Market Trends of Indonesia ICT Industry
Indonesia Moving Toward Digital Golden Era
- Indonesia is expected to peak in the digital economy in the next couple of years. The acceleration during the COVID-19 pandemic 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 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. It also describes Indonesia's policy goals, implementation plan, and timeline for digital transformation. 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 aims to offer the framework and steps needed to attain an equitable level of economic development based on technological advancement, digital connection, and innovation.
- According to the Indonesian Internet Service Providers Association (APJII), internet penetration in Indonesia rose from 78.1% in 2023 to 79.5% in 2024. Furthermore, according to the survey, the internet penetration rate among millennials aged 28–43 was 93.17% at the beginning of 2024. Among Gen Z (aged 12–27), the internet penetration rate stood at 87.02%, while among Gen X (aged 44–59), it was 83.69% during the same period.
- This growing internet penetration in the country has been instrumental in driving market growth in Indonesia, as businesses have been able to reach out to more customers, notably younger demographics. This supports the demand for internet services in the country, creating an opportunity for telecom service providers in the country in the future.
- According to a report by UNCTAD, the digital economy in Indonesia is projected to boost the GDP by USD 150 billion by 2025. The Indonesian government is carrying out noteworthy infrastructure development to attain the goal. The government has undergone numerous national initiatives for digital transformation, including the e-smart IKM and 100 Smart City Movement, supporting market growth.
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Emerging Technologies to Bolster the Economy
- Rapid technological advancements in Indonesia are expected to be accompanied by strong economic expansion. In fact, according to the Indonesian Ministry of Finance, adopting new technologies may boost the country'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.
- Indonesia is far ahead of others in terms of leveraging the Internet of Things (IoT). 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, are expected to 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 is projected to 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 human 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. This cutting-edge technology is used in a wide range of industries, including banking, e-commerce, medicines, melanoma detection, space exploration, and translation.
- Significant investments in 5G and IoT will soon change the connectivity model in Indonesia. By altering the way they function, 5G is expected to impact many industries. For instance, it would advance immersive services like mixed and augmented reality and streaming and gaming services.
- The country’s businesses have been integrating 5G technology in their network infrastructure to support the factory automation trends, creating a growth opportunity for the market in Indonesia. For instance, in March 2024, telecommunications provider Telkomsel and global ICT solutions provider Huawei inaugurated Indonesia's first 5G Smart Warehouse. This facility exhibited the potential of 5G technology to transform warehouse management, boosting operational efficiency and creating new opportunities for the logistics industry to support the digital economy leapfrog toward the Golden Indonesia Vision 2045. These factors are expected to boost market growth over the forecast period.
