The Jakarta Post
The surging e-commerce market and demands for regulation streamlining have made the Internet a new imperative for Indonesia. In regards to that, the country aims to make its Internet connection the second-fastest after Singapore in the Southeast Asia region by 2019. The Jakarta Post's Khoirul Amin recently talked to Communications and Information Minister Rudiantara to find out the government's agenda in translating the vision into reality. Here are excerpts of the interview:
Question: What will be your targets during your five-year term and how will you achieve those?
Answer: First, it has to be recalled that the information, communications and technology (ICT) sector is an enabler for other sectors' growth. So, the focus of the Communications and Information Ministry is to make sure that ICT supports the government's development focuses, such as those on maritime issues, infrastructure, food and agriculture, energy, tourism, human capital and regional borders.
There are three things that we will be focusing on: the telecommunications industry, cyber security and e-systems and broadcasting digitization.
In the telecommunications industry, we will develop our broadband and boost industry efficiency to resolve slow Internet speeds. For broadband connection, we have fixed and mobile broadband, but the latter is the one that is faster to be developed. That is why we will continue boosting 4G/LTE service, which was already commercialized on the 900-MHz frequency band.
In addition, while competition in the industry is getting healthier as the number of players has gone down from 12 to seven, we see that there is still room for efficiency. Every operator builds backbone infrastructure itself, mostly using imported materials. I think three or four operators will be the ideal number for the industry.
On cyber security and e-systems, we will partner with the State Apparatus Empowerment and Bureaucratic Reform Ministry as they will manage how to cut red tape while we will support technology and capacity building. We will also boost our e-commerce ecosystem ['¦], develop a national payment gateway, fiscal policy, etc. We will also discuss the inclusion of e-commerce in the country's negative investment list ['¦].
If we look at China, its e-commerce transaction value hit US$400 billion last year, while ours stood at only $12 billion ['¦].
In broadcasting digitization, we will support the migration of analog TV to digital TV so that we can allocate more spectrum for broadband. Analog TV is currently aired utilizing the 700-MHz frequency band.
The refarming of the 1,800-MHz frequency band is now underway, with an expectation that it will boost 4G/LTE speed to the next level. What is next? Why does everything seem to run smoothly and faster under your leadership?
We aim to launch commercialized 4G on the 1,800-MHz frequency band by mid-year. In the second half of this year, we will start discussing the 2.1-GHz frequency band as there is an idle 10-MHz bandwidth block in the frequency. We will discuss whether we will allocate the block through open tender or direct appointment, depending on the demand. We hope that we can carry out refarming of the 2.1-GHz frequency band next year.
We will then discuss the 2.3-GHz frequency band next year and the 700-MHz afterwards. The refarming of the 700-MHz frequency band will very much depend on the digitization as the frequency band is currently being used by analog TV.
Before coming into the 1,800-MHz refarming agreement, I had intense communications with each operator to discuss the matter. For me broadband is very important as it will be a legacy of President Joko 'Jokowi' Widodo's government in providing fast Internet access to the public.
The government has launched a $22 billion broadband project for the next five years. How will it actually be carried out? Where will the funds come from?
The funds will be mixed from various sources, but telecommunications operators will carry out most of the infrastructure developments. However, for some parts of the Palapa Ring (undersea fiber optic cable) that are not financially feasible but economically feasible for operators, the government will provide the funds. The funds can be from public-private partnerships or state budgets. We are now still discussing it and we are aiming to come up with details of the Palapa Ring funding by the end of this year. The Palapa Ring itself will cost between $250 and $500 million.
You have announced that the government will issue a 40 percent local content regulation for 4G smartphones by 2017. The plan has recently attracted both pro and con comments. What are the actual considerations behind the plan?
Capital expenditures of our three major operators this year hit around $4 billion, half of which would be used to import materials for infrastructure. In addition, the value of our smartphone imports hit around $3 to $4 billion each year. It means that our ICT sector contributes roughly around $5 to $6 billion to the trade deficit each year. Details on local content are also still being discussed, in which the locality will not only be defined from the hardware.
We aim to issue a ministry decree on the regulation by mid-year. I have met with the US Ambassador to Indonesia and already explained to him that we are still open for feedback and that the decree has yet to be issued.
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