INDONESIAS CABLE MARKET

INDONESIA CABLE MARKET:

MARKET SIZE AND SEGMENTATION
By Agustina R.Effendy,
PT DATA CONSULT
2.1. ESTIMATED DOMESTIC MARKET SIZE OF CABLE
A fast growth has been recorded in the countrys consumption of cables in the
past four years peaking in 2007 and 2008. In 2004, consumption totaled only
53,400 tons, while in 2007 it was 227,800 tons and 376,800 tons in 2008,
representing a 7 fold increase in five years.
The increase in cable consumption in 2007 came with the launching of the
governments crash program in the electricity sector. Under the first crash
program state electricity company PLN is to build coal-fired power plants with
a total capacity of 10,000 megawatts. Outside the program a number of power
plants have been built in Java and other regions to cope with shortage in
power supply.
In 2008, consumption continued to scale up as indicated by growing
production and sales until the first half of that year. In the second half of that
year demand began to fall both on the domestic and international markets as
a result of the global financial crisis. The slowing global economy has effect
on the domestic and export market demand. The demand on electricity and
telecommunication cable has drastically decreased as quite a number of
power generation and distribution projects were shelved or re-scheduled.
The crisis in the fourth quarter of 2008 continued into 2009. Recovery signs
were visible only in mid year of 2009. As a result, the total market volume
slumped drastically by around 36 % from 377 thousands tons in 2008 to
only about 240 thousand tons in 2009.
In 2009, was a difficult year for cable producers as many companies have to
cut down their production by around 30-40% due to shrinking of domestic
demand as well as reduced orders from overseas.
The resilience of the Indonesian economy, which was assessed by various
circles as quite good had prevented a worse impact of the global crisis than
what had taken place. The interest rate, which remained stable (though not
enough to push the real sector to carry out expansion), had helped dampen
any further contraction due to pessimism and anticipation of a bad domestic
business condition. The domestic economy in 2009, which grew about 4.5%

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INDONESIAS CABLE MARKET

in the midst of global economic contraction, had dampened any worse impact
on the domestic cable industry sector.

Table 2.1.1
Estimated domestic market volume of cable in Indonesia, 2004-2009
( 000 tons)
Year
2004
2005
2006
2007
2008
2009

Production
111.3
133.5
178.0
289.3
402.1
245.0

Import
20.8
36.5
36.0
50.1
85.9
73.8

Export
78.7
77.3
88.2
111.6
111.2
76.4

Market size
53.5
92.7
125.8
227.8
376.8
242.4

SOURCE: DATA CONSULT

Graph 2.1.1

000 tons

Estimated market volume of cable in Indonesia, 20042009

450
400
350
300
250
200
150
100
50
0
2004

2005
Production

2006
Import

2007
Export

2008

2009

Market size

Source: Data Consult

In terms of value, the domestic market of cable has increased sharply from
only around US$ 107.5 million in 2004 to around US$ 1,099 milions in 2006
and reached its peak at around US$ 3,690 million in 2008. However, in
2009, the domestic market value slumped by around 58% to only around
US$ 1,558 million.

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In the year 2009, beside the declining demand, the shrinking market value
was also caused by reduced sales price, due to lower price of materials
especially copper. The price of copper touched the bottom point of close to
US$ 3,000 / MT in December 2008. The price gradually moved up throughout
2009 in the range of US$ 7,000/ MT in December 2009. Meanwhile, the
lowest price for aluminum occurred in February 2009, close to $1300/MT,
while later also gradually moving up to nearly $2200 at the year end. The
average prices of both commodities were throughout 2009 lower by 35-40%
of the average prices of the year before. The fall in the prices of these main
raw materials also had their share in the drop of the sales value.
Table 2.1.2
Estimated market value of cable in Indonesia, 2004-2009
( US$ million)
Year
2004
2005
2006
2007
2008
2009

Production
430.6
647.7
1,615.3
2,780.0
3,776.2
1,652.9

Import
104.6
217.8
225.5
279.3
877.8
558.8

Export
427.8
505.8
742.0
917.8
962.8
653.4

Market size
107.5
359.7
1,098.9
2,141.5
3,691.2
1,558.3

Growth
234.7
205.5
94.9
72.4
-57.8

Source: Data Consult

Graph 2.1.2

Estimated market value of cable in Indonesia,

2004-2009
4,000.0
3,500.0

US$ million

3,000.0
2,500.0
2,000.0
1,500.0
1,000.0
500.0
-

2004

2005
Production

2006
Import

2007
Export

2008

2009

Market size

Source: Data Consult

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2.2.

MARKET SEGMENTS BY TYPE OF PRODUCTS

The market of cable in Indonesia is dominating by the power ( electric) cable

accounting for about 68% of the total market value. In 2009, the market value
of power cable is estimated at around Rp 9,430 billion ( around US$ 1.05
billion) consisting of Rp 7,335 Billion ( around US$ 815 million )for Low
voltage cable, Rp 1,715 Billion ( around US$ 190 million) for Medium Voltage
(MV) cable and the rest for High Voltage (HV) cable.
The dominant role of power cable is in line with the large amount of power
transmission and distribution networks developed in the country to connect
around 34.7 million residential customers, 1.6 million commercial customers
and around 47,000 industrial customers of PLN, the state electricity company.
The transmission lines was recorded at 4970 km of 500 kV, 11,330 km of 150
kV and 3,400 km of 70 kV in Java Bali system, while outside Java Bali, the
total transmission lines was 12,627 km in 2008. In the meantime, the total
length of distribution lines owned by PLN was 614,925 km in 2008.
The market segment of metallic telephone cable was only around 7% of the
total market as compared to around 17% for optical fiber cable. There is a
trend that the use of metallic telephone cable is being left behind by telephone
service providers and increasing volume of fibre optic cables are used to
replace metallic telephone cable. At the end of 2009, around 75% ( 24,489
transmission medium circuits) of the backbone transmission capacity of PT
Telkom Indonesia, the largest telecommunication serice provider, consists of
optical fiber cable, while microwave accounts for 14.8%, submarine cable
7.l7%, and satellite 2.2%.
In addition to power and telecommunication / fibre optic cable, cables for
automotive has quite a notable market in Indonesia , following growing
automotive industry in the country, both for cars and motorcycle. The
countrys automotive industry has revived with a big pace since 2003 and
touched its peak in 2005 with a total production of 500,710 units. In 2006, car
production dropped to 296,008 units but recovered to 411,638 units in 2007
and rose sharply to around 600,000 units in In 2008. In 2009 however, the
production slowdown to around 500,000 untis . Indonesia is also one of major
producer of motorcycle in the world. Production of motorcycle have
experienced a substantial growth over the last 7 years from only 2.27 million
units in 2003 to 5.9 million units in 2009. The year 2008 was in impressing
year for Indonesia motorcycle industry as it has grown tremendously by
recording sales of 6.2 million units and it was the highest ever in Indonesias
motorcycle industry history
The following graph presents, the market value of cable segmented by type of
cable.

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Graph 2.2.1
Domestic market value of cable by type of cable, 2009
HV power
3%

Others
2%

MV Power
12%

Fibre optic
17%

Power
cable
68%

Telephone
7%

LV Power
53%

Automotive
6%

Source: Data Consult

Table 2.2.1
The domestic market segment of cable by type of cable, 2010
Type of cable

Market value
( Rp billion)

HV power

381.0

MV Power
LV Power

1,714.6
7,429.8

Sub-total power
Automotive
Telephone
Fibre optic
Others
Total

9,525.4
917
1,048
2,410
306
14,207

Equivalent
In US$ million
42.3
190.5
825.5
1,058.4
101.8
116.5
267.8
34.0
1,579

Source: Data Consult

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2.2.

Market segment by main users

The main target market for electric equipment and components are the state
owned Electricity Company, PT PLN which is the main authority of power
generation and distribution in Indonesia. Private generating companies have
also been involved in this sector, but still their role is much smaller than PLN.
In the meantime, the transmission and distribution networks still monopolizes
by PLN.
The PLN market segment constitutes about 39 % of the market
for cable. The other major market segments are residential and buildikng
sectors which contributed around 32 % to the total market value in 2009.
Residential and building sector consumes primarily low voltage cables . While
small residential builders get the supply of cable from retailers , building
developers or their contractors buy the cable from distributors or stockists.
Telecommunication companies particularly PT Telkom and PT Indosat, the
two largest telecommunication service providers in the country are also two
main users of cable. Oil and gas sector is still a small market segment as
confirmed by a number of major cable manufacturers .
Based on interviews with several cable producers and business associations,
the, market share of each segment can be astimated as follows:
Graph 2.3.1.
Market segment by end users, 2009
Others( oil & gas,
manufact)
3%

PLN
39%

Automotive
industry
6%
Telecom providers
20%
Residential and
buildings
32%

Source: Data Consult

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2.3.1. Power Generation and distribution companies

The power generation and distribution companies are the biggest segment for
electrical equipment and component. Although private companies have in the
last few years been involved in power generation, but PLN, the state
electricity company is still the main player in the market.. PLN is responsible
for the majority of Indonesias generation, and is the monopoly provider of
public transmission, distribution and supply of electricity. Private participation
in electricity generation for public use is in principle possible through
cooperation with PLN acting as the single buyer for IPPs. Limited exceptions,
where private companies can sell directly to customers, apply for local area
sales by private power generators in certain circumstances.
PLNs current installed capacity of 25.4 GW plus 4.3 GW from IPPs is
insufficient to meet peak demand. In addition, many existing plants using oil
based fuels have become very expensive to operate in recent times. It is
forecast that 1,000 2,000 MW of additional generating capacity needs to be
commissioned annually in order to meet demand.
The distribution of the power plants by main regions is as follows;
Table 2.3.1.
Geographical distribution of power plants, 2008
Region/ island
Sumatera
Java-Madura-Bali
Kalimantan
Sulawesi
Nusa Tenggara
Maluku
Papua
Indonesia

Installed capacity ( MW)

4,941
22,599
1,178
1,195
265
182
168
30,527

Source: PLN
At the end of 2008, the installed capacity of the national power system totaled
30,527 MW consisting of 25,451 MW PLN generating plants (83%), 4,159 I0f
PPs generating plants ( 14%) and 916 MW of PPU ( Integrated Private
Power Utilities).
To distribute the energy to the customers, PLN had a total 261,163 kms
medium voltage (MV) networks and 353,762 low (LV) voltage networks.
These lines are only 10% higher than the situation in 2004.

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Table 2.3.2.
Transmission networks by island, 2009
No.
1
2
3
4
5
6
7

Island
Sumatera
Java-Madura-Bali
Kalimantan
Sulawesi
Nusa Tenggara
Maluku
Papua
Indonesia

SUTET
(kms)
782
5,092
5,874

SUTT
(kms)
8,906
15,501
1,429
2,474
28,310

Total
(kms)
9,689
20,593
1,429
2,462
34,184

Notes: SUTET = Extra high voltage aerial transmission

SUTT = High voltage aerial transmission

.
Table 2.3.3.
Existing power distribution networks, by island, 2008

No.

Island

1
2
3
4
5
6
7

Sumatera
Jawa-Madura-Bali
Kalimantan
Sulawesi
Nusa Tenggara
Maluku
Papua
Indonesia
SOURCE: PLN

MV
Networks
(kms)

LV
Networks
(kms)

72,131
128,364
23,695
23,017
7,473
4,484
1,999
261,163

77,431
217,912
21,441
23,795
7,315
2,337
3,531
353,762

Total (kms)
149,562
346,276
45,136
46,812
14,788
6,821
5,530
614,925

2.3.2. Other market segment for power cable

The use of power cable by other market segment is generally reflected from
the power connected capacity to each power users as shown by the following
table.

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Table -2.3.4.
Connected power by group of users, 2005-2008
(000 customers)
User Group
Residential
Business
Industry
General
Total
Source: PLN

2005
32.175
1,456
46
882
34,559

2006

2007

2008

33,118
1,655
47
931
35,751

34,685
1,611
47
922
37,334

36,025
1,716
48
1,055
38,844

Connected
Cap. (MVA)
29,335
11,929
14,531
4,291
60,086

Demand for cable for residential and commercial building sectors depends
highly on the development in constructions sectors particularly building
constructions.
The construction sector shows a strong rebound in 2004, as indicated by the
growth of its Gross Domestic Product ( valued at constant price ) of 8.2 % as
compared to only .4.1. % in 2002, 6.4 % in 2003.. In 2008, the growth slightly
declined to 7.34 %.
Based on data of the Indonesian Contractors Association (ICA), the main
market segments
of construction market in Indonesia are, building
construction . The following table presents construction value completed by
members of ICA ( Indonesian Contractors Associations) and the type of
construction works .
Table 2.3.5.
Construction works completed by value
(Rp million)
Type of works

2004

2005

2006

2007

2008*

(1)

(2)

(3)

(4)

(5)

(6)

Building construction

23,377,654

28,197,067

31,374,730

34,612,257

37,312,013

Civil constructions

21,499,912

24,378,724

26,049,107

28,615,500

30,847,509

Building installation
Special
constructions

8,836,706

9,303,702

8,524,699

8,686,315

9,363,847

2,290,266

5,438,426

5,994,773

9,760,901

10,522,252

56,004,538

67,317,918

71,943,309

81,674,973

88,045,621

TOTAL
Source: CBS

Investors in Indonesia are shifting money from low-yielding bank deposits into
real estate in search of higher returns, it has been revealed. The trend is
pushing up property prices in the main cities.

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