Industry Minister: Indonesia Able to be Production Base for World Class Telecommunication Devices

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation
Date 18 Februari 2018
Category: News
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A Number of Ministers and National Police Chief during the confiscation of illegal mobile phones. (Photo by: Archive of the Ministry of Industry).

A Number of Ministers and National Police Chief during the confiscation of illegal mobile phones. (Photo by: Archive of the Ministry of Industry).

Mobile phone industry in the country has experienced a rapid growth in production numbers over the last five years. This is as a result of the Government’s efforts to spur the development of telecommunications and informatics sector.

“The increase in mobile phone production in Indonesia is partly due to the creation of a conducive business climate, downstream policy, and optimization of local components resulting in more value added,” the Minister of Industry Airlangga Hartarto said in Jakarta on Saturday (17/2).

The Ministry of Industry noted that in 2013, imports of mobile phone reached 62 million units with a total value of USD3 billion. Meanwhile, domestic production is about 105 thousand units for two local brands. In this regard, the Government issued a regulation aimed at reducing imported products and encouraging domestic productivity.

As a result, in 2014, mobile phone imports decreased compared to that of the previous year to 60 million units. Meanwhile, domestic mobile phone production grew significantly to 5.7 million units. Then, in 2015, imported products decreased by 40 percent from a year earlier to 37 million units worth USD2.3 billion. Meanwhile, mobile phone production in the country increased by 700 percent to 50 million units for 23 local and international brands.

In 2016, mobile phone imports decreased again by 36 percent from a year earlier to 18.5 million units worth USD775 million and mobile phone domestic production increased by 36 percent to 68 million units.

“In 2017, mobile phone imports dropped to 11.4 million units, while mobile phone production in the country is 60.5 million units for 34 brands, eleven of which are local brands,” the Minister said.

The 11 local brands, among others, are SPC, Evercoss, Elevate, Advan, Luna, Andromax, Polytron, Mito, Aldo, Axioo, and Zyrex. They have a strong branding for be it the lower middle class or the upper middle class market share.

“We should be proud of mobile phone products assembled by our domestic industry,” the Minister said. In fact, the increasing capability of national mobile phone competitiveness will strengthen the positive image and popularity of these products in the eyes of domestic and international consumers.

Production Base

The Minister believes that Indonesia can become a production base for the development of world class telecommunication equipment industry, let alone supported by the potential of the domestic market which is very large and a number of local component manufacturers are quite competitive.

Based on the data the Ministry of Industry has, currently there are 24 companies manufacturing components of mobile phone and tablet products in Indonesia. Meanwhile, based on e-Marketer reports, active smartphone users in Indonesia will grow from 55 million people in 2015 to 100 million people in 2018. With that amount, Indonesia will become the fourth largest smartphone active country in the world after China, India, and the US.

The Government is also determined to boost the sustainability of the telematics industry in the country, one of which through the issuance of Regulation of the Minister of Industry Number 29 of 2017 on the Provisions and Procedures for Calculating Value of Domestic Component (TKDN) for Mobile Phone, Laptop, and Tablet Computer.

“With the growth of assembly and component manufacturing industries, around 30 mobile and tablet companies have fulfilled 30 percent of TKDN,” the Minister said. To that end, the Ministry of Industry continues to improve the competitiveness of local products in order to compete with imported goods.

The Minister also said that his office is trying to prevent and reduce the circulation of mobile phones that enter Indonesia illegally, thus protecting the local industry and consumers. The Ministry of Industry is developing Device Identification, Registration, and Blocking System (DIRBS) to detect mobile phone products through International Mobile Equipment Identity (IMEI) verification.

“In upcoming April, this IMEI data will have been consolidated. We have been working with Qualcomm and Global System for Mobile Communications Associations (GSMA),” the Minister added. After the DIRBS is installed, the Ministry of Industry will synergize with the Ministry of Communication and Information and the Ministry of Trade to prepare the necessary regulations in order to control the circulation of illegal mobile phone.

Furthermore, in order to further boost the performance of this sector, the most important factor is the development of human resource competence. “We hope that mobile phone industry players in the country participate in vocational education programs through partnerships with Vocational Schools around the industrial site to facilitate the absorption and upgrading of human resources needed by the company,” the Minister concluded. (Bureau of Public Relations of the Ministry of Industry/EN) (MUR/MMB/YM/Naster).

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