W

ith 2G handsets soon to be subject to higher taxes, the government says it hopes the majority of Indonesian cell phone users will move to 4G-ready handsets in the next three to four years.

Communications and Information Minister Rudiantara said he hoped 4G smartphones would be sold for cheaper in three or four years, allowing 2G handset users to switch to technology-enabled smartphones.

'€œWe estimate that the price of a 4G-smartphone will stand at around Rp 400,000 [US$30.4] in the next three to four years, with consumer purchasing power growing even stronger,'€ the minister said.

The number of cell phone users in the country has reached 308.2 million, exceeding the population of 250 million people, according to Singapore-based social media marketing agency, We Are Social.

However, only around one-fourth of the population are smartphone users with the majority using the 2G network, which only allows phone calls and the sending of text messages or multi-media messages.

A 3G network, meanwhile, enables users to do voice and video calling, send files, surf the Internet, stream videos and much more.

The 4G network, meanwhile, is expected to provide faster Internet speed than the 3G network.

Both the government and telecommunications operators are trying to encourage more people to migrate to 4G, as it will make doing business more efficient.

The Indonesian Cellular Telecommunications Associations (ATSI) recently proposed imposing higher taxes on 2G handsets to further accelerate the adoption of 4G.

'€œThere are a number of proposals, such as imposing a higher tax on 2G handsets or lowering the tax on smartphones so that there will be no big price difference between feature phones and smartphones,'€ said ATSI chairman Alexander Rusli.

Rudiantara said his ministry welcomed the association'€™s proposal, but said he had to discuss it first with the Finance Ministry.

'€œI think the Finance Ministry will be fine with it, as their tax revenues will increase [if the proposal turns into a regulation],'€ he said.

The country'€™s major telecommunications operators, Telkomsel, XL Axiata and Indosat, rolled out their commercial 4G services late last year.

Both operators and analysts previously stated that the adoption of 4G in the country would only be successful if affordable 4G-ready smartphones were available in the market.

Most available smartphones are currently global brands, such as Apple, Samsung and Sony, which sell for prices beyond the reach of most low- to middle-income consumers.

Local phone brand Polytron previously launched its 4G smartphone, the ZAP 5, at a price of around Rp 1.09 million, hoping to lure the country'€™s middle-class consumers with faster Internet access.

The Communications and Information Ministry is committed to launching a regulation in June to require a certain level of local content in the production of 4G smartphones in the domestic market by 2017.

The regulation is aimed at urging global cell phone makers to partner with local assemblers or manufacturers, resulting in more affordable prices for buyers in the country.