The World: Insider's View - Indonesia

Indonesia is slowly but surely overcoming the obstacles preventing it joining the digital era and integrating a vast and diverse community, Bob Hekkelman writes.

For a country as diversified as Indonesia - with 300 ethnic groups, 250 different languages and 13,700 islands - it's a challenge for any marketing and communication expert to connect with a population of roughly 220 million.

Indonesia is the fastest-growing market in Asia in terms of advertising spend at 15 per cent, and although it is one of the most cluttered TV markets in the world with 70 per cent of share being dedicated to the medium, the country is slowly emerging to join the information superhighway. This process, however, is not without its challenges.

The internet in Indonesia must clear several hurdles before the nation can join the new electronic economy. These impediments include a weak infrastructure, low user confidence and an inadequate public policy. The biggest challenge is that it must not only bring the internet to its vast rural population, but also bridge hundreds of islands in the future. The internet is the one channel that can cost-effectively link this vast archipelago and open up connections across urban and rural Indonesia.

Only 5 per cent of Indonesians have telephone service. Of those, only a quarter have access to the internet. While the existing landlines were designed to handle a three- to fourminute call, the average internet session lasts 30 minutes. The current system cannot support broad use of the internet.

Currently only 0.6 per cent of Indonesians are logged-on, compared with almost 50 per cent of the citizens in Singapore. Home PCs are abysmal in number, which leaves office connections and internet cafes the only penetration points - and that's only in urban Indonesia. But again, changes during the past year bode well for the future. The tiny number of internet users in Indonesia grew by 180 per cent in 2000, and is growing rapidly year on year. It's only a matter of time before Indonesia catches up with the big players.

As of 2006, 20 million users will have internet access, and this number is targeted to grow by 25 per cent by next year. Fifty-two per cent of all users access the web via Warnets, Indonesia's version of internet cafes, which are popular among those who cannot afford a computer or the high telephone bills.

The Indonesian internet consumer is more of a browser than a buyer. The internet is used as a tool to compare prices or gather information on products, after which the purchase is made using traditional methods rather than online. Marketers are wary of putting money on the net medium unless they are assured of returns on their investment. Until e-commerce becomes a reality, this situation won't change. But that, too, is in motion and, along with new 3G technology, could well provide the means for Indonesia to leapfrog from traditional to new media.

- Bob Hekkelman is the managing director of Ogilvy & Mather in Jakarta.

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