Indonesian govt considers increasing tax on 2G to drive 4G take-up

27 May 2015

The government of Indonesia is reportedly considering a plan to increase the tax levy on 2G handset sales in order to engineer a swifter migration to 4G over the next three or four years. The Jakarta Post writes that the state is keen to see mass take-up of 4G over that time frame, and communications and information technology minister Rudiantara wants the tax hike to make 4G seem relatively less expensive to end users, while also working to free up spectrum once 2G is abandoned. ‘We estimate that the price of a 4G smartphone will stand at around IPR400,000 (USD30) in the next three or four years, with consumer purchasing power growing even stronger,’ the minister is quoted as saying. However, given that over 200 million of Indonesia’s 318 million-plus mobile users are still on 2G, the task ahead is a monumental one. Another plan under consideration would be a straight cut in taxes applied to 4G services as a way of altering the balance in the new technology’s favour. The country’s principal mobile operators – Telkomsel, XL Axiata and Indosat – all launched 4G commercially at the end of 2014 and have collectively mustered fewer than a million subscribers to date.