E-business to boom after 5 years

E-business to boom after 5 years

JAKARTA (JP): Despite the continued launching of new Internet
sites, portals and related services by local and foreign firms,
Indonesia's Internet market will start booming only in the next
five to six years, an analyst has said.

The chief of the research division at securities company PT
Nomura Indonesia, Goei Siauw Hong, said that within the five-to-
six-year period Indonesia was expected to develop a densely
populated online community and an adequate infrastructure to
create a more conducive market for e-business.

"Internet business is surely very promising. But it's not
going to earn a company profit in a year or two if it operates in
such an unprepared market like Indonesia," he told The Jakarta
Post on Saturday.

He said Internet companies operating in Indonesia could start
generating profit in three to five years after they commenced
operations in line with an increase in online advertising.

He said Indonesia with its 210 million population and
predicted five million Internet users by 2002 was undoubtedly a
highly potential market for e-business.

However, many foreign investors do not see Indonesia as
attractive as neighboring countries like Singapore or Hong Kong
because they consider the market here less feasible, he said.

"Most investors always head for the ripe markets first. They
stormed the U.S. market when the Internet craze hit the country a
couple of years ago and are now moving to Asia, especially
Singapore and Hong Kong, where there is so much hype about dot-
com," he said.

Hong said Indonesia's Internet market was two or three years
behind the U.S. and one year behind Singapore and Hong Kong,
where Internet infrastructure and online communities were already
well developed and listed Internet companies were aplenty on the
local markets.

There are currently only 2.06 million telephone lines in
Indonesia. There are an estimated four million personal computers
in the country, while the estimated number of Internet users is
over one million.

There is hardly any Internet-oriented companies with good
track records listed on the Indonesia stock markets.

Several listed firms, like insurance firm Asuransi Lippo Life
(Lippo E-net) and electronics and office equipment suppliers
Astra Graphia, Multipolar and Metrodata Electronics, have
announced their plan to establish Internet companies.

Multipolar says it will develop high speed Internet access
using fiber optic with an investment of Rp 130 billion (US$18.5
million); Metrodata will create a portal site, Internet service
and business-to-business e-commerce worth at least $2.5 million;
and Lippo Life will expand business to Internet and e-commerce
businesses.

Hong said it was still not clear whether these companies were
serious in developing on the Internet or had just taken advantage
of the Internet fever taking many stock markets by storm,
including Indonesia, to boost the sales of their stocks.

"We have not seen any clear, detailed business plans made by
these companies to explain their strategies in developing their
new Internet businesses," he said.

Several of the newly established e-companies, such as news
portal Detik.com, which is jointly owned by local PT Agrakom and
Hong Kong-based venture capital firm techpacific.com, and
consumer-based portal www.kemana.com, which is owned by
international business information firm Castle Group and India-
based Internet application developer Edge NetVentures, have also
announced their plans to go public in the near future.

They said they needed to raise more funds to finance their
Internet development.

Some analysts predict that shares that could lure foreign
investors the most would likely be those owned by Metrodata
Electronics because the company's operations focus on the supply
of computers, which was currently the most used medium for
Internet access.

Hong said he expected to see more foreign investors enter the
Indonesian market to look for potential listed or nonlisted
companies next year.

He said that while some investors preferred to wait for the
market to ripen, others decided to start their investments here
early amid the currently undeveloped market in order to build a
solid foundation for their future businesses.

Foreign investors already here include Singapore's Arboc
Investments Pte Ltd., Hong Kong's Axiom Funds Management and
Geneva-based Alternative Investment Management Group, which
entered Indonesia's Internet market late last year through its
Southeast Asia portal operator Catcha.com Group, which bought a
local existing Internet firm and developed a new search engine
portal, Catcha.co.id.

California-based IT company AcuBid.com Inc. is also reportedly
ready to acquire a 90 percent stake of local multimedia firm PT
Jaring Data Interaktif.

Through the alliance, AcuBid.com and Jaring Data said they
would focus the business on providing Internet access through
telephone and satellite as well as developing web server and e-
commerce services. (cst)