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Indonesia
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Business Updates | Mobile Apps in Indonesia Clicking into Gear

Indonesia has long been viewed as a market of immense potential for mobile applications. With a population of well over 250 million people and an active consumer base known for its largely unparalleled use of mobile devices for internet browsing and social media, the country is rightly being targeted by mobile app developers as the next frontier to move into. Certainly, recent data from mobile ad network InMobi demonstrating that Indonesia consistently ranks among the top 5 downloaders of mobile apps globally suggests that this is a prospectively lucrative course of action.

Given the context of what is already one of the world’s biggest markets for mobile apps, Indonesia spells opportunity for a broad spectrum of industries. Companies offering consultancy services to bridge existing gaps in Indonesia’s mobile app landscape such as e-commerce security and efficient payment methods stand to benefit from entering the market (See E-commerce Incoming; An Industry on the Rise). The same can be said of start-up incubators providing access to investors, training and IT support in exchange for shareholdings in mobile app-based platforms. Opportunities also await firms taking a more direct approach to launching mobile apps in Indonesia following on from successes overseas.

In seeking to tap into a domestic market of growing international repute for its openness towards embracing new innovations in mobile phone functionality, companies need to stay cognizant of the importance of tailoring apps to suit current Indonesian consumer needs. International brand names drawing upon the latest technology in app-based services will only go as far as their willingness to adapt to local demand in designing mobile apps that solve issues inherent to Indonesia.

Catering to consumers seeking convenience

Indonesia’s market for mobile applications continues to be dominated by apps geared towards satisfying local consumers’ unmatched demand for social networking services, evidenced by Jakarta’s position as the world’s most active Twitter city (Semiocast). In surveying Indonesia as a precursor to pinpointing the country as an integral part of its global expansion, Chinese web giant Baidu found that 81% of respondents identified social media apps as among their most frequently used, followed by web browser apps (64.5%) and game apps (35.4%).

Appearing on the horizon, however, is a new breed of apps set to rise rapidly in popularity. Taking advantage of Jakarta’s infamous gridlock and need for improved transportation facilities (See Indonesia’s Public Transport Projects on the Move), a series of mobile apps have recently become ingrained in everyday life on the strength of their ability to cater to local consumers in search of greater convenience and mobility.

At the forefront of this wave is Go-Jek, a locally owned operator of motorcycle taxis first established in 2011 that enjoyed a marked spike in brand awareness upon becoming fully-mobile in early 2015 with the launch of an app for Android and iOS. Through the introduction of features such as driver tracking and a cashless in-app wallet system, the company has been credited for modernizing a segment of the Indonesian transportation industry that has traditionally solely been the domain of informal sector workers, who continue to oppose the app’s rise to prominence. This largely positive response and the subsequent benefits of word of mouth marketing - itself fueled by Indonesia’s aforementioned proclivity for social media - has since seen the company widen the scope of its operations beyond Jakarta to include Bandung, Surabaya and Bali as well as encourage the entry of similar app-centred transportation services such as GrabBike (a unit of the Malaysia-based GrabTaxi currently serving markets across the ASEAN) and Uber.

The emergence of ‘e-hailing’ mobile apps is by no means a surprise. Indonesia’s largest taxi-cab service provider, Blue Bird, anticipated the need for this type of platform to meet surging consumer demand several years ago upon launching the inaugural version of a mobile app to complement its call center for taxi bookings.

Not just transportation

In appealing to a consumer base whose spending patterns are increasingly being driven by convenience and accessibility, opportunities exist beyond developing apps designed to facilitate stress-free passenger transport. This is reflected in the emergence of mobile apps offering courier and home-delivery services, such as HappyFresh and Foodpanda, which have enjoyed success on the back of helping customers avoid sitting in traffic when purchasing groceries and take-out food, respectively. The scope for this type of venture is not restricted to niche retail sectors; Go-Jek has also launched a delivery service that enables customers to order items from any store within the company’s area of operation and then pay for said item upon receipt, up to a maximum of 1 million IDR.

Mobile apps designed to ease the customer experience in Indonesia are not limited to addressing challenges related to road congestion. Applications have also been developed as a means of facilitating greater consumer engagement, such as a mobile platform developed by Autocilin – a provider of car insurance – that enables users to initiate the claim process as well as access general information on different insurance products. In the home décor and building materials industry, Asri Pancawarna, a leading manufacturer of porcelain and granite tiles, makes available a mobile app that customers can use to calculate the number of tiles needed for a specific project and select motifs suited to their interior design without needing to consult additional resources. In this regard, mobile apps have the potential to serve as the ideal tool for businesses to better communicate with the market and streamline long-winded processes that still rely on often unreliable call center systems in Indonesia.

Ones for the future

The future prospects for the mobile app market in Indonesia depend in part on the development of infrastructure needed to support more data-intensive applications. At present, apps for streaming music and videos trail far behind that of social media platforms in terms of frequent usage (Baidu), and this is likely a function of gaps in the nation’s internet connectivity requiring lengthy buffering times. Ongoing efforts by the government to improve upon broadband connectivity being carried out in tandem with plans to stimulate the local production of 4G LTE-capable smartphones (See Rising Local Content Requirements for 4G Smartphones in Indonesia) should see this type of mobile application grow in popularity going forward.

A look into the global market further suggests that there is also substantial room to grow for educational applications as well as apps that provide government services - two areas that have proven to be profitable overseas but are still untapped in Indonesia. The development of the latter would be in keeping with the present administration’s plan to move complex, bureaucratic systems to online platforms for greater efficiency and transparency.  In the meantime, Indonesia projects to continue to serve as one of the world’s most promising markets for app-based businesses able to appeal to a youthful, smartphone-savvy consumer base by offering convenient solutions to the country’s day to day challenges.

Global Business Guide Indonesia - 1st July 2015

Indonesia Services Snapshot – Telecommunication

Contribution to GDP: 4.94% (Information and Communications, Q4 2016)
Fixed Telephone Line Penetration: 16% (2016)
Mobile Phone Penetration: 40.4% (Statista 2016)
Unique Mobile Phone Subscribers: 47% (2016)
Smartphone Penetration: 43% Statista, 2016)
Internet Penetration: 37% (2016)
Fixed Line Broadband Penetration: ±2% (2016)
Main Operators: Telkom, Indosat Ooredoo, XL Axiata, Axis Telekom, Hutchison 3 Indonesia, Bakrie Telecom, First Media, Smartfren Telecom.