Indonesia: A consumption haven for tech products

Indonesia has rapidly emerged to become one of the world’s most attractive telecom markets, with the country recording rapid growth in Internet users and mobile subscriptions in recent years. Backed by a huge, young and tech-savvy population, the local consumer market offers dynamic opportunities for mobile-focused firms, especially in apps, digital media and payments. The peculiarities of the local market mean that products that did not especially find an audience in the West, could still have huge success among Indonesia’s huge population, with Jakarta becoming somewhat of a regional tech mecca. Firms coming out of the London corporate finance scene, such as mobile app developer King Entertainment, are increasingly paying greater attention to the Indonesian market.

Indonesia’s telecom sector has been rapidly expanding following the impact of the Asian economic crisis of the late 1990s, which forced a restructuring of the industry through greater competition and liberalisation.With a population of around 250 million, Indonesia presents a strong communications consumer market, which has previously been held back by poor mobile and Internet coverage rates. Indonesia is a younger market than China and better digitally connected than India, with locals avid and trend-conscious consumers of telecom goods.

The growing domestic market for smartphone applications is seeing app developers target Indonesia in marketing campaigns. For example, Rovio Entertainment, the developer behind globally successful game Angry Birds, had a special launch for a new version of the game in Jakarta in 2012. With smartphone penetration rising rapidly, Indonesian consumers have a growing sway on the global app sector.

A voracious appetite for social networking, especially via mobile platforms, characterises the growing Indonesian telecom scene. In 2013, the country was among the world’s top-five markets for Facebook users, while capital Jakarta was the second-largest Facebook-using city, according to Socialbakers. Social networking platforms, such as US-based Path, are working with local mobile manufacturers to have their apps pre-installed on handsets. Social e-commerce demand has also expanded rapidly, as local retailers and international brands have made their products available online.

As the Indonesian population continues to grow and more unconnected segments of society are able to access digital services, the local market is likely to be one of the most dynamic globally. Indonesia will become a major battleground for smartphone brands, e-commerce sites and social networking platforms going forward, as Western and Asian firms compete to meet the massive demand potential of the large local populace.

However, despite the surging growth of the domestic telecom market, low disposable incomes and poorly connected rural areas limit better uptake. Although the Indonesian government has launched a number of initiatives to spread IT literacy and improve fixed broadband coverage, the country’s rural areas and the elderly demographic remain severely underconnected. Improved infrastructural developments and educational programmes will be necessary to unlock this section of the digital consumer market.

 

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