Words by Mpdclick’s Future Trends Researcher.
With an estimated population of 600 million and $2.5 trillion in combined GDP, the Southeast Asian region is set to join the ranks of China and India as a major economic growth force. In an ongoing business series entitled ‘Business: Southeast Asia Series’, MPDClick highlights the importance of the Southeast Asian region as an emerging market, focusing on the economies and cultural influence of Indonesia, Sri Lanka, Thailand, Vietnam and Singapore. First up is Indonesia, which has featured as an emerging market in a number of economists’ forecasts, namely the N-11, MAVINS, SLIMMA, Next 4 Billion, CIVETS and TIMBI.
Not just a major tourist destination, but its emerging luxury market, increasing exports, resources and ever-growing population are key to its future success as an emerging market. Here, MPDClick lay out the top ten reasons as to why businesses and brands should cast their sights on investments into Indonesia.
• Indonesian exports, which will expand by 15% annually over the next decade, will benefit from India as its fastest-growing market.
• With a population of 240 million, Indonesia ranks fourth on the most populous country in the world list behind China, India and the US.
• Noted as a luxury market with the highest potential for growth due to “the sheer size of its wealthy population, excellent infrastructure and culture for luxury and lifestyle driven shopping.” While sales for high-end brands have weakened in the West and the BRIC economies have somewhat stagnated, the ever-expanding Indonesian middle class will drive luxury good-consumption in the long term.
• Brands have an opportunity to tap into the mindsets of Indonesia’s growing affluent middle class. According to a study by CLSA and Julius Banks, the number of net worth individuals will triple in Indonesia to 100,000 by 2015. The report also claimed that the number of Indonesians with more than $1 million in investible assets is rising to 25%a year, making it the fastest growing rate in Asia.
• Indonesia has a booming cosmetics market. Estimated to become the third biggest beauty market in Asia, world top cosmetics firms like L’Oreal are opening factories and stores in the region.
• In 2012, international arrivals to Indonesia topped 8 million – a 10.5 % increase on the previous year, which according to the Central Statistics Agency, resulted in a 5.8 per cent increase in income from the tourism sector, generating $9.1 billion. Reports further show that the country could see foreign tourist numbers reaching 10 million by by 2014.
• The country is rich in oil, gas, coal, tin, copper, silver and gold. It is suitably located much closer to China and India than a lot of other commodities sources.
• The number of Internet users in Indonesia is expected to quadruple by 2015. This could translate into a $4.5 billion business opportunity, fuelling growth for media companies and phone carriers.
• Its long-term potential as a consumer market is significant if we consider that by 2050, it will have 313 million, more than the US has today.
• The country isn’t dependent on exports to Europe and the US for growth so the financial situation in these regions has limited impact on its expansion.
To discover more about the potential for growth in the luxury and cosmetics sectors, the importance to capture the mindsets of Indonesia’s growing affluent middle class, and the challenges which these opportunities will bring, subscribers to MPDClick can read the full report here.
Image Sources: Property Report, Komodo Island and Biyan Wanaatmadja