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Today's Headlines Purchasing Power

  • Food & Beverage Industry of Indonesia Expects Good Sales During Islamic Festivities

    Food & Beverage Industry of Indonesia Expects Good Sales During Islamic Festivities

    Stakeholders in Indonesia's food and beverage industry expect to see a 15 percent increase in sales during the Ramadan month and Idul Fitri celebrations (compared to normal conditions). Although the Ramadan is Muslims' fasting month, it is also a period when household consumption tends to rise sharply in Indonesia, specifically spending on food and drinks as well as clothes, bags and shoes grows significantly.

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  • Indonesia's Electronics Industry Plagued by Weak Purchasing Power

    Indonesia's Electronics Industry Plagued by Weak Purchasing Power

    Although a modest improvement is detected in the second half of 2017, Indonesian electronics manufacturers say that bleak consumer purchasing power poses a major challenge and therefore urge the government to implement policies that would strengthen purchasing power in Southeast Asia's largest economy.

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  • Do Indonesians Now Really Prefer to Save Rather than Consume?

    Do Indonesians Now Really Prefer to Save Rather than Consume?

    Indonesia's purchasing power may not be as weak as initially assumed in the first half of 2017. It could be that consumers and businesses now actually prefer to save their funds on banks than to spend and invest. Based on data from the Financial Services Authority (OJK) third-party funds in Indonesia's banking sector (saving and deposit accounts) expanded 11.2 percent year-on-year (y/y) to IDR 5,012.5 trillion (approx. USD $3,775.4 billion) in May 2017.

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  • Retail Sales Indonesia Expected to Remain Bleak in Remainder 2017

    Retail Sales Indonesia Expected to Remain Bleak in Remainder 2017

    Bleak retail sales in Indonesia are expected to continue in the second half of 2017 amid weak consumer purchasing power. Yongky Susilo, Executive Director at Retailer Services Nielsen Indonesia, expects the nation's retail sales growth to be be 6 percent year-on-year (y/y), tops. Normally, the growth pace of retail sales in Southeast Asia's largest economy averages 10 - 11 percent (y/y).

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  • Economic Update Indonesia: Layoffs & Weak Purchasing Power

    Economic Update Indonesia: Layoffs & Weak Purchasing Power

    Normally the Ramadan month and Idul Fitri holiday (the celebration that marks the end of the Islamic fasting month) trigger an acceleration of economic activity as people consume more products (such as food and clothes), while the exodus of people from the cities to the rural areas during the week-long Idul Fitri (where they will spend a short holiday) causes a massive flow of money from the urban areas into the regional economies.

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  • Astra's Earnings Undermined by Indonesia's Bleak Purchasing Power

    Astra's Earnings Undermined by Indonesia's Bleak Purchasing Power

    Car and motorcycle sales of the Astra Group, one of Indonesia's largest diversified conglomerates, still show no positive signs in the first half of 2017. Fransiscus Soerjopranoto, Executive General Manager at Toyota Astra Motor, said this Astra unit's retail sales fell 0.8 percent year-on-year (y/y) to 186,365 units in the first six months of 2017. This bleak performance is attributed to Indonesians' weaker consumer purchasing power.

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  • Q1-2017 GDP Growth Indonesia Expected to Remain Below 5%

    Economic Growth Indonesia in Q1-2017 Expected to Remain Below 5%

    Despite the improving export performance (supported by improving commodity prices), it may be difficult for Indonesia to deliver +5 percent year-on-year (y/y) gross domestic product (GDP) growth in the first quarter of 2017. Main reason is subdued consumer purchasing power due to higher electricity tariffs in Southeast Asia's largest economy. Therefore, economic growth of Indonesia is expected to be rather similar to the 4.92 percent (y/y) growth pace recorded in Q1-2016.

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  • Motorcycle Industry Indonesia Yet to See Rebound in Sales, Why?

    Motorcycle Industry Indonesia Yet to See Rebound in Sales, Why?

    While car sales are showing a rebound in Indonesia, motorcycle sales continue to decline. Based on the latest data from the Indonesian Motorcycle Industry Association (AISI), motorcycle sales in Southeast Asia's largest economy fell 15.9 percent year-on-year (y/y) to 473,896 units in March 2017 from 563,341 units in the same month one year earlier. AISI Chairman Sigit Kumala says Indonesian consumers continue to postpone the purchase of a motorcycle amid weak consumer purchasing power.

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  • Widodo: Safeguard the Strength of Indonesia's Household Consumption

    Widodo: Safeguard the Strength of Indonesia's Household Consumption

    Indonesian President Joko Widodo urged his cabinet members to guard - or even better: to improve - household consumption in Indonesia as this would have an immediate impact on Indonesia's overall macroeconomic growth. Over the past five years, the nation's household consumption accounted for about 56 percent of Indonesia's gross domestic product (GDP).

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  • Automotive Sector: Bright Future for Car Sales in Indonesia?

    Automotive Sector: Bright Future for Car Sales in Indonesia?

    Passenger car sales in Indonesia are estimated to rise 11.5 percent per year in the 2017-2021 period supported by Indonesia's expanding middle class. This conclusion originates from research that was conducted by London-based BMI Research. Meanwhile, business consulting firm Frost and Sullivan sees Indonesian car sales rise 5 percent (y/y) to 1.11 million vehicles in 2017 supported by the popular low cost green cars and multipurpose vehicles.

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Latest Columns Purchasing Power

  • CEOs' Optimism about Indonesian Economy & Politics Falls Slightly

    CEOs' Optimism about Indonesian Economy & Politics Falls Slightly

    Chief executive officers (CEOs) in Indonesia have become slightly less optimistic about the Indonesian economy and politics. This makes sense considering the presence of simmering global trade tensions, sharp rupiah depreciation against the US dollar, and Bank Indonesia's recent series of interest rate hikes.

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  • Indonesia's Purchasing Power, Retail Sales & Consumption on the Rise

    Indonesia's Purchasing Power, Retail Sales & Consumption on the Rise

    There are signs that household consumption in Indonesia is rebounding ahead of this year's Idul Fitri holiday. This would be a great boost for Indonesia's overall economic growth as private consumption accounts for around 57 percent of the nation's total economic growth. One of the reasons why Indonesia's gross domestic product (GDP) growth has been stuck around the 5 percent (y/y) mark in recent years is subdued household consumption (which has fallen slightly below the 5 percent y/y mark).

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  • Indonesian Food Manufacturers in Focus: Indofood Sukses Makmur

    Indonesian Food Manufacturers in Focus: Indofood Sukses Makmur

    Corporate earnings of Indonesia-based food manufacturer Indofood Sukses Makmur, which ranks among the biggest companies that are listed on the Indonesia Stock Exchange, are affected by subdued household consumption and fierce competition in the processed foods and beverage sector of Indonesia. Indofood Sukses Makmur has operations in each stage of the food manufacturing process, ranging from the production and processing of raw materials to consumer end-products on retailers' shelves.

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  • In Times of Elections Consumer Goods Companies Are Great Stock Picks

    In Times of Elections Consumer Goods Companies Are Great Stock Picks

    Consumer goods companies listed on the Indonesia Stock Exchange are expected to experience two good years in 2018 and 2019 due to the presence of the "political years" (regional elections in 2018 followed by legislative and presidential elections in 2019). Traditionally, consumption rises amid these "parties of democracy" and therefore those consumer goods companies with strong brands are expected to see rising sales in this period.

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  • DBS Group Research: Household Consumption to Improve in 2018

    DBS Group Research: Household Consumption to Improve in 2018

    Household consumption in Indonesia is expected to improve in 2018. This assumption is based on a number of indicators that show a positive trend. For example, consumer confidence in Indonesia rose to 126.4 points in December 2017. The country's macroeconomic picture is also strengthening with accelerating economic growth, low inflation and a stable (or actually appreciating) rupiah rate.

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  • Government of Indonesia Sees No Weakening Purchasing Power

    Government of Indonesia Sees No Weakening Purchasing Power

    Within Indonesia it is still being debated whether consumers' purchasing power has really weakened in the third quarter. Some argue consumers are currently focused on saving their money rather than spending it (this explains rising third-party funds in Indonesia's banking system). Others argue that Indonesia's household consumption data are distorted because this year's Ramadan and Idul Fitri celebrations fell in the second quarter of the year (whereas in 2016 these celebrations fell in Q3).

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  • Opinion Piece: Is Indonesia's Purchasing Power Actually Weak?

    Opinion Piece: What's Behind Indonesia's Weak Purchasing Power?

    Over the past couple of months there have been many reports about Indonesia's weak consumer purchasing power. For example, the Indonesian Retailers Association (Aprindo) said it detected rather weak retail sales during this year's Idul Fitri period (the week-long holiday that marks the end of the Islamic fasting month). Whereas these sales rose 16.3 percent during last year's edition of Idul Fitri, they rose only by an estimated 5-6 percent this year.

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  • Bank Indonesia Ending the Era of High Interest Rates?

    Bank Indonesia Ending the Era of High Interest Rates?

    Bank Indonesia (BI) is the central bank of the Republic of Indonesia, and was known as "De Javasche bank" or "The Java Bank" in the colonial period.  Bank Indonesia was founded on 1 July 1953 from the nationalization of De Javasche Bank. As an independent state institution, Bank Indonesia is fully autonomous in formulating and implementing each of its assumed tasks and most policy goals tend to center around the ability to stabilize prices in the economy.

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  • Indonesian Food Producers in Focus: Indofood CBP Sukses Makmur

    Indonesian Food Producers in Focus: Indofood CBP Sukses Makmur

    Packaged food producer Indofood CBP Sukses Makmur, subsidiary of Indofood Sukses Makmur, is expected to see rising profit in the second half of 2016 on the back of lower prices of raw materials (particularly wheat flour, the key ingredient for instant noodles), the stronger rupiah and improved purchasing power of Indonesia's consumer force. Meanwhile, the company may manage to curb losses that originate from the beverage segment. Indofood CBP Sukses Makmur has 6 business segments: noodles, dairy, snack foods, food seasoning, nutrition and special food products, and beverages.

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  • Indonesian Food Manufacturers in Focus: Indofood Sukses Makmur

    Indonesian Food Manufacturers in Focus: Indofood Sukses Makmur

    Growth in the fast moving consumer goods sector will surely boost overall growth and the financial performance of Indofood Sukses Makmur, one of Indonesia's largest food manufacturing firms. Moreover, the stronger rupiah and lower costs of raw materials will also impact positively on the company's earnings. Indofood Sukses Makmur, part of the Salim Group, offers a wide variety of food and beverage products to Indonesian consumers ranging from instant noodles, dairy, snacks, food seasoning, and nutrition to special foods and beverages.

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