Indonesia’s LED Lighting Breakneck Adoption Drives Product Quality and Market Access

Southeast Asia is an increasingly important market for light-emitting diodes (LED). Most of the growth comes from municipal, commercial and home consumers across the region, particularly Indonesia. To tap new sales opportunities, manufacturers in this region will need to understand what’s driving demand as well as the need and process for testing quality products amid greater regulatory control.

Energy saving lighting option fuels demand

Critical drivers for increasing demand of LED lights includes Southeast Asia’s high electricity prices and a sharp drop in the cost of LED lights. Due to demand and an abundance of supply, the days where price of a single LED bulb at USD30 are over.

While LED bulbs still cost more than incandescent bulbs, they are highly efficient, consuming about one-sixth the energy of incandescent light bulbs while lasting up to 25 times longer. As such, switching to LED bulbs can reduce electricity bills by as much as 75 percent.

Southeast Asian city officials are also just as eager to capitalize on the cost savings of LEDs amid the region’s rapid urbanization and ongoing economic advancement. These new energy efficient technologies and design can cut street light costs, which account for 38 percent of energy consumption and gas emissions; in some cities by 60 percent. Also, maintenance and operational expenses of industrial-use LEDs are found to be far lower than for most other lamp technologies. This realization has led to new government regulations calling for more energy saving lighting options.

Indonesia leads demand for LEDs

According to LEDinside, Southeast Asia LED lighting market grew fastest with a year-on-year growth rate of 63 percent. The six major markets in this region -- Thailand, Singapore, Malaysia, Vietnam, Indonesia and the Philippines -- lighting market is at USD 4.8 billion in 2015, of which LED lighting contributes to about USD1.5 billion. This demand has attracted LED lighting manufacturers to this region.^[1]

While Vietnam has seen the highest growth in LED lighting marketing with a year-on-year increase of more than 60 percent between 2013 to 2015, the transportation lighting market in Indonesia is enormous.

In 2010, PT Solarens Ledindo (previously known as PT Tricomm Aerocitra) awarded Osram Semiconductors Golden Dragon Plus LED the opportunity to light up Indonesia’s first LED-lit toll road, a 9.7km long highway in Jakarta. Indonesia has 8,159km railway network with about 40 percent of the tracks currently in neglect.^[2] The country has also launched pilot programs to retrofit street lights with LED lamps in cities such as Batang and Semarang and is committed to replacing traditional advertising materials with LED displays.

LED standards and testing drive market access

Chinese manufacturers dominate Indonesia's LED lighting industry. This phenomenon is due to the government's early policy of allowing foreign LED players to flood the market with competitively priced LED lights. However, the Indonesian government has now banned imports of LED lights (and other products) that do not meet the Indonesian National Standard (SNI) standards. This move has impacted foreign manufacturers' market share, but it has increased competitiveness for domestic LED players.

As a result, manufacturers already in Indonesia, or those that want to enter the Indonesian market will need to test their products against the SNI standards if they are going to tap into these growth opportunities.

At UL, our role in testing and certifying LED lights for energy efficiency, safety and reliability is critical for determining which LED products can meet global standards including the SNI.

To start, the lighting performance team tests bulbs for both instantaneous performance, such as energy efficiency, color quality and light output, and long-term testing to determine how long the light bulb needs to last. Our tests also include mechanisms to capture a full spectrum of electrical and environmental data, including how much electricity is running through the LEDs to produce the light output (for energy efficiency) and at what temperature it's operating (a vital safety consideration). Our labs can help confirm the overall reliability of the product as well.

The National Accreditation Body of Indonesia (KAN) has accredited our wire and cable lab in Jakarta as a Testing Organization (TO) and Certification Organization (CO) for the local SNI (The Indonesia National Standard). Through our Global Market Access Services we can help LED manufacturers to test to and achieve the SNI certification. Since different countries have different standards that manufacturers need to adhere to gain market entry, Indonesian LED lighting and electrical manufacturers can now gain market access to other Southeast Asian markets by testing their products at our lab, hence, enabling them to be more competitive.

LED brightening the future

With a population of 300 million people and growing, Indonesia offers a substantial domestic market for many foreign retailers; with a rising middle class, the country is currently one of the fastest growing markets in the region. Similar to other neighboring countries in the tropics, Indonesians tend to spend a lot of time indoors especially in malls. This lifestyle has spurred mall development in urban areas, and as such, contributes to the continuous adoption of LED lighting.

Other critical commercial drivers of growth include developments that include highway and railway development, ports, ferry piers, airports, industrial parks and other energy-related facilities such as power stations.

Meanwhile, consumer demand that will drive future adoption includes Wi-Fi connected LED bulbs such as those that can operate from a smartphone, or lamps whose colors automatically adjust based on the time of day or the weather among others.

The future of LED is undoubtedly bright as more and more people are adopting the lighting technology, and lighting companies are finding new and novel ways to integrate other functionalities to drive demand.

To find out more about UL’s methods for LED light testing, visit: https://www.ul.com/inside-ul/shedding-some-light-on-led-testing/.

[1]“Southeast Asia LED Lighting Market Scale and Trends in 2016.”LEDInside. (April 21, 2016). Retrieved from: https://www.ledinside.com/node/25219

[2] "Statistics Show Indonesia Holds Great LED Market Potential." LEDInside. (September 17, 2015). Retrieved from: https://www.ledinside.com/news/2015/9/staitistics_show_indonesia_holds_great_led_market_potential