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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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