| Indonesia Information Technology Report Q3 2009 |  | Author: Business Monitor International
Publisher: MarketResearch.com
Buy New: $530.00
as of 7/31/2010 04:48 CDT details
Seller: Amazon.com
Format: Download: PDF
Media: Digital
Pages: 55
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Product Description
The Indonesian IT market should grow at a compound annual growth rate (CAGR) of around 13% over2009-2013 despite an expected slowdown in 2009 as key segments are affected by the global economiccrisis. In H109, some manufacturing organisations were cutting IT budgets, but there was continuedspending in the financial sector, which had previously accounted for as much as 30% of total spending.2009 will still undoubtedly be a more difficult year, with pressure for cutbacks, as companies focus moreon the bottom line, and immediate needs. However, BMI expects the market to avoid negative growthdespite downside risks. In Q109, computer sales were indicated to be only slightly lower than the periodlast year, with hopes of an upturn in H209. Government IT spending was expected to increase as thegovernment encourages IT spending by state enterprises.
By 2013, Indonesia's hardware-dominated IT market is projected to reach a value of US$5.7bn,displaying faster growth than many Association of South East Asian Nations (ASEAN) neighbours. Withinformation and communication technologies (ICT) penetration of only around 20% and developmentrestricted to richer areas such as Java, the market has much latent growth potential. However, thecountry's uneven development, and resultant digital divide, is a major barrier to faster growth within thispotentially huge IT market.
Industry Developments
E-government is expected to emerge as an area of growing opportunity for IT vendors over the nextcouple of years. Currently, several ministries at both federal and province level are planning to implementprojects. In 2008, a number of projects were launched, including an e-procurement system by the StateMinistry for State Enterprise, which covered 25 state-owned enterprises, including state oil and gascompany Pertamina and state electricity company Perusahaan Listrik Negara (PLN).
A framework for Indonesian e-government development was set out by presidential instruction No.3/2003. A number of projects are ongoing, and these can be expected to increase. Indonesia's Departmentof Communications and Informatics (Depkominfo) is rolling out a new platform to increase the efficiencyof a number of department services. The new system will be deployed to help expedite processing ofpermit applications, as well as increasing transparency of department operations.
The government is also rolling out new e-learning initiatives which could see education's share of thelocal IT spending rise from its estimated level of around 4%. The current ratio of PCs to students inpublic schools is around 1:3,200, and the government wants to increase this to 1:20. As there are 53million students in Indonesia's schools system, this would require at least 2.5mn computers.
Competitive Landscape
Toshiba revealed recently that it planned to rely on low-end notebooks as its mainstay products in theIndonesia market this year. The company defines low-end as notebooks sold for less than IDR8mn.Toshiba's Indonesian notebook distributor, PT Techking Enterprises, said that Toshiba planned for lowendnotebooks to account for 70% of sales this year, an exact reverse of the situation last year.
Software market leader Microsoft Indonesia reported a 30% year-on-year (y-o-y) rise in revenues inFY08, well above the company's global average of 18%. Microsoft has recently been involved in IT forEducation initiatives, announcing a co-operation with telecom company PT Telkom and local softwarecompany PT Pesona Edukasi on an educational software development programme.
Major IT services vendors have reported a growing demand in the telecoms, manufacturing and bankingsectors. Oracle has an agreement with local IT solutions provider PT Sigma Cipta Caraka (Sigma) toprovide outsourcing services. Meanwhile, e-government is also being eyed by IT services vendors as apotential growth area. Tata Consultancy Services (TCS) said that it was targeting government as afuture growth driver in the Indonesia market. Currently, TCS's fifteen local clients are principally fromsectors such as banking and financial services, telecoms and media.
Hardware
Computer hardware sales, including notebooks and peripherals, will be worth around US$2.5bn in 2009,according to BMI projections, up from US$2.4bn in 2008. Growth slowed in Q408 following robustgrowth in the first three quarters of last year, and is seen as easing further this year before ticking upagain in 2010. Early results from 2009 are moderately encouraging, with sales in January at a similarlevel to the period of 2008, according to industry figures. However, vendors remained cautious, withsome still expecting a y-o-y market contraction.
Software
For 2009, software sales are projected by BMI at US$402mn, up from an estimated US$377mn in 2008,despite the current economic slowdown. There were signs in H109 that many firms were planning toincrease software spending. One market inhibitor is the continuing software piracy problem, which, bythe local government's own figures, loses Indonesian software companies alone more than US$100mn ayear. Over the forecast period, enterprise resource planning (ERP) software continues to be of mostinterest to the small and medium-sized enterprises (SME) market as currently only around 20% ofIndonesian SMEs are estimated to make use of IT.
IT Services
Indonesia's IT Services market is expected to be worth US$589mn in 2009, recording y-o-y growth of 4%from US$564mn in 2008, according to BMI estimates. Currently, IT services account for only 17% of thecountry's hardware-centric IT market sales. Hardware deployment services remain the largest IndonesianIT services category, with approximately a 20% share. Currently, opportunities are mainly in fundamentalservices such as system integration, support systems, training, professional services, outsourcing andinternet services.
E-Readiness
Only about 6.6% of Indonesians have internet access, translating into around 14.5 million users. Lowtelephone line density, high charges and low PC penetration are all significant obstacles. However, thepicture is not all bad as there are signs of faster growth in user numbers, and recent surveys have shownthat among a very small elite, there is fast adoption, by regional standards, of broadband and a willingnessto pay for video conferencing, security and other additional features. BMI estimated that there werearound 1.4 million broadband users in 2007, representing a 0.6% penetration rate. The government isencouraging fixed wireless deployments, including WiMAX, to bring internet to more remote areas.
The government is rolling out an internet-based National Education Network, which involves 1,000network points in five clusters nationwide, designed to facilitate the use of the internet in schools. Despitesome advances in e-education, constraints remain due to poor infrastructure and lack of public awarenessin a country where only 20 million people own fixed-line telephones.
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