One of Indonesia's priority infrastructure projects in the 2016-2019 period is the Palapa Ring project. 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. The project is the first government-to-business cooperation scheme within Indonesia's telecommunication sector that utilizes the so-called "availability payment method".
The Palapa Ring project is one of the many infrastructure projects in Indonesia that had been delayed (in fact the government has been planning the project since 1998). After the project came back off the shelf and the central government agreed to guarantee the project through state-owned financing guarantee company Penjaminan Infrastruktur Indonesia, the private sector has been more confident to work on this ambitious project that is divided in three sections (the West, Central and East sections). The project is scheduled to be completed by 2018.
The "availability payment method" that is applied in the Palapa Ring project means that the private partner is to receive payment based on the availability of the designed infrastructure at a specified performance level.
According to the Association of Internet Service Providers in Indonesia (APJII), Indonesia's Internet penetration rate now stands at 38 percent, implying some 100 million Indonesians are connected to the Internet. The APJII stated that the joint efforts of the government, the nation's Internet services providers and other stakeholders to make Internet access available across the archipelago (and create a conducive regulatory environment) have been key to boost Internet penetration in recent years. This growth will continue in the years ahead, particularly after the Palapa Ring project is completed.
Jamalul Izza, Chairman of the APJII, said the number of Indonesian Internet users is growing by about 10 percent per year, adding that some 70 percent of Indonesian Internet users use a smartphone to access the Internet. However, after India and China, Indonesia still has the highest amount of citizens who are not connected to the Internet, and therefore there is still plenty room for growth. Rapidly rising Internet and smartphone penetration also implies that Indonesia's e-commerce industry can blossom in the year ahead as there will emerge millions of new online shoppers.
Currently, fast Internet in Indonesia is primarily available in the urban regions on Java and Bali. The five Indonesian cities with the fastest Internet connection are Bandung, Bekasi, Jakarta, Surabaya ad Tangerang (all on Java). Outside the islands of Java and Bali, the Internet connection in Indonesia tends to be slow, yet expensive.