Local firms unsure about e-commerce

JAKARTA (JP): Indonesian business-to-business (B2B) e-commerce providers are still facing difficulties surviving due to the lack of interest from the local business community in conducting business through the Internet, a research made by PT Boston Consulting Indonesia shows.

Scott Desmarais, vice president of the U.S-based Boston Consulting Group's Indonesian subsidiary, said here on Wednesday that most local companies still prefer off-line transactions, as they still consider e-commerce an insecure marketplace.

The lack of a secure system and the absence of adequate legal instruments are the main factors why most local companies still prefer the conventional system of conducting business transactions, he said.

Desmarais said that considering such conditions, the industry's estimate that the country's B2B transactions would reach $5 billion in 2003 will be difficult to achieve.

He said that the lack of advertising had prompted B2B e- commerce providers to charge their clients high transaction fees in order to allow them to survive. But this has also discouraged companies from using the Internet.

According to him the average transaction fees charged by local B2B e-commerce providers is about 5 percent, far higher than between 0.5 percent and 2 percent in the United States.

Indonesia now has 12 B2B e-commerce providers including www.bidnet.com and www.tradealliance.com founded by Sinar Mas Group, www.lipposhop.com founded by the Lippo Group, www.indonesiaexport.com founded by PT e-commerce Nusantara, www.nexiaonline.com founded by IndoExchange, and www.epulpaper.com founded by Andover EPulpaper Ltd.

"We have 12 Indonesian B2B e-commerce providers today, but we will only be left with two or three in the next two years," he said, referring to the prospect of the country's future e- commerce activities. (05)