According to research conducted by Citibank, Indonesians increasingly regard property as the most lucrative investment instrument, instead of cash, deposit or saving accounts. On second and third place come cash and insurance. Citibank conducts an annual survey through which the bank assesses Indonesians' ability to understand the importance of financial planning and implementing good financial discipline. The survey involves various groups based on gender, age, residency and income levels.

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Mahendra Siregar, Chairman of the Indonesia Investment Coordinating Board (BKPM) said that Japan has replaced Singapore as the largest investor in Indonesia. In 2013, Japan invested USD $4.7 billion in Southeast Asia's largest economy, particularly in the automotive sector due to the sector's promising outlook as demand for cars among Indonesia's expanding middle class grows strongly. Singapore, which was the largest investor in Indonesia between 2010 and 2012, fell to second place with USD $4.6 billion worth of investments.

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Indonesia's domestic consumption is expected to continue its steady growth in the next five to 10 years as Indonesia's rapidly expanding middle class is becoming increasingly consumptive and eager to follow the latest trends (purchasing the latest trendy products). This expanding middle class is the result of robust economic growth in Southeast Asia's largest economy. Although currently slowing, the country's annual gross domestic product growth has reached an average of almost 6 percent since 2005.

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Indonesia's Ministry of Transportation expects the number of air passengers in Indonesia to exceed 100 million in 2014, a 15 percent growth from this year's estimated 90 million air passengers. Air traffic in Southeast Asia's largest economy is growing rapidly. From 2012 to 2013, passenger numbers grew at least 19 percent (from 60 to 90 million), while the total number of flights increased from 566,000 in 2011 to 684,000 in 2012. This robust growth necessitates investments to safeguard comfort and safety in Indonesia's aviation sector.

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According to Indonesia's Ministry of Industry, the import of mobile phones can be reduced by 50 percent within the next three years because of the establishment of new mobile phones factories. It is estimated that Indonesia imports 70 million cellular phones in 2013 as demand for mobile devices is high among the rapidly expanding middle class of Southeast Asia's largest economy. Due to this middle class and size of the total population (over 240 million people), Indonesia contains a lucrative market for telecommunication devices and services.

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Indonesia continues to top the ranking of countries with the highest consumer confidence in the third quarter of 2013 although its score fell four points from the second quarter to 120. According to the Nielsen Global Survey of Consumer Confidence and Spending Intentions, consumers in Indonesia are optimistic due to the general elections in mid-2014 and growth of the country's middle class. However, as inflation surged after prices of subsidized fuels were raised in June, the score fell slightly.

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Turnover of Indonesian minimarkets has grown sharply. In 2014, the value of sales is expected to jump 13.5 percent to IDR 94 trillion (USD $8.3 billion) compared to this year's projection of IDR 82.9 trillion (USD $7.3 billion). Indonesia's large population (over 240 million) and rapidly urbanizing society gives rise to high demand for nearby shops where people can find their daily needs. In recent years, outlets of minimarkets have been mushrooming in Indonesian cities, particularly on Java. Outside the island of Java, there is still ample room for growth.

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Fitch Ratings, the global rating agency, expects slower growth in Indonesia's property sector for the next 12 months. However, for the longer term, the institution still maintains a positive outlook as Indonesia is characterized by high urbanization, a rapidly expanding middle class and low mortgage rates. Since the revival in 2011, the average selling price of Indonesia's residential properties increased by about 30 percent year-on-year, particularly in the Greater Jakarta area.

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Attracted by the promising prospects of Indonesia's domestic consumption (with per capita GDP rising strongly), a total of about 100 foreign franchises will enter the Indonesian market in 2013. The most popular investment destination of these franchises is Indonesia's culinary sector. The majority of franchises originate from the United States. Others include those from South Korea, Japan, Australia and Europe. In 2013 so far, more than 170 foreign franchises received approval from the government.

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According to a Bank Indonesia report that was released on Monday (19/08), consumer confidence in Indonesia has weakened after the government decided to raise prices of subsidized fuels in June 2013. The country's consumer confidence index fell 8.7 points to 108¹ in July from 117 points in June. Higher fuel prices led to higher transportation costs that subsequently made many retailers increase prices of products, thus impacting on Indonesian households' purchasing power. In July, the annual inflation rate accelerated to 8.61 percent.

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Indonesia's largest company by market capitalization is still HM Sampoerna, the country's largest tobacco company. The company has been the top company in Indonesia since March 2013 when it replaced Astra International, Indonesia's largest diversified conglomerate, on the top spot. Astra had been Indonesia's largest company since 2010. Currently, the third-largest company in terms of market capitalization is Unilever Indonesia. Unilever, which is Indonesia’s largest consumer goods producer, jumped four places in the ranking since late 2012.

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Starting from 1 September 2013, the minimum down payment for the purchase of a second house or apartment (bigger than 70 m²) in Indonesia will be raised to 40 percent. Indonesia's central bank (Bank Indonesia) implements this new rule to avoid a possible credit bubble in Indonesia's property sector. The country's property sector has been booming in recent years, giving rise to many new property projects, soaring profits for property companies (as well as impressive stock performance) and significantly rising property prices.

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Although the United States continues its traditional focus on direct investments in developed countries, primarily in Western Europe, there has been a significant rise in US investments in Indonesia in recent years. Whereas US investments in the developed economies of Western Europe is mostly found in the financial sector and through holding companies, in developing Asia, the US is more focused on the manufacturing sector due to lower production costs. In the last two years, the US emerged as the second-largest investor in Indonesia after Japan.

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One of the sectors that showed exceptional growth in 2012 was Indonesia's property market. On average, net profit of companies engaged in Indonesia's property sector grew 68 percent during the full year. Of the 45 property companies that are listed on the Indonesia Stock Exchange (IDX), 26 posted net profit growth that exceeded 50 percent. But the success story did not end there. In the first quarter of 2013, the property sectoral index of the IDX continued its fast pace by rising over 41 percent.

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It is no secret that Indonesia's economy has been booming in recent years and is appearing more and more on the radars of foreign investors. In the 2000s it was the commodities sector that brought much profit for Indonesian companies that were engaged in the extraction of natural resources such as coal, palm oil, and rubber. The outbreak of the global financial crisis in the late 2000s, however, ended the commodities boom abruptly, while other sectors came to the fore as Indonesia's new gold mines.

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In my previous column, I outlined the emergence of a new and promising class of Indonesian consumers that is most likely to bring a positive effect on the country's economic growth in the years ahead. I also pointed out that the level of prosperity of a population is an influential factor towards the state (and future) of democracy in a country: the wealthier a population becomes in terms of per capita GDP, the longer the life expectancy of its democracy will be.

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A fresh breeze is blowing on the face of the Indonesian economy. One that is characterized by the projected growth of a new class of Indonesian consumers that seems promising in the years ahead. This new consumer force certainly brings a positive effect on Indonesia's economic growth as domestic consumption has always been a pillar of economic support for the country. Agung Budiono, analyst at Jakarta-based Pol-Tracking Institute, takes a closer look at the topic.

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Within a timespan of a few years only, Matahari Department Store has shown impressive growth. Its market capitalization increased from IDR 146 billion (US $15 million) in late 2008 to a current IDR 31.95 trillion (US $3.28 billion). The company, which sells fashion apparel, accessories and beauty products, is now the largest company in Indonesia's retail sector, outperforming other giant retailers, such as Alfa Supermarket or Hero Supermarket.

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Despite the fact that Indonesia reported the world's third-highest GDP growth in 2012 (behind China's 7.4 percent and Saudi Arabia's 7.1 percent), supported by rising consumption by a burgeoning middle class and significant increased foreign direct investment, the country's performance in terms of competitiveness is disappointing. It is cheaper to import products from countries that contain competitive businesses than to produce them in Indonesia.

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The number of air passengers in Indonesia has increased significantly during the last decade, and turned the country in one of the fastest-growing air travel industries worldwide. Blessed with robust macro economic growth and a subsequent burgeoning middle class, Indonesians are increasingly using airplanes as means of transportation. It is estimated that in 2012 about 72.5 million people used air transport in Indonesia, a ten percent year-on-year increase.

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