Indonesian Government Needs Private Sector for Faster Internet Connectivity
Lukita Dinarsyah, Deputy Minister at Indonesia’s Development Planning Agency (Bappenas), said that Indonesia requires at least IDR 278 trillion (USD $23.2 billion) worth of investments to build supporting infrastructure for faster Internet connectivity across the country. Enhanced Internet connectivity is one of the tools to support faster economic growth. Dinarsyah cited a study that claims that with every ten percent growth in Internet users the economy expands by an additional 1.2 to 1.4 percent.
Due to the positive impact of improved Internet connectivity on the economy, the government aims to start six priority programs during the presidency of president-elect Joko Widodo (2014-2019). However, the government hopes that the private sector will bring in the financial means as the state has a limited budget only for development of the information and technology sector.
Although Indonesia is already one of the most important global markets for online social media such as Twitter and Facebook (due to the country’s large and young population), there is still ample room for further growth as Indonesia’s internet penetration rate stood at 28 percent only at end-2013 (71.2 million Internet users). These Internet users are mainly clustered in the western part of Indonesia (Java and Sumatra), where per capita GDP is higher and Internet infrastructure is more developed.
Earlier this week, Facebook CEO Mark Zuckerberg visited Indonesia to attend an Internet.org meeting, and also met with Widodo to discuss how Facebook can be utilized for the benefit of the Indonesian people and how the social media network can support Indonesian micro businesses.
Since 2011, Indonesia’s economic growth has been slowing due to global turmoil (resulting in weaker commodity exports) as well as prudent fiscal policy of the central bank and government. The central bank (Bank Indonesia) raised its benchmark interest rate gradually over 2013 to combat higher inflation (that was caused by higher subsidized fuel prices implemented in June 2013), combat the wide current account deficit, and support the rupiah exchange rate. Indonesia’s higher interest rate environment is expected to continue due to looming higher US interest rates and another possible subsidized fuel price hike before the year-end.
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