A shopkeeper stands in an empty alley at a shopping mall in Pekanbaru, Riau, last May. (Antara Photo/FB Anggoro)

Smartphone Makers Face Existential Threat Amid Government's Database Snafu


OCTOBER 12, 2020

Jakarta. Indonesian cellphone makers are on the brink of collapsing after a government's snafu preventing them from making new sales, which are already depressed amid slowing demand during the Covid-19 pandemic. 

Since Sep 15, smartphone makers have not been able to register any new devices with the government, which is critical for ensuring the devices usable within Indonesia's territory. The problem is that the government's server that is supposed to record all the information about the devices' international mobile equipment identity (IMEI) is already full, less than two months since it went online. 

"This condition greatly impacts the continuity of the cellphone industry," Hansen, the chief executive officer of Mito Mobile, a local smartphone maker, said on Saturday. 

"We could be hit by a recession more quickly if the system is not repaired fast," he said. 

The Industry Ministry requires producers and importers to register the IMEI number of all mobile devices they sell in Indonesia. The government issued the regulation las year to protect smartphone makers that already establish manufacturing facilities in Indonesia against illegal items on the black market.

The government set up a centralized equipment identity register (CEIR) to list all the legal devices, unlike similar systems in other countries containing blacklisted devices. Any device whose identification number is not registered in the system will not work within the Indonesian territory. 

Initially, the ministry was confident of getting the system online in April, but the Covid-19 pandemic delayed the procurement and pushed the schedule back to July. Early this month, the ministry admitted that the system was almost full, and they could not accept more registrations without the risk of crashing the system.   

That leaves producers with tens of thousands of unregistered devices they cannot sell. 

"My understanding is that this incident was not only experienced by Mito. Other national brands are experiencing the same problem," Hansen said. 

"We hope that the related parties concerned with CEIR management can immediately provide solutions. Don't let us enter the abyss of recession," he said. 

Smartphone sales in Indonesia already took a hit from the pandemic as consumers delay their purchase. According to the latest report by global research firm Counterpoint Research, the sales declined 20 percent in the April to June period from the same period last year. 

Chinese smartphone makers Vivo and Oppo took the first and second spots with 21.2 percent and 20.6 percent market share, respectively, followed by South Korean Samsung with 19.6 percent, other Chinese rivals Xiaomi (17.9 percent), and Realme (13.6 percent). Local companies like Mito and other foreign brands only make up 7.6 percent of the market. 

Hansen said that any regulation made with the spirit to grow the national smartphone industry must be accompanied by adequate infrastructure readiness. "Do not let it cause new problems for the industry," he said. 

Dini Hanggandari, the director of the electronics and telematics industry at the Industry Ministry, said the CEIR system currently contained active IMEIs and inactive ones, which were already reserved, but producers or importers never used.

Producers and importers were supposed to report back to the ministry about their productions or imports so that the ministry could list the devices' identification in the database, Dini said.

Since the producers and importers did not file their report, the ministry decided to dump all the IMEIs that it had reserved for the producers and importers to the database, to prevent devices already in use by customers from becoming unusable when the government IMEI blocking becomes effective.   

"As a result, the CEIR system is now almost full, and it is feared that it will be down if we input more data," Dini said last week. 

Indonesian Telecommunication Companies Association (ATSI), which now manages the government's register, said the system could store up to 1.2 billion identity number. About 95 percent of that capacity was already used up, the association said. 

Dini said the government and the association are working to clear up the register. One option was removing all inactive IMEIs from the database. 

"We are still looking for an ideal solution to solve this problem," Dini said.