Mon, 14 Feb 2000

Despite drawbacks, Indonesia's Net market rosy

By Christiani Tumelap

JAKARTA (JP): Despite its current lack of infrastructure and nascent computer-literate community, Indonesia is still a highly promising market for internet business, executives of foreign internet providers said.

The newest foreign internet player in town, the Singapore- based search engine portal Catcha Group, said they decided to expand their business to Indonesia because they saw a great deal of internet opportunities here.

"The market here may be considered rather immature or limited at present. But we see a definite, huge need for internet service," the group's chief production officer, Luke Elliot, told The Jakarta Post recently.

Catcha Group, which was founded in mid-1999 by four young men all under 26 years old from Malaysia, Australia and Japan, opened its Indonesian search engine portal last week with an investment of at least US$100,000.

"With a population of over 200 million in Indonesia, it is an enormously potential market. Another plus is that the people here are pretty much adaptive to technology changes," Elliot said.

Separately, Ilyas Khan, managing partner of, a Hong Kong-based investment company focusing on internet-related business, said Indonesia was expected to experience the impending prosperous internet business development in Asia given the predicted vast growth of the country's internet market.

"Indonesia is a marginal market at present and it is clearly behind India, China, Korea, Singapore or Hong Kong. But the internet is a global phenomenon and its impact will also be felt in Indonesia as much as anywhere else," he told the Post over the weekend.

The Association of Indonesian internet Service Providers recently estimated the number of internet users in Indonesia reached over one million in 1999, of which 260,000 were subscribers to the 36 active internet Service Providers.

The association predicted the number of users would swell to 1.45 million this year and nearly two million next year.

Khan said, which holds at least a 15 percent stake of local website portal Detikcom, decided to invest in Indonesia to anticipate the tendency of more internet companies to be established here.

Catcha's Elliot said the sprout of more local internet companies would help spur the local public's interest and demand for internet services.

"We need to create a stronger demand here to help expand the market," he said.

Elliot said the potent of Indonesia's huge internet market was also recognized and well-anticipated by many manufacturers and service companies.

He said there was a strong tendency for the companies to advertise more on the internet in order to capture new customers among internet surfers.

Catcha Group projects the advertising to be spent on Indonesian websites will vigorously amplify from about $1.5 million in 2000 to $5.6 million in 2001, $15.7 million in 2002 to hit $29.7 million in 2003.

Ai Mulyadi Mamoer, the chairman of telecommunications and information technology division of the Indonesian Chamber of Commerce and Industry, shared Elliot's view, saying that the internet was a strong sensation in Indonesia that many companies felt they should get involved in either by establishing an internet-related company or advertising on the net.

However, he said, whether or not Indonesia would be able to experience the predicted boom of internet business in Asia -- which Khan of said would likely happen in the next five years -- would rely on the government's support and commitment to promote the internet sector.

"The Indonesian government has not only been slow in promoting the development of required infrastructure, but it has also failed to show a serious commitment to the upbringing of the information technology sector," he told the Post over the weekend.

As of the end of last year, the country had over six million fixed telephone lines, a basic infrastructure of the internet along with computers, in operation to serve its 210 million population, according to data from state-owned telecommunications company PT Telkom.

Ai said in order to further stimulate the growth of the internet market, internet Service Providers should consider to provide services at a reasonably affordable price.

He said the currently expensive price of computers and access fees to the internet had resulted in a sparse computer and internet-literate population.

The Association of Indonesian Telecommunications Society estimates that Indonesians should pay an average of $26.68 in total on telephone calls, internet subscriptions and usage fees for 20 hours surfing on the internet.