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Indonesia to be Asia-Pacific’s fastest-growing IT market: Report
The country’s IT spending is expected to experience a 13 percent compound annual growth rate (CAGR) over the next few years, bringing the value of the sector to US$6 billion by 2024, according to a report by Boston Consulting Group (BCG) and technology company Cisco published on Tuesday.
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ndonesia is expected to lead Asia-Pacific in IT spending over the next four years, driven by a strong shift toward cloud-related services as the COVID-19 pandemic prompts local enterprises to digitalize their operations.
The country’s IT spending is expected to experience a 13 percent compound annual growth rate (CAGR) over the next few years, bringing the value of the sector to US$6 billion by 2024, according to a report by Boston Consulting Group (BCG) and technology company Cisco published on Tuesday.
India is expected to experience the second-fastest growth with a 12 percent CAGR, then Malaysia with a 10 percent CAGR over the same period, read the report, citing Gartner data.
“Indonesia is the fastest-growing IT market in Asia Pacific, Japan and China,” said Cisco ASEAN president Naveen Menon on Tuesday.
The COVID-19 pandemic has boosted demand for cloud services in Indonesia as mobility restrictions have compelled companies to accommodate a remote workforce and serve greater online demand.
Amid the restrictions, office occupancy rates have been limited and online activity has surged as housebound citizens rely on online platforms to buy goods, hold meetings and attend school.
Gartner predicts that of the country’s total IT spending in 2024, 52 percent will be for public cloud services, while the remaining 48 percent will be for on-site IT infrastructure.
The country’s cloud market potential has attracted several tech giants, including Google Cloud, Microsoft, Alibaba and Amazon Web Services (AWS), which are building data centers in the country.
However, IBM Indonesia and Google Cloud Indonesia representatives said in early February that cybersecurity issues and the high cost and limited availability of human capital prevented many companies from migrating to cloud-based infrastructure.
Read also: Firms struggle with cloud migration, despite high pandemic demand
A separate survey conducted by law firm Baker McKenzie on 800 businesses from eight Asia-Pacific countries showed that 84 percent of Indonesian businesses felt disrupted over the past year, meaning they lagged behind competitors in digitalizing their operations.
“There is not a one-size-fits-all [method], or one solution that fits all organizations, in the cloudification road map,” said BCG Singapore managing director and partner Prasanna Santhanam on Tuesday.
The report also predicts that Indonesia’s IT spending will be the eleventh-highest in the region by 2024. Japan is expected to have the highest spending with $155 billion and mainland China the second-highest with $141 billion.
Overall, Asia-Pacific spending on IT is expected to grow at an 8 percent CAGR to $475 billion by 2024, driven by spending on public cloud services.
Economist Intelligence Unit chief economist Simon Baptist said the size of Indonesia’s market, the largest in Southeast Asia, made it an attractive country for digital technology investment.
“The challenge Indonesia has is around data nationalism, that the government there puts restrictions on companies in terms of having to host everything and be subject to restrictions in moving data in and out of the country, across borders. That is going to limit adoption of some technologies in the market,” he said.
Government Regulation (PP) No. 71/2019 eased requirements for private cloud providers setting up shop in the country. The regulation amended PP No. 82/2012, which required providers to build data centers within the country, a costly endeavor.
Read also: Stakeholders at crossroads amid uncertainty in data management
However, the latest PP still requires providers to report cross-border data transfers to the Communication and Information Ministry. Lawmakers are currently working on a data protection bill that, according to a draft, would revoke the requirement.
