Jakarta: A 'paradise' for shoppers<\/p>\n
Indonesian retail is booming. Jakarta, with over twelve
\nmillion people, is sprinkled with glittering new malls. World-
\nclass retail chains are rushing to set up outlets here to tap the
\nspending power of the growing middle class. The Jakarta Post took
\na look at what is really happening. The following report and three
\nrelated stories on Page 6 were prepared by Arief Suhardiman, I.
\nChristianto, Dwi Atmanta, Johannes Simbolon, Meidyatama
\nSuryodiningrat, Stevie Emilia and Yoko N. Sari.<\/p>\n
JAKARTA (JP): Pasar Pagi Retail Center and the Jakarta
\nInternational Trade Center in Mangga Dua area have undergone a
\nphenomenal transformation.<\/p>\n
From crummy and disorderly wholesale centers six years ago,
\nthey have become modern shopping centers.<\/p>\n
Foreign tourists come on the weekends to buy clothes,
\nelectronics, and accessories. Many branded goods sold there are
\ncheaper than in Singapore, the region's shopping paradise.<\/p>\n
Even former president of the Philippines Corazon Aquino
\nshopped there when she was here on an official visit several
\nyears ago.<\/p>\n
Shopping in Indonesia? Some years ago, shoppers might have
\nshaken their heads and gone overseas to buy international brands.<\/p>\n
One of the first modern malls in Jakarta, Ratu Plaza, was
\nbuilt 15 years ago but international brands were barely visible
\nuntil Japan's Sogo opened its department store in Plaza Indonesia
\nin 1990.<\/p>\n
Soon many major retailers were vying to serve the growing
\nmiddle and upper class: Britain's Marks & Spencer, Japan's Seibu
\nand Maruzen, Wal-Mart and J.C. Penney of the United States,
\nFrench Carrefours, Singapore's Robinson & Co. and Metro.<\/p>\n
Warner Bros from the United States, Printemps of France and
\nHanshin Department Store of Japan have committed to opening
\nIndonesian outlets within the next two years.<\/p>\n
Over a dozen world class fashion boutiques have also opened up
\nhere. They include Gucci, DKNY, Issey Miyake, Escada, Kenzo,
\nVersace, Armani, Guess and Esprit.<\/p>\n
The Presidential Decree No. 54\/1993 bars foreign direct
\ninvestment in the retail business. Foreign chains may only
\noperate in Indonesia in the franchising system, where the
\nIndonesian franchisees use the name and technical know-how of the
\nforeign franchisers for a 1 percent fee.<\/p>\n
Domestic retailers, like Matahari, Golden Truly, Ramayana,
\nPasaraya, and others have also developed but are facing an uphill
\nstruggle.<\/p>\n
\"Indonesia's retail business is the throes of revolution,\"
\nsaid Kustarjono Prodjolalito, executive director of the
\nIndonesian Retail Merchants Association.<\/p>\n
In less than a decade, scores of modern supermarkets, malls,
\nshopping centers, department stores, and super-malls were built.<\/p>\n
According to PRoLEASE Property Consultants, Jakarta's shopping
\ncenters covered 1,490 000 square meters at the end of June 1996.
\nBy the year 2000, that is set to reach 3 million square meters.<\/p>\n
International brands have gradually filled the domestic
\nmarket. Some of them are sold for less than elsewhere in Asia
\nbecause they are manufactured locally, while others are more
\nexpensive due to high import duties.<\/p>\n
Great River Industries, for instance, holds the licenses for
\n50 international brands, including Triumph, Arrow, Kenzo, Choya,
\nCerrutti, Jockey, Hom, Mickey & Co. (Disney), Elle and Grand
\nSlams. Approximately 70 percent of its products are sold in the
\ndomestic market.<\/p>\n
Yet Indonesians continue to shop abroad.<\/p>\n
The Singapore Tourist Promotion Board recently revealed that
\nabout a million tourists from Indonesia come to the island state
\nevery year, the second largest group after Japanese tourists.
\nIndonesians make up the largest group of visitors during the
\nGreat Singapore Sale which takes place during the mid-year
\nholiday.<\/p>\n
Indonesians average 3.7 days in Singapore and spend S$746,
\nabove average.<\/p>\n
Many branded goods sold in Singapore are cheaper than in
\nJakarta. But cheap prices don't seem to be the main reason for
\nIndonesians to shop abroad. Indonesians are very import-minded,
\nprefer famous foreign brands to local products and don't even
\ntrust the quality of foreign brands made in Indonesia.<\/p>\n
Safioen, a director of Great River Industries, said they only
\nsew \"Made in Indonesia\" into products to be exported to the U.S.
\nand Japan. The ones to be sold in Indonesia don't get any labels.<\/p>\n
\"If we sewed in labels here, people might not want to buy the
\nproduct,\" he said.<\/p>\n
But many Indonesian businessmen are optimistic.<\/p>\n
Ciputra, active commissioner of Jaya Group, which owns Cahaya
\ndepartment stores, says Jakarta will be able to compete with
\nSingapore as the shopper's paradise in the region when the ASEAN
\nFree Trade Area starts in 2003.<\/p>\n
In the AFTA era, he said, the goods in Jakarta will be cheaper
\nthan in Singapore for several reasons: many are manufactured in
\nIndonesia, import duties will decrease, rental fee for space and
\nwages in Jakarta are cheaper than in Singapore.<\/p>\n
Kustarjono said that low price are not everything for
\nshoppers. Other factors are convenience, service and
\ninfrastructure.<\/p>\n
\"How will tourists want to shop in Indonesia if they know that
\nthey will first have to be cheated by taxi drivers at the
\nairport. In Singapore, they don't face the same problem,\" he
\nsaid.<\/p>\n
The fact that the shopping centers are isolated, unlike in
\nSingapore where they are clustered, also discourages people to
\nshop here, he said.<\/p>\n
\"If people want to shop in Singapore they go to Orchard Road
\nand find lots of shopping centers there. Here, they find a small
\nnumber of shopping centers in Blok M, some in Mangga Dua, and
\nsome others in Lippo Karawaci. They have to move from one place
\nto another,\" said Kustarjono.<\/p>\n
Meanwhile, Anton Lukmanto, a director of the Hero Group, a
\nsupermarket chain, said that government and retailers should work
\nhand in hand not only to improve professionalism in the retail
\nbusiness but also to prepare regulation.<\/p>\n
\"Better regulation is necessary. The regulator has to be able
\nto define what the retail business is.\"<\/p>\n
\"In the meantime, the number of shopping centers is growing
\nonly in Jakarta and Surabaya. What about other cities?\" he said.
\n\"We have to improve local retail management.\"<\/p>\n
Destination<\/p>\n
Minister of Tourism, Post and Telecommunications Joop Ave told
\nThe Jakarta Post that Jakarta is indeed a destination for
\nshoppers.<\/p>\n
\"Jakarta will become one of the capitals of fashion and
\nshopping,\" he said.<\/p>\n
He said that the government and the association of retailers,
\nshopping centers and hotels should coordinate and help each
\nother.<\/p>\n
\"We don't have to wait until 2003. Jakarta is ready.\"<\/p>\n
Other cities in Indonesia also have potential. \"For instance,
\nfrom Oct. 15 to Nov. 15, Surakarta in Central Java will host a
\ngreat sale, a trade fair offering traditional and local products.
\nHotels will offer discounts of between 30 percent and 50 percent.
\nIf successful, the event will be held annually.\"<\/p>\n
Meanwhile, chief of the Jakarta office of the Ministry of
\nTourism, Post and Telecommunications, Pudjo Basuki, told the Post
\nthat there should be more choice.<\/p>\n
\"For example, more shops offer traditional products such as
\nwood carvings from Jepara (Central Java) or pearls from eastern
\nIndonesia.\"<\/p>\n
He said that service must also be improved.<\/p>\n
\"I understand that many electronics shops in West Jakarta lack
\nqualified personnel to describe the computers they sell.\"<\/p>\n
Pudjo said that packaging is also important. \"Most overseas
\nchocolates, for instance, are expensive and attractive because of
\nthe wrapping.\"<\/p>\n
According to Pudjo, Jakarta at the moment is the only city
\nready to become a shopping destination.<\/p>\n
The capital, which is holding an annual shopping festival
\nbetween June and July, has a lot to offer.<\/p>\n
\"If you are looking for traditional products, go to Jakarta or
\nwhere the goods are produced.\"<\/p>\n
He said that the annual shopping festival in Jakarta needs
\nimprovement. \"Shopkeepers must be more honest. They should not
\nraise the prices before offering a 50 percent discount.\"<\/p>\n
He also said it is also important to study changing trends.<\/p>\n
\"At present, the tourists mostly come from East Asia, not
\nEurope. So we have to study the tastes of visitors from the
\narea,\" he said.<\/p>\n
Foreign tourist arrivals in Jakarta between January and August
\nthis year increased by 22 percent to some 1.5 million. In the
\nsame period last year the growth rate was just 8 percent, he
\nsaid.<\/p>",
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