More stores opening in the offing<\/p>\n
By Hendarsyah Tarmizi<\/p>\n
JAKARTA (JP): Signs of recovery in the country's retail sector
\nhave become more apparent lately with the opening of more
\nshopping centers in the capital and surrounding areas.<\/p>\n
Lippo Supermall in Karawaci, Tangerang has reopened about
\n9,000 square meters of its east wing, which was closed following
\nthe bloody riots that hit the capital in May 1998.<\/p>\n
Several other outlets, which were damaged during the riots,
\nare also scheduled for reopening before the end of this year.
\nThey include Glodok Plaza and Mal Daan Mogot, both in West
\nJakarta, Plaza Kebayoran in South Jakarta, and Plaza Pondok Gede
\nin East Jakarta.<\/p>\n
In addition to the refurbished outlets, several newly built
\nshopping centers such as Plaza Cengkareng in West Jakarta and
\nWisma Maspion in Central Jakarta have also opened for business.<\/p>\n
The other new retail outlets such as the expanded area of
\nPasar Raya in Blok M, Sport Trade Center in Senayan and The Town
\nSquare in Cilandak, South Jakarta, are also scheduled for opening
\nthis year, PT Procon Indah reports in its second quarter property
\nmarket review.<\/p>\n
Hundreds of shopping centers in the capital were seriously
\ndamaged or burned during the riots, which had led to the fall of
\nformer authoritarian leader Soeharto. Most of the damaged outlets
\nhave been under extensive refurbishment to meet the growing
\ndemand from local retail chains and department stores.<\/p>\n
The higher demand had caused an increase in the rent contracts
\nby between 5 percent and 20 percent during April-June, while
\nfixed exchange rates of the rupiah against the U.S. dollar rose
\nby between Rp 200 and Rp 500 during the second quarter.<\/p>\n
According to the Jakarta Property Trends 2Q01 property market
\nreview issued by PricewaterhouseCoppers (PWC) recently, offering
\nrents for typical floors were approximately US$80, $34, $32, $28
\nand $18 per square meter a month for Grades A+, A, B, C, D in
\nJakarta, respectively.<\/p>\n
In Bogor, Tangerang and Bekasi (Botabek), the average for all
\ngrades was about $25 per square meter per month.<\/p>\n
The average exchange rate of the rupiah against the U.S.
\ndollar during the April-June period was Rp 5,100 for Grade A+, Rp
\n4,900 for Grade A, Rp 4,000 for Grade B and Rp 3,900 for both
\nGrade C and Botabek area. On average there was an increase of
\nbetween 3 percent and 4 percent .<\/p>\n
There was no increase in service charges despite higher fuel
\nand electricity rates during the quarter, the publication said.
\nAverage contract service charges remained at $8.5 and $7 per
\nsquare meter per month for Jakarta and Botabek, respectively.<\/p>\n
PWC estimates that the expected increase in demand will
\nfurther push up the rents.<\/p>\n
Retail expansion<\/p>\n
Several local department store chains recently announced their
\nplan to build more outlets this year to anticipate an improvement
\nin the country's economy.<\/p>\n
PT Matahari Putra Prima Tbk will, for example, open four new
\noutlets this year, three of which will be opened in Pontianak,
\nMadiun and Lampung.<\/p>\n
The retail chain, which recently reopened its Mega Mall Pluit
\nin North Jakarta, will spend some Rp 80 billion for the expansion
\nof its outlets.<\/p>\n
Matahari, which operates 78 outlets (27 of which are located
\nin Jakarta) in 35 cities throughout the country, expects a 25
\npercent increase in sales this year to Rp 5 trillion from Rp 4
\ntrillion in 2000, partly due to the opening of the new outlets.<\/p>\n
The promising outlook in the country's economy has also lured
\nother retail chains to expand their operations. Like Matahari, PT
\nRamayana Lestari Santosa and PT Rimo Catur Lestari are also
\nplanning to expand their businesses.<\/p>\n
Ramayana, which specially caters to the low and middle income
\ngroup, will open 10 new outlets, two of which will be located in
\nCiledug and Mauk, Tangerang to replace the old stores, which were
\ndestroyed during the May riots.<\/p>\n
Another outlet will be opened in Jakarta and the remaining
\nseven will be built outside Java.<\/p>\n
"We have allocated about Rp 300 billion for this year's
\nexpansion," the company's corporate secretary Richard Sentosa
\nsaid.<\/p>\n
He said with the increase in the number of outlets, the
\ncompany expected sales to increase by 23 percent to Rp 2.9
\ntrillion this year from Rp 2.3 trillion last year. With the
\nprojected sales, net profit is estimated to reach Rp 318.6
\nbillion, a 25 percent increase over the previous year.<\/p>\n
Future growth<\/p>\n
The retailers' expansion programs were announced amid a
\nslowdown in the country's consumption demand during the second
\nquarter of this year.<\/p>\n
But analysts said the move as a right step to anticipate
\nfuture growth.<\/p>\n
The recent ascendance of Megawati Soekarnoputri as the
\ncountry's fourth president will certainly bring more certainty to
\nthe business climate. However, the impact on the country's
\neconomic performance for the rest of the year will be limited.<\/p>\n
Raden Pardede, a senior analyst at state investment bank
\nDanareksa, said the economic growth would stay at last year's 4
\npercent despite the change.<\/p>\n
"A favorable political environment is just a bonus," he said
\nin a recent seminar.<\/p>\n
Chairman of the Indonesian Retail Merchants Association
\n(Aprindo) Kustardjono Pudjolalito shares the same view on the
\ncountry's economy.<\/p>\n
He said the retail sector had not yet fully recovered as many
\npeople thought. "Many people go the mall, but mostly just for
\nwindow-shopping," he told The Jakarta Post.<\/p>\n
He acknowledged that although its sale performance was not
\nremarkable, the overall activities of the industry was
\nimpressive, with almost all of the retail outlets in the capital,
\nwhich were burned or damaged during the May riots, being
\nrenovated.<\/p>\n
"Physically, the retail sector has returned to the pre-May
\nriot level," he said.<\/p>\n
According to him, the performance of the retail sector was
\nstrong during the first quarter of this year. However, the
\nbullish situation could not be sustained due to growing political
\nuncertainty in the following months.<\/p>\n
"In June and July, sales started to decline again," he said.<\/p>\n
Kustardjono said the change in the country's leadership had
\nsignificantly improved the business confidence in the country.<\/p>\n
The significant increase in the value of the rupiah against
\nthe U.S. dollar during the past several weeks indicates how
\npeople have positively responded to the new leadership, he said,
\nadding that if the value of the rupiah can be sustained, the
\nprices of goods, especially imported products, can be lowered.<\/p>\n
"Results in September will determine in which direction we are
\ngoing to. If we pass the month with good results, then we will be
\nable to fully recover next year," he added.<\/p>\n
Kustardjono said that retail sales of the association's 260
\nmembers were estimated to increase by 20 percent to about Rp 33.9
\ntrillion this year from Rp 28.3 trillion last year.<\/p>\n
This year's projected sales growth of 20 percent, which is the
\nsame as last year's, is quite high compared to a meager 4 percent
\ngrowth in 1999.<\/p>",
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