Jakarta, 1 February 2024 – Lembaga Penyelidikan Ekonomi dan Masyarakat Fakultas Ekonomi dan Bisnis Universitas Indonesia (LPEM FEB UI) has just published “Economic Impact of the Screen Industry in Indonesia – An Opportunity” report, jointly written with PwC Indonesia. The report suggests that Indonesia’s screen industry in 2022 has a significant economic impact, with a total contribution to output amounting to USD 8.2 billion (IDR 130 trillion), a contribution to the GDP of USD 5.1 billion (IDR 81 trillion), and the creation of job opportunities for 387,000 individuals. The industry is projected to grow at a Compound Annual Growth Rate (CAGR) of 6.13% from 2023 to 2027. The study also explores the potential economic benefits of the development of the screen industry, identifies critical issues which could constrain it from reaching its full potential, and proposes possible policy initiatives to support its continuing development.
According to Prani Sastiono, PhD, a researcher at LPEM FEB UI, the total economic impact of the screen industry in 2027 is expected to increase by 17% in terms of output, 17% in terms of GVA/GDP contribution, and 37% in terms of employment compared to 2022. Every increase of Rp 1 trillion in revenue is expected to result in a total of Rp 1.43 trillion in increased output, a Rp 892 billion increase in GDP contribution, and the creation of 4,300 new high-quality jobs. Denny Irawan, PhD, Head of Economics and Research at PwC Indonesia, added that, within the screen industry, cinema and online curated content (OCC) are expected to grow rapidly, with an expected CAGR of 15.09% from 2022 to 2027, bolstered by investment in cinema screens and the entry of local and international OCC players into the Indonesian market.
Beyond economic growth, the screen industry also generates the highest rate of productivity within Indonesia’s creative economy. In 2021, the screen industry employed 150,000 workers, and contributed USD 7.8 billion (Rp 125 trillion) in Gross Added Value (GVA) to Indonesia’s economy in 2020. Within the screen industry, television contributed the most economic value, generating GVA of USD 7.7 billion (Rp122.7 trillion) in 2020.
Julian Smith, Director at PwC Indonesia, commented: “Besides creating its own value, the screen industry can also stimulate economic activity in other sectors through non-transactional spillover. Spending in the screen industry creates spillover benefits such as film-induced tourism, increased sales of books that have been adapted into films, or increased streaming of music featured in TV series. It creates opportunities for local businesses in other sectors, including the development of products and services in the form of tours, exhibitions, and merchandising.”
Despite the significant opportunities, there are a number of obstacles to the development of the Indonesian screen industry, including the lack of a generally recognized definition and scope, limited funding, a small pool of skilled talent, infrastructure constraints, as well as regulatory and law enforcement challenges.
Some of the potential policy initiatives highlighted in the report include updating and simplifying regulations, reskilling and upskilling film talent, increasing infrastructure capacity in the screen industry, and offering incentives to attract global and local investors.
According to Dr. Hera Susanti SE, MSc, Associate Director at LPEM FEB UI, “The regulatory framework plays an important role in driving the growth of industries, including the screen industry. In Indonesia, there is a growing need to refine and update the definition of the screen industry, considering industry dynamics and international best practices, in order to obtain a common perception from stakeholders. Apart from that, to support and advance the growth of the screen industry, incentives and regulations are needed regarding production, shooting locations, or other factors that will make Indonesia more attractive as an investment destination in the screen industry, as well as being beneficial for the community.”
Ruben Hattari, Director of Public Policy at Netflix Southeast Asia added, “We hope that this study can strengthen the views of governments and policy makers on the benefits of investment in local film production, especially for job creation and economic growth. This will benefit the future of the Indonesian screen industry in playing an increasingly important role in the economic development and receiving the support it needs.”