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INDONESIA’S ICT: EVERYTHING IS IN TRANSITION
 
Eddy Satriya
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 ABSTRACTS
 As one of the most dynamic and lucrative sectors, Information andCommunication Technology (ICT) has been believed to have ability to foster country’s economy. By establishing a new Department of Communication andInformation (Depkominfo) in January 2005, the Government of Indonesia hassent positive signals to make ICT sector ready for a real take off.However, there are much bigger challenges and constraints ahead inreshaping ICT industry. Among others are: revision on local autonomy laws;transition in internal organization; deadlock in the newly proposed regulationon Information and Electronic Transaction; less independence of regulatoryagency and slow progress in competition; lack of innovation in selecting keyapplication and content; and less transparent in licensing process.Therefore, in the future, the development of ICT sector in Indonesia has tobe carefully and thoroughly done in order to make use of all potential in thesector for the benefit of economy and Indonesian people. In a short term, it canbe achieved by refocusing job description in the new Depkominfo, preparing anew comprehensive and concise ICT regulation, improving the independence of regulatory agency, smartly choosing best-suit application for national programs, and introducing tariff differentiation to boost up Internet use.
Keyword: ICT, Telecommunication, IT, Internet, Indonesian Economy.
INDONESIA’S ICT: EVERYTHING IS IN TRANSITION
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INTRODUCTION
Once I had a discussion with practitioners on Indonesia’s ICT development. After a long debateand spending a couple of hours we ended up with the question “Why cannot Indonesia takeadvantages on ICT as India and China did?“ Yet, the advancement on ICT sector achieved byChina, and India - which contributed significantly on their economy - has made Italian PrimeMinister Silvio Berlusconi to invite these two populous countries to the next G-8 meeting
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. Mycolleagues and I underlined that if Indonesian authorities had successfully set up priorities on the
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Ir. Eddy Satriya, MA is a Staff Member of the Directorate of Energy, Telecommunication and Informatics NationalDevelopment Planning Agency (BAPPENAS). This paper has been presented in “e-Indonesia Initiatives” Conference, held byDepartment of Electrical Engineering-ITB and ICT Institute, Bandung, 3-4 May 2005. Views on this paper is personal, do notnecessarily reflect Bappenas’ policy where the author is currently working with.
 
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development program on ICT sector in the last five years, we should have reached the levelwhere China and India have enjoyed robust growth both for ICT industries and betteremployment. Then, we also agree that there is a lack of awareness on authority and societyacross the country about the potential of ICT in economy.In fact, advancement in ICT has had a profound impact in country economy, thus the quality of human life. ICT revolution has opened up new possibilities of economic and socialtransformations from which both developed and developing countries can potentially benefit. AsSaunders (1994) noted that in general ICT has helped, among others, to reduce the transactioncost, to provide cheaper access to information, to increase efficiency, to provide better service,and to speed up the diffusion of ideas.
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 Thus, taking lesson learnt from China and India on how they mapped out ICT industry on totaleconomy prospective, then, Indonesia has to be very clear first of ICT’s role on the nationaleconomy. This paper explores existing condition and challenges on the development of ICTsector in Indonesia. After discussing the transition periods that might confront the decisionmakers and practitioners in setting up the industry, the final remarks suggest important stepstowards a better ICT industry to improve maximum contribution for national development andfor the benefit of all Indonesian people.
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WHAT DO WE REALLY EXPECT FROM ICT?
As a member International Telecommunication Union (ITU), Indonesia has been engaging inmany international and regional activities in ICT sector. Indonesia has also committed toimprove the development of ICT sector in order to be able to provide access to as manyIndonesian as possible. One of commitments is to pave the road to establish Information Societyas defined in the last World Summit on Information Society (WSIS) in December 2003. Linkagebetween Information Society and the use of ICT is well defined in “Tokyo Declaration” prior toWSIS as the following:“
... a primary aim of Information Society must be to facilitate full utilization of ICT at alllevels in society and hence the sharing of social and economic benefits by all, by means of ubiquitous access to information networks, while preserving diversity and cultural heritage.”
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Following the international pattern on economic development, Indonesia also imitatesinternational trend. Indonesia has proceeded from traditional economic pattern to agriculturaleconomics prior to 1970s. Then, the national development process enjoyed robust growth from1970s to the mid of 1990s at annual growth rate of 6-7 percent in average resulted from theaggregation of agricultural and industrial economics activities. While Indonesia was preparing towelcome information economy in the mid of 1990s supported by the expansion of telecommunication networks across the country and IT industry, then the financial crisis haltedeconomic activities in many sectors. As to other sectors, many development targets ontelecommunication and IT sector, then, had to be revised and adjusted.Recently, Government of Indonesia has already set up the target for Medium Term of NationalDevelopment Plan (5 year). Among others are: economic growth at 6.6 % in average; povertyincidence at 8.2 % (2009); and manageable level of inflation and exchange rate. One of theconsequences is the need for about US$ 80 billion to finance the development of infrastructurealone.
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 As to ICT sector, the huge amount of fund needed for the development is expected mainly fromthe private sector, not from the state budget. Accelerating development process from privatemoney means also that the government has to provide positive climate for the investment. Forthis purpose, as launched in
 Infrastructure Summit 
last January 2005, government has set upthree main policy initiatives. There are: (1) General Policy Environment to secure appropriateguarantee framework for reducing uncertainty; (2) Entry Policy to reduce regulatory obstacle andfacilitate fair competition; and (3) Pricing Policy to conduct reliable procedure and institutionalset up for price determination.Thus, as one of the main tools for accelerating the development in other sectors, better ICTservices is ultimately needed for economic activities. Modern telecommunication - fixed andmobile telephones - has helped people in improving the quality and efficiency of businessarrangement. While high speed internet access provides people with faster data transfer andabundant resources for research activities. Other progress in ICT technology such asimprovement in memory and data storage, software development, smarter and more practical3
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