Jakarta, 1 February 2024 – The Institute for Research on Economics and Society, Faculty of Economics and Culture, University of Indonesia (LPEM FEB UI) published the report "The Economic Impact of the Screen Industry in Indonesia - an opportunity", written together with PwC Indonesia. The report shows that the screen industry in Indonesia will have a significant economic impact in 2022, with a total contribution to output of USD 8,2 billion (Rp. 130 trillion), a contribution to GDP of USD 5,1 billion (Rp. 81 trillion), and the creation of fields employment for 387.000 individuals. This industry is projected to grow at a Compound Annual Growth Rate (CAGR) of 6,13% in the period 2023 to 2027. This study also explores the potential economic benefits of developing the screen industry, identifies important issues that could hamper industry development, and outlines options. policies that have the potential to support the development of the screen industry in Indonesia.
According to Prani Sastiono, PhD, LPEM FEB UI researcher, the total economic impact of the screen industry in 2027 is estimated to increase by 17% in output, 17% in NTB/GDP contribution, and 37% in employment compared to 2022. Each additional income is IDR 1 trillion is estimated to result in an increase in output of IDR 1,43 trillion, an increase in GDP contribution of IDR 892 billion, and the creation of 4.300 new quality jobs. Denny Irawan, PhD, Head of Economics and Research PwC Indonesia, also added that cinema and online curated content (OCC) is expected to grow rapidly with a CAGR of 15,09% from 2022 to 2027, due to investment in cinema screens in Indonesia and the emergence of local and international players in the Indonesian market.
Apart from economic growth, the Indonesian screen industry also produces the highest level of productivity among all sectors of the Indonesian creative economy. In 2021, the screen industry employs 150.000 workers and contributes NTB USD 7,8 billion (Rp. 125 trillion) to the Indonesian economy in 2020. In the screen industry, television contributes the largest economic value, seen from NTB at around USD 7,7 billion (Rp. 122,7 trillion) in 2020.
Julian Smith, Director of PwC Indonesia, said: "The screen industry can also stimulate economic activity in other sectors through non-transactional spillovers. Spending in the screen industry can create spillover benefits such as increased tourism interest from films, increased sales of written works adapted into films, or increased streaming for music included in TV series. This creates opportunities for local businesses in other sectors, including product and service development in the form of tours, exhibitions and merchandise.”
Although there are significant opportunities for the screen industry in Indonesia, there are also a number of obstacles to its development, including the lack of a standard definition of the screen industry, limited funding, limited number of skilled workers, limited infrastructure, as well as regulatory and law enforcement challenges.
Several policy recommendation options are proposed in this report to support the development of the screen industry in Indonesia, including updating and simplifying regulations, updating and improving skills, increasing infrastructure capacity in the screen industry, and offering incentives to attract global and local investors to the screen industry.
Dr. Hera Susanti SE, MSc, Deputy Director of LPEM FEB UI said, "The regulatory framework plays an important role in encouraging industrial growth, including the screen industry. In Indonesia, there is a growing need to refine and update the definition of the screen industry, taking into account industry dynamics and international best practices, to gain a shared perception from stakeholders. "Apart from that, to support and advance the growth of the screen industry, incentives and regulations are needed regarding production, filming locations, or other factors that make Indonesia more attractive as an investment destination in the screen industry, and are beneficial for society."
Director of Public Policy for Netflix Southeast Asia, Ruben Hattari added, "We hope that this study can strengthen the views of governments and policy makers regarding the positive impact of investment in local film production, especially in terms of job creation and economic growth. "So that in the future the Indonesian screen industry can play an increasingly important role and receive the support it needs."
