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Indonesia ICT Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

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  • 100 Pages
  • April 2023
  • Region: Indonesia
  • Mordor Intelligence
  • ID: 5764827
The Indonesian ICT Market is expected to register a CAGR of 8.2% for the next five years. The country would become more prepared for the digital era due to the increased use of ICT infrastructure. ICT growth in Indonesia is regarded as the start of a more optimistic future, and Indonesia would be one of the most promising ICT markets in South East Asia.

Key Highlights

  • The digital economy in Indonesia is projected to boost the GDP by USD150 billion by 2025. The Indonesian government is carrying out significant infrastructure development to reach the goal. The government has started several national initiatives as part of the digital transformation, including the 100 Smart City Movement, e-smart IKM, and Go Digital Vision 2020.
  • The Indonesian Broadband Plan (IBP), an operational policy document to develop the Indonesian broadband sector to enhance the welfare of citizens, has been put into practice by the Indonesian government as a framework for several projects for the ICT industry to grow with the technologies.
  • However, Indonesia's tech market is witnessing a need for more skilled human resources. According to a World Bank Report, technology graduates of the nation frequently fall short of the industry norm, and there would be a shortage of 9 million ICT professionals in the period between 2015 and 2030. Also, internet and technology business needs more and better facilities in terms of quantity and quality. There is now a gap in Indonesia's infrastructure for both internet and energy.
  • According to the chief economist of the Economist Intelligence Unit, Indonesia is a desirable location for investments in digital technology due to the size of its largest market in Southeast Asia. Many digital powerhouses are constructing data centers in the country due to the potential of cloud business. As a result, cloud computing would offer a wide range of advantages that are consistent with their operations and objectives. The government has announced a plan to facilitate adoption through further regulation development because it recognizes the significance of cloud migration in the nation's journey to develop the digital economy.
  • Indonesia is anticipated to lead the Asia-Pacific in IT spending over the next four years, backed by a significant shift toward cloud-related services as the COVID-19 pandemic forced local businesses to digitalize their operations. Since the start of the COVID-19 epidemic, the Internet of Things has significantly improved the commercial landscape in Indonesia. The COVID-19 pandemic has raised the demand for cloud services in Indonesia owing to the mobility restrictions that have caused companies to accommodate a remote workforce and meet rising online demand.

Indonesia ICT Market Trends

Moving Towards Digital Golden Era

  • Indonesia will reach its peak in the digital economy in the next couple of years. The pandemic acceleration has caused the digital industry to develop quickly during the last two years. Not only did the number of people using the internet dramatically rise, but so did societal knowledge of how to use the digital industry as an economic engine even more.
  • The Ministry of Communication and Informatics has created a Strategy for Digital Indonesia 2021-2024. Digital Infrastructure, digital governance, digital economy, and digital society are the four main focuses of this blueprint. Indonesia's policy goals, implementation plan, and timeline for digital transformation are described in this roadmap. Also, another goal is a more equitable allocation of the digital economy across the regions.
  • Indonesia's Ministry of Communication and Informatics (MCI) launched the Roadmap Indonesia Digital 2021-2024 to promote the country's digital transformation. The plan aimed to offer the framework and steps needed to attain an equitable level of economic development based on technological advancement, digital connection, and innovation.
  • Indonesia's digital economy is expanding rapidly, in large part due to the rapid adoption of digital technology and well-known online marketplaces like Tokopedia and GoJek. To enable the three stages of the cities of the future - Decent Cities (comfortable, liveable, and safe), Greener Cities (resilient to climate change and disasters), and Smarter Cities - which are competitive and technology-based - the Indonesian government launched the Smart City vision Indonesia 2015-2045.
  • According to the KEMKOMINFO research last year, Indonesia's digital literacy index score grew from 3.46 in 2020 to 3.49. Overall, digital literacy and culture have grown. Encouragingly, the country's digital culture increased from 3.55 in 2020 to 3.9 in the last year, and digital skills increased from 3.34 in 2020 to 3.44 in the previous year.

Emerging Technologies to Bolster the Economy

  • Rapid technological advancement tends are expected to be accompanied by strong economic expansion. In fact, according to the Ministry of Finance, adopting new technologies may boost Indonesia's economy by as much as USD 2.8 trillion by 2040. The use of technology, particularly digital, robotics, and automation, is growing in the country and has a significant influence on many industries, including manufacturing, energy, and housing, to mention a few.
  • Regarding leveraging the IoT, Indonesia is among the countries far ahead of others. IoT hugely influences healthcare spending, industrial productivity, and corporate operating expenses. IoT applications in industries, including manufacturing, agriculture, and natural resources, which account for 50% of Indonesia's GDP, would have the greatest economic impact.
  • Smart homes and smartphones are the main drivers of IoT growth in Indonesia. The use of smart gadgets rises dramatically every year, thanks to smart homes. Every residence would likely have at least five devices to ensure proper operation. The IoT is getting better faster than the number of people using smartphones.
  • While this is happening, the ecosystem of physical IoT devices, which includes cars, home appliances, factory robots, and other internet-connected gadgets like sensors, is poised to revolutionize a variety of facets of our lives, from transportation to healthcare. Meanwhile, professionals skilled in AI and machine learning are in high demand in the country, and that need is rising quickly. A wide range of industries, including banking, e-commerce, medicines, melanoma detection, space exploration, and translation, use this cutting-edge technology.
  • Significant investments in 5G and IoT would soon change the connectivity model in Indonesia. By altering the way they function, 5G is expected to have an impact on many industries. For instance, it would advance immersive services like mixed and augmented reality and streaming and gaming services. According to Ericsson's research, five million smartphone users in Indonesia might choose 5G services in the first two years after commercial networks go live.
  • According to the Open Signal report, the 5G network in Indonesia had an average download speed of 69.3 Mbps and an average upload speed of 19.2 Mbps as of January this year. In Indonesia, peak download speeds for 5G users might reach 192.9 Mbps.

Indonesia ICT Market Competitor Analysis

Indonesia's ICT market is at a fragmented stage as the market currently consists of many players. Several key players in the ICT market are in constant efforts to bring advancements. A few prominent companies are entering into collaborations and expanding their footprints in developing regions to consolidate their positions in the market. The major market players include The International Business Machines Corporation (IBM), NTT Data, Fujitsu, Telkom Indonesia, and Indosat Ooredoo.

In July 2022, the Telkom Indonesia group of companies unveiled its partnership with Edgecore, one of the market leaders in network solutions, for the opening of a demonstration lab in Indonesia to facilitate open, disaggregated solutions. Edgecore offered to participate in and sponsor the demonstration lab in Indonesia to demonstrate its strong support for open networking.

In April 2022, NTT announced the opening of a high-tech data center in Jakarta. To serve the expanding digital economy in Southeast Asia, NTT launched the biggest data center in Indonesia, expanding its hyperscale data center presence there.

Additional benefits of purchasing the report:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support

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Table of Contents

1.1 Market Definition and Scope
1.2 Study Assumptions
4.1 Market Overview
4.2 Industry Stakeholder Analysis
4.3 Industry Attractiveness-Porter's Five Force Analysis
4.3.1 Bargaining Power of Suppliers
4.3.2 Bargaining Power of Consumers
4.3.3 Threat of New Entrants
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5.1 Market Drivers
5.1.1 Digital Era is Soon to Start
5.1.2 Robust Demand for Emerging Technologies
5.2 Market Restrain
5.2.1 Shortfall of Skilled Resource
5.3 Assessment of the Impact of COVID-19 on the IT Spending
6.1 Cloud Technology
6.2 Artificial Intelligence
6.3 Cyber Security
6.4 Digital Services
7.1 By Type
7.1.1 Hardware
7.1.2 Software
7.1.3 IT Services
7.1.4 Telecommunication Services
7.2 By Size of Enterprise
7.2.1 Small and Medium Enterprises
7.2.2 Large Enterprises
7.3 By Industry Vertical
7.3.1 BFSI
7.3.2 IT and Telecom
7.3.3 Government
7.3.4 Retail and E-commerce
7.3.5 Manufacturing
7.3.6 Energy and Utilities
7.3.7 Other Industry Verticals
8.1 Company Profiles
8.1.1 The International Business Machines Corporation (IBM)
8.1.2 Tata Consultancy Services (TCS)
8.1.3 Amazon
8.1.4 Oracle Corporation
8.1.5 NTT Data
8.1.6 Wipro Limited
8.1.7 Fujitsu
8.1.8 Apple
8.1.9 Telkom Indonesia
8.1.10 Indosat Ooredoo
8.1.11 XL Axiata
8.1.12 Smartfren Telecom
8.1.13 Tri Indonesia
8.1.14 Net1 Indonesia

Companies Mentioned (Partial List)

A selection of companies mentioned in this report includes, but is not limited to:

  • The International Business Machines Corporation (IBM)
  • Tata Consultancy Services (TCS)
  • Amazon
  • Oracle Corporation
  • NTT Data
  • Wipro Limited
  • Fujitsu
  • Apple
  • Telkom Indonesia
  • Indosat Ooredoo
  • XL Axiata
  • Smartfren Telecom
  • Tri Indonesia
  • Net1 Indonesia