Indonesian retail sales surged 14 percent in November 2013 from one year earlier (the highest growth rate since July 2013). On a month-to-month basis, Indonesia's retail sales increased 1.5 percent from October 2013. These findings were the result of a survey conducted by the central bank of Indonesia (Bank Indonesia), which surveyed 650 retailers in 10 Indonesian cities. The bank's survey also indicated that Indonesian retailers may increase prices of their products in 2014 in order to compensate for the depreciating rupiah exchange rate.
Indonesia's currency has fallen 26 percent against the US dollar during 2013 amid capital outflows due to the looming end of the Federal Reserve's quantitative easing program and concerns about the country's wide current account deficit. Although showing an easing trend in recent quarters, the current account deficit is still at an unsustainable level (about 3.5 percent of GDP at the end of 2013).| Source: Bank Indonesia
The turnover in Indonesia's retail industry in 2014 is expected to amount to IDR 165 trillion (USD $13.8 billion), a 12 percent growth from last year. This increase in turnover is caused by the upcoming legislative and presidential elections as well as general economic growth of between 5 and 6 percent. General elections always boost the money flow, thus giving rise to higher retail sales. Prior to - and during - the 2014 elections, IDR 44 trillion (USD $3.6 billion) is expected to flow on Indonesia's market amid political party campaigns.
Tutum Rahanta, Chairman of the Indonesian Retail Merchants Association (Aprindo), said that it is important to focus on improvement of Indonesia's infrastructure to make products from the regions (particularly outside the island of Java) more competitive. Due to the lack of quantity and quality of infrastructure, logistic costs rise steeply in Southeast Asia's largest economy. According to Rahanta, weak infrastructure also affects the target of the Regulation of the Minister of Trade No. 70, 2013 (Permendag No.70/2013), which orders Indonesian shopping centers and modern shops to sell at least 80 percent of domestically-made products.