Some retailers see higher consumer spending this year

Moch. N. Kurniawan, The Jakarta Post, Jakarta

While financial institutions expect consumer spending to slow down this year, some retailers are upbeat that household consumption will increase and drive sales up.

The spokesman of publicly listed retailer PT Ramayana Lestari Sentosa, Richard Sentosa, said the appreciation of the rupiah and improving confidence in the economy would lead households to spend more money on retail goods.

"Look at our first quarter sales results. It jumped by 30 percent from the first quarter of last year.

"People will continue to spend money on daily goods like food and clothes," Richard told The Jakarta Post on Thursday.

Ramayana sales stood at Rp 540 billion (US$56.8 million) during the first three months of the year, compared to Rp 414 billion in the same period last year, he said.

He said 72 percent of sales came from clothing, 20 percent from food and the remainder from other items.

He added that sales were projected to grow by about 24 percent this year.

Lee Kang Hyun, general manager of Samsung Electronics Indonesia, is optimistic spending on electronic products such as televisions and refrigerators will increase this year because people had put off electronics purchases over the past several years.

"They have started spending more since last year and this trend is continuing to grow this year," he told the Post.

Lee said Samsung Electronics Indonesia had sold about 20,000 TVs a month this year, a sharp increase from the 8,000 units a month it sold last year.

The government has said consumer spending will be the main driver of economic growth this year, with exports and investments expected to slow due to the global economic downturn.

The government has forecast economic growth of 4 percent this year.

But some economists have said household consumption will remain low this year because many people had lost their jobs as a result of the economic crisis.

The Asian Development Bank (ADB) said in its annual report that Indonesia's economic growth would likely slow to 3 percent this year from 3.2 percent last year because of weak consumption and investment.

ADB said spending was unlikely to increase in 2001 because it had increased faster than overall income during the second half of last year.

A spokesman for retailer Matahari, Rudi Sumampouw, shared the view of the ADB, saying increases in fuel prices and electricity and phone rates would limit people's spending capacity.

"Consumers will reduce their expenditures due to these new policies," he said.

Matahari is seen by analysts as catering more to consumers in the middle to upper-income brackets.