Cellular market penetration has little impact on growth

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)