The linkage analysis of telecommunication sector in the Indonesian economy in mobile broadband era

This paper aims to investigate the linkage of telecommunication sectors and the rest of sectors in Indonesian economy in the mobile broadband era. The year 2006 is regarded as the beginning of the mobile broadband era as in this year, the third generation (3G) of the cellular system (the first generation of mobile broadband) began to serve Indonesian consumers. This study applies the Input-Output approach to obtain Backward and Forward Linkage (BL and FL) of telecommunication sectors with the rest of Indonesian economy sector. Due to data limitations, We only anlyze the linkage for the year of 2000 to 2014. We compare the magnitudes of BL and FL in the period before 2006 with those in 2006 and beyond. The results show that the the magnitudes of BL and FL along the perod of 2000-2014 did not show big difference. This finding is not in line with the rapid increase of mobile broadband penetration in Indonesia. We identify that one of the causes is the low utilization of mobile broadband in economic activities, while another cause is the inavailability of local upstream industries of mobile broadband network equipments. Therefore, the network equipment manufacturing industry will not create the added value for the Indonesian economy, but for the device-producing country.