Boston, MA -- (ReleaseWire) -- 06/12/2014 -- Indonesia is expected to be a regional outperformer during our forecast period to 2018 due to a combination of positive consumer electronic market fundamentals and a strong economic growth story. There is downside in 2014 as a result of rupiah depreciation and potential disruption from smartphone import taxes, but the medium term outlook remains positive. In addition to solid economic growth, investment in supporting infrastructure, for instance data networks and retail operations, will deepen the market. Meanwhile, declining device prices in key categories such as tablets and smartphones due to competition between local and Chinese vendors in the Android and Windows ecosystems will boost adoption rates. This trend should see rapidly rising penetration in key product categories. Overall market growth will see the market reach USD16.4bn in 2018, equal to a compound annual growth rate of 8.3%.
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Headline Expenditure Projections
- Computer Hardware Sales: USD44.1bn in 2014 to USD6.5bn in 2018, CAGR of 10.6% 2014-2018. Due to low penetration we expect continued growth in notebook volumes, contrasting with the developed market trend. Nonetheless it will be tablets that outperform with unit growth CAGR of 32.9% to reach over 7.8mn units in 2018.
- AV Sales: rising from USD2.4bn in 2014 to USD3.2bn in 2018, CAGR of 8% 2014-2018. The increasing share of sales going to flat-screen TVs will drive increases in market value, offsetting the squeeze on audio devices and digital cameras from the rise of multi-functional smartphones.
- Handset Sales: rising from USD5.3bn in 2014 to USD6.7bn in 2018, a CAGR of 6.3% 2014-2018. Overall market growth will plateau due to the high penetration of mobile devices, and intense price competition in both the Android and Windows ecosystems.
Key Trends & Developments
The Indonesia smartphone market boomed in 2013, and is expected to continue growing rapidly over the medium term. The sharp fall in the price of smartphones since 2012 has deepened the Indonesian market, where consumers are highly price sensitive. However, there is now the threat of disruption as the government is reported to be considering a 'luxury tax' on all mobile devices rather than just high-end smartphones. A possible 20% tax on devices over IDR5mn (USD442) was under consideration in October 2013, even after the existing tax on imported consumer goods rose to 7.5% from 2.5%, and it was reported in the local press in April 2014 that the government was considering extending the tax to all devices. BMI believes the move would be disruptive in the short term, but would boost the local manufacturing base inline with wider government economic development policy goals.
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