Consumers ignore economic 'problems'

Consumers ignore economic 'problems'

A'an Suryana and Emmy Fitri, The Jakarta Post, Jakarta

Indonesia is a land of controversy. When statistics announce that
consumption rates are dropping and economic growth is rapidly
shrinking, consumers still go to shopping malls, movie theaters
and music concerts, paying hundreds of thousands of rupiah to be
entertained and buy retail goods.

In addition, in recent months, a significant number of trade
centers have broken ground and are under construction in Jakarta,
and according to developers and businessmen, those were
continuing full steam ahead despite a real possibility of a
downturn predicted by economists.

In light of these unscientific indicators, it is hard to
believe the economic "experts" when they attempt to paint a
gloomy picture of the Indonesian economy.

Despite the specter of serious economic problems in the coming
months as a consequence of the terror bombings in Bali on Oct.
12, people were still shopping, and not only on weekends but also
mid-week. Throngs of shoppers regularly clog the traditional
markets and small street businesses, creating traffic jams and
continual nightmares for traffic police.

A tenant at ITC (International Trade Center) Mangga Dua,
Central Jakarta, Louisa Widjaja, admitted she could earn at least
Rp 5 million (US$543.5) per day and if "sales are good, which is
usually on weekends, Rp 10 million is possible."

Buyers at ITC were both retail and wholesale shoppers.

For consumers, trade centers like Mangga Dua and Fatmawati in
South Jakarta could be the right options to shop due to the
cheaper price and also the practicality reasons.

The trade centers' concept of one-roof-shopping might be the
strong magnitude to attract consumers who usually shop at malls
and department stores or other retail outlets to turn to the
trade centers.

With a better plan than the impulsively built malls, the trade
centers have grown into more comfortable shopping places.
Although there is not yet any clear evidence of adverse
environmental impact as a result of all the new construction,
environmental scientists see a big problem in the future.

Most of the superblocks have prepared spacious parking lots,
food corners, public facilities and, the most important thing,
the strategic location in the heart of the city.

"It's like a mall but with cheaper prices," said Wasti, a
resident of Cilincing, North Jakarta.

Greater Jakarta has been experiencing a surge in trade center
construction in recent years with a large number of buildings
currently under construction while others are in the pipeline.

Among other projects are WTC Mangga Dua in West Jakarta, the
Bekasi Trade Center in Bekasi, ITC Permata Hijau in South Jakarta
and Cilandak Town Square in South Jakarta.

PT Procon Indah property consultant firm has predicted that a
total of 1.65 million square meters will have been built by the
end of this year in the Greater Jakarta.

And the numbers are still growing.

"Next year, the number will grow by 15 percent or, in other
words, there will be 221,500 square meters of new trade center
buildings in 2003," Lini Djafar, advisory group director at PT
Procon Indah, told The Jakarta Post.

The thriving business also triggers a big question mark: Why
is the trade center business on the rise, while at the same time
the country's consumption level has yet to return to its previous
level prior to the financial crisis of 1997?

The answer lies in the fact that the market is still there for
retail products, says retail analyst Kustardjono Prodjolalito.

Kustardjono, a former executive with the Indonesian Retail
Association (Aprindo), said Indonesians spent approximately Rp
200 trillion on retail products last year.

Some Rp 35 trillion was spent on products sold in modern
retail stores such as ITC Mangga Dua, Hero supermarket, Mega
malls and others while Rp 165 trillion was spent at traditional
markets such as community shops, he said.

"Judging from the figures, the potential market for modern
stores, including the trade centers, is huge," he told the Post.

According to Kustardjono, another reason behind the
mushrooming trade center business was there was also bubbling
optimism among retailers and petty traders over the country's
future economic performance.

Indeed, he acknowledged that consumption has yet to reach pre-
crisis levels, as Indonesia and global economies were still
suffering from a hangover as a result of the global economic
downturn.

This theory was confirmed by market research firm PT
ACNielsen, who said that consumers bought retail products at the
same rate as they did prior to the 1997 economic crisis.

Kustardjono's revelation may explain why the demands for space
in trade centers remains high. In addition, the evidence is
there.

According to Procon, the occupancy rate for trade centers in
Greater Jakarta has never been lower than 90 percent since the
year 2000.

Striking examples may be found at WTC Mangga Dua, which has
been able to sell 70 percent of its space, despite construction
still being underway.