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Global Services Supply Chain in Indonesia: The Case ofTelecommunications Services.

1. Introduction

The services sector has been gaining importance in many countries in recent years. Responsible for more than 70 per cent of employment in OECD countries, the sector has continued to show steady growth in terms of share of total employment around the world. A similar trend is also observed in Indonesia. Although not as dramatic as manufacturing, the share of services in the national GDP has been steadily rising. However, the latest statistics show that services account for a higher share of employment than of GDP, indicating that labour productivity observed in services is lower than in other sectors.

This paper examines services sector liberalization for Indonesia in terms of global value chain (GVC) activities, primarily focusing on the telecommunications sector. Using Input Output Tables and sectoral-level data, the value chain for the telecommunications services is mapped out to show the sector's economic contributions. The study also discusses the relevant regulatory constraints impeding the services sector and the steps that can be taken to enhance its growth.

A number of studies suggest that increasing the services sector's competitiveness could prove to be of great significance to Indonesia's overall economic progress. For example, research conducted by Duggan, Rahardja and Varela (2013) on Indonesia, Arnold, Mattoo and Narciso (2008) on African countries, and Fernandes and Paunov (2008) on Chile revealed how an increase in the degree of competition in the domestic services sector can also increase the productivity of the respective economies' manufacturing sector. Similarly, Deardoff (2001) argued that liberalization of trade in services can generate benefits beyond the services sector, by reducing real barriers to trade in other sectors. Using simple theoretical models, he further showed that the gains yielded will be even higher for formerly restrictive economies like Indonesia. Mattoo and Stern (2008), (1) in fact, have suggested that the gains from liberalizing services may be substantially greater than those from opening up trade in goods because of the potential spillover effect of the required movement of capital and labour within and between economies. In the same context, Robinson et al. (2002) showed that welfare gains from a 50 per cent cut in services sector protection will be five times higher than the gains from non-services sector trade liberalization.

In terms of the regulatory framework, Dee (2012) emphasized the need for "regulation reformation" to expedite the attainment of liberalization goals. Also, regulatory constraints can largely depend on industrial characteristics, as proposed by Deardoff (2001). With regard to the labour market, growth in employment in services is also linked to export of manufacturing products; consequently, the regulations that affect labour migration can play a crucial role in creating greater yields for an economy (Manning and Aswicahyono 2012).

Given this background, this study presents a case study of the telecommunication services sector in Indonesia. The paper is organized as follows. The next section provides an overview of Indonesia's services sector. The third section focuses on the country's participation in global value chains. The subsequent section highlights the case study of the telecommunications sector, and the final section concludes.

2. Indonesia's Services Sector at a Glance

The services sector in Indonesia has been steadily growing over the past few decades, progressively accounting for larger shares of GDP and employment. However, the sector accounts for a minor portion of export and import figures. The share of services trade in total Indonesian exports has been relatively steady over the last decade at around 10 per cent, while its share in total imports has fallen from 31 per cent in 2003 to around 16 per cent in 2013 (Figure 1). As a result, its proportion to total trade displayed a somewhat declining trend from around 18 per cent in 2003 to only around 14 per cent in 2013. This is in contrast with the proportion of trade in goods, which has remained strong at above 80 per cent throughout the 2003-13 period, except in 2004.

During the 2004-14 period, me travel sector dominated Indonesia's services exports, followed by other business services (Figure 2). (2) Despite fluctuations, the travel sector maintained its lead over other services in terms of exports, far exceeding financial, insurance and pension services. Similar features are observed in Indonesia's services imports (Figure 3). Here, transportation, travel and other business services formed the bulk of the country's import of services, closely followed by telecommunications, and computer and information services.

Despite the relatively small share in overall trade, the growing importance of Indonesia's services cannot be overlooked. Based on the 2005 and 2010 Input Output (I-O) Tables, the services sector accounted for about 34.3 per cent and 33 per cent, respectively, of the total intermediate input, with trade and transport providing the largest services input to the manufacturing sector. The 2010 Indonesia's I-O Table also highlighted the contribution of the telecommunications services in manufacturing. As a matter of fact, the data reported that about 0.5 per cent of manufacturing intermediate input came exclusively from telecommunications.

Here, the "restrictiveness stance" of services is worth noting. As international trade in services is often impeded by international trade and investment barriers as well as domestic regulations, the OECD has developed the Services Trade Restrictiveness Index (STRI) to help identify policies that limit trade. Indonesia's scores on the STRI in select sectors available at the OECD STRI dataset are shown in Figure 4. Based on the OECD calculations, Indonesia has a higher STRI score than the sample average in all twenty-two services. This reflects the restrictions that emerge due to the presence of at least one major state-owned enterprise (SOE) in all key services such as air transport, banking, broadcasting, construction, courier services, distribution, insurance, maritime, logistics and telecommunication services (OECD 2015). While logistics customs brokerage, architecture and engineering services were the three sectors with the lowest STRI scores (most open), they were still higher than the sample average. Meanwhile, legal services, motion pictures and air transport (covers establishment only) scored the highest, making them the most restrictive services in the country.

The high restrictiveness in Indonesia's services sector is generally supported by another index that focuses on measuring the regulatory barriers on foreign direct investment (FDI). The evolution of the OECD FDI Regulatory Restrictiveness Index from 1997 to 2014 (Figure 5) shows that, while Indonesia is becoming more open to foreign investment, obstacles remain. It can be seen that hotels and restaurants have become the most progressive sector in terms of FDI openness. The communications and distribution sectors grew more restrictive in 2014 compared to 2006, but real estate investment remained completely closed throughout the observed period. Overall, the easing of regulations has induced greater FDI inflows to Indonesia. Although the services sector has been leading the direct investment projects in the country, in terms of monetary value of the projects, manufacturing has enjoyed the lead since 2012 (Indonesia Investment Coordinating Board).

3. Indonesia and Global Value Chains

The Trade in Value-Added (TiVA) database is a joint OECD-WTO initiative to measure global production networks and supply chains. The TiVA database derived from the 2015 version of OECD's Inter-Country Input-Output (ICIO) database contains a range of indicators measuring value-added of international trade flows and final demand. The ICIO was constructed from a compilation of various national and international data sources and balanced under constraints based on official (SNA93) National Accounts by economic activity and National Accounts main aggregates. (3) The 2015 TiVA database consists of sixty-two economies and thirty-four industries analysed in 1995, 2000, 2005, and 2008-11.

Figure 6 shows the GVC participation index for ASEAN countries from 1995 to 2011. Indonesia has the lowest score in the region, with its index value increasing by merely 1.7 per cent in 2010 to an average of 43.5 in 2011. Among other ASEAN economies, Singapore, Malaysia and Thailand topped the list, with their average scores being 61.6, 60.4 and 54.4, respectively.

The breakdown of GVC participation in terms of backward and forward participation (Figure 7), shows that Indonesia and Brunei have higher forward participation. In other words, the value-added of exported goods from these countries which have been used as inputs in destination countries was higher than the value-added of imported goods used as input in domestic production. In contrast, Cambodia, Malaysia, the Philippines, Singapore, Thailand and Vietnam have engaged in GVCs mostly through backward participation (i.e., via imported inputs).

For Indonesia, the manufacturing and business services sectors show high GVC participation. In 2011, for example, the manufacturing sector contributed 8.3 per cent of the 12 per cent of Indonesia's backward participation in GVCs, and 25.6 per cent out of the 31.5 per cent of the country's forward participation. This indicates that manufacturing is highly engaged in global production networks compared to other sectors. Likewise, business services accounted for about 1.8 per cent of Indonesia's backward participation and 4.3 per cent of forward participation in 2011 (Figure 8).

Figure 9 depicts Indonesia's services value-added share of gross exports. Overall, from 1995 to 2011, the share of services value-added decreased over time, from 40.4 per cent in 1995 to 29.0 per cent in 2011. While 24.3 per cent of the services value-added was procured from the domestic market, 4.7 per cent was derived from the foreign market. Table 1 compares the services value-added share of gross exports across eight ASEAN economies in 2011; Indonesia ranked seventh. Singapore, Cambodia and the Philippines secured the top three positions on die list.

4. Telecommunications Services: A Case Study

This section discusses the engagement of Indonesia's telecommunications services wim global value chains as a case study using Input-Output (I-O) Tables and industry-level data.

4.1 Methodology

In order to map the value chain of the telecommunications services, the multiplier effect and linkage analysis are used. The study relies on Indonesia's I-O Table for 2010 for data.

4.1.1 Multiplier Effect. To determine the multiplier effect of a sector, the sector from which the input is sourced and to which sector the output distributed are identified. Here, the output multiplier is basically derived from the Leontief inverse matrix, as follows:

[DELTA]X = [DELTA]X + [DELTA]Y (1)

[DELTA]X=[(I-A).sup.-1] 1Y (2)

[DELTA]X = L. [DELTA]Y (3)

where, X = ([[[X.sub.i]].sub. n x i]), is the column vector of the transaction flows between sectors of activities. A = ([[[a.sub.i,j]].sub.n x n]), is the matrix of technical coefficient, where each element in each component in any of matrix A represents direct input required from sector i to produce sector j. Y = ([[[Y.sub.i]].sub. n x 1]), is the column vector of final demand, or exogenous variable changes. L = ([[[l.sub.i,j].sub.n x n]) = [(I - A).sup.-1] is the Leontief inverse matrix.

An output multiplier for sector j is defined as the total value of production in all sectors of the economy that is necessary in order to satisfy a dollar's worth of final demand for sector j's output (Miller and Blair 2009). It is obtained by the column summation of the Leontief inverse matrix:

[mathematical expression not reproducible]

The study also calculate the income multiplier ([IM.sub.j]). [IM.sub.j] is the simple income multiplier which is calculated similar to output by simply converting the elements in matrix into dollars worth of employment using labour-input coefficients (Miller and Blair 2009).

4.1.2 Linkage Analysis. Linkage analysis consists of backward and forward linkages, and is used to show interdependence among sectors. Sectors with high backward linkage (BL) value are considered important for other production activities. Sectors with high forward linkage (FL) value, on the other hand, indicate that their output is needed by other sectors. BL or FL value of more than one indicates strong interdependence. The backward and forward linkages are based on the following formulae:

[mathematical expression not reproducible]

[mathematical expression not reproducible]

Based on the I-O Table, Indonesia's telecommunications services show significant forward linkage (Figure 10). Apart from supporting itself, telecommunications also enables trading services (other than cars and motorcycles), financial banking and government services. It relies on other sectors such as electronics, computers and information technology. Export and imports of the sector as recorded in Indonesia's I-O table are very limited.

4.2 Performance of the Sector

In Indonesia, the demand for telecommunications services has increased rapidly, particularly for mobile and Internet services. In the past fifteen years, the cellular subscription rate has increased substantially, from as little as 3.7 million users in 2000 to 338.4 million in 2015. Similarly, the Internet penetration rate in the country has also increased significantly, from 1 per cent in 2000 to 22 per cent in 2015 (Figure 11). Moreover, ITU (2015) reported that fixed-broadband subscriptions increased, from 4,000 to 2.8 million users between 2000 and 2015. In contrast, fixed-telephone subscription rate has decreased, from 40.9 million consumers in 2010 to 22.4 million in 2015.

It is important to note that Indonesia is a net exporter of telecommunications services. Based on balance of payment (BOP) data, the sector enjoyed positive balance in 2016, although exports have decreased over time. In 2012, exports from the sector amounted to US$1.1 million while imports accounted for US$0.7 million; in 2016, exports had declined to US$0.76 and imports reached US$0.71 million (Figure 12).

The telecommunications sector in Indonesia is classified into four categories, namely: fixed network; mobile network; telecommunications services; and special telecommunications services. Based on data provided by the Ministry of Communication and Information (MoCI), there were 136 fixed network providers in 2015, with most companies providing closed fixed network. In the mobile network classification, there were nineteen service providers, and in me telecommunications services category, mere were 388 industry players (Table 2).

4.3 Mobile Cellular Sector

This subsection focuses on the mobile telecommunications services, the fastest growing segment in Indonesia's telecommunications sector. Currently, there are six companies serving the mobile cellular market, with Telkomsel enjoying the widest coverage and largest market share (48 per cent of total subscribers) (Table 3). All providers offer post-paid and pre-paid subscription products.

Based on the 2014 Potensi Desa Database (Podes), 90.6 per cent of villages/urban villages have access to cellular phone signal, with 68 per cent of the villages receiving strong signal and 22.6 per cent receiving weak signal (Statistik Telekomunikasi 2015). While the entire Indonesian population has 2G coverage, about 67 per cent has 3G coverage. Recently, LTE spectrum bandwidth has also been expanded in the country to deliver better 4G user experience (PT Telkomsel Annual Report 2016).

The tariff rates across different service providers tend to be competitive. Table 4 compares the tariff rates for voice call, short message service (SMS) and Internet data between major players. In terms of voice call services, Kartu Halo, Simpati and Kartu offer the most expensive plans for on-net and off-net calls, while Tri (3) provides the cheapest. (5) Similar pattern is also seen in the case of SMS services. For internet data, Kartu Halo and IM3 are the most expensive providers, while Tri (3) remains the cheapest.

Another interesting feature of the cellular sector is the local interconnection fee, which has been reduced twice in 2009 and 2011. The fee is based on an operators' long-run incremental costs and agreement by all operators. The MoCI plans to reduce the fee even further, but the decision is still in formulation. Compared to several Asian countries, the interconnection fee in Indonesia is lower than the Philippines, but higher than Malaysia, Pakistan, China, Sri Lanka, Bangladesh and India (Figure 13).

4.4 Value Chain of Mobile Telecommunication

Lee and Gereffi (2013) developed a mobile telecommunication value chain comprised of four stages: hardware manufacturing; sales and marketing; mobile services and use; and after use (Figure 14). We evaluate Indonesia's regulations on the sector based on this framework.

In Indonesia, regulations related to telecommunications services are based on Law 36/1999. However, telecommunications hardware manufacturing has no specific sectoral law. Investment in telecommunications hardware is governed by the Investment Law. The sector is open to foreign investment, as Government Regulation 44/2016 concerning an "investment negative" list does not include this sector. As imports of 3G mobile phones were very high in the past, the government introduced a "minimum domestic component" regulation in 2014 for 4G mobile phones that are sold in Indonesia. The regulation aims to reduce the trade deficit arising from the import of mobile phones. In 2015, three ministries (Ministry of Industry, Ministry of Trade and Ministry of Communication and Information) announced that the minimum domestic component for 4G mobile phones was set at 30 per cent. Following the announcement, Indonesia's Ministry of Industry also enacted Regulation 65/M-IND/PER/7/2016 on guidelines for domestic component calculation for certain gadgets based on three aspects: manufacturing; development; and software--with assigned weightage of 70 per cent, 20 per cent and 10 per cent, respectively. According to the Ministry, in 2016, twenty-three electronics manufacturing services (EMS) related to the telecommunications and information industry operating in Indonesia had accumulated total investments worth IDR7 trillion and employed around 13,000 workers. (6)

In terms of trade, mobile phone sales and marketing are subject to Law 7/2014. Regarding investments in the field, Government Regulation 44/2016 mandates retail to be open only to domestic investors, while distribution that is not affiliated with manufacturing remains open to foreigners (up to 67 per cent). In addition, all 4G mobile phones that are distributed should satisfy the minimum domestic component condition, too. Overall, mobile phone distribution in the country can be undertaken though self-owned shops, authorized dealers, as well as non-authorized retailers.

The two telecommunication retailers that have gone public in Indonesia include PT Trikomsel Oke Tbk and PT Erajaya Swasembada Tbk. As of December 2016, PT Trikomsel Oke Tbk owned 260 stores in the country, with its total sales averaging IDR1.25 trillion. Similarly, PT Erajaya Swasembada Tbk's distribution network covered seventy-six points with over 48,000 third-party reseller partners, managing 700 retail outlets across Indonesia. Its net sales grew by 2.7 per cent to IDR20.55 trillion as of 31 December 2016.

In 2016, the Ministry of Trade enacted Regulation 41/M-DAG/PER/5/2016 as an amendment to Regulation 82/M-DAG/PER/12/2012 for the import provision of cellular phones, handhelds and tablet computers. Based on the regulation and as a condition for obtaining import approval, importers need to provide proof of development of a local manufacturing plant or plans to cooperate with domestic manufacturing/design/R&D/apps industry in Indonesia. This initiative is part of a broader government strategy to use more local components in mobile phones distributed in Indonesia. The MoCI Regulation 27 (2015) mentions that, by 2017, every 4G LTE mobile device that is made, assembled and imported into Indonesia needs to have a minimum local content of 30 per cent. One concern here is the deterioration in mobile service performance due to the lack of domestic competency to produce certain components.

For the country's mobile service value chain, the Telecommunications Law sets the regulation. Currently in effect, Law 36/1999 marks a new era of telecommunications governance in Indonesia by eliminating the monopoly of PT Telkom and PT Indosat, and establishing the Indonesian Telecommunication Regulatory Body (BRTI). (7) BRTI consists of the directorate general of post and telecommunications (DGPT) and a telecommunications regulatory committee. It has authority to regulate, supervise and control telecommunications activities like issuing all licences to operate telecommunications network and operating telecommunications services, including mobile phone services. In 2016, the government stipulated Presidential Regulation 44 related to an "investment negative" list that sets the maximum foreign equity limits for telecommunication services, including mobile service (Table 5).

Electronic waste (e-waste) management in Indonesia is subject to Government Regulation 101/2014 for hazardous and poisonous waste for industry and household, and Municipal Waste Act 18/2008 for solid waste management. In 2014, the Ministry of Environment and Forestry stated that the electronic waste from 2,000 industries totalled 19,300 tonnes. E-waste management is currently handled by the government and, in the case of Jakarta, the local government provides drop-boxes for e-waste that are later transported to recycling centres. (8) In addition, there is also participation from the informal and formal sectors. While the informal sector usually takes part in collection, refurbishment and recycling, especially in bonded zones, the formal sector participates in the collection, transportation, segregation, separation/dismantling and disposal stages. Overall there are six companies for collection and two companies for recycling in Indonesia (BCRC-SEA 2016). Also, e-waste export is allowed in Indonesia, but its import is prohibited.

Figure 15 shows the comprehensive evolution of the regulatory framework for Indonesia's telecommunications sector.

4.5 Post-Reform Performance

Telecommunication reforms in Indonesia were introduced in 1999 with the removal of the monopoly of PT Telkom and PT Indosat. As a result, mobile subscription grew by 78 per cent and 79 per cent in 2001 and 2002, respectively. From 2000 to 2008, the mobile subscription growth rate was about 58 per cent per annum, on average. The 2008-11 period was marked by reduction in the interconnection fee for voice calls and SMS. However, the subscription growth was slower in 2009 (16 per cent) but increased in 2010 (29 per cent). By 2012, the number of mobile users in Indonesia exceeded 280 million, a figure higher than the total population. Between 2012 and 2015, the subscription growth rate was about 8 per cent per annum (Figure 16). Although there seems to be a positive correlation between telecommunication reforms and the number of subscribers, it is important to understand that subscription is also affected by other socio-economic factors.

The number of Internet users in the country also increased from 0.9 per cent in 2000 to 22 per cent in 2015. This can be attributed to government policies such as the universal service obligation for telecommunications operators, which has improved Indonesia's telecommunication infrastructure and, subsequently, individual access to Internet.

Despite the reforms, however, the sector remains relatively restricted, with an STRI value of 0.57 out of 1.00. Barriers to competition and restriction on foreign entry are the primary contributors of STRI in the sector (Figure 17).

5. Conclusion: More Challenges Ahead

As indicated by OECD, trade in services drives exchange of ideas, know-how and technology. It helps firms cut costs, increase productivity, participate in global value chains and boost competitiveness. The integration of services into the value chain of other sectors has played a crucial role in increasing the productivity of the Indonesian economy. By making further use of services, Indonesia can place itself at a higher position along emerging global value chains.

Despite the reforms that have been undertaken in recent year, several challenges remain in the telecommunications services sector. These mainly include high interconnection costs and limited investment in telecommunications infrastructure. Although telecommunications tariffs were brought down in 2009 and 2011, the rate remains considerably high in Indonesia. The tariff reduction policy was targeted to be issued in 2015, but has not been enacted so far. Similarly, the need for investments to develop telecommunications networks and infrastructure remains urgent, but capital inflow continues to be low due to perceived unprofitability. As of now, most infrastructure developers involved in Indonesia's telecommunications sectors are local providers, who are required to establish telecommunications network for five years in predetermined areas (Presisi Indonesia 2016).

In terms of control and supervision, Indonesia has no regulation on over-the-top services (OTT) that have developed globally, such as Netflix, Facebook and WhatsApp. Likewise, regulations on e-commerce have not yet been implemented either (Presisi Indonesia 2016).

Acknowledgement

The authors would like to thank Rahmasari Istiandari and Nur Afni Panjaitan for their valuable research assistance.

NOTES

(1.) A Handbook of International Trade in Services, World Bank (2008).

(2.) "Other Business Services" include any services other than the eight categories of services listed on Figure 2's legend.

(3.) http://stats.oecd.org/Index.aspx?DataSetCode+TIVA2015_Cl

(4.) For detailed mathematical steps in composing the Leontief inverse matrix, see Miller and Blair (2009).

(5.) On-net tariff is tariff within the same operator, off-net is tariff between operators. Off-net call or SMS is charged with interconnection fee. Indonesia's telecommuncation regulator determines the formula but not the tariff (BRTI 2012); thus, the price between operators varies.

(6.) http://ekonomi.kompas.com/read/2017/06/09/213805026/menperin.resmikan.pabrik.ponsel.motorola.dan.lenovo. di.serang.banten

(7.) BRTI was established based on Minister Decree 31 (2003).

(8.) http://mediaindonesia.com/news/read/102659/ramai-ramai-kumpulkan-sampah-elektronik/2017-04-29

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http://stats.oecd.org/Index.aspx?DataSetCode=TrVA2015_Cl

https://opensignal.com/networks/indonesia/

http://www.thejakartapost.com/academia/2016709/01/what-we-know-and-dont-know-about-interconnection.html

http://ekonomi.kompas.com/read/2017/06/09/213805026/menperin.resmikan.pabrik.ponsel.motorola.dan.lenovo. di.serang.banten

http://mediaindonesia.com/news/read/102659/ramai-ramai-kumpulkan-sampah-elektronik/2017-04-29

Titik Anas and Dionisius A. Narjoko

Titik Anas is Senior Lecturer at the Department of Economics, Padjadjaran University; and Managing Director of Rumah Riset Persisi Indonesia, Menara BCA 50th Floor, Jl. MH. Thamrin No. 1 Jakarta - 10310, Indonesia; email: tanas@presisi-indonesia.com

Dionisius A. Narjoko is Senior Economist at the Economic Research Institute for ASEAN and East Asia (ERIA), Sentral Senayan II, 6th floor Jalan Asia Afrika No. 8, Gelora Bung Karno, Senayan, Jakarta Pusat 10270, Indonesia; email: dion.narjoko@eria.org

DOI: 10.1355/ae36-3i
TABLE 1
ASEAN's Services Value-Added Share of Gross Exports in 2011
(Percentage)

No  Countries          Share (%)

1   Singapore          66.44
2   Cambodia           55.14
3   Philippines        48.50
4   Thailand           43.02
5   Malaysia           41.71
6   Vietnam            38.14
7   Indonesia          28.96
8   Brunei Darussalam  10.50

Source: Trade in Value-Added (TiVA), October 2015, OECD.

TABLE 2
Telecommunications Providers in Indonesia

Type of Telecommunications Provider          2012  2013  2014  2015

Fixed Network                                110   109   125   136
Local Fixed Network                           33    36    43    48
Circuit Switch and Basic Telephony Services    5     5     5     5
Switch Package                                28    31    38    43
Distant Range Fixed Network                    2     2     2     2
International Fixed Network                    3     3     3     3
Closed Fixed Network                          72    68    77    83
Mobile Network                                18    19    18    19
Trunked Radio Terrestrial Mobile               9    10     9    11
Network
Mobile Cellular Network                        8     8     8     7
Mobile Satellite Network                       1     1     1     1
Telecommunications Services                  348   359   343   388
Value-added telephony services                39    29    25    25
Internet Service Provider Multimedia         223   245   240   281
Services
Network Access Provider Services              48    50    46    50
Public Purpose Internet Telephony             27    24    22    22
Services
Data Communications System Services           11    11    10    10
Special Telecommunications Services           23    23    23    23
Total                                        499   510   509   566

Source: Ministry of Communication and ICT, retrieved from Statistik
Telekomunikasi 2014 and 2015.

TABLE 3
Performance of Major Mobile Cellular Providers in 2015

No.                        Subscriber    Revenues           Assets
                           (in million)  (in IDR trillion)  (in IDR
                                                            trillion)

1    PT Telkomsel          152.6         76.1               84.1
2    PT Indosat             69.7         26.7               55.3
3    H3I                    43.1         --                 --
4    PT XL-Axiata           42.1         22.9               58.8
5    PT Smartfren Telecom   11.02         3.02              22.8
6    Sampoerna Telekom     --            --                 --

No.  Share
     Subscriber (%)

1    48
2    22
3    14
4    13
5     3
6    --

Notes: There is no data for Sampoerna Telekom. Revenue and asset of
H3I only in Asia level.
Source: Annual Report of each company.

TABLE 4
Tariff Comparison between Providers in Indonesia

                                         Tariff
                                                            00.00-05.59

               Kartu Halo          On-net                 1440
                                   Off-net                1560
                                   Fixed line             1560
               KartuAS             On-net                 3540
                                   Off-net                1760
                                   Fixed line             1760
               Simpati             On-net                 2299
                                   Off-net                3096
Voice                              Fixed line: Local      1584
(IDR/minute)                       Fixed line: Non-local  3696
               IM3                 On-net                 1000
                                   Off-net                1350
               XI                  On-net                 1000
                                   AXIS                   1000
                                   Off-net                1000
               3(Trl)              On-net                   75
                                   Off-net                 500
               Smartfren           On-net                  240
                                   Off-net                 900
               Kartu Halo          On-net                  230
                                   Off-net                 240
                                   Fixed line              240
               KartuAS                                     275
               Simpati                                     27S
               IM3                 On-net                  225
SMS (1 sms)                        Off-net                 225
               XL                  On-net                  200
                                   AXIS                    200
                                   Off-net                 200
               3(Trl)              On-net                   50
                                   Off-net                 100
               Smartfren           On-net                  150
                                   Off-net                 150
               Kartu Halo
               Kartu AS
               Simpati
Internet (mb)  IM3
               XL/AXIS (per 5 Mb)
               3(Tri)
               Smartfren

                 06.00-11.59     12.00-16.59     17.00-17.59

               1440            1440            1440
               1560            1560            1560
               1560            1560            1560
               3180            3180            2880
               1760            1760            1600
               1760            1760            1600
               2090            1881            1710
               3096            3096            2880
Voice          1584            1584            1440
(IDR/minute)   3696            3696            3360
               1000            1000            1000
               1350            1350            1350
               1000            1000            1000
               1000            1000            1000
               1000            1000            1000
                 75              75              75
                500             500             500
                240             240             240
                900             900             900
                230             230             230
                240             240             240
                240             240             240
                275             275             275
                275             275             275
                225             225             225
SMS (1 sms)     225             225             225
                200             200             200
                200             200             200
                200             200             200
                 50              50              50
                100             100             100
                150             150             150
                150             150             150
               6000
               3000
               3000
Internet (mb)  6000
               2000
                100
               2000

                  18.00-23.59

                1440
                1560
                1560
                2830
                1600
                1600
                1710
                2880
Voice           1440
(IDR/minute)    3360
                1000
                1350
                1000
                1000
                1000
                  75
                 500
                 240
                 900
                 230
                 240
                 240
                 275
                 275
                 225
SMS (1 sms)      225
                 200
                 200
                 200
                  50
                 100
                 150
                 150



Internet (mb)

Notes: Shaded cells show tariff above average. (*) Simpati, Kartu
Halo and Kartu AS are used only for Jakarta; (**) For IM3, XI, dan
Tri (3) post-paid scheme is used; (***) For Smartfren prepaid
tariff is used.
Source: Each company's website, accessed July 2017.

TABLE 5
Investment Negative List for Telecommunication Sector Based on
Presidential Regulation 44 (2016)

Business Field                                      Requirement

Telecommunication services (Wired, Wireless,        Maximum foreign
                                                    equity 67 per cent
Content Provision)
Call center & other telephone added value services  Maximum foreign
                                                    equity 67 per cent
Internet service provider, Data communication       Maximum foreign
                                                    equity 67 per cent
system                                              Monopolized by
                                                    Public Broadcast
                                                    Agency: Radio
                                                    Republik Indonesia
                                                    (RRI),
Public broadcast agency (Radio & TV)                Televisi Republik
                                                    Indonesia (TVRI),
                                                    and local
                                                    public broadcast
                                                    agencies (LPPL)
Provider & operator of telecommunication tower      Domestic equity
                                                    100 per cent
Publication of newspaper, magazine                  Domestic equity
                                                    100 per cent
                                                    1. Only for
                                                    business addition
                                                    and development.
Private broadcast agency (LPS) & Subscription       2. Maximum foreign
                                                    equity 67 per cent
broadcast agency (LPB)                              Maximum foreign
                                                    equity 49 per cent
Postal services
Operator of Trade Transaction through               Maximum foreign
                                                    equity 49 per cent
Electronic System (platform-based market place,
daily deals, price grabber, online classified
advertisements) with Investment Value of less
than IDR 100,000,000,000.00

Source: Presidential Regulation No. 44/2016 Concerning Lists of
Business Fields That Are Closed to and Business Fields That Are Open
with Conditions to Investment.
COPYRIGHT 2019 Institute of Southeast Asian Studies (ISEAS)
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Article Details
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Title Annotation:RESEARCH NOTE ON "SERVICES, TRADE AND GLOBAL VALUE CHAINS"
Author:Anas, Titik; Narjoko, Dionisius A.
Publication:Journal of Southeast Asian Economies
Geographic Code:9INDO
Date:Dec 1, 2019
Words:5452
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