Indonesia is the largest economy in ASEAN and a member of G-20 major economies. The country's GDP in 2025 is projected to reach US$3.1 trillion, making it the 10th largest economy globally. Mr. Ajay Sunder, Vice President, ICT Practice, Frost & Sullivan Asia Pacific said that Indonesia's top 5 provinces are expected to contribute 60% of its GDP in 2020, with Jakarta alone contributing 15.5%.
Mr. Ajay Sunder said the enterprise service market in Indonesia is expected to reach $3.86 billion by 2019 at a CAGR of 18.6%. Mr. Sunder is optimistic on growth in the enterprise services market due to improved infrastructure, stable and growing economy and the increasing number of ICT personnel in the workforce.
He said the Indonesian market is beginning to see good adoption of shared services, and outsourcing managed services will be a big segment driven by Indonesian enterprises increasing their footprints both domestically and internationally.
Overall, enterprise solutions are expected to reach $820 million by 2019 at a CAGR of 17.5. "ERP solution is the biggest segment within Business applications driven by adoption from Manufacturing firms and fast-growing medium-size enterprises," he added.
Mr. Ajay expects enterprise connectivity to reach $1.12 billion, with ethernet as the biggest segment primarily driven by large enterprises looking for International connectivity.
Mr. Sunder said that within cloud, SaaS will be a significant market accounting for 88% of the cloud market and its expected to remain fragmented with lots of niche players offering specialized software on cloud.
He added that data center services is expected to reach $263.9 million by 2019, with co-location to account for 85% of the estimated revenues.
Mr. Spike Choo, Associate Director, ICT Practice, Frost & Sullivan Asia Pacific said that low cost smartphones are driving the data demand in the Indonesian market. This is fuelling the OTT ecosystem and he expects more mega funding deals for local players in 2015.
A few budget devices will lure users to OTT ecosystems, for example Google Chromebooks, Xiaomi, Coolpad for Computers & Smartphones, Amazon Fire TV, Android TV, Xiaomi TV, Mi Box for media streamers and Xiaomi MiBand, Misfit Flash, Pivotal Tracker for wearables, he added.
Mr. Choo also said that OTT ecosystems will expand to adjacent sectors to extend user experience; Eg Apple iWatch, Samsung VR Gear, XiaoMi TV.
Mr. Choo also said that online shopping continues to gain traction as shopping experience improves making eCommerce and mCommerce usage gain traction supported by infrastructure build out & well-funded startups.
Further, he said that the operator revenue will remain challenging, with more connections expected but lower ARPU contributing to slower revenue growth. He added that operator revenue continues to lag global average inflation rate of 4%, while apps, content and advertising is forecast to grow strongly.
Mr. Choo said that mobile data traffic growth is projected to grow strongly due to M2M and budget smartphones. He also said that fixed data traffic (including WiFi) will remain the primary mode for online video and music streaming, gaming, browsing, SNS and others.
Rise of the Digital Consumer
Mr. Sunder said that Indonesia will have around 1.7 billion connected devices in 2020 with over 470 million mobile subscribers and over 200 million active internet users.
"Indonesia, which is currently the fourth largest Facebook market, will continue to expand its social media community with nearly 104 million social network users expected to join the community by 2015," Mr. Ajay said.
Internet of Things, Big Data & Cloud market potential
Banking, Financial Services and Insurance will continue to be the biggest spender on ICT services while Manufacturing and Transportation will show steady growth with respect to adoption of ICT services.
Mr. Ajay Sunder said that managed services especially managed network services will drive the government spending. "The concerns around security and resiliency are also expected to drive government demand for data connectivity services especially disaster recovery," he added.
He also said that cloud based services, enterprise software and connectivity services will drive demand in Logistics & Transportation due to public infrastructure projects such as MRT & BRT development.
He added that cloud based services will also be driving the demand in Education driven by MICT new policies on Education and specific initiatives like smart school.
Further, he said that other important segments will be Healthcare, retail & hospitality, media & entertainment as domestic consumption and rising middle-class spur growth in ICT adoption among SMEs.
The Way Forward
ASEAN Economic Community (AEC) will be an immediate opportunity for Indonesian ICT value chain players. AEC will usher more foreign direct investments especially in infrastructure, spending in both public and private transportation. The ability to be more attractive for FDI based on tax incentive will be ended and corporate tax rates difference will also disappear. "There will be lots of opportunities for Indonesian Service Providers and value chain players to participate in both domestic and regional opportunities," Mr. Sunder said.