The market is huge here, players say

The market is huge here, players say

The Jakarta Post, Jakarta

How many Indonesians are actually really rich, with idle money of
between Rp 200 million (US$19,564) and Rp 1 billion at any
particular point of time?

The answers vary, depending on who does the survey.

A recent study by Morgan Stanley found that there were 3,495
Indonesians with assets worth over US$5 million. Of that number,
the majority (2,796) live in Jakarta, 441 in Surabaya, 115 in
Bandung and the remaining 143 others scattered throughout the
country.

While data from the Market Research organization says about
6,000 Indonesians are classified as rich.

Among the 6,000 people, however, only one has been named by
Forbes magazine as being among Southeast Asia's top 10 richest
men. He is Budi Hartono, the owner of cigarette maker Djarum in
the small town of Kudus, Central Java, with total asset of $2.3
billion.

Last year, Forbes listed seven Indonesians -- including
businessman-cum-minister Aburizal Bakrie -- as being among its 40
richest people in the region with assets ranging between $500
million and $2.3 billion.

These rich individuals are the targets at whom banks are
aiming their wealth management services.

Bank Mandiri Senior Vice President for Wealth Management Kemal
Imam Santoso said his bank has projected that 1 percent of the
country's population, or roughly two million people, are rich but
are not yet making use of wealth management services.

Standard Chartered general manager for wealth management and
consumer banking Darmadi Sutanto believes there were 600,000
people with savings of Rp 500 million or more who have yet to be
tapped.

Jack Rusli Irawan, Bank Central Asia's (BCA) advisor for
consumer banking, estimates that one sixth of the population, or 36.7
million people, have deposits of at least Rp 200 million.

He highlighted that these affluent people accounted for a huge
percentage of the third party deposits in the country's banks.

"Take BCA, for example. Of its six million customers, some
70,000 are BCA Prioritas customers with deposits of at least Rp
200 million," Jack said. "They control about 70 percent of the
bank's total third party deposits, which stood at Rp 128 trillion
as of the end of this year's first half."

Meanwhile, Kemal said some 20,000 customers of Mandiri
Prioritas have deposits of at least Rp 500 million and that these
deposits made up over half of the bank's total third party
deposits, which stood at Rp 183.184 trillion as of June.

Darmadi said that of the total of Rp 11.5 trillion of third party
deposits in Standard Chartered, affluent customers owned 70
percent of them.

Certified Wealth Managers' Association (CWMA) chairman Martha Bambang
Priambodo said that nationally, wealthy customers contributed the
most to the country's total third party deposits.

"If the country's total third party deposits stood at Rp 1,000
trillion, about 60 percent of these belong to individuals
depositors. Around 60 percent of these individuals are believed
as high net-worth individuals, or rich people," said Bambang, who
is also a vice president of Bank Niaga.

"Therefore, it is important for banks to keep these customers
with them while at the same time trying to acquire more," he
said.

"Roughly, only 10 percent of Indonesia's rich people avail of
local wealth management products. There is a great bulk of
potential customers out there waiting to be tapped."

Bambang estimated that the number of rich people would grow by
between 3 percent and 4 percent annually, boosted by economic
growth of 5.8 percent.

Suheil Chander, ABN AMRO country head for consumer banking,
said that as Indonesia's economy becomes more stable, more people
would have the chance to become rich.

"The market is growing as a result of the improved economy and
this means more people can be upgraded to the affluent category,"
he said.

Both Jack and Darmadi were upbeat that the wealth management
business would continue to grow in the future as more rich people
became aware of their need for the services.

"I project that wealth management customers will grow by 20
percent annually," said Darmadi. (006)