Over the next four years, Indonesia is expected to lead Asia-Pacific in IT spending, supported by a strong shift toward cloud-related services as the Covid-19 pandemic prompts local enterprises to digitalise their operations. As per a report from a business consulting firm and a technology company, the country’s IT spending is expected to grow at a 13% compound annual growth rate (CAGR) over the next few years, bringing the sector’s value to US$6 billion by 2024.
The Covid-19 pandemic has increased demand for cloud services in Indonesia, as mobility constraints have forced businesses to cater to a remote workforce and serve increased online demand. “Indonesia is the fastest-growing IT market in the Asia Pacific, Japan, and China,” said the technology company’s president.
The size of Indonesia’s market, the largest in Southeast Asia, made it an attractive country for digital technology investment.
– Indonesia’s Economist Intelligence Unit chief economist
Office occupancy rates have been constrained by the lack of restrictions, and online activity has increased as housebound citizens rely on online platforms to buy goods, hold meetings, and attend school. According to a Global Research and Advisory Company, 52% of the country’s total IT spending in 2024 will be for public cloud services, with the remaining 48% for on-site IT infrastructure.
Prior to the pandemic, 77% in Indonesia reported that a solution’s ability to integrate well with existing solutions/IT infrastructure, as well as security credentials (62%), were the two most important factors in choosing a cloud vendor. Following the pandemic, security credentials remained one of the most important considerations for Indonesian businesses when deciding to collaborate with a cloud vendor (64%), indicating the ever-increasing importance of cyber security, particularly as businesses expand their digital footprint online.
The potential of the country’s cloud market has attracted several tech giants who are building data centres in the country. However, in early February, two representatives of Indonesian cloud computing companies said that cybersecurity concerns, coupled with high costs and limited human resources, were preventing many companies from switching to cloud computing. cloud-based infrastructure. A separate survey by a law firm of 800 firms in 8 Asia-Pacific countries found that 84% of Indonesian firms felt a disruption in the previous year, indicating that they are lagging behind. competitors in digitising their operations.
As per the report, Indonesia’s IT spending will rank eleventh in the region by 2024. Japan is expected to spend the most, at US$155 billion, with mainland China spending the second most, at US$141 billion. Ultimately, Asia-Pacific IT spending is expected to grow at an 8% CAGR to US$475 billion by 2024, driven by public cloud services spending.
Economist Intelligence Unit chief economist 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 the adoption of some technologies in the market,” he said.
With this, cloud computing will bring a multitude of benefits in line with their operations and goals. Recognising the importance of cloud migration in the country’s journey to develop the digital economy, the government has announced a plan to further facilitate adoption through the creation of regulations. efficiency determination.
The Indonesian government relaxed requirements for private cloud providers looking to set up shop in the country. The regulation amended, which required providers to build data centres in the country, which was an expensive endeavour. However, the most recent regulation still requires providers to report cross-border data transfers to the Ministry of Communication and Information. In contrast, according to a draught, lawmakers are currently working on a data protection bill that would repeal the requirement.
