South-East Asia’s IoT market ripe for the picking: Pundit
By Benjamin Cher August 27, 2015
- Govts spearheading IoT development in Singapore and Malaysia
- In Indonesia, it’s the telcos driving development and adoption
THE Internet of Things (IoT) is now a reality. Gartner predicts that by 2020, there will be 26 billion connected ‘things,’ while IDC believes that this push to connect every ‘thing’ will likely be spearheaded by Asia Pacific.
Countries in South-East Asia have reacted to the emergence of IoT in different ways, with governments spearheading initiatives in some countries, and businesses taking the lead in others – and in some markets, the private and public sectors working together.
The region is fecund with business opportunities but the IoT market still hinges on a vibrant ecosystem, according to Zaf Coelho, managing director of Industry Platform Pte Ltd, which organises the IoT Business Platform series of events.
“There’s a saying with that the IoT industry in South-East Asia: The aim is not to grow the slice, the aim is to grow the pie,” he told Digital News Asia (DNA) in Singapore recently.
The state of the SEA pie
When looking at South-East Asia, the incongruity of economic and infrastructure development is pretty evident when countries like Philippines and Singapore are stacked together. In much the same way, IoT take-up across the region can be divided into different stages of development.
“I’ll rank countries like Singapore and Malaysia together, in terms of their current state of development,” Coelho (pic) said. “Developing countries like Indonesia, Thailand and the Philippines are ranked in another group.”
Singapore and Malaysia possess the infrastructure necessary for the IoT, and both have governments spearheading various initiatives.
The Singaporean Government has its Smart Nation initiative which is driving IoT development, while the Malaysian Government has unveiled a national IoT roadmap which is expected to boost the gross national income by US$11 billion by 2025.
“Malaysia is interesting as the Government is making a strong push for IoT development,” Coelho said.
“The strategic roadmap is also interesting as it’s the first time a government in South-East Asia is putting its thoughts and figures on paper on how it envisions the IoT will contribute to the economy,” he added.
Coelho said this national roadmap makes it easier for IoT players to get on board and create an ecosystem in Malaysia.
Indonesia, Thailand and the Philippines are still at a nascent stage, and fragmented in their IoT development, he argued.
But even “this allows for more opportunities for IoT players as the boundaries are not yet defined,” he added.
In Indonesia, telcos are driving IoT development, and they are in it for the long haul, according to Coelho.
“Telkomsel, Indosat, and XL Axiata are investing heavily into IoT development, even forming dedicated business units within their organisations to look into it,” he said.
Telkomsel launched an IoT platform for businesses, and Indosat followed suit.
“These telcos are taking the lead and are looking for partners to be part of their IoT ecosystem,” Coelho said.
“The success of the IoT hinges on [having] an ecosystem, and while telcos are very competitive in nature, they see the importance of educating businesses on the IoT,” he added.
In Thailand, it is the government leading the charge, according to Coelho, with a recent policy on the digital economy that is set to kick off ICT development.
“The Thai Government is pushing for a digitalised economy, passing bills in Parliament to get the country on the digital track,” he said.
“It is also putting in place infrastructure, with a bid right now for a 4G (Fourth Generation) network, which will help in IoT adoption,” he added.
In the Philippines, both Globe Telecom and Smart Communications have started some programmes to develop the IoT, but are facing challenges.
“The biggest hindrance to IoT adoption in the Philippines is the slow Internet connectivity and low stability,” Coelho said.
“It is still lagging behind compared with the other countries in South-East Asia,” he added.
Temperature of the pie
The IoT ecosystem varies across the South-East Asia region, and offers different kinds of opportunities for IoT players to step in.
“Countries that are starting out like the Philippines and Thailand have a weak IoT ecosystem, and solutions providers can step in and become almost like a telco,” Coelho said.
While the telcos in Indonesia and Singapore still hold sway over the IoT ecosystem with their infrastructure, Coelho noted an interesting trend in Malaysia.
“In Malaysia, the telcos are still stuck on selling SIM cards and are not as adventurous as their Indonesian counterparts,” he said.
“Solutions providers have become quite strong in the Malaysian market, and telcos will have to create more interesting offerings to break into that market,” he added.
Cutting the crust
While the eyes of governments, telcos and solutions providers are lighting up, the same cannot be said of the general business community in South-East Asia.
“There is some resistance from SMEs (small and medium enterprises) … which are still not fully aware of what the IoT is, the potential, the mechanism, how they can go about using it,” Coelho said.
The initial costs for getting into the IoT game can be off-putting for SMEs, which already struggle to keep up with technology with their limited budgets.
“SMEs need to be convinced that the cost involved does not outweigh the potential the IoT has,” Coelho argued.
“There is a strong need to educate SMEs on the benefits of the IoT,” he added.
Justifying the return on investment to management remains one of the biggest challenges SMEs face, according to Coelho.
“Convincing the management to foot the initial cost for the IoT is a challenge, especially when it is hard to accurately quantify a dollar value to what the IoT brings,” he acknowledged.
Serving the pie
Despite the challenges the IoT faces in South-East Asia, it is seeing adoption for varied uses even in countries where it seems to be weak.
“Branchless banking has taken off in Indonesia and the Philippines, where most of the population are in remote areas,” Coelho said.
“Customers don’t do their banking with a bank account but with a mobile phone,” he added.
Utilities companies have also adopted the IoT in Indonesia, with smart meters.
“One of the biggest problems in Indonesia is that people don’t pay their utilities bill on time,” Coelho said.
“These smart meters can communicate with the state utility company, and you need prepaid credits before it will supply electricity,” he added.
This reduces late payments, and even cuts down on the manpower needed to record meter readings.
Singapore is using smart surveillance integrated with big data analytics to help make the country safer; while in Malaysia, Celcom Axiata has installed tablets in taxis which will show advertisements and provide WiFi for customers.
“Fleet management still remains the mainstay for the IoT,” Coelho said.
The ingredients for the next pie
The business opportunity for the IoT in South-East Asia is “massive,” according to Coelho.
Pointing out that only 16.72% of Indonesia’s population is currently hooked up to the Internet, bringing the rest of the country online will also generate massive opportunities for IoT solution providers, he argued.
“I’m optimistic that in time, with the ecosystem coming into place and governments realising the importance of the IoT, international IoT players will come and strike partnerships with local players and drive IoT implementations in South-East Asia,” Coelho said.
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