By 2015, the number of internet users in China, India and Indonesia will have pulled far ahead of the other developing Asian countries, driven in large part by their huge populations. Indonesia’s mobile-first dynamic mean that usage habits differ from its two larger cousins, both of which are more PC-oriented. Looking into the future, there is a strong case for the internet sector in Indonesia growing at a compounded 25% rate for the next TWO decades.
As many internet users as Vietnam, Thailand, Malaysia and the Philippines combined
For a crystal clear example of the way Indonesia will dominate the ASEAN region in the coming years, take a look at the forecasts for the internet user base in 2015. With 125 million users, Indonesia will have as many people using the internet as the next four largest ASEAN countries combined.
While penetration will lag Malaysia (with its higher GDP per capita) and Vietnam (with strong government IT policies and a much easier geography to connect to the internet), it will significantly exceed both Thailand and the Philippines. Indonesia also, by the way, is on course to have a higher internet penetration level than China.
Different usage habits, different access methods
Two things are notable in an analysis of regional usage habits – Indonesians access the web via their mobile phones much more than those in other countries, and they spend less time online per week.
We believe the two factors are related, since statistics around the world show that people spend less time online when they access the internet from a smaller screen. But there is also a cultural effect, since one common Indonesian trait is to do frequent, short bursts of online activity – witness the rapid growth of SMS and Blackberry Messenger on mobile phones, and the emerging growth of Twitter over Facebook.
And a last thought on the size of Indonesia’s internet economy
The internet economy in Indonesia is currently estimated to be about 1.6% of GDP, a number which indicates the share of Indonesia’s economic output that can be directly attributed to the Internet. For comparison, the UK’s internet economy is currently estimated at 7.3% of GDP.
By 2030, Indonesia is forecast to have a larger economy than the UK. Given the rate of technological progress, it could conservatively be assumed that by 2030 the internet economy in Indonesia will be at least 7% of GDP.
These assumptions suggest that the internet economy in Indonesia will grow from US$13 billion today to US$657 billion in 2030, representing a sustained average growth rate of almost 25% for the next 17 years.
That is a market worth investing in.
Sources: ITU, Frost & Sullivan, Nielsen, McKinsey Global Institute,Standard Chartered, eMarketer, Deloitte, Bank Indonesia, Gartner.