Cellular market penetration has little impact on growth
The Jakarta Post, Jakarta
Increasing market penetration and investment in the cellular phone industry have had no apparent impact on the country's economic growth, telecommunications observers say.
Though the International Telecommunications Union (ITU) has projected that every 1 percent increase in market penetration will result ion 3 percent growth in gross domestic product (GDP), this does not seem to have been the case with Indonesia.
The country's GDP growth is expected to be 6 percent this year, a slight increase from last year's 5.13 percent growth.
At the same time, the country has seen rapid growth in cellular market penetration, recording a 7 percent increase from last year's 11 percent market penetration. The Association of Indonesian Cellular Operators (ATSI) has projected investment in the cellular industry will increase from US$1.2 billion last year to $1.8 billion this year.
The director of the Indonesian Infocom Society, Mas "Wig" Wigrantoro Roes Setiyadi, told The Jakarta Post that growth in the cellular phone industry did not translate into GDP growth in Indonesia because only large cities were experiencing greater cellular market penetration.
"That correlation can only happen if the ICT (information, communication and technology) absorption takes place across the country and most daily activities are facilitated using ICT," he said.
Djarot Subroto of the Indonesian Chamber of Commerce and Industry's committee for telecommunications and information agreed with Mas Wig, saying cellular market penetration was only happening in major cities, particularly Jakarta.
Mas Wig and Djarot called on the government to provide more incentives for local industries that support the cellular industry.
"Currently, 95 percent of cellular phone components are imported. The government should issue a policy -- such as that applied for the automotive industry -- to encourage the industry not to import components that can be manufactured here," Mas Wig said. (006)