Dotcom euphoria

Dotcom euphoria

Hardly a day goes by in Indonesia now without a news
announcement of a new dotcom company, a new web or portal site,
or a new Internet Service Provider opening shop. Although a late
starter compared to most other Asian countries, Indonesia has
finally been caught up in the dotcom euphoria.

Dotcom is probably about the only business that has thrived
these past few months while the Indonesian economy struggles to
come out of its deep recession. So much money, most originating
from abroad, has poured into the nascent industry. The way
foreign investors are coming in, they obviously need no
convincing about the prospects of the dotcom business in
Indonesia, even as the country's political climate and security
conditions remain uncertain. Unlike investors in manufacturing
and other sectors, they did not wait around for more government
assurances about the security of their business.

Indonesia's dotcom business has marched on even after the
bubble burst in many parts of the world last month. Share prices
of many overseas dotcom companies plunged then, but they have
since recovered to again reinvigorate the business worldwide. The
ILOVEYOU virus attack on millions of computers around the world
last week will most likely be regarded as a small glitch when the
dust settles. Indonesia's backwardness in computer usage has its
merits as it is not as exposed to computer glitches as most other
countries. But with the country now finally joining others in the
digital era, Indonesia cannot count on being spared from similar
attacks in the future.

Given the huge sums of money and resources devoted to building
these dotcom companies, one would have thought that this is a
money-spinning industry. But that is not the case. It is far from
a surefire business. The bottom line is that only a few dotcom
companies are profitable ventures. Many of the large ones,
including popular bookseller Amazon.com, are losing millions of
dollars. While some Indonesian dotcom companies may boast of
making some money, they can hardly cover their operations, let
alone the initial investments.

Although most dotcom companies have yet to figure out where
the streams of revenue will come from, that has not stopped
investors from believing that this is where the future is. They
know that computers and the Internet will sooner or later
revolutionize the way people communicate and conduct business.
This is where dotcom companies come in. However, with
uncertainties about their commercial viability, only a few of
these, if any, will survive the rigorous competition. These are
likely to be the ones with enough capital backing to outlast
competitors. Hence the reason for dotcom companies rushing to
make initial public offerings (IPOs) to raise capital through the
stock exchange.

Indonesia, with a population of over 210 million, is certainly
an alluring business proposition for dotcom companies. Just
imagine what it would mean for business even if only half or a
quarter of the population was connected to the Internet. Any
optimistic prediction however must be tempered with reality.
There are currently only 200,000 Internet subscribers and 1.5
million users in Indonesia at the last count. And only two
million people in Indonesia currently have personal computers.

The number of people with access to computers or the Internet
will certainly grow, but at what speed will largely be determined
by the development of the infrastructure, particularly fixed
telephone lines. Telkom currently has only managed to provide six
million telephone lines throughout the country.

There will be many other problems encountered along the way
before we can expect the number of people using dotcom services
to pick up significantly in this country. Personal computers are
still considered a luxury for most people and so it will be some
time before even a significant minority of the population adapt
to the e-commerce world. Telephone rates in Indonesia are still
prohibitively high for people to want to log on to the Internet
for any reasonable length of time.

There is no doubt that Indonesia will have to catch up with
other countries in moving toward the digital era. What is sorely
lacking in Indonesia is government involvement in the endeavor.
The government would do well to emulate Singapore and the United
States where public usage of the computer and the Internet are
being encouraged, sometimes with government financial assistance.

The way things have been developing in Indonesia, the
corporate world appears to have taken the lead in pulling the
country into the digital era. The dotcom euphoria so far is a
corporate phenomenon. The public has been slower to adapt, and
the government, which is seemingly ignorant of the challenges of
the digital world, is lagging even further behind.