February 2, 1998 (JAKARTA) -- Oracle Corp. won a contract to supply software to Indonesia's superhighway as that country scrambles to promote multimedia business.

Both government and private companies are now working on the multimedia project, which is expected to be ready by the early 21st century.

The government is building the superhighway to provide an information technology infrastructure for private companies, which will supply local content as well as some infrastructure.

Post, Tourism and Telecommunication Minister Joop Ave said Indonesia is ready to enter the multimedia era in the next century even though its current telephone penetration is a low 3 lines per 100 people.

Nusantara-21 Superhighway

The Indonesian government started the ambitious Nusantara-21 superhighway project in early 1997.

The Nusantara-21 project is set to develop an infrastructure and information system to link the whole of Indonesia, which will allow the people of Indonesia to get multimedia access to all regions in the country by early next century, said secretary general of post, tourism and telecommunication ministry Jonathan L. Parapak.

By that time all Indonesia's regions will be connected by a high-speed infrastructure with terrestrial cables, submarine cables, radios and satellites.

All cities in Indonesia, including the district capital, will have an access speed of 64kbps. Access to high-quality interactive video also will be provided in multimedia cities.

The multimedia business will cover sectors like trade, educational, health, tourist, research and development, public service and government applications, Parapak said.

Nusantara-21 also is designed to prepare the country to become a full member of the global information society and to increase the competitiveness of Indonesia in the world, Parapak said.

"As part of the modern community we need to provide the information infrastructure that will support all activities in government, business, education, health and other areas," Parapak said.

Despite the monetary crisis, which has hurt Indonesia since July 1997, the government will continue its superhighway project as scheduled, Parapak said.

"Of course, there will be some revisions and adjustments due to monetary crisis, but it will not affect the project's schedule, since most parts of the project were already underway," Parapak said.

The government will put its priority on building multimedia cities as part of its effort to make adjustments.

The Indonesian superhighway project will be developed in phases. It will include the development of infrastructure for the Indonesian archipelago's superhighway, multimedia cities and the multimedia community access center.

The archipelago superhighway will connect the 27 provincial capitals with a "ring of rings" high-speed backbone network.

The development of the infrastructure on Java island has been completed.

Sumatra, Kalimantan and Sulawesi islands are still under development and will be completed soon, Parapak said.

Multimedia cities will provide the information infrastructure to support information transactions with broadband facilities like electronic data interchange, education and health.

The government will build 11 multimedia cities in the country as a first step. The first multimedia city will be ready by 1999 in Jakarta, a hub of administration and commercial activities.

After that, other big cities will follow, including Bandung, Semarang, Medan Yogyakarta, Surabaya, Batam, Kuala Kencana (Irian Jaya), Balik Papan, Ujung Pandang and Denpasar (Bali).

The Nusantara multimedia community access center is set to provide broadband pay phones, business centers, multimedia kiosks and network electronics libraries, Parapak said.

US$40 Billion Investments

To develop the first stage of the Nusantara-21 mega project, the government needs investment of around US$15 billion until the year 2001.

The total investment needed for developing the project until 2006 will be about US$40 billion, Parapak said.

The investment will be provided by both government and corporations.

For the government project, part of the financing will come from a loan from the World Bank.

World Bank Names Oracle

The World Bank at the end of 1997 approved a loan of around US$35 million to finance the government application including tourism, government network and planning system.

The World Bank appointed the U.S. software company Oracle Corp. as the software supplier for the Indonesian superhighway project.

Other companies, including IBM Corp., Microsoft Corp. and Sun Microsystems Inc. also will be involved in the project, Parapak said.

The prospects for multimedia business are bright in Indonesia in the future, especially after the whole infrastructure is completed, Parapak said.

"Indonesia, as a country with 200 million people, has a strong potential market for multimedia business," he said.

The telecommunication system has been improved, broadcasting also has developed well, the computer industry is developing and Internet use is increasing day by day.

These all will support the development of multimedia business in Indonesia in the future.

Some companies already have prepared themselves to anticipate the development of the multimedia business in Indonesia.

Six Firms to Enter Multimedia Business

At least six companies are ready to enter the multimedia business to provide content as well as infrastructure.

PT. Indosat, an international telecommunications operator owned by the government, is now the most aggressive company entering the multimedia business.

"We believe there will be lot of opportunity in the multimedia business in the future, so Indosat has prepared itself over the past few years to become the leader in the multimedia business," said Tjahjono Soerjodibroto, president of Indosat.

The company so far has invested around US$71 million for its multimedia business. Tjahjono expects multimedia business to contribute around 15 percent to company revenues by 2005.

Indosat has acquired 5 percent of the Japanese cable TV company Suginami at US$2 million in an effort to prepare its cable TV business in Indonesia.

The company also bought an Indonesian TV station in 1997 for US$50 million to provide interactive TV service.

Microsoft Starts Interactive Internet Service

In the middle of 1997, Indosat launched its interactive Internet service, the first in the country, working with U.S. software company Microsoft. Indosat also will provide the content for its multimedia business.

The company acquired a 40 percent share in production house company PT. Yasawirya Tama Cipta for US$12 million.

The company now is building the Multimedia Center, the first integrated and largest multimedia facility in Southeast Asia that will be completed by 1998.

"The project will continue despite the monetary crisis. We even should speed up the project, since the dollar continues to increase to make safe our foreign exchange reserve," said Indosat spokesman JB. Basuki.

Money Crisis Claims Toll

For another content provider, PT. Multimedia Nusantara, the monetary crisis influenced the development of some of its projects. The company canceled its Jakarta Tower mega project.

Previously, the company planned to build its US$560 million project in 1998 and complete it by 2001. Multimedia Nusantara has also postponed the launch of its cable TV service from January to May 1998 due to the monetary crisis.

In December 1997 the company signed an agreement with Japanese TV station NHK to provide programs to it.

Satellite company PT. Pasifik Satelit Nusantara expects to launch its multimedia satellite as scheduled in 1999.

President director of PSN Adi Rahman Adiwoso said the company will find a strategic partner to allow the project to continue.

"There are five large foreign companies now interested in investing in the multimedia satellite," Adiwoso said. Indosat owns a 26.67 percent stake in a multimedia satellite.

The multimedia satellite will provide broadband communications to deliver multimedia services like home shopping, pay-per-view TV and video-on-demand directly to the home.

Another satellite company, PT. Datacom Asia, also will continue its plan to launch and operate its second satellite for multimedia.

Datacom at present operates a direct broadcast satellite to provide digital broadcasting directly to homes. The company provides 40 channels of foreign TV broadcasting, including CNN, Discovery, HBO and Star TV.

Datacom will increase its channels to 100 and also will provide service for home shopping and pay TV. At present Datacom provides service for 24,000 customers.







(Alfia Rahmaniar, Asia BizTech Correspondent)