Indonesia Pushes for 5G Implementation to Boost Economic Growth

5G Tower

The Ministry of Communication and Information Technology (Kominfo) has emphasized the need for efforts to manage frequency spectrum or “farming and refarming” in order to optimize the quality of internet network services in Indonesia, including both 4G and the development of 5G networks.

As commercial 5G services have already been introduced in several residential areas and hotspots in 13 cities across Indonesia through three mobile operators – PT Telkomsel, PT Indosat, and PT XL Axiata – the government is now aiming to further improve the availability of 5G technology throughout the country.

The presence of 5G networks in society is expected to bring significant benefits, as it will allow for faster data connection speeds for activities such as downloading and streaming, as well as more responsive connections. Moreover, 5G technology will have a greater capacity to connect multiple devices without compromising network quality, ensuring a seamless connection.

The need for 5G networks in Indonesia is significant given the country’s current internet speeds, which are far behind those of many other countries, even its neighbors in Southeast Asia.

According to the Ookla report in February 2023, Indonesia’s mobile and fixed broadband internet speeds are the slowest among several Southeast Asian countries, with a recorded speed of 20.17 Mbps. Cambodia, for example, has a faster internet speed, with a recorded speed of 21.09 Mbps, ranking 96th on the list.

The implementation of 5G networks is expected to accelerate economic, social, and cultural transformations, and even contribute to the growth of a country’s economy.

According to IHS Markit & IHS Technology in “The 5G Economy: How 5G Technology Will Contribute to the Global Economy, 2017,” the global real GDP will grow at an average annual rate of 2.9%, of which 5G will contribute 0.2% to this growth.

In other words, without the application of 5G technology, the global real GDP will grow at a slower rate of 2.7%. From 2020 to 2035, the annual contribution of 5G to the GDP will amount to $3.0 trillion.

By 2035, 5G is expected to stimulate global sales activities worth $12.3 trillion or Rp184.5 quadrillion (exchange rate of Rp15.000/1US$) across various industries and support a global value chain ecosystem that generates output worth $3.5 trillion or Rp52.5 quadrillion.

According to research conducted by the Bandung Institute of Technology, the development of 5G networks in Indonesia is projected to contribute more than Rp2,800 trillion or 9.5% of the total GDP in 2030. This number could potentially increase to Rp3,500 trillion or 9.8% of Indonesia’s total GDP in 2035.

The implementation of this latest networks may also lead to an increase in business investments in Indonesia worth Rp591 trillion and Rp719 trillion, respectively, in 2030 and 2035, if implemented aggressively.

Given the significant potential for the development of 5G technology, the farming and refarming programs of frequency spectrums such as the 700MHz band, which was previously used for analog TV, are expected to have a positive impact on Indonesia’s future economy and society.

The government’s efforts to improve the quality of internet services through the implementation of the latest networks is expected to have a far-reaching impact on the country’s economic growth, and ultimately, the well-being of its citizens.