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Mark Zuckerberg Is Optimistic About Indonesia, Should You Be Too?

Mark Zuckerberg, Co-Founder and CEO of social media titan Facebook Inc, recently visited Indonesia  with the hopes of helping to push widespread Internet-access and connectivity in the country. Currently, 69 million of Indonesia’s 250 million citizens are active users of Facebook’s social media site, making Indonesia one of the largest geographical markets for the company.

According to a Wall Street Journal report on Mr. Zuckerbeg’s trip, he said that he was excited about visiting Indonesia after seeing Joko Widodo, Indonesia’s president-elect, successfully connect with fellow Indonesians .

Mr. Zuckerberg believes that he can help Indonesia’s businesses get on the internet and improve their connectivity through Facebook. It’s a move which has the potential to help grow the country’s economy.

According to the same Wall Street Journal report, Facebook is in partnership with other global technology companies to help improve internet access in places where penetration rates are low. In countries like Indonesia, where mobile phones are the primary device used by people to get onto the internet, the focus is on lowering costs and improving the efficiency of mobile data networks. The Wall Street Journal added that in Indonesia, the internet penetration rate is only 20% of the population, whereas 85% are covered by a mobile data network.

If Indonesia does become a more connected country, what does it mean for Singapore-listed companies which are based there?

Many of such companies are actually commodity plays. For instance, we have the palm oil firms like Wilmar International Limited (SGX: F34), Golden Agri-Resources Ltd (SGX: E5H), and Indofood Agri Resources Ltd (SGX: 5JS). For them, having Indonesia attain better connectivity through the internet might have no real direct impact on their business. That’s because it seems unlikely that the internet can help get them better pricing for their products; the selling prices of commodity companies’ products are closely tethered to the market price of the commodity itself.

However, the internet might help them in promoting the benefits of their products (such as palm oil) to the masses and help drive mass acceptance. In this way, the commodity firms might yet be able to boost the overall demand for commodities and thus benefit indirectly.

Besides the commodity plays, there are also Indonesia-based Singapore-listed companies involved with consumer products. If a more connected Indonesia can mean a stronger economy, then demand for most consumer products should increase along with a growing middle class. Companies such as Jardine Cycle and Carriage Limited (SGX: C07), which is the largest automotive player in the country, stands a chance of benefiting if the country progresses.

All said, it seems Mr. Zuckerberg is optimistic about the future of Indonesia. Should you be too?

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns Wilmar International Ltd