the urban and rural areas.
Currently, there are 114 Indonesian districts and cities (out a total of 514) that do not have broadband connection. Indonesian telecommunication providers are reluctant to invest in 57 districts/cities because calculations show that invest at these locations will not generate enough revenue and profit. Therefore, it is the task of the government to offer these people "online experiences" and create a more just society in terms of Internet penetration.
Fast Internet in Indonesia is currently primarily available in the urban regions on the islands of Java and Bali. The five Indonesian cities with the fastest Internet connection are Bandung, Bekasi, Jakarta, Surabaya and Tangerang (all on Java). Outside these two islands, Internet connection tends to be slow, yet expensive.
Internet penetration in Indonesia remains relatively low at 38 percent of the total population. This figure implies that some 150 million Indonesians are still not 'online'. Supported by the Palapa ring, ongoing network expansion by private telecommunication network providers, cheaper smartphones/tablets, recovering purchasing power and GDP per capita growth, the number of Indonesian Internet users has ample room for growth in the years ahead. This also implies that Indonesia's e-commerce industry is in a great position to grow sharply in the period ahead. The Indonesian E-Commerce Association (idEA) estimates that the number of Indonesian online shoppers will reach 10 million in 2016, implying earnings in Indonesia's e-commerce industry should more than double to IDR 20 million this year. By 2020, the idEA expects the online retail industry to account for five percent of Indonesia's economy (from 0.7 percent in 2015).