Two Indonesian girls search how-to-start-a-trash-fire at an Internet shop in Jakarta

 

When I decided to move to Indo (the Coco, the No-No), I had a number of explanations that made it seem like I was making a logical decision based on a professional diagnosis of market, among them were:   

  • Indonesia is a developing country with an untapped technology market
  • South East Asia will be the gateway into the Chinese market place which will have global dominance in the 21st century
  • Low overhead for business startups
  • Less competition
  • I like  beaches
  • I like Lida

2 of those were somewhat unfounded, but I thought it made me sound logical and less like I was just ditching out on my responsibilities. I came across a few articles that help support that and generally validate my decision, since as stated before, I have a very weak constitution and am constantly searching for validation.    

The first is about Googles intentions in Indonesia. Personally I think the “40 million internet users” is a bit misleading.  I believe they are including mobile web-user which really should be a completely different segment since delivery, product and demographics are vastly different. Data services for your web enabled cell phone here are about $15 USD/month where as a decent internet connection is gunna run you about $100 USD/month.  Since the average monthly Indonesian income is $100/month, you have to assume that the broadband user is far more affluent. The 40 million number indicates that 15% of the country are internet users.  I believe the actual PC (dont get offended Mac/-nix users, its the royal “PC”)  user base is more like 5-10 million and Id venture a guess that a good portion of those dont actually own a PC or have internet access at home, they just go to internet cafes. I think before the real internet boom can happen in Indonesia two things have to happen:    

  1. Im no network technician but there is an inherent problem with bandwidth in Indonesia.  I cant find a good resource but from what I have read and heard there is really only one exchange point in Indonesia through which all ISPs connect too.  This governs the traffic inside and outside of Indonesia (read: hops from your access point to your destination).  Because of this there, is a limit to the speed (through-put is probably the more accurate term). There has to be a more concerted effort to provide multiple exchange points beyond the current infrastructure, which Ive been told, is via a Singapore backbone. With a redundant network not only will the bandwidth increase but reliability (less packet drops) will occur, allowing us to download unlicensed music and movies quicker.
  2. Cost prohibitive taxation on luxury items not built in Indonesia (sometimes upwards 0f 300%) makes technology purchases for the middle to lower class Indonesians unrealistic and will keep the market stunted. While the cost of living in Indonesia is exponentially lower than many other countries, this model is not reflected when purchasing electronics.  Used PC and laptops sell for the same price as new models and the new models are unknown and unreliable brands with warranties that are unproven.

The second article is a bit old but I think brings up an interesting scenario.  Yahoo recently purchased Koprol.  In addition they have announced plans to open an office in Indonesia, although they have delayed the opening and havent announced a time line. I cant help but wonder if Google and Yahoo truly feel there is an immediate potential or if they are just hedging their bets and waiting to see what the market bares.    

Finally, the Chinese connection (requires WSJ login) seems to be materializing much quicker than I expected.  In this opinion article by one of the sons of the Jakartan business tycoon Aburizal Bakrie (Bakrie is feard if not respected, by everyone in government and private industry across Indonesia), there are some interesting suggestions (read: warnings) to western government that Indonesia shouldnt be discounted if there is to be an emerging relationship.     

Perhaps a third point to bring up about the internet boom in Indonesia is that there must be standardization and regulatory infrastructure to support the kind of growth seen in the Dot-Com era of the late 90’s/early 00’s or perhaps more relevent to Indonesia, as seen in the Industrial Revolution. Without this we will see a monopolistic private industry where government regulation is directly tied to private industries desires. A worrying trend seen with Mr. Aburizal Bakrie position as the chairman of Golkar party, as well as previous posts including Chief Economic Minister of Indonesia, Coordinating Minister for People’s Welfare and chairmanship of the Indonesian Chamber of Commerce and Industry.  Not to say that this is specific to Indonesia, we’ve seen this cross-over in the U.S. as well (read:Haliburton and the Bush Empire), however, Im not confident there are checks and balances in Indonesia as we have in the states (however this could just be my own ignornace).    

 Selections from the articles above:    

Google eyes Indonesia for expansion

Google is collaborating with a local wireless broadband Internet company Bakrie Connectivity, whose new modem will come with Google Chrome web browser as a standard feature.    

Paging for Mr. Obama in Indonesia

The longer the United States waits to demonstrate its interest in renewing ties in its backyard, the easier it will be for China to fill in the gaps. Beijing has already inked a free-trade agreement with the 10-member Association of Southeast Asian Nations. Chinese investment capital is pouring into Indonesia to build much-needed infrastructure. For example, China’s state-owned energy and investment firms are reportedly looking at Indonesia for takeover targets and joint venture partners. Beijing has been a strong proponent of giving Jakarta, already a member of the Group of 20, a stronger voice in international economic fora.    

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