Analyst downplays dot-com bubble burst

JAKARTA (JP): As the bubble bursts on Internet companies in many parts of the world, Indonesia has little to fear due to lower public exposure and fewer players in the market, an expert said.

"Public exposure to dot-com companies in Indonesia is bigger on paper than in reality, so the bubble burst here, if any, will be small," Andersen Consulting Indonesia manager Heru Prasetyo said on Wednesday.

"There aren't many dot-com companies here that have gone public, which means there won't be many public shareholders suffering losses if a bubble burst occurs," Heru said during a break in a seminar on the future of Internet companies.

Heru is also chairman of the Indonesia Internet Business Community, which was launched on Wednesday.

Indonesia has a good chance to survive the Internet slump being experienced by other countries if local Internet companies are ready to make adjustments and learn from the failure of others, Heru said.

Internet businesses began making inroads in Indonesia last year and there are currently more than 150 Internet companies in the country, according to Nia Sari Nastiti of Andersen Consulting.

At least five dot-coms were launched every week between February and May this year, but the growth has since slowed considerably to about one or two a week, she said.

The Internet industry rode a wave of success for many years, before a sharp plunge in the technology-heavy Nasdaq in April, causing losses of about US$2.1 trillion.

Many Internet companies, including some in Asia, were forced to delay their initial public offerings (IPOs) following the plunge. This hit the industry particularly hard, because IPOs were the only source of income for many dot-coms.

The bubble burst opened many people's eyes to the volatility of the business, Heru said. "Investors are now more wary about putting their money into these businesses."

"This, however, does not mean the end for dot-coms. The Nasdaq may collapse, but because the ball has already started rolling (for the Internet industry), customers have become more demanding," Heru said.

To be successful, Heru said, an Internet company must merge old and new-economy styles of management.

An Internet company must follow the principles of the old economy, including having sources of revenue other than the stock exchange, Heru said. "Revenue matters, business models matter. Above all, profits really matter." (10)