New Market Research Report: Indonesia Information Technology Report Q2 2013

Indonesian IT spending is expected to reach IDR64.6trn in 2013, up 16%, although BMI has downwardly revised its forecast due to our expectation of a deteriorating investment climate. BMI still expects the Indonesian market to be one of the region's fastest-growing IT markets over our five-year forecast period. In 2013, continued strength in government spending should offset an expected deceleration in household demand. PC penetration remains at below 10%, giving this huge market unrivalled long-term growth potential. Rising computer penetration and growing affordability should ensure the market remains firmly in positive growth territory.

Headline Expenditure Projections

Computer hardware sales: IDR45.9trn in 2013 to IDR63.2trn in 2017, an average of 10%. Forecast revised after a slowdown in H112, but growing affordability and credit availability are driving sales in the consumer segment.

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Full Report Details at
- http://www.fastmr.com/prod/584520_indonesia_information_technology_report_q2_2013.aspx?afid=301
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Software sales: IDR7.8trn in 2013 to IDR12.6trn in 2017, average growth of 14%. Forecast upwardly revised due to analyst modification although progress will depend on the success in bringing down illegal software use.

IT services sales: IDR11trn in 2013 to IDR16.6trn in 2017, up 12% over the period. Forecast unchanged, with a key growth area being cloud services, which could be worth more than US$100mn by 2017.

Risk/Reward Ratings: Indonesia's score was 41.9 out of 100.0. Indonesia remained in ninth position in our latest RRR table.

Key Trends & Developments

* An active approach by the government to encourage IT development, led by the National ICT Council, should stimulate spending through a series of infrastructure and education initiatives. The Indonesian government's Master Plan for Acceleration and Expansion for Indonesia Economic Development (MPEEI) states that connectivity between the islands of the country is a priority area. Major government infrastructure and ICT initiatives, particularly the Palapa Ring Project, have been rolled out to create the infrastructure to support IT market growth.
* With ICT penetration of only 20% and development restricted to richer areas such as Java, the market has much growth potential. However, Indonesia's uneven development and digital divide are major barriers to faster growth within this potentially huge IT market.
* According to government data, there are 30-35mn Indonesian companies that still do not use IT-based solutions, representing a huge potential market. Modernisation is driving spending on applications such as CRM, ERP and financial management in key sectors such as financial services, telecoms, utilities, government, retail and manufacturing.

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