Indonesia is Google’s ‘Regional Focus’

Jakarta Globe, Shirley Christie, July 26, 2011

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Google, the world’s largest Internet-search provider, may make a “huge investment” in Indonesia to take advantage of the country’s enormous market potential, a government official said.

The Internet giant would focus its Southeast Asian investment on Indonesia, Gita Wirjawan, chairman of Indonesia’s Investment Coordinating Board (BKPM), said on Monday.

Google executive chairman Eric Schmidt said “Google wants to invest, and based on their calculation it would be bigger than its previous offices in Southeast Asia,” Gita told a press conference in Jakarta.

“I do not know yet whether it is going to be $100 million or more, but the investment would definitely be bigger than [the amount spent] in Singapore and Malaysia,” he said

Google could set up operations in Indonesia, Gita said, but the company needed to study the potential for revenue from advertising in the country and the establishment of a data center.

Those matters are being discussed with the Communications Ministry, he said.

Google’s global brand and innovative reputation means the company’s presence would encourage other investors to do business in Indonesia, Gita said.

BKPM forecasts total foreign and domestic investment hitting Rp 240 trillion ($28 billion) this year, up 15 percent from 2010.

Gatot Dewa Broto, a spokesman for the Ministry of Communications and Information Technology, told the Jakarta Globe the ministry welcomed Google’s plan and has not imposed any requirement for the company to establish a data center locally.

Schmidt met Indonesian Vice President Boediono last Friday to inform him of the company’s plan to open a representative office in Indonesia by next year.

At an entrepreneurial summit in Bali, Schmidt said Indonesia would have an “Internet explosion” that would change the country for the better.

“There are 50 million small businesses in Indonesia. Just numerically those will be the engine of growth for the future economy,” he said.

Other foreign companies have already established local businesses to appeal to Indonesia’s Internet users. Yahoo has been operating in Indonesia since early last year.

Indonesia has about 40 million Internet users and is home to Facebook’s second-highest number of subscribers.

Global research firm Frost & Sullivan found Indonesia had 194 million wireless subscribers at the end of last year, representing a penetration rate of about 81 percent. About 80 percent of mobile users are using Internet-enabled hand-held devices.

Indonesian advertisers spend less than 2 percent of their budgets on online promotions, meaning the online advertising industry here has significant space for expansion.

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