Going OTT in Indonesia is Driving SME Growth
Posted By On May 1, 2018

Last week, prominent policy think tank the Indonesian Centre for Strategic and International Studies (CSIS) discussed recent research conducted with the Asia Internet Coalition that highlighted the astonishing growth of over-the-top (OTT) platforms, such as WhatsApp and Facebook. The research reinforced that these OTT platforms are transforming from information platforms to trading platforms and, in so doing, are a dynamic force in promoting small and medium-sized enterprises (SMEs) in Indonesia. This is of no small significance. SMEs represent an estimated 99 percent of all business in Indonesia and are the country’s main provider of employment.

This event profiled a cookie seller from East Java, Diah Arfianti, who started selling her cookies by word of mouth to neighbours and friends. Now that over 80 percent of her business is conducted via Facebook, she can earn as much as US$35,000 in one week in peak holiday season.

One reason cited by the research for the rapid growth in OTT trading platforms is that while they facilitate access to a much larger pool of consumers they also help to personalise communication between buyers and sellers.

The challenge for government in confronting this growth of OTT platforms has been in moderating an instinct to restrict and regulate—notably reflected in recent calls to ban Facebook in Indonesia—by developing clear and appropriate regulations on such issues as tax, payment gateways and physical presence requirements.

Leading the government’s engagement on this issue, the Ministry of Communication and Information has long been calling for a level playing field for domestic and international providers that provides consumer protection—including restrictions on content, to include topics related to terrorism, pornography and racial propaganda—while asserting state sovereignty. Minister of Communication and Information, Rudiantara, has been quoted as stating of OTT providers: “They have to provide customer service, they will have their rights and obligations, and be taxed.”

POPS Advisory Council member Mari Pangestu, a former Minister of Trade in Indonesia, also spoke at the CSIS event. She used the opportunity to remind the government that it remained behind the curve on many issues regarding OTT services. Pangestu recommended that the government spend less time discussing restrictions and more time educating citizens on how to utilize such platforms in a more structured and appropriate manner.


Photo credit: shaireproductions.com

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