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Jakarta Post

Online marketing, the next frontier for local SMEs

Most Indonesian SMEs are missing out as global trade becomes more integrated and the Internet is increasingly used as a marketing and transaction utility, experts agree

The Jakarta Post
Jakarta
Fri, July 23, 2010

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Online marketing, the next frontier for local SMEs

M

ost Indonesian SMEs are missing out as global trade becomes more integrated and the Internet is increasingly used as a marketing and transaction utility, experts agree.

In a discussion forum hosted by HSBC Bank in Jakarta on Thursday, speakers agreed that small and medium enterprises (SME) should understand that the Internet was an ideal way to reduce operating costs and access a bigger network of potential clients and customers.

Less than 10 percent of Indonesian SMEs utilize the Internet as a marketing tool, said Sandiaga Uno, Indonesia Chamber of Commerce and Industry (Kadin) vice chairman for SMEs.

“Not many people think that having a website is an advantage,” he added.

Another trend is the liberalization of trade between countries. Sandiaga said that business players
could benefit more from market liberalization if they adopted the Internet as marketing and transaction tool.

Many entrepreneurs can testify to the benefits of conducting business with clients in China over the Internet. Sandiaga said in a seminar held before the discussion,

“Many online SME entrepreneurs at the seminar said that they can get cheaper raw materials overseas and even penetrate the Hong Kong market during the ACFTA,” he said, referring to the ASEAN-China Free Trade Area.

Ponco Suhirno, an owner of a furniture company who also spoke at the seminar, said he had been marketing his products online since 2005.

Online marketing is even more effective than exhibitions, he said. “My profits doubled after I started marketing my furniture online.”

“If I market my furniture through exhibitions, my profits are equal to the money I spend,” he said.

The biggest markets for his business are France, the United Kingdom and the United States,
he added.

Online marketing is a low cost medium with a wide network that could benefit businesses, HSBC Bank senior vice president Jeffrey C Tjoeng said.

“In the middle of the economic crisis, SME entrepreneurs using the internet have the ability to grow their market share,” he said.

According a recent HSBC survey on the barriers faced by local SMEs, 25 percent of respondents
say limited networking with overseas partners and buyers is the main barrier to expanding their businesses into foreign markets. Twenty-one percent of respondents cite high operating costs as the main obstacle.

Sandiaga and Jeffrey agreed that the low utilization of the Internet as a supporting tool by SMEs was a direct result of relatively poor infrastructure provided by the government.

“We have slow bandwidth which could hinder the utilization of internet,” Sandiaga said.

The Communications and Information Technology Ministry said that there were 45 million Internet users in Indonesia as of the end of May, a drastic increase from an estimated one million users in 1999.

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