Naila Nadeem engages with key industry experts from Indonesia to find out more about the growth prospects and challenges faced by the market.
As the largest economy in Southeast Asia, the Indonesian government has set an ambitious target for economic growth, aiming to achieve a rate of between 5.1% and 5.5% by 2025. In general, economic growth is good for the professional audio visual industry. But is this true for Indonesia? And more importantly, can AV businesses and professionals avail the opportunities being presented? Melvin Halpito, managing director at MLV Teknologi, gives his thoughts on how the Indonesian AV market has been developing: “2024 has been a very slow year for AV in Indonesia. Back in 2023, it was even slower so things are finally picking up now.
Last year, businesses were waiting for the results of the presidential elections, and wondering how new policies will shape the business landscape in Indonesia. Because of certain constitutional issues, there was a decline in private sector trust and foreign domestic investments. There’s been uncertainty in the region, which is making the AV market slow.” Despite the slow trajectory at which the AV market in Indonesia is progressing, he does identify bright spots to focus on: “There is light at the end of the tunnel and we’re now seeing more activity going on in the corporate sector. Projects that were recalled in 2023 have resumed operations, which is a good sign. Moreover, the education sector is quite interesting right now. We’re expecting at least five universities from Australia to build campuses in Indonesia. The education sector is promising but it is also highly dependent on the budget of the end user.”
Crown jewel
While things might be slow at the moment, they are expected to pick up. The centrepiece of Indonesia’s ambitions for the future is the plan to build a new capital city, Nusantara, in East Kalimantan. Construction on key infrastructure and government buildings has already begun, and businesses are now increasingly involved in the city’s development. It goes without saying that this development is one of the primary reasons for the interest and renewed attention being paid to the Indonesian market. It’s not every day that you get the chance to help shape an entirely new city, and the prospect of this endeavour seems to be thrilling for businesses in AV. Nomo Prasetiyo, founder of PT Intav Prima Solusindo, comments: “In the next five to 10 years, Nusantara is going to be a city with newer, state-of-the-art technology.”
But the opportunities presented by the development of Nusantara are attracting competition. Prasetiyo continues: “This is why a lot of system integrators from Southeast Asia such as Vega, DVI Solutions, ESCO, and Spectrum, have set up local offices in Indonesia.”
Are Indonesian AV businesses in danger of missing out? Bun Handry, director of Data Indonesia, answers: “Once the progress of redevelopment is in the next phase, there’ll be a lot of opportunities for AV as there will be new buildings which require AV systems. If it all goes to plan, a significant number of multinational corporations (MNCs) will also start to open offices in the next three to five years (in Indonesia).”
However, the boons of working on the development of Nusantara seem to be a bit further down the road. Halpito elaborates: “The government sector in Indonesia has always been the strongest. So, the new capital is being built entirely by government contractors at the moment, and the construction work is usually awarded to government-owned contractors before private AV contractors get involved. However, this is something that businesses like ours are being very cautious about as delayed or nonpayment has been a common issue in the past. We need to navigate the nuances of doing business in Indonesia, protect our own interests, and build bridges with government-owned contractors to ensure that all parties can prosper.”
He adds: “There have been many instances where we’ve created plans and designs for government projects, but in the end, the government-owned contractors can simply switch to lower-grade equipment.”
While it seems like a good idea to try and get involved with the development of Nusantara, it looks like only time will tell how it impacts the future of AV in Indonesia.
Indonesian tech tastes
The AV market in Indonesia is currently characterised by a strong preference for simplicity over complexity, driven largely by financial considerations and market demand. Handry notes: “There’s not much appetite for complex AV products since Indonesia is still a developing country and AV products are not cheap here. Globally, I would say the most famous brands are Q-SYS, Biamp, and Crestron. In Indonesia, these products are used mostly only by MNCs – local offices tend to go in different directions. They would rather opt for all-in-one products with a speaker, microphone, and camera integrated into them. This is why brands like Jabra, Poly, and Cisco are doing well in Indonesia. Chinese brands such as Yealink also tend to do better here. Time is still needed for certain global brands to penetrate the local market.”
Another key trend in Indonesia’s AV market is the growing preference for bigger and better displays, to which Halpito notes: “Screen sizes are getting bigger. Five years ago, a 55-in screen was sufficient. Now, we’re seeing 65-in, 75-in, and even 86-in screens becoming the standard in meeting rooms. Looking ahead, I believe all LCD panels will eventually be replaced by LED displays. Sooner or later, we’ll see 136-in screens become the standard for medium-sized meeting rooms.”
Nadia Anggita, interim country manager, sales and marketing department head from Vega Indonesia, adds: “A lot of companies – both MNCs and bigger local firms — are starting to prioritise the ‘wow’ factor in spaces like lobbies or recreational rooms, so LED is a popular choice in these spaces. Apart from that, Jakarta is full of skyscrapers and tall buildings, and many of these retail and corporate spaces are also focusing on improving the look of their façade by installing digital and display signage.”
On the other hand, Prasetiyo observes that pricing remains a big barrier for many in the country: “End users have to decide whether LED is worth the investment. Companies, especially government-owned ones, need proper justification to spend money on LED. So if a company needs a display solution that is sustainable and offers higher resolution, they’ll mostly go for LED. If we sell LED just based on how much the LED product costs, we often are never able to secure the project. If we sell it as part of a solution, bundling it with other solutions, more end users are willing to make that investment.”
Lay of the land
To capitalise on these opportunities for growth, one must first understand the unique dynamics of the AV market in Indonesia. A shared insight echoed by all three interviewees highlights a critical point, summed up by Handry: “No matter how excellent your products or solutions are, without strong relationships with clients, you won’t secure the project.”
It seems that success is as much about who you know as what you offer. The AV market in Indonesia is highly driven by relationships, and this makes it complex to navigate. From the perspective of Aquila Data, relationship is especially key to building a distributor’s business model. Handry says: “As a distributor, I have to work very closely with manufacturers. To maintain these relationships, we don’t carry multiple products with the same functionality. We have commitments; for instance, I distribute Neat products. Because they are competitors with Poly, I don’t carry Poly products. I limit myself to one product line for videoconferencing, one for AV products, one for speakers, and so on.”
And though this means that distributors like Aquila Data restrict themselves to carrying certain brands, such a business model underscores the importance of building strong relationships in Indonesia’s AV market — prioritising long-term relationships over short-term gains. The distributor takes a similar approach towards its SIs: “We have many potential SIs to partner with, but we aim to work with those who are really focused on selling AV solutions. Even IT companies can be partners, but we prioritise those dedicated to AV products.”
Anggita notes: “Relationships are key, but on top of that, we need to also evaluate the quality of our manpower, our services, and our expertise to prove to clients why they should work with us. Some Indonesian clients are still in the process of changing to more tech-savvy work cultures. Information and trend dissemination is one of our duties as SIs. Later on, it will assist them in defining their requirements and budget.”
Products + service
Another key insight shared by the interviewees is that the AV market in Indonesia is still largely perceived as a collection of standalone products rather than a comprehensive service offering. Halpito expands on this: “A lot of end users tend to bypass SIs and consultants, going directly to distributors or manufacturers to buy and install their products on their own. This often leads to a compromise in quality of the AV setup as factors like acoustics and audio specifications of a space are disregarded. The market isn’t educated about the importance of AV integration and consultancy services. Meanwhile, in more mature markets, like in IT, end users see IT networks not just as a product but as a complete integration of IT engineering which requires a whole IT system.”
This limited perception of AV leads to a fragmented approach when building smart offices or other tech-driven spaces. Anggita illustrates: “One of the challenges we face is the timeline delivery of AV system integration in projects. Often, clients approach AV integration after much of the office design and layout has already been finalised. In reality, AV design should be integrated from the outset, in collaboration with interior designers, project managers, contractors, and MEP (mechanical, electrical, and plumbing) consultants.”
Moreover, a key problem that the market faces is the lack of official standards for AV, says Prasetiyo. He comments: “We can say that a system integrator provides good services, but there’s no official standard for businesses to adhere to. Because of this, there is little consistency within the services provided. End users themselves don’t know what a good standard is for offices or meeting rooms.” With a lack of standards and awareness towards the service AV provides, end users tend to rely on other vendors such as interior designers to take the lead in designing AV systems.
Prasetiyo observes: “This approach causes problems because interior designers typically don’t have the AV knowledge required to design AV systems, they just choose what looks good. As an SI, if an interior design consultant tells them to use certain products, even if those products aren’t the best, the integrator might not speak up. They just follow the designer’s instructions to deploy those products on site.”
The problem with talent With a young and growing population, Indonesia enjoys a competitive advantage that could, theoretically, translate to positive outcomes for all parties. However, the nation’s statistics agency recently cautioned that the window for Indonesia to reap the benefits of its “demographic bonus” will likely close by 2041. This puts a ticking clock on the nation’s ability to harness its youthful workforce, making the development of skilled talent in all industries including AV more urgent than ever.
The on-going discourse on the growing population then turns into a question of talent, and more importantly, the quality of talent in Indonesia’s AV market. Handry highlights a significant gap in the talent pool in Indonesia: “If you look at Malaysia or Singapore, most AV professionals there have earned their CTS certification. In Indonesia, many lack AV certifications and credentials. But if you talk about ITcertifications, then there’s definitely more people with credentials.”
Halpito chimes in: “As an SI, we rely heavily on manufacturers to provide training for our new talent. Even our experienced staff need to continuously upgrade their knowledge and skills of new technologies. This is something that’s lacking right now, making it very difficult to find qualified talent.”
Moreover, the problem with talent is further aggravated by the lack of formal education and dedicated specialisation for AV. Handry explains: “When we talk about the AV industry in Indonesia, we typically separate it into two categories: AV and UC. Here, AV and UC are still considered different skill sets. Some system integrators are very good at UC, while others excel in AV. There aren’t many companies that have expertise in both areas. Most companies don’t have specialists or divisions for AV. Usually, the people who handle AV are IT professionals.”
He elaborates further: “For UC, most companies focus on videoconferencing hardware, like Poly, Logitech, Cisco, and Jabra, and platforms like Zoom. They do a lot of integration work with IT products, but they don’t necessarily understand AV. For those specialising in UC, AV is often seen as just a product rather than a whole system. So, these IT professionals may be able to handle projects involving simple videoconferencing setups, but they lack the knowledge for more complicated AV installations.”
Embrace the future
The AV market in Indonesia stands at a crossroads between tradition and technological innovation. What does the future look like for the market then? While emerging technologies like AI are increasingly discussed as game changers, the consensus among industry experts is that the local market is still lagging in terms of full-scale adoption and understanding.
Though Anggita is optimistic about the future of AI in Indonesia, she provides a nuanced sentiment of the reality on the ground: “Some clients are becoming increasingly interested in multi-feature videoconferencing systems that have AI integrated into their platforms. Clients are also now realising the importance of these technologies, but budget constraints often limit their ability to adopt them. Our role as system integrators and consultants is to educate end users and help them understand the potential of these technologies.”
Halpito discusses the broader trends that he predicts will be seen in AV: “In AV, we’re always talking about inputs and outputs, but the challenge lies in the process in between. In the early 2000s, that inbetween process was bulky and complicated because it was all analogue, which required a lot of cables and connections. Now, in 2024, we just need a switch here or there — the process has become slimmer, simpler, and more compact.”
He notes: “Looking at the future of AV, we can expect even more compact processes, but the inputs and outputs will remain. The trend we’re seeing now is the integration of AV with AI. The hardware is becoming simpler and more compact, but it will be driven by powerful software, much of which is generated by AI.”
As for Indonesian end users and clients, the question is whether they will be receptive to these changes. Handry gives his perspective from a distributor’s angle: “It’s not wrong to talk about the future but the demand for these advanced technologies isn’t really there yet. Not many local companies are specifically asking for AI-driven cameras or speakers. They’re impressed with these products, but it isn’t a necessity for them especially if it comes with a higher price tag.” Anggita concludes: “It’s our homework as SIs and consultants to provide knowledge to our end users in the market. If we want to improve the standard of AV in Indonesia and do better business, change starts from within the industry.”