Sat, 12 Feb 2000

Let's go digital

Indonesia's almost dormant Internet industry received a welcome jolt this week from foreign investors, showing their confidence in the untapped but potentially lucrative local e- business., a popular local cybernews content provider, turned itself into a portal service site on Wednesday after it sold 20 percent of its equity to a Hong Kong internet company. On the same day,, a wholly foreign-owned operation, made its debut as an Indonesian portal. Both and are vying for the small but undoubtedly growing e-commerce market in Indonesia. On Thursday, Catcha Group of Singapore expanded its Indonesian site,, as a content search engine portal, and announced that it is looking for local companies to form joint ventures to expand its e-business operations in Indonesia.

This is a quiet foreign invasion into an industry about which the government seems to be completely ignorant. The Internet industry is not even on the list of economic sectors touted by President Abdurrahman Wahid to investors in any of his recent extensive overseas tours. Thankfully, a number of local giant corporations like Lippo and Astra have already caught on before the invasion began. Lippo Life switched from insurance business to e-business last month, and renamed itself Lippo-E-Net. Astra Graphia, Multipolar and Metrodata Electronics are other major local companies which have announced their entry into e-business, helping to usher Indonesia into the digital era.

Following the rapid global development of information technology, e-business is the way forward for the Internet industry. After a period of trial and error processes, enterprising industrialists have finally found a way of turning the Internet industry into a money making machine. This is led by e-commerce which has turned the Internet into a virtual electronic marketplace, allowing people to buy and sell, as well as a host of other things. More important than facilitating the way we do our shopping, e-commerce is revolutionizing the way people run businesses. Since e-commerce enhances globalization, it is bound to make international competition even fiercer than it already is. It is therefore essential for every country to keep up with this technology if it is to survive globalization.

Compared to other countries, including many of its neighbors, Indonesia has been slow in jumping onto the e-business bandwagon. A small fraction of the 210 million people in this country have access to the Internet. The Association of Indonesian Internet Service Providers says about 1 million Indonesians are online. The volume of e-commerce transactions is also minuscule. The International Data Corporation of the U.S. puts the number of Indonesians making online purchases at 70,000 this year.

Yet while it is small, the number of Internet users continues to grow, suggesting that it is not a totally dormant industry. And with a population of 210 million people, the future looks promising enough for the likes of, and to try their hand in developing the e-commerce industry in Indonesia.

The initiative for developing Indonesia's e-commerce so far has come from the private sector, including foreign investors. The government's role has been almost negligible. As much as we like to see the private sector taking the lead, government support is vital to get e-commerce off the ground. The widely touted potential will never materialize without strong and conscious support from the government.

Many of the physical and social infrastructures needed to build a solid e-commerce industry are lacking here, or worse still, they do not exist. Most households in this country are not even connected with telephones. PT Telkom, the government-owned monopoly for domestic telephone service, has installed 5.94 million fixed lines throughout the country. Very few people have access to computers, and even fewer with access to the Internet.

Because it is an entirely new and still changing business, the legal framework for the Internet industry is, understandably, almost non-existent. But laws and regulations are necessary to give the industry, and e-commerce, a solid legal footing.

Finally, most Indonesians are still computer illiterate, and for such a life-death matter to the nation's future, computer science is not included among the compulsory subjects in the national school curriculum.

Indonesia's entry into the digital era has been slowed by the economic crisis and the political upheavals of the last three years. But with the international business environment drastically changed by the arrival of e-commerce, Indonesia cannot afford to remain aloof and hope to survive the global competition without making some effort. The invasion of foreign Internet companies on our shores this week, if anything, should be seen as a wake-up call for the country to rise to the challenge of the digital era.