MULTI-MEDIA BUSINESS INCREASINGLY ATTRACTIVE.
An annual report by the World Bank titled "Global Economic Prospects and the Developing Countries 2001" warns that the danger of economic marginalization is looming over countries that fail to make effective use of the Internet technology. The report says that Internet is a steroid of globalization which spurs the integration of domestic markets with the international market efficiently.
According to one World Bank lead economist, those countries that are incapable of adopting technological advancements will be increasingly marginalized because the Internet is playing an increasingly greater role in global trade. In this regard, the challenge to developing countries is how to make the best use of the Internet technology in accelerating economic growth and in preventing digital divide from growing.
The era of the Internet technology provides a new paradigm for the global business of information technology (TI). As a result, more and more TI hardware and software products are being developed in the fact of the era of the global Internet.
The opportunities emerging out of the challenges posed by the era of the global Internet have been seized by a growing number of local and foreign investors, who see Indonesia as a potentially large target-market for the business of multi-media, including the Internet. Currently, at the time when investors are too reluctant to enter Indonesia's manufacturing sector due to the crisis, the Investment Coordinating Board (BKPM) is flooded with investment applications from those investors wishing to try their fortune in the business of multi-media, especially those that have something to do with the Internet. This report briefly discusses what opportunities the players in the multi-media business have, who the existing multi-media business players are, who are wishing to enter this business, what development efforts are being made by the major players in the multi-media business, and how the overall prospects for the multi-media business are.
Trends in Multi-media Services
Generally defined, multi-media are a combination of voices, texts, features, and rays. Multimedia users can use them to make local calls, long-distance calls, and international calls, to have internet communication, cellular communication, and optic-fiber communication, as well as to have interactions through the broadcasting network.
Multi-media form one of the most important parts of the TI business because the convergence of digital technologies has been directing the development of hardware and software technologies at multi-media. Thus, the multi-media business has to be understood in the context of the TI industry in the broader sense. Through multi-media, the user can access information (i.e. electronic news), entertainment, films, music, TV, radio, video, and interactive games. Multi-media are adopted to carry out such functions as ISDN, video conference, e-mail, fax mail, teledoctor, teleshopping, mail box, and others.
In general, multi-media technologies are divided into the following groups:
a) Packet Switched Data Network (PSDN),
b) Integrated Service Digital Network (ISDN),
c) Internet, and
d) cable TV and satellite TV.
A company can provide just one of the groups of services mentioned above or all of them through an integrated multi-media service network.
Telecommunications companies operate the provision of integrated multi-media services
The multi-media business is mostly handled by telecommunications companies, including the largest two of state-owned telecommunications companies, i.e. PT Telkom Tbk and PT Indosat Tbk. In the near future, these two state enterprises will compete tightly with each other for the provision through their subsidiaries of multi-media services.
a. PT Telkom the largest provider of multi-media services
Currently, with its ISDN service, state-owned PT Telkom is the largest provider of multi-media services. The company's ISDN service is widely used by its customers in five major Indonesia cities: Jakarta, Bandung, Surabaya, Medan, and Batam.
PT Telkom has established a network management system called Telkomnet, which provides multi-media access services at different levels of accuracy, quality, effectiveness, and security. This system can monitor the performance of end-to-end services down to the customer point.
The services offered by Telkomnet are Internet access and service. There are different types of Internet access offered by Telkomnet, and they are Dinaccess (short for Dedicated Network Access), Vinaccess (Virtual Network Access), and Rinaccess (Remote Intelligent Network Access). On the other hand, Telkomnet's Internet service comprises Astinet (short for Access Service to Internet), Celling (Corporate Closed Intelligent Internet), and Glorinet (Global Roaming Internet Access).
Telkom has also introduced another multi-media service system called Electronic Mega Mall (EMM). The EMM system provides such services as transactions, information, and entertainment and can be used as a forum for communication among buyers, sellers, and the financial institution that supports the transaction. There are three types of services offered by EMM, and they are Kiostron (short for Electronic Kiosk), Plazatron (Electronic Plaza), and Ikamerston (Electronic Commercial Transaction).
PT Telkom Tbk. is currently developing a broadband service network through PT Indodua Telemedia (INT), a subsidiary which the former established with its partner, ALCATEL. This project will absorb some US$ 200 million in investment. At the initial stage, which will commence in 2001, INT will cover 10 major cities, including Jakarta, Surabaya, Bandung, and Denpasar, using an optic-fiber network. The other services which INT will provide in subsequent stages include fast Internet, e-commerce, cable telephone, and online transactions.
PT Telkom Tbk is also reported to have made a plan on acquiring PT Multimedia Nusantara in a bid to strengthen its pay-cable TV business. The aim of the planned acquisition is to enable PT Telkom to provide an integrated interactive multi-media service network for its customers. The planned acquisition of PT Multimedia Nusantara will enable PT Telkom to offer its services in the same packet with other interactive multi-media services, making them more attractive to customers.
PT Multimedia Nusantara is one of the existing pay-cable TV operators in Indonesia, and it is more popularly known by the name Metra. The company currently manages at least 10,000 outlets spread over a number of major cities. One outlet has the capacity to serve dozens of pay-cable TV customers. Since the commencement of its operations, Metra has spent Rp 18 billion in developing its pay-cable TV services. The company is the only pay-cable TV operator in Indonesia with a license to operate nationwide. It is jointly owned by Telkom (31%), PT Indocitra (49%), PT Indosat Tbk (15%), and the TVRI Foundation (5%).
PT Indocitra, on the other hand, is jointly owned by Sudwikatmono and Henry Pribadi.
b. Indosat to launch a major expansion program in the multi-media business
Not wanting to be outperformed by PT Telkom Tbk, PT Indosat Tbk will also invest between Rp 1 trillion and Rp 2 trillion for the next five years in developing an integrated multi-media service network in Indonesia through a subsidiary called Indosat Mega Media (IM2). According to Indosat's Director for Business Development Budi Prasetyo, the type of service which IM2 will offer for the first year of its operations will be pay-cable TV. For the following year, it will also provide high-speed multi-media access (HSMA) service. The funds for the implementation of this multi-media project will come from a number of sources owned by the state-owned telecommunications company. These will include the company's own equity, the sale of its subsidiaries, and the issuance of bonds. The first year of IM2's operations will be financed with some Rp 150 billion by Indosat. Last years, Indosat invested Rp 202 billion in developing its Internet and multi-media service business.
According to the plan, IM2's pay-cable TV service will be ready for operations in Jakarta and Surabaya early next year. Indosat's investment commitments for IM2 amount to Rp 119 billion for 2002 and Rp 100 billion for 2003. Meanwhile, the company's total investment commitment for 2001 is Rp 6.7 trillion, of which the largest portion (i.e. Rp 4.89 trillion) will be for the development through Mobile Multimedia (IM3) of DCS 1800-based cellular services. Some Rp 517 billion will be used for the expansion of Indonesia's existing business, and some Rp 716 billion for the development of its backbone network. The rest (i.e. Rp 476 billion) is earmarked for the development of local networks and DLD.
PT Indosat Tbk has also established an alliance in the business of multi-media and DTH (short for Direct-to-Home) telecommunication services with PT Pasifik Satelit Nusantara (PSN). These services will be provided through the satellite and will cover the Asia-Pacific region. The total investment commitment for this multi-media business project is US$ 500 million, of which some USS 75 million has been paid by the two publicly listed companies.
PSN's Director of Operations Rian Alisjahbana said that the market growth prospects for the business of integrated multi-media services through the satellite in the Asia-Pacific region are still good, given that the demand for such services in the region has continued to grow rapidly. According to Alisjahbana, the multi-media services which PSN will offer are similar to the mobile phone services provided by PT Asia Cellular Satelit (AceS).
To develop the satellite-operated multi-media services, the two companies have established Multi-Media Asia (M2A). Unlike AceS, which is designed to provide cellular services, M2A will offer integrated multi-media services, DHT services, and digital TV services. The foreign investors taking part in Aces include SingTel, LTD Company (of the Philippines), Jasmine Telecommunications (of Thailand), and Lockheed Martin (of the United States).
PSN is the majority shareholder in AceS, having deposited US$ 90 million (or 35% of the shares). Having seven extended C-band transponders and 28 extended C-band transponders, the satellite in use is capable of reaching out to 2/3 of the world's total population. In addition to multi-media, digital TV, and high-speed Internet access services, Indosat can also use the satellite to provide fixed telephone services for remote areas in Indonesia. With this multi-media satellite, the unit cost of developing telephone lines is much lower than with the traditional method.
c. PT Multimedia Nusantara to expand into the FCCN business
PT Multimedia Nusantara will also develop the so-called FCCN (short for Fixed Computer Communication Network). The first phase of this network will be developed with an investment commitment of US$ 2 million (or Rp 14 billion) and is expected to be able to serve at least 100 customers.
The launching of the computer communication network will enable customers to enjoy better and faster communication services including home banking, home shopping, and teleeducation. The FCCN multi-media technology enables people to see each other face-to-face when making inter-PC communication. FCCN is one of the trends in the information technology (IT) which telecommunication and multi-media service operators all over the world will develop, given that it is a new service technology that has very promising prospects for market growth.
d. Newcomers appear one after another
The competition in the integrated multi-media service business is likely to grow tougher and tougher because a number of other companies are also on the way to entering it. Elang Mahkota Teknologi Group (EMTEK), for example, has established cooperation with The Singleton Group (Singleton) and Carnegie-Wylie Group (Carnegie), both of which are from Australia, in developing the telecommunication, multi-media, broadband, and television service business in Indonesia.
For the first phase, the two Australian investors has injected some US$ 35 million in funds through convertible bonds into PT Abhimata Mediatama, which is to be used to purchase 33% of the shares in PT Cipta Aneka Selaras (CAS), a company which will become the holding company for SCTV. Abhimata Mediatama is a subsidiary of EMTEK which deals in the media business. Singleton indirectly controls some 17% of the shares in SCTV while Carnegie and EMTEK together owns 16%. The other shareholders in CAS are PT Bhakti Investama Tbk and PT Mitrasari Persada, which is owned by Henry Pribadi and Sudwikatmono.
Singleton is an Australian media conglomerate group which once managed the operations of The Network TEN (Channel 10) TV and a number of radio stations. The group is the owner of Singleton, Ogilvy & Mather, the largest media agency in Australia. Meanwhile, Carnegie is an investment group with wide participation in the telecommunication and IT sector.
For the provision of telecommunication, broadband, and multi-media services, EMTEK will cooperate with the two Australian investors in developing a VSAT (short for Very Small Aperture Terminal) network through a subsidiary called PT Tangara Mitrakom, in which PT Telkom Tbk owns 10% of the shares. The EMTEK Group has eight subsidiaries, and all of them deal in the business of telecommunication, integrated system, multi-media, Internet, and B2B (business-to-business) e-commerce services.
Table - 1 Multi-media services providers
Name of Shareholders company PT Datacom Asia * Bambang Trihatmodjo (PT Ariland) * Anthony Salim (PT Lembah Subur Adi Pertiwi * Peter F. Gonta (Persada Griya Abadi) * Aziz Mochtar (Azbindo Nusantara) * PT Indosat * PT Trisadnawa Solusi Komunikasi PT Multimedia * Sudwikamono Nusantara (PT Indocitra Grahabuwana) * PT Telkom * PT Indosat Mega Media * Yayasan TVRI (TVRI Foundation) PT Multimedia * PT Pasific Satelite Nusantara Asia Indonesia * PT Indosat * PT Telkom * PT Telekomindo Primabhakti * PT RCTI * PT Datacom Asia PT Yasa Tama * PT Indosat Mega Media Wirya * Youk Tanzil * PT Datacom Asia PT Yasawirya * PT Indosat Indah Mega * PT Yasa Tama Wirya Media PT Indosat Mega * PT Indosat Media PT Indonusa * PT Telkom Tbk Telemedia * Alcatel PT Cipta Aneka * Elang Mahkota Teknologi Grup Selaras (EMTEK) * Singleton Group (Singleton) * Carnegie-Wylie Grup * PT Bhakti Investama Tbk * PT Mitrasari Persada Name of Share Line of business company (%) PT Datacom Asia 33.3 * TV Cable 24.2 * Home shopping * Tele-education 28.7 6.8 5.0 2.0 PT Multimedia 49.0 * Video on demand Nusantara 31.0 * News on demand 15.0 * Home shopping 15.0 15.0 PT Multimedia 73.5 * Network Service Asia Indonesia 26.5 Provider 35.0 * Video on demand 25.0 * News on demand 20.0 * Home shopping 20.0 PT Yasa Tama 40.0 * Multi-media Wirya 35.0 Content Provider 25.0 PT Yasawirya 50.0 * Home shopping Indah Mega 50.0 * Video Media on demand * Game on demand PT Indosat Mega * TV cable Media * Highspeed multimedia Access PT Indonusa * fast Internet Telemedia * e-commerce, * tellephone cabel transaction with online. PT Cipta Aneka 16 * multi-media Selaras services, 17 * broadband 16 * television n.a broadcast n.a
Source: Data Consult (data collected from various sources)
Integrated Service Digital Network (ISDN)
PT Telkom is the only ISDN operator in Indonesia. The company's ISDN service is known by the name PASOPATI (short for Paduan Solusi Pelayanan Teknologi Informasi or Integrated Solution to Information Technology Services). For the first phase, Telkom has developed 500 BRAs, most of which are found in business and elite areas. Some 60% of the BRAs are found in Jakarta, and the rest in Surabaya, Bandung, Medan, and Batam. The services offered through PASOPATI can be seen from the following table.
Table - 2 ISDN services and User
User ISDN services Finance/Insurance/ G4-Fax, Data Transmission System, ATM Remote Securities Monitoring System, Back-up for On-line System, Videoconference for Consultation and Coordination Manufacturing G4-Fax, Data Transmission System, Videoconference, CAD Trading G4-Fax, Data Transmission System, Remote Store Monitoring System, Videoconference for Consultation and Coordination Construction G4-Fax, Data Transmission System, CAD Data Transfer System Medical Telediagnose, Closed User Group, Teledoctor Broadcasting Live broadcast, Videoconference for live TV Programme
Source: Data Consult
Internet service business increasingly attractive
A number of ASEAN members including Indonesia seem to have been actively stepping up the development of the IT industry because they are aware that this industry will make one of the pillars of global economy in the future. They are trying to emulate India, which has managed to emerge as the basis for Asia's software industry.
Currently, no less than 40 companies specializing in the provision of Internet services-which are called internet service providers (ISPs)-- operate in Indonesia. Indonet, which is managed by PT Indo Internet, is the first commercial ISP to operate in Indonesia. Radnet, the second ISP to operate in Indonesia, is the only ISP which operates an A-Backbone network for the Asia-Pacific region.
The number of ISPs operating in Indonesia is expected to increase in the near future, as indicated by the many applications received by BKPM for licenses to operate in this line of business.
In addition to the commercial ISPs, a number of government agencies and educational institutions also serve as ISPs such as Ipteknet, LIPI.net, and others.
Although the number of internet customers in Indonesia has continued to rise, Indonesia still compares very poorly with other developing countries such as Malaysia, Thailand, and China in terms of internet penetration. The total number of internet users in Indonesia as per the beginning of 2000 is estimated at only 350,000, which will increase to a projected 700,000 by the beginning of 2003. These figures are insignificant compared to the world's current total, which is estimated at 300 million. Due to the sheer size of its population, Indonesia has good opportunities to increase the number of its internet users.
The following table shows that only seven of the 41 ISPs operating in Indonesia have more than 5,000 customers each, with Indosat as the largest ISP, followed by CBN.net.id..
Table - 3 Internet Service Providers (ISP) in Indonesia, 1999 (bandwith, number of customers, and domain)
Provider Bandwith (MB) 01. Indosat, PT 24 02. Cyberindo Aditama, PT 14 03. Dyviacom Intrabumi, PT 4 04. Rahajasa Media Internet, PT 7 05. Transmedia Mitra Indonesia, PT 4 06. Carakayasa Binekakarta, PT 9.5 07. Total Info Kharisma, PT 2 08. Aplikanusa Lintasarta 8 09. Graha Sedaya Serasi, PT 5 10. Indointernet, PT 8 11. Khasanah Timur Indonesia, PT 0.5 12. Usaha Mediantara Internet, PT 6 13. Uninet Bhaktinusa, PT 5 14. Uninet Media Sakti, PT 5 15. Visionindo Network, PT 8 16. Ramaduta Teltaka, PT 4 17. Satata Neka Tama, PT 4 18. Bitnet Komunikasindo, PT 4 19. Bumi Sejahtera Inti Kencana, PT 512 (KB) 20. Jasa Jejaring Wasantara, PT 3 21. Centrin Utama, PT 11 22. Elgayasa Media, PT 4 23. Starkomindo 2 24. Telekomunikasi Indonesia, PT 2 25. Gema Nusa Perkasa, PT 2.5 26. Melvar Lintas Nusa, PT 384 (KB) 27. Sejahtera Globalindo, PT 6 28. Primedia Armoekadata, PT 0.5 29. Jasnita Telekomindo 5 30. Pos Indonesia (Jakarta), PT 5 31. Sistelindo Mitra. Lintas, pT 5.6 32. Global Antar Semesta, PT not operations 33. Media Lintas Antar Buana, PT not operations 34. Infotek Mitra Sejati not operations 35. Bima Putera Utama, PT n.a. 36. Seruling Indah Permai, PT n.a. 37. Parikesit Perwira, PT not operation yet 38. Raginar Intermedia, PT not operation 39. Jala Widya Caraka, PT n.a. 40. Teledindo Media Utama, PT not operation yet 41. Meganusa Lintas Buana, pT 3 Total Provider Number of Domain customers 01. Indosat, PT 41,000 indosat.net.id 02. Cyberindo Aditama, PT 35,000 cbn.net.id 03. Dyviacom Intrabumi, PT 9,000 dnet.net.id 04. Rahajasa Media Internet, PT 8,000 rad.net.id 05. Transmedia Mitra Indonesia, PT 100 access.net.id 06. Carakayasa Binekakarta, PT 3,100 cbi.net.id 07. Total Info Kharisma, PT 375 cline.net.id 08. Aplikanusa Lintasarta 4,000 idola.net.id 09. Graha Sedaya Serasi, PT 60 sig.net.id 10. Indointernet, PT 7,000 indo.net.id 11. Khasanah Timur Indonesia, PT 300 prima.net.id 12. Usaha Mediantara Internet, PT 150 spot.net.id 13. Uninet Bhaktinusa, PT 1,000 n.a. 14. Uninet Media Sakti, PT 2,000 n.a. 15. Visionindo Network, PT 1,000 vision.net.id 16. Ramaduta Teltaka, PT 100 n.a. 17. Satata Neka Tama, PT 350 sat.net.id 18. Bitnet Komunikasindo, PT 2,000 bit.net.id 19. Bumi Sejahtera Inti Kencana, PT 225 bumi.net.id 20. Jasa Jejaring Wasantara, PT 2,600 pacific.net.id 21. Centrin Utama, PT 5,000 centrin.net.id 22. Elgayasa Media, PT 900 elga.net.id 23. Starkomindo 300 starindo.net.id 24. Telekomunikasi Indonesia, PT 40 telkom.net.id 25. Gema Nusa Perkasa, PT 550 commerce.net.id 26. Melvar Lintas Nusa, PT 1,500 melv.net.id 27. Sejahtera Globalindo, PT 1,000 mbasania.net.id 28. Primedia Armoekadata, PT 1,000 kadin.net.id 29. Jasnita Telekomindo 1,000 jasmita.net.id 30. Pos Indonesia (Jakarta), PT 3,000 wasantara.net.id 31. Sistelindo Mitra. Lintas, pT 4,000 ibm.net.id 32. Global Antar Semesta, PT 0 n.a. 33. Media Lintas Antar Buana, PT 0 n.a. 34. Infotek Mitra Sejati 0 n.a 35. Bima Putera Utama, PT 0 koi.net, id 36. Seruling Indah Permai, PT 0 link.net.id 37. Parikesit Perwira, PT 0 -- 38. Raginar Intermedia, PT 0 -- 39. Jala widya Caraka, PT 0 itc.ac.id 40. Teledindo Media Utama, PT 0 global.net.id 41. Meganusa Lintas Buana, pT 5,000 mega.net.id Total 140,650
Source: Data Consult
As the number of ISPs grow, more and more dotcom companies come into operations in Indonesia. Initially, the emergence of dotcom companies brought about admiration among some people, who thought that this was indicative of how responsive Indonesian businesspeople were to new developments in IT and how prepared they were for the era of global interact. However, such admiration has turned into a worry because these dotcom companies seem to have emerged not out of a solid vision but, rather, out of an imitative drive. Nowadays, when dotcom companies are collapsing one after another in the United States and Europe, the dotcom business in Indonesia is also turning wobbly because of imbalances between the flow of revenues and that of expenses. As a result, some dotcom companies in Indonesia have also stopped their operations.
Table - 4 Dot com companies
Name of company Website A. General portal PT Astaga Internet Konsultindo Astaga!.com PT Agrakom Detik.com Satunet Group (Sri Agung Cahaya Sakti) Satunet.com PT Jaringan Data Interaktif web8888.com PT Kompas Cyber Media (KCM) kompas.com PT Jaringan Nuasa Jasa Searchindonesia.com B. Special Portal Indonesia Net Exchange Indoechange.com PT Sumber Wahana Tekno jsxonline.com Sinar Mas Group rileks.com Indonesia Net Exchange nexiaonline.com PT Global Jaringan Nusantara indonesiansource. com PT Enchargo Webindo ehargo.com PT Indoproperti Investama indoproperty.com PT Ojolali.com ojolali.com PT Travoo Onlie travoo.com PT Lippo Shop Lipposhop.com Macsearch Internusa Sanur.co.id PT Prasindo Dotkom Bidnets.com Name of company Source of income A. General portal PT Astaga Internet Konsultindo banner ad PT Agrakom banner ad, transaction fee, news sale Satunet Group (Sri Agung Cahaya Sakti) banner ad PT Jaringan Data Interaktif transaction fee, banner ad, ISP membership fee PT Kompas Cyber Media (KCM) banner ad, e- commerce fee PT Jaringan Nuasa Jasa banner ad B. Special Portal Indonesia Net Exchange Design,web solution, banner ad, member- ship fee PT Sumber Wahana Tekno Sinar Mas Group banner ad, transaction fee Indonesia Net Exchange PT Global Jaringan Nusantara membership fee, banner ad PT Enchargo Webindo PT Indoproperti Investama banner ad, transaction fee PT Ojolali.com PT Travoo Onlie Transaction fee PT Lippo Shop transaction fee Macsearch Internusa transaction fee, banner ad PT Prasindo Dotkom Transaction fee Name of company Investment commitment A. General portal PT Astaga Internet Konsultindo US$ 75 mill. PT Agrakom Rp 100 mill. Satunet Group (Sri Agung Cahaya Sakti) Rp 3-4 billion PT Jaringan Data Interaktif US$ 1 million PT Kompas Cyber Media (KCM) PT Jaringan Nuasa Jasa B. Special Portal Indonesia Net Exchange PT Sumber Wahana Tekno Sinar Mas Group Indonesia Net Exchange PT Global Jaringan Nusantara US$ 4-5 mill. PT Enchargo Webindo PT Indoproperti Investama Rp 15 billion PT Ojolali.com PT Travoo Onlie US$ 800,000 PT Lippo Shop Macsearch Internusa Rp 1 billion PT Prasindo Dotkom US$ 3-4 mill.
Source: Data Consult (data collected from various sources)
Satellite TV and cable TV
The first company to offer satellite TV services in Indonesia is PT Matahari Lintas Cakrawala, which is more popularly known as Indovision. Indovision broadcasts over 40 TV stations in Indonesia and abroad using Palapa C1, Palapa C2, and AsiaSat satellites.
Cable TV was first introduced into Indonesia in 1997 by PT Tanjung Bangun Semesta, which is more popularly known as Kabelvision. Both Kabelvision and Indovision are affiliated to the Bimantara Group.
Late in 2000, PT Multimedia Nusantara started to provide cable TV services under the name Metravi. According to the latest reports, this company will be taken over by PT Telkom Tbk..
Table - 5 Areas of cable TV and satellite TV coverage in Indonesia
Company Type of Name of services service PT Matahari Lintas Satellite TV Indovision Cakrawala PT Tanjung Bangun Cable TV Kabelvision Semesta PT Multimedia Cable TV Metravi Nusantara Company Average of coverage PT Matahari Lintas 27 provinces Cakrawala PT Tanjung Bangun Jakarta: Kebayoran, Menteng, Semesta Kelapa Gading, Pulomas, Pondok Indah, Bintaro, Tebet, Puri Indah, Kedoya, Taman Aries, Sunter PT Multimedia not operation as yet Nusantara
Source: PT Data Consult
Foreign investors allowed to enter into the multi-media business
The Government finally revoked a ban on foreign investment (PMA) in the multi-media information service sector, which was stated in Presidential Decree No. 96 of 2000, following a flurry of objections by dotcom investors to the policy.
The lifting of the ban is stated in Presidential Decree No. 118 of 2000 re Amendments to Presidential Decree No. 96 of 2000 re Business Lines Closed to Investment and Those Open, with Certain Conditions, for Investment. The latter was signed by President Abdurrahman Wahid on 16 August, 2000.
Point 7 in Attachment II to Presidential Decree No. 96 of 2000 re Business Lines Closed to Investment states that "radio and television broadcasting services, pay-radio and --television services, multi-media information services, and printed-media information services are closed to foreign investors, be they individuals or corporate bodies."
A similar clause is found in point 7 in Attachment II to Presidential Decree No. 118 of 2000, but the phrase multi-media information services is left out. In addition, Presidential Decree No. 118 of 2000 also revokes the provision found in Presidential Decree No. 96 of 2000 which stipulates that ownership by a foreign individual or a foreign corporate body be no more than 49% in the telecommunication business (Attachment III, point 8)and in the scheduled/nonscheduled commercial air transportation business (Attachment III, point 9). This means that the two lines of business are now open to foreign investors on the condition that they have to establish joint ventures with local investors.
Investor interest up
Although the economic condition is still bad, the investor interest in the multi-media sector, especially in the internet service business, has shown rapid growth. In the year 2000, no less than 30 applications for licenses to operate in the IT/multi-media business were approved by BKPM, most of which were from joint-ventures with capital ranging from US$ 50,000 to US$ 2 million.
Of the different types of TI services, the most attractive to foreign investors are computer internet consultancy and information and management technology consultancy, followed by internet service provision.
The investment commitment for the multi-media business projects approved under the foreign investment (PMA) scheme ranges from US$ 65,000 to US$ 4 million while that for the projects approved under the domestic investment (PMDN) scheme ranges from Rp 5 billion to Rp 70 billion.
Of the foreign companies that are prepared to do business in the multi-media sector, three are also interested in becoming internet service providers (ISPs), and they are PT City Network Perkasa Indo, PT E-Samuel Indonesia, and PT Safe-T-Net Indonesia. The three together will invest about US$ 3.5 million in the provision of internet services.
Of all the projects approved under the PMA Scheme, the largest in terms of investment commitments belongs to PT Rileks Indonesia (US$ 4 million). The company will deal in the provision of computer and internet consulting services. Another company, PT Dino, will invest US$ 1 million in the business of main-server services.
As for the projects approved under the PMDN scheme, the largest one belongs to PT Jaring Data Interaktif (JDI), which will invest Rp 70 billion in the provision of internet access services. However, JDI now operates under the PMA scheme following an exchange of shares with Asia Webs Holdings Inc. of the United States, which is 90% owned by Asia Webs. JDI now owns 70% of Asia Webs.
Recently, JDI --which is set to net over 90,000 internet customers in 2001-- has asked the Singapore Branch of Bank of America to help seek some US$ 20 million in fresh funds from a number of foreign investors.
The other local companies wishing to become ISPs are PT Royal Standar (with an investment commitment of Rp 18 billion) and PT Supra Primatama Nusantara (Rp 15 billion).
Table - 6 Multi-media/Internet projects approved by Investment Coordinating Board (BKPM), 1997 - 2000
Name of Company License Line of business Foreign Investment (PMA) NEGRI MAYA ASIA, PT 578/I/PMA/2000 Internet services provider ASIAEP DOTCOMINDO, 371/I/PMA/2000 Consulting services in PT internet information technology ASIANET MULTIMEDIA, 248/I/PMA/2000 Internet provider PT services and holding company BATAVIA-BATAVIA, PT 449/I/PMA/2000 Computer and internet consulting services BIDNETS INDONESIA, PT 368/I/PMA/2000 Consulting services in computer, interact, and interact management C2 TRADE INDONESIA, 359/I/PMA/2000 Internet consulting PT services CATCHA INDONESIA, PT 297/I/PMA/2000 Interact consulting services CIPAS INDONESIA, PT 23/I/PMA/2000 Interact Providing technology consulting services CITY NETWORK PERKASA 505/I/PMA/2000 Interact services INDONESIA, PT provider and distribution COMPUTER ASSOCIATES, 596/I/PMA/2000 Software development PT consulting services CYBER GT TECHNOLOGY 657/I/PMA/2000 Computer and interact INDONESIA, PT management consulting service CYBERCITY INDONESIA, PT 406/I/PMA/2000 Information technology consulting and multimedia services DINO (Dude Internet 393/I/PMA/2000 Internet services On-Line), PT provider and e- commerce DOOWANGNET, PT 392/I/PMA/2000 Internet consulting services DOT COM DUNIA, PT 167/I/PMA/2000 Information technology, internet and software design E-SAMUEL INDONESIA, PT 398/I/PMA/2000 Internet services provider E-SAMUEL INTERNATIONAL, 557/I/PMA/2000 Information technology PT and internet consulting services EURONET SIGMA 56/I/PMA/2000 Integrated computer NUSANTARA, PT supply services EXCEL CYBER 366/I/PMA/2000 Computer and interact CONNECTION, PT management consulting services FORMIS SOLUSI 500/I/PMA/2000 Information technology INDONESIA, PT consulting services FRANTIC INDONESIA, PT 681/I/PMA/2600 Technology information, internet & computer management consulting services GLOBAL RESEARCH 205/I/PMA/2000 Computer management UTAMA, PT consulting services HOT COMMUNICATION, PT 250/I/PMA/2000 Information technology consulting services ICORP ASIA DOTCOM, PT 342/I/PMA/2000 Interact technology consulting services INDONESIA ONLINE 407/I/PMA/2000 Computer and internet LINTASBUANA, PT management consulting service INTERMEDIA INISIATIF 209/I/PMA/2000 Internet provider INDONESIA, PT services INTERNET KOMERSIAL 52/I/PMA/2000 Internet consulting BISNIS, PT services IPH TECHNOLOGY 214/I/PMA/2000 Information technology INDONESIA, PT application consulting service JAGAT LINTAS MULTIMEDIA, 388/I/PMA/2000 Communication PT technology consulting services JARINGAN JAYA NUSANTARA, 453/I/PMA/2000 Internet management PT consulting services JAWA SOFT, PT 510/I/PMA/2000 Information technology consulting services KE SYSTEMS INDONESIA, PT 330/I/PMA/2000 Information technology management consulting service MEDIAWIT INDONESIA COM, 288/I/PMA/2000 Information technology PT consulting services NEXTWEB INTERNET 325/I/PMA/2000 Information technology KONSULTINDO, PT consulting services NOVASPRINT, PT 276/I/PMA/2000 Information technology consulting services ORN COMPUTER SYSTEM 602/I/PMA/2000 Computer system INDONESIA, PT management consulting services Q SUITE INDONESIA, PT 559/I/PMA/2000 Internet consulting services RIEGE SOFWARE 67/I/PMA/2000 Computer system INTERNATIONAL, PT application services RILEKS INDONESIA, PT 444/I/PMA/2000 Computer and internet consulting services SAFE-T-NET INDONESIA, PT 289/I/PMA/2000 Internet provider services SAHARA LOYALTY 404/I/PMA/2000 Information technology INTERNATIONAL, PT consulting services SILVERLAKE TECHNOLOGY 539/I/PMA/2000 Information technology PTE. LTD, PT and software/hardware consulting services UNIGRAPHICS SOLUTIONS 452/I/PMA/2000 Information technology INDONESI, PT consulting and import trading WORLD WIDE WEB CONSULT 684/I/PMA/2000 Information technology, INDONESIA, PT interact & computer management consulting services ZOOM JARINGAN PACIFIC, PT 460/I/PMA/2000 Internet management consulting services Domestic Investment (PMDN) HELLO INDO DOTCOM, PT 111/I/PMDN/ Internet service 2000 provider INATEL CORPORINDO, PT 15/I/PMDN/2000 Information technology consulting services INDONESIA SELULER 36/I/PMDN/1998 Cellular UTAMA, PT telecommunication operating services INDOPRIMA MIKROSELINDO, 568/I/PMDN/ PSC/PCN-PHS PT 1997 telecommunication services INFOKOM ELEKTRINDO, PT 86/I/PMDN/1998 Telecommunication system services (earth station) ITECHNO INDOJAYA, PT 33/I/PMDN/2000 Information technology consulting services JASNIKOM GEMANUSA, PT 53/I/PMDN/1998 Radio communication for data services KHASANAH TIMUR 563/I/PMDN/ Interact services INDONESIA, PT 1997 operator ITECHNO INDOJAYA, PT 33/I/PMDN/2000 Information technology consulting services JASNIKOM GEMANUSA, PT 53/I/PMDN/1998 Radio communication for data services KHASANAH TIMUR 563/I/PMDN/ Internet services INDONESIA, PT 1997 operator LINTAS MEDIA DATA 89/I/PMDN/2000 Internet services SARANA, PT provide METRODATA GLOBAL AKSES, 90/I/PMDN/2000 Internet services PT provider MULTIMEDIA ASIA 543/I/PMDN/ Multi media INDONESIA, PT 1997 telecommunication satellite system MULTIMEDIA NUSANTARA, PT 92/I/PMDN/1998 TV cable network operation and multimedia services NATRINDO GLOBAL 428/I/PMDN/ Telecommunication TELEKOMUNIKASI, PT 1997 services SISINDOSAT LINTASBUANA, 113/I/PMDN/ Information technology PT 1998 application & consulting services SUMBERKREASI PRIMA, PT 409/I/PMDN/ Radio trunking services 1997 TANAGARA LINTAS BUANA, PT 15/I/PMDN/1998 Telephone operating services ESTOCKSMULATION DOT COM, 88/I/PMDN/2000 Internet consulting PT services ETERINDO INTIUTAMA, PT 141/I/PMDN/ Information technology 1998 application & consulting services INDOTENAGA CEMERLANG, PT 86/I/PMDN/2000 Internet services provider and multimedia INFOTIMUR SISTIMATAMA, PT 71/I/PMDN/2000 Software program and development services JARING DATA INTERAKTIF, 46/I/PMDN/2000 Computer and internet PT operating services KRAKATAU INFORMATION 98/I/PMDN/1998 Information technology TECHNOLOGY, PT & consulting services LIMAS STOK HOMINDO, PT 500/I/PMDN/ Information technology 1997 and management consulting PRAISINDO DOTKOM, PT 1009/I/PMDN/ Software and 1999 communication services ROYAL STANDARD, PT 51/I/PMDN/2000 Internet provider services (multimedia, data com, callback) SUPRA PRIMATAMA 63/I/PMDN/2000 Internet provider NUSANTARA, PT services TELEINDO SOLUSITAMA, PT 48/I/PMDN/2000 Internet provider services VERSA TORRON SISTEKINDO, 155/I/PMDN/ Information technology PT 1997 consulting services Name of Company Investment Shareholder Foreign Investment (PMA) NEGRI MAYA ASIA, PT US$ 2,125,000 1. Sahat Parulian Siagian 2. Mir Muhammad Khan (Malaysia) ASIAEP DOTCOMINDO, US$ 150,000 3. Tan Boon Nunt PT (Malaysia) 4. Lee Suet Hong (Malaysia) ASIANET MULTIMEDIA, US$ 1,333,333 5. Multipolar Corp PT Tbk, PT 6. Lippo Pacific Convergence Ltd (Cayman Island) BATAVIA-BATAVIA, PT US$ 75,000 7. Wahyu Wigati Wijayanti 8. Stephen Howard Fletcher (United Kingdom) 9. Brian Dickinson (United Kingdom) BIDNETS INDONESIA, PT US$ 250,000 10. Praisindo Dotkom, PT 11. Bidnets Venture Holdings Ltd (Mauritius) C2 TRADE INDONESIA, US$ 714,285 12. eBest Ltd (British PT Virginia) 13. Rajat Sagar (India) 14. Pradeep Vasudeo Luthria (India) CATCHA INDONESIA, PT US$ 100,000 15. Catcha.Com Pte Ltd (Singapore) 16. Patrick Y-Kin Grove (Australia) CIPAS INDONESIA, PT US$ 58,571 17. Rajawali Tri Manunggal, PT 18. Cardpro Technologies Sendirian Berhad (Malaysia) CITY NETWORK PERKASA US$ 1,000,000 19. Net Peripheral INDONESIA, PT Int'l, PT 20. Monitorindo Internusa, PT 21. Yang Cheng Fen (Taiwan) 22. TVM Indonesia Corp., PT COMPUTER ASSOCIATES, US$ 1,200,000 23. Computer Associates PT Int'l Inc (USA) 24. Computer Associates Pte Ltd CYBER GT TECHNOLOGY US$ 1,000,000 25. Cyber GT Technology INDONESIA, PT Hid. Ltd (British Virgin Island) 1. ASA Partners Hid. Ltd. CYBERCITY INDONESIA, PT US$ 750,000 1. Mandiri Intifinance Tbk, PT 1. L&M Group Investment Ltd (Singapore) 1. L&M System Indonesia, PT DINO (Dude Internet US$ 1,000,000 1. Abdullah Budhiman On-Line), PT Sirod 2. Widjajaatmadja. R 1. Daein Information System Co. Ltd. (South Korea) DOOWANGNET, PT US$ 50,000 3. Shin Kwang Taek (South Korea) 4. Lee So Wang (South Korea) DOT COM DUNIA, PT US$ 200,000 5. Seolin Niagatama, PT 6. Yeon Su Ha (South Korea) 1. Sin Deog Ha Jeong (South Korea) E-SAMUEL INDONESIA, PT US$ 106,000 1. Samuel Sekuritas Indonesia 2. Samuel Aset Manajemen, PT 3. Atlas Holdings Limited (Mauritius) E-SAMUEL INTERNATIONAL, US$ 300,000 4. Eunice M. Satyono PT 5. New Age World Ltd. (British Virgin Islands) EURONET SIGMA US$ 500,000 6. Sigmacipta NUSANTARA, PT Caraka, PT 7. EFT Service Holding B.V. (The Netherland) EXCEL CYBER US$ 300,000 8. H. Chanaty Binti CONNECTION, PT Sulaiman Ltd. (Singapore) 9. Pang Xiang Zhong (Singapore) FORMIS SOLUSI US$ 100,000 10. Formis Holdng INDONESIA, PT Berhad (Malaysia) 1. Hamdan Bin Hamzah (Malaysia) FRANTIC INDONESIA, PT US$ 1,200,000 2. Prasindo Dotkom, PT 3. Frantic Holdings Ltd (Mauritius) GLOBAL RESEARCH US$ 400,000 4. Global Research UTAMA, PT Group Inc. (British Virgin Islands) 1. Pacific Andes Int'l Holding HOT COMMUNICATION, PT US$ 100,000 1. Aartago Rekadaya Sarana,PT 2. Raffi Tal (USA) ICORP ASIA DOTCOM, PT US$ 150,000 3. Asean Group Investment Ltd (British Virgin Islands) 1. Uniworld System Ltd. (BSI) INDONESIA ONLINE US$ 250,000 1. Indonesia Online LINTASBUANA, PT Inc (Mauritius) 2. Information Online INTERMEDIA INISIATIF US$ 2,000,000 1. Jawa Post, PT INDONESIA, PT 2. L & M Corn Pte. Ltd (Singapore) INTERNET KOMERSIAL US$ 50,000 3. AT Reservation BISNIS, PT Network Pre Ltd (Singapore) 4. Boh Tuang Poh (Singapore) IPH TECHNOLOGY US$ 40,000 5. IPH Technology Pre INDONESIA, PT Ltd (Singapore) 6. Phua Tech Chew (Singapore) JAGAT LINTAS MULTIMEDIA, US$ 100,000 7. Tony Legi PT 8. Aeliron Aps (Denmark) JARINGAN JAYA NUSANTARA, US$ 65,000 9. Cyber Moment Ltd PT (British Virgin Islands) 10. Jitara Investment Ltd. JAWA SOFT, PT US$ 150,000 11. Ewan Clive Dermot Makepeac (England) 12. Poul-Anders Goltermann L. KE SYSTEMS INDONESIA, PT US$ 100,000 13. Radian Delta Corpora, PT 14. Hariyadi BS Sukamdani 15. KE Technology Sdn Bhd. (Malaysia) MEDIAWIT INDONESIA COM, US$ 260,000 16. Togam Lumban Tobing PT 17. Farid Khan Bin Kaim Khan (Singapore) 18. Mediawit. Com Pte Ltd (Sing NEXTWEB INTERNET US$ 250,000 19. Internet Consulting KONSULTINDO, PT Servic Inc (Mauritius) 20. Asia Internet Holding Ltd. NOVASPRINT, PT US$ 100,000 21. Novasprint. Com Pte Ltd. (Singapore) 22. Chan Wing Kong (Singapore) ORN COMPUTER SYSTEM US$ 150,000 23. Chua Boon Kid INDONESIA, PT (Singapore) 24. Tan Chong Beng (Singapore) Q SUITE INDONESIA, PT US$ 100,000 25. Heng Hong Sun (Malaysia) 26. Chang Kum Fai (Malaysia) RIEGE SOFWARE US$ 200,000 27. Komindo Solusi INTERNATIONAL, PT Teknodata, PT 28. The Riege Software International GmbH (Germany) RILEKS INDONESIA, PT US$ 4,000,000 29. Indonesia Dotkom, PT 30. Myrice Indonesia Holdings Ltd (British Virgin Island) SAFE-T-NET INDONESIA, PT US$ 2,000,000 31. Ratiza P. Widianto 32. Cybernet Asia.com Limited (British Virgin Islands) 33. Chong Yuen Thub (Singapore SAHARA LOYALTY US$ 400,000 1. Anky INTERNATIONAL, PT Suryadinata 2. SAHARA Holding Int'l Ltd (British Virgin Islands) SILVERLAKE TECHNOLOGY US$ 100,000 3. Kan Mun PTE. LTD, PT Leong Eddie (Singapore) 4. Loke Poh Keun (Singapore) UNIGRAPHICS SOLUTIONS US$ 500,000 5. Unigraphics INDONESI, PT Solutions Inc. 6. Unigraphics Solutions Asia 7. Pacific Incorporated (USA) WORLD WIDE WEB CONSULT US$ 400,000 8. Praisindo INDONESIA, PT Dotkom, PT 9. World Wide Web Consult Hid Ltd. (Mauritius) ZOOM JARINGAN PACIFIC, PT US$ 250,000 10. Indovartal Pacific Inc. 11. Java Network Holdings Ltd. (Mauritius) Domestic Investment (PMDN) HELLO INDO DOTCOM, PT Rp 19,500 INATEL CORPORINDO, PT Rp 35,000 INDONESIA SELULER Rp 1,083,810 UTAMA, PT INDOPRIMA MIKROSELINDO, Rp 80,000 PT INFOKOM ELEKTRINDO, PT Rp 162,674 ITECHNO INDOJAYA, PT Rp 10,000 JASNIKOM GEMANUSA, PT Rp 135,000 KHASANAH TIMUR Rp 800 INDONESIA, PT ITECHNO INDOJAYA, PT Rp 10,000 JASNIKOM GEMANUSA, PT Rp 135,000 KHASANAH TIMUR Rp 800 INDONESIA, PT LINTAS MEDIA DATA Rp 10,000 SARANA, PT METRODATA GLOBAL AKSES, Rp 100 PT MULTIMEDIA ASIA Rp 1,096,791 INDONESIA, PT MULTIMEDIA NUSANTARA, PT Rp 100,000 NATRINDO GLOBAL Rp 10,564 TELEKOMUNIKASI, PT SISINDOSAT LINTASBUANA, Rp 262,650 PT SUMBERKREASI PRIMA, PT Rp 21,500 TANAGARA LINTAS BUANA, PT Rp 50,225 ESTOCKSMULATION DOT COM, Rp 2,750 PT ETERINDO INTIUTAMA, PT Rp 50,000 INDOTENAGA CEMERLANG, PT Rp 5,000 INFOTIMUR SISTIMATAMA, PT Rp 200 JARING DATA INTERAKTIF, Rp 70,000 PT KRAKATAU INFORMATION Rp 241,000 TECHNOLOGY, PT LIMAS STOK HOMINDO, PT Rp 1,000 PRAISINDO DOTKOM, PT Rp 6,000 ROYAL STANDARD, PT Rp 18,000 SUPRA PRIMATAMA Rp 15,000 NUSANTARA, PT TELEINDO SOLUSITAMA, PT Rp 1,210 VERSA TORRON SISTEKINDO, Rp 1,091 PT
Sourcer: Investment Coordinating Board/Data Consult
A number of South Korean investors have also made plans on entering the IT business in Indonesia, and they have set up Korean IT Association in Indonesia (KITAI, for short) and assigned it to develop South Korean investment in this sector in Indonesia.
Each South Korean IT investor has an investment commitment of at least one million U.S. dollars. PT Padamu Komunikasi, for example, has launched a portal called Padamu.com worth US$ 2.4 million. One obstacle to the South Korean investors' efforts at developing their investment in the IT business in Indonesia is that the telecommunication infrastructure in the country is still poor, resulting in difficulties in developing e-trading services (i.e. electronic trading through the internet). Among the South Korean IT companies that have actually invested some money in Indonesia are PT Padamu Komunikasi (web portal services), PT Boleh Net (web portal services), PT H@nbitel Media Jaya (e-Biz Solution Provider Network), PT Ockto Communication (multi-media solution), PT JagoGame Indonesia (online Game Solution), and a number of IT consulting service companies.
Prospects and opportunities
Generally, the multi-media business has good opportunities for growth in Indonesia. With a population of over 200 million, Indonesia makes a large market for a wide range of products and services. As stated in a recent World Bank report, the danger of economic marginalization is threatening countries that cannot make effective use of the Internet technology. Countries that fail to adopt developments in the Internet technology will find themselves increasingly pushed to the sideline of economic activities, given that Internet will play an important role in global trading. Like it or not, Indonesian business players will have to do something in anticipation of this situation if they want to compete successfully on the global market.
Currently, the rate of IT and multi-media penetration in Indonesia is still very low compared to that in other developing countries in Asia. Such a situation can be seen as indicating that Indonesia still has good opportunities to increase its domestic IT and multi-media penetration. The influx of foreign multi-media investors into Indonesia shows that they believe the IT and multi-media business has bright prospects for growth in Indonesia.
To Indonesia, whose population is spread over different islands, the IT and multi-media technology will help improve the welfare of its people by, e.g. providing such facilities as e-health, telemedicine, e-education, tele-education, and the likes. Another advantage of the IT and multi-media technology is that it will facilitate the provision of public phone services. Up to now, the public phone business worldwide has been concentrated in the hands of a few players. In Indonesia, the player in this business is PT Telkom. However, the so-called Internet Protocol (IP) Telephony is bringing major changes to the public phone business. The rapid emergence of ISPs and, even, warung internet (internet cafes) will help bring sound competition to the public phone business.
The question now is how to get serious government support for IT and multi-media development efforts in Indonesia. In other developing countries in Asia, the government plays a very important role in facilitating the development of the IT and multi-media business by, among others, providing sound rules of the game and improving the condition of the relevant infrastructure.
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|Publication:||Indonesian Commercial Newsletter|
|Article Type:||Brief Article|
|Date:||Jan 16, 2001|
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