How LED Lights Market Is Positioned in Indonesia?
Lighting market was traditionally dominated by fluorescent tube lights (FTLs) and incandescent bulbs (ICLs) until a decade ago. The prime reasons attributed to their dominance were easy availability, cheaper products relative to other lighting products and easy installation. However, these lighting sources were highly inefficient in terms of energy consumption.
The increasing consumption of electricity in the country and the government’s plans to gain 100.0% electricity supply in the country have stimulated the need for energy efficient lighting system in the country. The Indonesian government identified the glitches in the lighting sector and therefore started aggressively promoting energy efficient sources of lighting in the country. With the advancements in technology, superior sources of lighting such as LEDs came into the market. Light Emitting Diodes (LEDs) are solid state semiconductor devices without mercury content.
As the electricity penetration increases the consumption of electricity shall automatically rise. The country already has a shortage of electricity. Blackouts and power rationing even occurs in the country’s main capital Jakarta. LED being the latest lighting technology in the country has garnered a significant traction among the people in Indonesia since it got introduced in the country.
Which Type of LED is Preferred the Most?
In Indonesia both LED luminaires and lamps are sold by the players. The choice of the type of LED depends on the purpose and location of the LED light. LED luminaire amounts for only ~ lighting industry sales in the country as of 2016, according to statistics compiled by The Indonesian Electrical Lighting Industry Association (APERLINDO), and has great future market potential.
In the Indonesian LED lights market, luminaires dominated the market with a share of ~% during 2016. In Indonesia, there are different types of luminaires namely panel lights, downlights, spotlights and directional lights. Luminaires can be used for both indoor and outdoor applications. The major customers of luminaires form the residential and commercial customers who largely use the same for their indoor lighting purposes. LED Luminaires for office lighting are well developed in terms of design and performance and also available at a viable price now in the country. Though luminaires are expensive in comparison to Lamps in terms of installation cost, people prefer to use them owing to its modern design, stylish fixtures. Moreover, luminaires are rich with product variety.
The replacement demand for luminaires is less one its major attractive factor being the longevity. Luminaires are durable. In Indonesia luminaires are sold by both local and international players namely, Hori LED, Philips, Osram and others. Apart from indoor applications luminaires are also compatible for outdoor usages such as applications in parking lot, building exterior and roadway fixtures and others.
Which Usage Of Led Lights Dominates In Indonesia?
The wide product range in the LED lights segment has made it compatible for both outdoor and indoor applications. The application of LED lights is dominated by the indoor segment with a share of ~% as of 2016. Major customer segment for LED lights are residential customers who prefer the installation of LED lights within their houses. It is also used for office lighting purposes at the commercial spaces. LED lights specialize in indoor areas as they are resistant from water vapor and dust due to their low heat emitting qualities and the small size, which does not allow such substances stick to the installed lights. Thus, the level of ingress protection, which is required by indoor light applications, is achieved by such heat resistant LED lights.
Outdoor lighting represents the traffic lightings, park lightings, street lightings, roadway lightings, exterior building lightings and other open area lightings. It majorly serves the purpose of creating a sense of personal security by illuminating larger areas. LED lightings emit much brighter light that it shall very well cater the outdoor lighting needs. Both, LED luminaires and lamps are used for the outdoor lighting purposes. The lighting of building exterior dominates the outdoor LED lights applications. The public lighting retrofit programs have been introduced in the past two years or are currently being introduced and are not widely practiced in the country yet.
Which Distribution Channel Is Preferred The Most In Indonesia?
Installation of LED lights is way more expensive than the traditional lighting systems. Hence, people tend to save money in the procurement of the product. Buying LED products directly from distributors are cheaper than buying it from any other sources. In Indonesia even the residential customers prefer to buy LED lights from the distributors. The market is dominated by distributor-led sales. Distributors get rebates on the products that enable them to offer the products at discounted prices to the customers.
Distributor-led sales are followed by retailers that held a share of ~% in 2016. Retailers generally cater to the lighting requirements of the residential customers. The major companies in the country have their retail stores operating at the centre of major cities, at various malls and other similar locations. In Indonesia, lighting products are distributed via various types of retail entities such as electrical shops, hardware stores, mini markets, supermarkets and traditional/grocery stores. Post retailers the sales channel is dominated by direct sales. Direct sales refer to the sale of LED products directly by the manufacturers. In 2016, the channel accounted for a meager share of 10.0% in the overall LED lighting market revenue.
Which Region Dominates The LED Lights Market In Indonesia?
Jakarta is the capital and the largest city of Indonesia. It is located on the northwest island of Java and it is the country’s economic, cultural and political centre. This signifies the importance of the city for the country. As in case of other product markets the LED lights market of the country is also dominated by this region in terms of revenue generation. It accounted for a share of ~% in the market as of 2016. Jakarta is one of the highly populated areas in the country. It has a population of more than 9.7 million as of 2016. Jakarta is followed by Surabaya in terms of revenue. Surabaya is also one of the major metropolitan areas of Indonesia. It has a population of more than 9.2 million as of 2016. The city held the second position in terms of revenue contribution to the LED lights market of the country with a share of ~% as of 2016. It is the port city on the Indonesian Island of Java. It is a business driven city and it has many commercial establishments and plants. Bandung followed Surabaya in terms of revenue generation in the market. Bandung has one LED manufacturing plant. The economic growth, rapid increase of the population, and urban expansion, which can be attributed to the tremendous growth in its commercial, industrial, and educational sectors, have brought many opportunities to Bandung.
What are the Major Trends and Issues in Indonesia led lights Market?
The initiatives being taken by the Indonesian government is expected to be the biggest driver for growth in the country’s LED lighting market. The country’s government is keener on reducing GHG emissions and the electricity consumption in the country. Especially, the deficiency in electricity and the plans of the government to completely electrify the country by 2019 have induced the government to launch energy saving programs.
The trade relation between Indonesia and China is getting stronger every year. It is expected to be helpful for the domestic producers to procure the LED components and products more easily. A major chunk of LED imports occur from China as both countries signed a mutual recognize agreement (MRA) that cut import tariffs for LED and other energy-efficient lighting to 5 percent. Therefore it is cheap to import LED lights from China.
Indonesia lacks in infrastructure development and its improvement is the top priority of the present government. In the 2016 budget, the Indonesian government earmarked the highest amount ever allocated for infrastructure development which was nearly USD ~ billion.
The lighting industry is one which keeps on upgrading in terms of technology. The LED light market of the Indonesia has witnessed RAPID expansion of product lines of the market. Within every two or three months a new model of LED light is introduced in the market. The rapid evolving technology leads to changes being brought about in the LED lights overtime, which makes it hard for the customers to buy new lights with minor changes in the latest models.
How the Competition is prevailing in Indonesia LED Lights Market
The Indonesia LED lights market is highly concentrated with the dominance of few leading lighting manufacturers and distributors in the country. The market is dominated by one of the international player which is Philips a Netherlands based lighting company. Philips is followed by Panasonic which is also a foreign company based in Japan. There are ~ manufacturers of LED lights in the country including both national and international players. Nearly ~% of the market is dominated by top four players in the market, of which Philips accounts for a share of ~% as of 2016. Since the sector requires large amount of capital to be invested, this has inhibited the emergence of several companies in the space. Though the other companies hold a very small share in the midst of rising demand for energy efficient lighting systems are expected to boost the sales revenue for small LED lighting companies in the country. Frequent introduction of new LED products, rapid changes in technology, changing customer requirements, long product life cycle, and number of retail outlets and prices of similar technology by various companies are common platforms on which the competition prevails in the overall lighting market of the country.
What is the Future Outlook for Indonesia LED Lights Market?
The LED lighting market of Indonesia has showcased a tremendous growth during the review period 2013-2016. The lighting segment in the country is expected to contribute the largest growth towards the LED lights market and is expected to be driven by the government initiatives, decreasing LED prices, and investments from multinational players in the Indonesian market. The Indo LED & Light Expo, held in 2016, to raise the awareness of the public is expected to raise the demand LED lights in the country from both residential and non-residential customers in the country. The Indonesian government’s decision to replace the traditional advertising materials with LED displays and putting more efforts for raising consumer awareness spreading the importance of energy-saving lighting options in the country are expected to boost the sales of LED lights in the country for non-residential use. Indonesia has recently signed the ‘One Belt One Road’ (OBOR) deal with China. This has also raised the LED lights market of the country that would impact the traditional lighting replacement market.
Companies Cited in the Report
List of Companies Companies Covered in the Report
- Philips Indonesia
PT Panasonic Eco Solution
PT Honoris Industry Major Players in Indonesia
- Jaya Eco Energi LED Lights Market
- Solarens Ledindo
- Holz International Technology
- Sinar Angkasa Rungkut
Key Factors Considered in the Report
Comprehensive analysis of Indonesia LED Lights Market and its segments
Listed major players and their positioning in the market
Identified major industry trends and issues in last few years and assessed the future growth of the industry
Government initiatives and regulations in Indonesia LED Lights Market
Product Portfolio by company in Indonesia LED Lights Market
For more information on the market research report please refer to the below link:
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Ankur Gupta, Head Marketing & Communications