Hot Verticals
Indonesia comprises more than 17,000 islands scattered over more than one-tenth of the equator, between Southeast Asia and Australia. Despite the spread-out geography,the commercial segment is mostly in the major cities of Jakarta, Surabaya and tourist hotspots in Bali. Oil and gas developments are concentrated in Kalimantan and Sumatra, while government projects depend on different territorial developments.
Some verticals such as financial institutions are thriving because of government regulations and a strong market outlook. Other market segments such as retail and end-users are a direct result of Indonesia's vibrant economy. Currently the most active markets are financial institutions, the commercial sector and airports.
Banking
Banking is a booming industry fueled by government security regulations. In addition, financial institutes tend to have more budgets for security. Many distributors are optimistic because banks and ATMs are increasing in major Indonesian cities, Lim said. In addition to surveillance cameras, alarms and integrated solutions are required as well, making banking a market with strong potential.
Commercial
The commercial sector, with offices, hotels and retail stores, has increased security demand after the Bali bombings, especially in Jakarta, Yonathan said. Jakarta is the center of security market.
As Indonesia moves from mom-and-pop stores and street vendors to supermarkets and shopping malls, demand for electronic security equipment increased as well. This market segment is more price-sensitive, compared to banks and public projects. However, no one can ignore the increased number of offerings for entry-level cameras and equipment. The volume of this segment should not be underestimated, Shing said.
Airports
“Airports are the big ongoing projects since we are an island country,” Fajarwati said. With more than 17,000 islands under the republic's flag, the main mode of transportation for interisland travel in Indonesia is air. It is reported that Indonesian government will boost capital spending to ($140 billion) next year to solve infrastructure bottlenecks and spur growth, among fears of a global economic slowdown. These infrastructure projects include the development of 14 airports. Airport modernization and expansion will be significant for surveillance and access control players.
IP Uptake
IP solutions and network cameras are growing in Indonesia. “IP applications in Indonesia may not be as widespread as in Japan, Korea or Singapore but more Indonesian customers are looking at it for surveillance,” Fajarwati said. It is a popular trend as it enables flexibility in remote monitoring and integration.
Network camera market development in Indonesia depends on several key factors — the development of new infrastructure in major cities and the improvement of compression and storage technology. Increases in megapixel resolution are not the driving force, while bandwidth stability has always been a crucial issue in expanding the local market, Lim said. Bandwidth availability presents one of the major challenges for network surveillance. The realization of IP application is still limited in major cities and only for entry-level network cameras.
Large corporations are still the major users of network cameras, while government projects may not specify them. Budget is another key factor. “If companies understand which megapixel network cameras have quality, they definitely know the cost and they have budget for that,” Lim said.
End users are getting more interested in network cameras and IP applications. This might be attributed to the popularity of smartphones in Indonesia, as nearly every businessman owns one. Users can access security cameras via tablets or smartphones. “Security is more like a lifestyle,” Tan said.
Remote access ibility and smartphone monitoring are the best selling points. “Many retail store owners want to install network equipment because of smartphones,” said Shing.
However, analog cameras still remain dominant and are doing very well. For installers and system integrators, the introduction of network cameras is good news since IP has clear benefits and offers higher margins than analog cameras. However, for distributors, network cameras may require too much work, requiring time and money in network maintenance. In the long run, the heavy maintenance cost may cancel out the margin, said Shing.