Business and Market Overview on Indonesia

ECONOMY. Indonesia is a market-based economy but the government plays a significant role in the country’s economy with 160 government-owned enterprises. Indonesia’s GDP per capita ranks fifth after Singapore, Brunei, Malaysia and Thailand. The Asian economic crisis of 1997 adversely affected the country economy and businesses and caused spiralling prices of necessities resulting in social unrest. Future prospects of Indonesia’s economy are bright with economic structural reforms in placed since the Asian economic crisis.

Indonesia’s GDP was US$258.3 billion with a GDP per capita of US$1,193 in 2004. Indonesia’s real GDP grew at an average of 4.6% annually from 2000 to 2004 driven by domestic consumption accounting for nearly three-quarters of Indonesia’s GDP. Inflation rose from 3.8% in 2000 to 11.9% in 2002 but eventually declined to 6.1% by 2004. GDP per capita increased from US$801 in 2000 to US$1,193 in 2004 but unemployment also increased from 6.1% to 9.9% during the period.

The manufacturing sector contributed towards 43.7% of Indonesia’s GDP in 2004 while the service sector contributed 40.9%. Though nearly 45.0% of the country’s workforce is involved in agriculture, this sector contributed only 15.4% of the country’s GDP during the period. Major industries include petroleum and natural gas, textiles, apparel, footwear, mining, cement, chemical fertilisers, plywood, rubber, food and tourism. Major agriculture products include rice, palm oil, rubber, cacao, peanuts, copra and cloves.

DEMOGRAPHY. Indonesia comprises nearly 18,000 islands and has the largest population among the Southeast Asian countries with 217 million people in 2004. Main islands are Java accounting for 55% of the population followed by Sumatra (18%), Kalimatan (5%) and Sulawesi (6%). Other less populated islands include Irian Jaya, Bali and Nusa Tenggara.

Indonesia is a country of diverse ethnic and sub-ethnic communities with different languages and dialects, cultures and foods. The Javanese accounts for 45% of the population followed by Sundanese (14%) and Madurese (8%) and coastal Malays (8%). Chinese who migrated to Indonesia during the Dutch colonial period account for nearly 5% of the population. Islam is the predominant religion followed by Christianity and minority religions include Buddhism and Hinduism. The national language is Bahasa Indonesia (similar to Malay used in Malaysia, Singapore and Brunei). English is not widely used but many businesses and government officials dealing with foreign companies and foreigners are fluent in the language.

More than half of the population live in the rural areas but the proportion of the urban population is increasing from 36.0% in 1995 to 45.0% by 2004. Major cities include Jakarta with a population of 10 million followed by Surabaya, Bandung, Semarang, Yogyakarta, Surakarta, Medan and Padang.
Nearly 25% of the population live below the poverty level while another 60% are from the lower income group. The remaining 10% belong to the middle income and 5% in the higher income group. Though Indonesia has a relatively small proportion of middle to high-income consumers, this equates to nearly 33 million consumers. This is more than Singapore’s 4.3 million population with a GDP per capita on par with many advanced economies of the European Union.

INFRASTRUCTURE. Indonesia’s domestic telecommunication system is generally fair while its international services can be categorised as good. Internet broadband services are mainly concentrated in the major cities. Road systems are more developed on Indonesia’s populated island of Java, fairly developed in Sumatra and Sulawesi but poorly developed on the island of Kalimantan. Besides sea ports serving the international shipping lines, Indonesia are also served by smaller sea ports serving coastal shipping. All the cities and major towns are connected by airline services.

INTERNATIONAL TRADE. Indonesia’s major trading partners include Japan, US, Singapore, South Korea and China. Much of the imports from Singapore are Singapore’s re-exports from other countries and exports to Singapore are re-exported to other countries. Main exports from Indonesia include oil and gas, electrical appliances, plywood, textiles and rubber products. Main imports include machineries and equipments, transport equipments, chemicals, fuels and foods.

CONSUMER USAGE OF TECHNOLOGY. Mobile phone penetration is just 13% of the populations, which is lower than Singapore (93%), Malaysia (67%) and Thailand (45%). Furthermore, there are only 10 million fixed-line telephones serving the whole country. The penetration of computers is less than 2% of the households and the country has only 1.2 million internet subscribers with an estimated 12 million internet users i.e. a penetration of only 0.5% of the population. Most middle and high-income homes would own televisions but the penetration in lower income homes is lower. Thus the household penetration of television in Java is nearly 60% and in Sumatra 52%. Similar scenario exists for refrigerators.

RETAIL MARKET. Retail sales of food and non-food items totalled an estimated US$32 billion in 2004. Many Indonesians still shop at the traditional markets or “mom and pop” establishments but shopping at modern shopping malls, hypermarkets, supermarkets, mini-markets and supermarkets is increasingly popular. There are nearly 5,000 such modern establishments in Indonesia accounting US$4.5 billion in retail sales in 2004. Most of these establishments are concentrated on the island of Java followed by Sumatra. Since 1998, the government opened the retail industry to foreign investments and participation.

FOOD CULTURE. Indonesia’s food culture is diverse because of the various ethnic and sub-ethnic communities that comprise the country’s population. Typical meals eaten are rice-based dishes and occasionally noodles. However, there are many western franchise fast food outlets located mainly in the major cities such as Jakarta, Surabaya, Bandung, Semarang and Yogyakarta. Mid to high-end bakery outlets serving western and local bakeries are also found in the major cities.

Change – The One Constant In Life, Business And Marketing

Change can be one of the hardest things for you to deal with, but it’s the only constant there is in the world.

So, how do you thrive in your business, and keep your business growing and moving forward? You change with the times. And, if you’re really good and really aware, you’ll change before the times do and stay ahead of the game and your competition.

To change before the times, you have to look at the history of your industry and the economy. History is not something a lot of people look at in their businesses, niches, or industry in general. But, if you do, you might see the trends happening, and be able to make changes ahead of the trends to increase your profitability.

If you can be ahead of the trends, because you’re willing to change, then you’ll move from being a follower in your industry to being on the cutting edge, and a leader in your industry. You become the person everybody else is trying to catch up with.

One way to put yourself on the cutting edge of your industry is to model something from a different industry. Find something that is successful in another industry, and put that to work for your business. When you do that, you’re doing things differently than most other people in your business or niche, and you become the leader of that industry – the trendsetter as opposed to the pioneer (The pioneers were the ones with the arrows in their backs, left bleeding, or dead on the prairies).

So, if you look at your industry historically and watch the trends, you’ll be able to predict what’s happening in the economy and can be ready for change. And, if you’re ready for the upcoming shifts and changes, and you’re willing to change and be adaptable you’ll stay ahead in your business.

The way you thrive in your business, and your life, is to be adaptable… constantly be willing to change. Ideally, this is what your paradigm should look like, your new normal – you’re going to change and continue to change to stay ahead of the trends then it won’t be hard, it’ll just be what you do.

So, think about your business and your industry and how you can change to stay ahead of the times. How can you change to become the leader of your industry instead of the person who follows what everyone else is doing? When you do this your business will thrive and grow and keep moving forward.

Business and Market Overview on Brunei

ECONOMY. Brunei’s economy is dependent on oil and gas and is the third largest producer of crude oil in Southeast Asia after Indonesia and Malaysia. Brunei is also the world’s fourth largest producer of natural gas. Brunei’s current oil and gas reserves are sufficient at least until 2015. Thus, Brunei’s government has used its oil wealth for investments outside the country for future generations. Furthermore, the government seeks to develop the country’s economy beyond on oil and gas but with little success.

Brunei’s GDP was US$5.2 billion with a GDP per capita of US$13,879 in 2004. The economy grew at an average GDP growth of 3.0% annually from 2000 to 2004 driven mainly by Brunei’s export of oil and gas and therefore dependent by world oil and gas prices. Inflation was less than 1.5% in 2000-2001, experience deflation in 2002-2003 but inflation eventually crept at 0.9% in 2004. The government is Brunei’s largest employer and many of its citizens prefer to work with the government. The country experienced increasing unemployment from 2002 to 2004 but remained below 5.0%.

The industrial sector (mainly oil and gas related activities) contributed towards 56.1% of Brunei’s GDP in 2004. The service sector contributed towards 40.3% while the agriculture sector contributed only 3.6% during the period. Main industries are petroleum, petroleum refining, liquefied natural gas and construction. Major agriculture products include rice, vegetables, fruits, chicken and eggs.

DEMOGRAPHY. Brunei has a small population of slightly more than 370 thousand. Brunei Malays are the largest ethnic group and account for nearly 70% of population followed by Chinese accounting for 15%. Others include indigenous people and immigrants who have settled in the country. Islam is the official religion of the country and 70% of the population practice the Muslim faith. Other religions include Buddhism, Christianity and indigenous practices. The official language is Malay while Brunei’s Chinese community often used the Chinese language within the community. The population is generally proficient in English since schools teach the language and used in higher education, business and the sciences.

Three quarters or 75% of the population live in the urban areas and mostly work in government services, oil and gas industry, wholesale and retail trade and construction. Major urban areas include the nation’s capital Bandar Seri Begawan, Muara, Tutong, Seria and Kuala Belait.
Poverty is practically non-existent in the oil rich nation of Brunei. Brunei’s GDP per capita is half of Singapore but based on purchasing power parity (PPP) it is slightly less than Singapore. Nearly 70% of the households belong to the middle or high-income categories while the remaining 30% in the lower-income category.

INFRASTRUCTURE. Telecommunication services within the country well developed while reliability of services outside from Brunei is good. Internet access is available throughout many parts of the country but broadband services are limited. Towns well connected by roads and crosses the border into East Malaysia. Country served by single international airport at Bandar Seri Begawan.

INTERNATIONAL TRADE. Major trading partners include Japan, South Korea, Australia, US, Thailand, Indonesia, China, Singapore and Malaysia. Much of the imports from Singapore are Singapore’s re-exports from other countries. Major exports include crude oil, natural gas, refined petroleum products. Major imports include machineries and equipments, vehicles and vehicle parts, consumer goods, foods, construction materials and chemicals.

CONSUMER USAGE OF TECHNOLOGY. Nearly all homes in Brunei have fixed-line telephones and the penetration of mobile phones by population was 40% in 2004. Brunei’s general population have the financial means to install computers in their homes but the penetration in homes is low at 20%. Penetration of internet users is also low at 9% of the population or 34,000 users. Nevertheless, nearly all homes in Brunei have televisions and refrigerators.

RETAIL MARKET. Marketers into Southeast Asia often neglect Brunei as a potential market because of its small consumer population. However, the country has the second highest GDP per capita in the region after Singapore and depends on imports for nearly all of its consumer goods and foods. The estimated value of Brunei’s retail market in 2004 was US$390 million in 2004 of which foods accounted for nearly US$280 million. The “mom and pop” stores and mini markets dominate the retail industry alongside a few department stores and supermarkets. Consumers in Brunei often shop cross the border into Malaysia for wider choices of consumer goods.

FOOD CULTURE. Foods eaten by the Malays tend to be rice with spicy meat and vegetable dishes. However, the people of Brunei are accustomed to Indian foods due to the numerous small Indian eateries across the country. Thus, homes often serve fish, chicken or beef curry dishes. Popular food service establishments include Chinese, Indonesian, Indian, Thai and Japanese restaurants but interestingly few Malay restaurants. Among the younger generation, many are accustomed to western style foods served by the fast food outlets and bakeries.