Wed, 31 Dec 2008
Debnath Guharoy, Consultant

What a year it's been. By any yardstick, 2008 was an exceptional one for most people regardless of age, gender or geography. In the turmoil, the established economic order is in question around the world.

Many readers of this column will have lost significant chunks of their investments, seen their assets devalued, or both.

But to the overwhelming majority of Indonesians, the rising cost of food and fuel took a particularly heavy toll on their everyday lives in the first half of 2008. However, later in the year, prices of many household essentials actually came down; to use that old clich*, change is the only constant.

But the need to know the facts during these for better or for worse changes is fundamental. To measure the impact of these powerful influences on our roller coaster lives, Roy Morgan Research completed a special survey at the end of October, conducted across a broad cross-section of society nationwide.

A total of 1917 respondents were interviewed. They were asked what percentage of their household's monthly expenditure was spent on primary items.

To start with the basics, Indonesia's fundamental divide of "haves" and "have-nots" at a ratio of 40:60 was reconfirmed yet again.



In answer to the question "does any member of this household regularly save a percentage of monthly income", only 41 percent of respondents said yes. In other words, 59 percent of households do not save any money each month.

Similarly, 55 percent do not spend anything on the home itself, by way mortgage, rent or repairs. That's because the modest home is more than likely to be a generational hand-me-down, usually housing an extended family.

Most disturbing is the revelation that food comprises a major portion of the domestic budget for most homes. Fifty-nine percent of households spend 30-50 percent of their monthly budget on food alone. For another 15 percent of the population, more than half the money is literally eaten up. About half of all households spend between 5 and 10 percent of their budgets on transport and another 5-10 percent on utilities such as electricity, gas and kerosene.

Forty-one percent of households spend 10 to 20 percent on education, even though public schools are supposedly state funded. Meanwhile 35 percent of households spend 5 to 10 percent of their monthly budget on health care costs.

While most homes spend between 5 and 20 percent of their budgets on "other" expenses including clothes, detergents, personal hygiene products and the like, real discretionary expenditure is a luxury enjoyed by a small fraction of society.

Recent dips in the price of essentials like food and fuel have already had a positive impact on consumer confidence, across all stratum of society. With prices in global markets on the decline, the lift of spirits in Indonesia is expected to continue for a few more months yet.

But the tide will again turn, when the impact of declining exports, a consequence of declining consumer demand from developed countries in recession, bites into the Indonesian economy.

There is no silver bullet for the major challenges facing Indonesia, compounded now by the problems gripping the major economies of the world.

There has perhaps been no better time for Indonesia to look inwards, without abandoning the many links built successfully with the global marketplace. Handouts cannot fight unemployment, but two engines of growth can indeed make an impact.

The first is public spending on infrastructure. Beg, borrow or steal, every rupiah spent on developing Indonesia's infrastructure can only pay rich dividends when times get better.

For the next five years, every job created and every rupiah spent on building roads and bridges, ports and transport systems, schools and hospitals will not only create jobs immediately but build essential assets for the future.

The second is helping to strengthen the backbone of any economy, small business. One particular area hungry for attention is agriculture. For a largely rural population, Indonesia imports too much of its food.

Offering incentives, advice and assistance to encourage more farmers to grow food is now a national necessity, not a nicety. These are crucial to the country's well-being in the turbulent, unpredictable times ahead. There are no easy alternatives.

These opinions are based on reliable, regular insights from around the country. Roy Morgan Single Source watches society, products and consumers, every week.

With over 25,000 respondents annually, it is projected to reflect the views of almost 90 percent of the population 14 years and older, both urban and rural. The reports are updated every 90 days. Any significant shifts in the nation's attitude and people's behavior become immediately visible.

The writer can be contacted at
Debnath.Guharoy@roymorgan.com



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