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DIGITALPRENEUR AS INDONESIAS NEW ECONOMIC PILLAR

Jurry Hatammimi Institut Manajemen Telkom Indonesia
Presented @ THE 36TH FEDERATION OF ASEAN ECONOMIC ASSOCIATIONS (FAEA) CONFERENCE, Kuala Lumpur, Malaysia November 24, 2011

INTRODUCTION
1. Unemployment as impact of global financial crisis The rise of Indonesia educated unemployment : bachelor degree : 701.651 (2009) 710.128 (2010) graduate diploma : 441.000 (2009) 443.222 (2010) Limited employment offered by government and private sectors become entrepreneur

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INTRODUCTION
2. Indonesia digital market
- grow 1.880% from yr 2000

INTRODUCTION
mobile internet user : 22% (2009) 48% (2011) 8th worlds largest mobile internet user cellular subscriber : 52M (2007) 91M (2008) 117M (2010) Indonesia is a big and potential internet market

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INTRODUCTION
3. Digital entrepreneur bring SME as new national economic pillar
Indonesia entrepreneur : 400.000 persons (0,18% from total population) To raise 10% economic growth need 4,8M persons (2%) OPPORTUNITIES provide ICT (content business) professional manpower & entrepreneur DIGITALPRENEUR.

THEORIES
1. Digital entrepreneur (Pamudi, 2010) : individual who uses the internet as a tool to create commercial opportunities, disseminate information, and collaborate with clients and partners. 2. Creative Industry (UK-DCMS Task Force,1998) : Creatives Industries as those industries which have their origin in individual creativity, skill & talent, and which have a potential for wealth and job creation through the generation and exploitation of intellectual property and content

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THEORIES
3. Creative Industries Sub Sector (based on Indonesia Creative Industry Study 2007): 1. Advertising 2. Architecture 3. Art and antiques market 4. Hand made 5. Design

THEORIES
6. Fashion Design 7. Video, Film and Photography 8. Interactive Games 9. Musik 10.Art on stages 11.Printing and Publishing 12.Computer service and software 13.Television and radio 14.Research & Development

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THEORIES
4. Micro, Small and Medium Enterprises (MSMEs)
Criteria for micro-enterprises in Indonesia governed by the Regulation of the Minister of Finance No. 40/KMK.06/2003, small business by Law no. 9 year 1995 on Small Business, medium-sized enterprises by Presidential Instruction No. 10 of 1998
Criteria Asset Micro Small < IDR 200 M Medium IDR 200 M 10.000M Total Sales/year Man Power 1-4 persons 5-19 persons 20 -99 persons < IDR 100 M IDR 1.000 M >IDR 1.000 M

THEORIES
four pillars driver of Indonesia economy :
state-owned enterprises, cooperatives, private sector, MSMEs. Digitalpreneur as a branch of entrepreneurs are doing business in the form of groups of MSMEs.

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ANALYSIS
1. The development of digital content 2. Indonesias current content industry 3. Digitalpreneur as part of Indonesia creative industry 4. Digitalpreneur as Micro, Small and Medium Enterprises (MSMEs)

The development of digital content

Internet rapid transfer of knowledge technology as all people domain Competition of hardware & platform industry (Symbian, Windows Mobile, iPhone OS, BlackBerry OS, Android, and Nokia OS) with its apps store Development of access network technologies (ADSL, WIMAX, 3G, and fiber optics) Increasing needs of support for business, social, entertainment Indonesia start digital content industry since 1998 (premium service call & SMS, ring tone, wallpaper, news, games, quiz, dial tone, video)

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ANALYSIS
1. The development of digital content 2. Indonesias current content industry 3. Digitalpreneur as part of Indonesia creative industry 4. Digitalpreneur as Micro, Small and Medium Enterprises (MSMEs)

Indonesias current content industry

1. Digital Content Competition
Indigo Fellowship held by Telkom Indonesia IMULAI (Indonesia Mulai) held by Microsoft Indonesia and USAID IM2 Android Application Contest 2010 held by Indosat SWAstartup Yahoo Mobile Development Award (YMDA) 2009 Indonesia ICT Award (INAICTA) Love Indonesia Blackberry 'Super Apps' Developer Challenge 2010 in Asia Pacific Region and Ramadhan Pocket Guide made by Veelabs Indonesia as finalist iWriteWords the Best App Ever Awards Winner in Best App for Preschoolers in 2009 & the Best iPhone Apps for Kids by The New York Times 15 local startup creation Asia's Top 50 Apps 2010

2. International Awards

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Indonesias current content industry

3. Acquisition and Cooperation
Koprol acquired by Yahoo (USD 1 million) East Venture, Singapore invest in Tokopedia, Urbanesia, PriceArea , Scraplr Merah Putih Inc incubating Lintas Berita, Krazy Market, Info Kost, Ads On It, Daily Social, and Gantibaju.com Djarum (2nd biggest cigarettes company) acquired the largest Indonesian
community forum, Kaskus

4. Local Start-Up Communities

gathers startup founders, digital/tech world enthusiasts, investors and media

Indonesias current content industry

5. Local Application
News aggregator applications (Koran Droid, Indonesia on the Go) Religious (Quran, Islamic Pocket Guide, Christian Pocket Guide) Discount and shopping (disdus.com, tokobagus.com, Caripromo, yuktravel,Love Indonesia) Culinary (Menoo!) Social networking (Friendzip) Instant messaging (12Frenz) Games (Football Saga, Ponporon, Lilocity, Nyanyi yuk) Business solutions (reservation services, Warehouse Management, Project Management, Invoicing, Customer Base, Product Base, Accounting, Timekeeping, Salary, CRM, eCommerce, and CMS)

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ANALYSIS
1. The development of digital content 2. Indonesias current content industry 3. Digitalpreneur as part of Indonesia creative industry 4. Digitalpreneur as Micro, Small and Medium Enterprises (MSMEs)

Digitalpreneur as part of Indonesia creative industry

Digitalpreneur included to the creative industry sub-sectors, which is computer services and software and also interactive games growth of creative industries from 2003 to 2008:
number of businesses : 14.39%, workers absorbed : 14.71%, contribution to GDP : 115.51% (increase IDR 193,308 billion)

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Digitalpreneur as part of Indonesia creative industry

Contribution of Indonesia Creative Industry Sector in 2003 and 2008
Indicator Contribution to GDP x IDR 1M current value added (national contribution) Number of Labor (national contribution) Number of Business (national contribution) 6,700,589 (7.38%) 2,623,965 (6.3%) 7,686,410 (7.53%) 3,001,635 (6.4%) 2003 167,355,000 (8.31%) 2008 360,663,000 (7.28%)

Digitalpreneur as part of Indonesia creative industry

Comparison of GDP Contribution of Indonesia Industry Sector in 2003 and 2008
No. 1 2 3 4 5 6 7 8 9 10 Manufacturing Agriculture, Livestock, Forestry and Fishery Trade, Hotel and Restaurants Mining and Quarrying Services Construction Creative Industry Finance, Real Estate, and Business Services Transport and Communication Electricity, Gas and Water Supply Industries Sectors 2003 24.6% 15.2% 13.0% 8.3% 9.7% 6.2% 8.3% 7.9% 5.9% 1.0% 2008 24.4% 14.4% 11.3% 11.0% 9.6% 8.5% 7.3% 6.5% 6.3% 0.8%

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Digitalpreneur as part of Indonesia creative industry

Fashion and Crafts sub-sector : nearly 70% of the total Gross Added Value creative industry. But Fashion average growth : -0.7% indicates stagnant or going to decline in subsequent years. Crafts average growth : 3.17%. Both average growth warning not too dependent to both sub-sector. Sub-sectors digitalpreneur 2 digits average growth. Computer Services and Software 16.87% & Interactive Games 13.88%. Far from national GDP average growth: 5.56%

Digitalpreneur as part of Indonesia creative industry

Comparison of Gross Value Added Contribution of Indonesia Creative Industry Subsector
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sub Sector Fashion Handycraft Design Advertising Publishing and Printing Music Architecture TV and Radio Computer Service and Software Research and Development Film, Video, and Photography Art Market and Goods Interactive Games Show Art 2003 49.77% 23.76% 7.03% 5.28% 4.35% 3.47% 2.25% 1.40% 0.66% 0.63% 0.56% 0.55% 0.22% 0.09% 2008 43.48% 24.59% 6.38% 7.58% 5.01% 5.23% 2.59% 1.64% 1.19% 0.75% 0.63% 0.47% 0.36% 0.10% Average GVA 2002 2008 (x IDR 1M) 107,870 57,088 15,487 15,122 12,010 11,438 5,750 3,562 2,249 1,605 1,392 1,174 670 217 Average Growth GVA 2002 2008 -0.70% 3.17% 0.35% 13.42% 5.73% 13.42% 6.43% 7.57% 16.87% 6.20% 5.19% 3.24% 13.88% 7.67%

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Digitalpreneur as part of Indonesia creative industry

Creative Industry sector workers absorption: 5th among 10 (2008), with the contribution: 7,686,410 workers (7.53% from the total national workforce). Average worker absorbed growth of Creative Industry Sector: 3% (2004 2008) above national average of 1.82%.

Digitalpreneur as part of Indonesia creative industry

Comparison of Worker Absorbed Contribution of Indonesia Industry Sector 2003 and 2008
No 1 2 3 4 5 6 7 8 9 10 Industries Sectors Agriculture, Livestock, Forestry & Fishery Trade, Hotel and Restaurants Services Manufacturing Creative Industry Transport and Communication Construction Finance, Real Estate, and Business Services Mining and Quarrying Electricity, Gas and Water Supply 2003 46.26% 14.88% 10.54% 8.67% 7.38% 5.47% 4.52% 1.30% 0.80% 0.17% 2008 41.83% 16.76% 12.29% 8.53% 7.53% 5.88% 4.64% 1.29% 1.04% 0.20%

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Digitalpreneur as part of Indonesia creative industry

Worker absorbed :
Interactive Games : 14% (highest & the only twodigit average growth) Computer Service & Software : 5.61%. Both subsectors far from average national employment that is worth 1.82%.

Digitalpreneur as part of Indonesia creative industry

Comparison of Worker Absorbed Contribution of Indonesia Creative Industry Sub Sector 2003 and 2008
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sub Sectors Fashion Handycraft Design Publishing and Printing Music TV and Radio Advertising Art Market and Goods Architecture Film, Video, and Photography Computer Service and Software Research and Development Show Art Interactive Games 2003 53.30% 32.52% 5.24% 2.14% 2.17% 1.80% 0.95% 0.57% 0.41% 0.33% 0.28% 0.15% 0.11% 0.04% 2008 54.77% 31.07% 5.32% 2.37% 1.51% 2.13% 0.83% 0.63% 0.39% 0.38% 0.27% 0.13% 0.13% 0.05% Avg Growth 2002 2008 -0.26% -0.89% -0.17% 0.93% -1.87% 5.87% 9.38% 4.83% 7.36% 4.50% 5.61% 4.39% 5.08% 14.00%

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Digitalpreneur as part of Indonesia creative industry

Number of business :
Creative Industry Sector : 4th (2008) 6.4% of the total number of businesses in Indonesia (3 million businesses) Reason of high numbers :
Small size business Little barrier to entry

Digitalpreneur as part of Indonesia creative industry

Comparison of Total Business of Indonesia Industry Sectors 2003 and 2008
No 1 2 3 4 5 6 7 8 9 10 Indutries Sectors Agriculture, Livestock, Forestry and Fishery Trade, Hotel and Restaurants Transport and Communication Creative Industries Manufacturing Services Construction Mining and Quarrying Finance, Real Estate and Business Services Electricity, Gas and Water Supply 2003 51.9% 21.6% 8.0% 6.3% 5.4% 4.3% 1.7% 0.6% 0.2% 0.0% 2008 45.8% 25.0% 8.3% 6.4% 6.3% 5.5% 1.6% 0.7% 0.4% 0.0%

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Digitalpreneur as part of Indonesia creative industry

Comparison of Number of Business in Indonesia Creative Industry Sub Sectors
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sub Sectors Fashion Handycraft Design Publishing and Printing Music Art Market and Goods Film, Video, and Photography Computer Service and Software Advertising Architecture TV and Radio Show Art Research and Development Interactive Games 2003 50.28% 38.01% 7.20% 2.77% 0.33% 0.40% 0.31% 0.28% 0.17% 0.07% 0.08% 0.06% 0.03% 0.01% 2008 51.97% 35.16% 7.13% 3.68% 0.47% 0.39% 0.23% 0.30% 0.26% 0.14% 0.13% 0.06% 0.04% 0.03% Business Avg Growth 2002 2008 0.4% -1.2% 0.3% 4.1% 7.8% 3.4% -12.0% 6.2% 20.0% 20.5% 10.4% 4.0% 10.9% 38.0%

Digitalpreneur as part of Indonesia creative industry

The exports total value of the Creative Industry sector : IDR 58.4 trillion (2002) IDR 114.9 trillion (2008) Pass through 2007 crisis Positive net trade/net export (2002-2008) import < 10% of the export annualy

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Digitalpreneur as part of Indonesia creative industry

Comparison of Net Trade of Indonesia Creative Industry Sub Sector
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sub Sectors Fashion Handycraft Music Publishing and Printing Art Market and Goods Interactive games Computer Service and Software Research and Development Show Art TV & Radio Architecture Advertising Design Film, Video, and Photography 2003 (x IDR 1000M) 34,605.77 17,659.25 972.92 27.75 23.33 (14.98) (0.54) (29.16) 327.83 (35.17) 2008 (x IDR 1000M) 69,314.49 35,605.84 (62.36) 143.56 67.84 75.06 (1.85) 64.74 (636.55) (87.62)

ANALYSIS
1. The development of digital content 2. Indonesias current content industry 3. Digitalpreneur as part of Indonesia creative industry 4. Digitalpreneur as Micro, Small and Medium Enterprises (MSMEs)

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Digitalpreneur as Micro, Small and Medium Enterprises (MSMEs)

Digitalpreneur is part of MSMEs group important role of MSMEs in Indonesia economy :
Number of business Number of work force absorbed

Digitalpreneur as Micro, Small and Medium Enterprises (MSMEs)

Comparison of Indonesia MSMEs Contribution with
Large Enterprises in 2003
Type of Business Indicator Contribution to GDP x IDR 1M current value added (national contribution) Number of Labor (national contribution) Small Enterprises (include Micro) 450,415,060 (41.9%) Medium Enterprises 187,825,282 (17.5%) Small & Medium Enterprises 638,240,342 (59.4%) Large Enterprises 436,901,970 (40.6%) Total 1,075,142,312 (100.0%)

57,965,368 (88.7%)

7,009,393 (10.7%)

64,974,761 (99.4%)

364,975 (0.6%)

65,339,736 (100.0%)

Number of Business (national contribution)

36,761,689 (99.85%)

51,889 (0.14%)

36,813,588 (99.99%)

1,831 (0.01%)

36,816,400 (100.0%)

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CONCLUSIONS
1. Digitalpreneur developments prove that Indonesia is not only great as the Internet users, but also become a dominant player in Internet-based business. 2. Based on the indicator of national economic pillar, Creative Industry as a new sector (particularly digitalpreneur) experienced a significant increase & contributed GDP in the rank 7 of the 10 sectors (2008)

CONCLUSIONS
3. Although subsectors of digitalpreneur (Computer Service & Software and Interactive Games) still give small contribution to national GDP, but the average growth of GVA is very encouraging and the value tend to above the average of 14 sub-sectors. Therefore, digitalpreneur should be developed more serious as it can really rely on the strength of the nation itself.

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CONCLUSIONS
4. The importance of digitalpreneur recognized by the Republic of Indonesia Government.
Presidential Decree number 28 year 2008 on the National Industry Policy which is mentioned in chapter 2 about priority for the creative industry, Presidential Instruction Number 6 year 2009 on the Development of Creative Economy.

5. Digitalpreneur development is expected to have a major impact on Indonesia economy.

creation of more work fields, local work force with specific skill, entry of large investment , big export earnings keep preservating the national culture identity

CONCLUSIONS
6. Digital content business can be developed in ASEAN countries cooperation, towards ASEAN Economic Community (AEC) 2015.

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THANK YOU

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