Internet industry hit hard last year<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
After experiencing euphoria over the Internet business last
\nyear, Indonesia, like most countries around the world, this year
\nwitnessed the collapse of its dotcom industry.<\/p>\n
Last year, newspapers were packed with advertisements from
\nInternet startup companies looking for employees, while public
\nplaces, including the roadside, featured numerous banners
\ncarrying the names and logos of new dotcomers.<\/p>\n
Today, such advertisements and banners are rarely seen.<\/p>\n
Most of the dotcomers that were born last year to much fanfare
\nare already dying or have ceased operations.<\/p>\n
Amid bearish global sentiments over information technology
\nshares and a spate of revelations about the bankruptcy of
\nInternet companies, three Internet firms -- Internet service
\nprovider (ISP) PT Dyviacom Intrabumi, PT Kopitime Dot Com and
\nbusiness portal PT Indoexchange Dotcom -- decided to float their
\nshares in Jakarta, while software developer-cum-Internet center
\noperator PT Myohdotcom Indonesia did so in Surabaya.<\/p>\n
Aware of the bearish sentiment clouding dotcoms, the companies
\ncut down on the number of shares offered to the public.<\/p>\n
Kopitime offered 60 million shares, as against the 120 million
\ninitially planned, while Indoexchange cut its offer to 120
\nmillion shares from 250 million under the initial plan.<\/p>\n
Dyviacom shares closed at Rp 110 on Nov. 29, compared to Rp
\n250 on the first day of trading in December 2000.<\/p>\n
Indoexchange closed at Rp 105 on Nov. 29, compared with its
\ninitial trading level of Rp 125 in May this year.<\/p>\n
Kopitime shares closed at Rp 305, as against Rp 300 on its
\nfirst day of trading in April.<\/p>\n
An initial public offering (IPO), which during the golden days
\nof the Internet boom provided a chance to raise a lot of funds,
\nis no longer a bonanza for dotcomers.<\/p>\n
Leading Internet firms -- such as PT Agranet Multicitra
\nSiberkom (Agrakom), which operates news portal Detik.com; PT
\nCyberindo Aditama, which owns the ISP called CBN; and M-WEB
\nIndonesia, which operates various news portals, Internet centers
\nand Internet corporate service facilities - have thus far
\nannounced no IPO plans.<\/p>\n
The question is: Does the Internet business still have a
\nfuture in this country?<\/p>\n
M-WEB Indonesia, a subsidiary of South Africa-based
\ntelecommunications and Internet firm Myriad International Holding
\n(MIH), is still confident that the Internet business holds good
\nprospects. M-WEB has subsidiaries in 50 countries.<\/p>\n
\"We're optimistic about the future of the country's Internet
\nbusiness. We'll invest more here to make M-WEB Indonesia our
\n(MIH's) largest company in Asia, competing with M-WEB China,\"
\ncompany director David Burke said.<\/p>\n
M-WEB, which began operating here last year, has invested
\nUS$20 million and plans to invest another $10 million next year
\nto further develop the contents of its portals, establish more
\nkiosks in the country and buy more equipment and software, Burke
\nsaid.<\/p>\n
M-WEB started its Internet business in the country by
\nacquiring an ISP called Cabinet last year. It then entered the
\nnews portal business by acquiring Astaga.com, Satunet.com,
\nKafegaul.com and developing its own portal M-WEB.co.id. All the
\nportals now receive about 1.4 million visits every day.<\/p>\n
The company then expanded into the Internet kiosk business, by
\nestablishing giant Internet centers in various universities. It
\nrecently launched a new service to help the corporate sector
\nconduct its business on the Internet.<\/p>\n
Burke said the company, for the moment, had no plans to float
\nshares on the stock market as it had strong financial backing and
\ncould make money from its business.<\/p>\n
\"With strong financial support (from its parent company MIH)
\nit's obvious that we have no intention of looking for funds from
\nan initial public offering (IPO), like others have done,\" Burke
\nsaid.<\/p>\n
Separately, Budiono Darsono, chief editor of Detik.com, said
\nAgrakom had managed to survive the slump by focusing on its
\npopular news portal, after failing to expand into the newspaper
\nbusiness.<\/p>\n
\"That's our key (to survival). We are now focusing on
\nenriching (the news portal),\" he said.<\/p>\n
Detik.com, the country's first Internet news portal, was
\nlaunched in 1998.<\/p>\n
Last year, Agrakom, emboldened by Detik.com's success, tried
\nits luck by publishing a newspaper with contents drawn mostly
\nfrom the news portal. It later decided to close the business down
\ndue to financial problems.<\/p>\n
Detik.com, with about 700,000 page views every day, continues
\nto enjoy strong revenue growth from advertising, maintaining its
\nposition as the leading news portal, according to Budiono.<\/p>\n
Up to November, the portal's revenue accounted for half of
\nAgrakom's total revenue of Rp 13.2 billion (US$1.26 million), or
\nRp 1.1 billion a month, an increase from Rp 850 million a month
\nin 2000, he said.<\/p>\n
Internet business analysts RM Roy Suryo and Mas Wigrantoro
\nRoes Setiyadi said the dotcom slump over the past year was part
\nof a natural selection process that would lead to the survival of
\nthe fittest in the industry.<\/p>\n
\"We can see it clearly. The survivors are those who have good
\nmarket diversification and differentiation,\" Roy Suryo told the
\nPost.<\/p>\n
Aside from M-WEB and detik.com, Roy Suryo said, Mizan.com and
\nSanur.co.id, which sell books online, and others selling
\nfurniture online, would survive.<\/p>\n
Wigrantoro said the demise of many local dotcomers was also
\npartly due to the industry's failure to realize that Internet
\nusers in the country were still few in number and \"immature.\"<\/p>\n
\"It's difficult to expand dotcom businesses when the number of
\nInternet users is not increasing,\" he said.<\/p>\n
According to him, the country has around 1.5 million Internet
\nusers, less than 1 percent of the country's population.<\/p>\n
Besides, he said, people still felt unfamiliar and insecure
\nabout conducting transactions over the Internet. That's why, he
\nsaid, local e-retailers were continuing to suffer losses.<\/p>\n
Wigrantoro believes the Internet business will recover quickly
\nin the future once the number of Internet users in the country
\npicks up and people feel more secure about online transactions.<\/p>\n
Burke admitted that it was difficult to estimate when the
\nInternet business would rediscover its golden days.<\/p>\n
\"But we believe there will be progressive changes in the
\ncountry's Internet business when the government revokes PT
\nTelekomunikasi Indonesia's monopoly over domestic telephone lines
\nin two years,\" he said.<\/p>\n
He said the liberalization of the telecommunications sector
\nwould cut the cost of telecommunications connections and this in
\nturn would boost the number of Internet users and broaden the
\nmarket for the country's Internet industry.<\/p>\n
Budiono predicted competition in the industry would decrease,
\nas few companies would survive the current slump.<\/p>\n
\"Whoever is good at selling will survive, whoever is not will
\ndie,\" he said.<\/p>",
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