Booming Indonesia Good News for Tech Spending
International Data Corporation, a global research firm, expects spending on information and communication technology in Indonesia to increase by almost 20 percent this year as more foreign companies operate in the country and more people demand connectivity.
Indonesia has been in the spotlight and has become a beacon in the Southeast Asian region for businesses and a favorite for long-term investment despite the global crisis, Sudev Bangah, senior research manager for IDC Asia Pacific, said in Jakarta on Wednesday.
He said an influx of capital from foreign investment would be the main driver of ICT spending here this year, estimated at $12.9 billion, up 18 percent from 2011.
Companies setting up plants and offices in Indonesia will also spend money installing ICT devices to enable them to communicate easier with their businesses across the archipelago or even globally, Bangah said.
“This will be a ‘spillover’ effect to ICT, pouring from foreign direct investment to traditional sectors [such as manufacturing] in Indonesia,” he said.
Between January and September last year, Indonesian FDI was Rp 46.4 trillion ($5.15 billion), 15.7 percent higher than the same period in 2010.
With Indonesia regaining its investment-grade credit rating, more FDI money could come into the country.
Bangah said robust investment would help Indonesia become one of the top nations in Southeast Asian in terms of ICT spending growth.
Tougher competition among businesses will also support spending in ICT, he said.
“With competition getting tougher, its getting harder to differentiate one business from another. Many companies use technology as their competitive edge,” Bangah said.
Indonesia’s government is likely to lead spending in ICT as it pushes the country into a “transformative phase” in order to compete in the global market and boost the local economy, he said.
Financial-services companies, he added, will follow to keep up with demand in the business world for constant connectivity.
Indonesia’s manufacturing industry, once a “traditional sector,” Bangah said, could become one of the biggest spenders on technology.
Services companies working in tourism and hospitality will also invest heavily in ICT as they look to draw customers through their Web sites and social media, he added.
However, Bangah said the country needed to quickly upgrade its ICT infrastructure to accommodate the increasing demand for communication.