Local SMEs use Internet to do business: Survey

Tantri Yuliandini, The Jakarta Post, Jakarta

Small and medium companies in Indonesia are increasingly logging on to the Internet to communicate with buyers, a study by Castle Asia in conjunction with The Asia Foundation and USAID disclosed.

Castle Asia' researcher Bettina Cavenagh said that surprisingly, out of the 227 small and medium companies she researched across 12 cities in Indonesia, some 67 percent of the companies were using the Internet.

"Considering that the availability of the Internet in Indonesia is mainly in large cities, and that Internet connection is still very slow, this number constitutes quite a large amount of users," she said on Thursday in a seminar on the Internet and small business development in Indonesia.

Bettina said that most of the companies had only started to use the Internet in the last three years, but that about 20 percent had joined in the last year only.

The research also showed that those companies that use the Internet in their businesses mainly have buyers located abroad or that they have seen competitors use the Internet to an advantage, Bettina said, citing businesses in Lombok going on the Net because they see their counterpart in Bali doing well using it.

Some 93 percent of companies are using a dial-up connection as opposed to wireless, cable or leased line, because of limited availability or the alternatives are too expensive.

Some 147 companies, or 96 percent of the sample, use the Internet to access email, with 90 percent using it specifically to communicate with buyers.

Bettina said that the Internet as a communications tool was considered very important especially for export oriented manufacturing companies and overseas oriented domestic and trade companies.

"Export oriented manufacturing companies usually meet clients at trade shows and use email to communicate further with them. It is considered a more effective way to communicate rather than by fax," she said, adding that conversely their counterparts with domestic orientation preferred faxed documentation.

However, of the companies using the Internet in their businesses only 58 companies or 38 percent have their own websites.

Many consider a website a powerful marketing and promotional tool for a business, although they do not think it is important for sales, Bettina said.

"Many businesses also reason that by having their own website they gain credibility," she said.

However, companies do not maintain and update the information regularly, and do not realize the importance of keeping up-to- date information on their business on a website, Bettina said.

The survey also showed that besides communications, the Internet is also used for research; to find potential buyers, locate products and service suppliers, to do research on competitors and undertake price and product comparisons.

"However, research is limited due to the slowness of the connection," Bettina said.