Indonesia is a major economy with a robust security industry. But that is not to say the country’s security market is without any challenges. This articles explores some of the challenges facing the Indonesian security industry and ways to overcome them.
Indonesia is a major economy with a robust security industry. But that is not to say the country’s security market is without any challenges. This articles explores some of the challenges facing the Indonesian security industry and ways to overcome them.
Indonesia is the seventh largest economy in the world. Strong demand from both public and private sectors are driving the growth of the country’s security sector. In fact, as our
previous article points out, growth of 10 to 15 percent is forecasted for Indonesia’s security market over the next two to five years.
In particular, certain vertical markets are especially booming. “Several vertical markets are experiencing rapid growth, driving an increased demand for security solutions. Key sectors include manufacturing, data centers and digital infrastructure, mining, oil and gas, construction and infrastructure, as well as transportation,” said Hatmadita Ramuny, Co-Founder of Aetherica.
The data center vertical is also not to be ignored. “Several global data centers have Indonesia as one of their focus countries to invest and grow in. Disruption to data centers can stop businesses from functioning. With the ever-increasing demand for real-time data, AI, cloud computing, and edge technologies, the role of data centers has become more critical than ever. As the investments in infrastructure increases rapidly to meet these demands, so does challenges that require innovative solutions and strategic collaboration. For us at Axis, we ensure to provide this security at every layer from the perimeter to the core of the site,” said Carl Malmqvist, Regional Director for South Asia Pacific at Axis Communications.
Industries that are tied to Indonesia’s rich natural resources are also performing well. “Indonesia is known for its abundant natural resources, and that’s a big reason why sectors like industrials and resources play such a crucial role in driving the country’s economy. With industrial sectors contributing around 44.7 percent and resources like mining and extraction making up 9.2 percent of the total economy … there’s also a corresponding growth in the demand for security solutions tailored to their needs. So, as Indonesia’s natural resource-driven industries continue to grow, we can expect the security market to follow suit, especially in these sectors,” said Alfredo Endon, Business Development Manager at PT. Indostar Security.
Challenges
Despite the rosy outlook, Indonesia’s security sector is not all smooth sailing. Below we look at some of the challenges facing Indonesia security and how they can be resolved.
Intense competition: ‘Every company on earth wants a piece of the action’
Being a major growth market, Indonesia security is eyed by players from all over the world. “Indonesia is a big market and I believe every company on earth wants a piece of the action. We have a lot of companies from China, Malaysia, U.S. and many more that are competing to sell their products and have a share of the market,” said Sean Conti, Sales Manager for Indonesia at Apollo Security.
Yet this inevitably has led to fierce competition and aggressive pricing strategies. “Online prices are really pushing security players to the edge. As for projects, depending who you're talking to, some are bitter because they lost from competitors who claimed to be distributors or even principals. Some are still going because they have better financial standing/cash flow and dare to take on longer payment terms,” said Heng Dju Ong, MD of PT. Mega Teknologi Utama. “Overcoming it is never easy as this is the condition when all brands, especially Chinese brands, are competing against each other.”
Further, Indonesia is known for price sensitivity, which makes the price war even worse. “Indonesia is also a very price sensitive market where both the government and the private sector wants to spend the least amount of budget for the best security solution,” Conti said.
“The public sector here is mostly budget oriented or politically loaded. Demand only surfaces when the corresponding interests are challenged or can benefit from the ‘new tech’ they propose. Otherwise they will keep the status quo. This sounds like a somewhat pessimistic view but that is based on my previous dealings with government sectors,” Ong said.
That said, providing security solutions that offer the best value and collaboration with seasoned SIs are key to win out in the competition.
“I can see that many companies are competing in terms of price and product quality, and from what I can see those who are able to win a large scale of the market are those who has a diverse and complete security solution to provide the convenience of ‘one stop shopping’ with the best value for the money,” Conti said.
“It's common to see decision-makers attracted to cheap, low-end cameras or trying to use basic cameras for complex tasks. The key is understanding that different technologies offer varying levels of capability. Businesses need to recognize which level of technology is the best fit for their needs to ensure long-term sustainability,” Endon said. “This is where working with experienced system integrators who understand both the technical and operational side of this new security is crucial. Collaboration with system integrators can bridge the gap between their current infrastructure and the advanced solutions that will help them stay ahead of the competition.”
Cybersecurity
According to Malmqvist, cybersecurity is the biggest challenge facing security players in Indonesia as well as worldwide. “There is a YOY increase in cyberattacks and any country with a weak cyber infrastructure is a target. As Indonesia determinedly focuses on its digital transformation with the rise of fintech, e-commerce, cloud computing and more, it will need to ensure a strong cyber defense to secure this foreign and national investment,” he said.
Infrastructure readiness
According to Ramuny, the ability to implement advanced security solutions is often limited by existing infrastructure. “This is particularly so in remote areas. Overcoming this challenge requires close coordination with regional authorities and nationwide infrastructure companies to ensure adequate support and accessibility,” he said.
Standardization challenges
The absence of standardized protocols for emerging technologies, such as AI and AIoT, also creates barriers to seamless integration and interoperability. “Establishing international, regional, or national forums and organizations dedicated to developing and enforcing security standards is essential to addressing this issue,” Ramuny said.