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Jakarta Post

Roy Morgan Update: Consumer confidence hits a new low, with no glimmer of hope

The Roy Morgan Consumer Confidence Index dipped another seven points in the April-June quarter to 102, the lowest since the national survey began in Oct

Debnath Guharoy (The Jakarta Post)
Tue, September 2, 2008

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Roy Morgan Update: Consumer confidence hits a new low, with no glimmer of hope

The Roy Morgan Consumer Confidence Index dipped another seven points in the April-June quarter to 102, the lowest since the national survey began in Oct. 2004.

The higher cost of fuel that took effect in May added to the spiraling prices of food and essentials. The average consumer is facing tougher challenges today, even tougher than the days that followed the twin fuel price hikes of 2005.

But a national index of 102 masks the real picture. Teetering, but still in positive territory above the neutral 100 mark, it will allow politicians and spin-doctors to continue championing an economy that is growing at over 6 per cent per annum.

A look behind the rating reveals the truth about Indonesia's different societies, living different lives in parallel everyday. Predominantly an agricultural society, the confidence level of the rural population is always significantly lower than their urban counterparts.

Today, bucking that trend, the pain caused by rising prices has dropped rural Indonesia to 103, two points above their urban counterparts at 101. Living off the land slightly cushions them from the rising costs of goods and services -- unlike the city folk.

Regardless of the cost of groceries, good times continue to roll for the fortunate few who earn over Rp 5 million per month. They also are down from the exuberance of 159 a year ago, dipping 14 points in the last quarter alone to the current 135.

At that level, they remain in a world of their own, with much higher confidence levels than the national averages of the world's most affluent countries.

The reason is simple. In contrast with their fellow citizens, relative to the cost of living in Indonesia, they live a privileged life. The rising cost of food and fuel has little or no impact on their lifestyle. For the millions of people at the other end of the spectrum, the impact is all too real.

In negative territory since April 2006, the rating for Main Income Earners bringing in less than Rp 600,000 per month to the household is now at an all-time low of 87. The urban poor are in worse shape than their rural cousins.

What is most worrisome is that there is no end in sight to this global phenomenon. The current economic crisis is being labeled the worst in 60 years by economic pundits from around the world.

No recovery is expected anytime soon. While Asia's GDP growth rates are also slowing down, they still remain in the high single digits. However, the inequalities between the region's rich and poor grow wider each quarter.

In Indonesia, the government has been implementing measures to alleviate the pain, with short-term cash disbursements for the underprivileged and longer term micro-business loans aimed at bolstering the lower and middle classes via job creation.

Businesses large and small can make a major contribution in these particularly difficult times. Any attempts at cutting back on jobs are counter-productive to progress.

All efforts to cut back on every other type of cost, whether wasteful or unessential, will produce results for the good of all -- immediately and into the future. If this includes cutting back on energy and transportation costs, and if sub-contracting to small businesses is less expensive than internal production, then businesses can positively impact the company's bottom-line as well as society at large.

These conclusions are based on the Roy Morgan Single Source, the country's largest syndicated survey with over 27,000 Indonesian respondents annually, projected to reflect about 90 percent of the population over the age of 14. It is used by more marketers and advertising agencies than any other survey in the country.

In today's borderless world, Indonesia, like every other country, is unable to fully protect itself from global crises. But it can do a much better job of helping itself and in particular its underprivileged than it has in the past; a culture of exploitation needs to change to a culture of empathy.

Exploitation is only a good word when it is used in the context of opportunities, not people, and sympathy alone achieves little.

Real change will only happen when Indonesia's captains of industry and the privileged few begin to take pride in the welfare of the people they come into contact with everyday.

As long as the rich and the powerful fail to flinch at the squalor outside their mansions, they will be restricting Indonesia from developing into its fullest potential. There's nothing wrong with buying another new car or another new home, as long as they are not the only goals used to value or measure achievement.

Real change starts in the mind. If the disparity in confidence levels does not embarrass the readers of this column, the paper it is printed on will have been wasted.

If the inequalities in society have no effect on the minds of Indonesia's affluent few, they will continue unabated for decades to come. On the other hand, a conscious effort by those who can help others who have limited means and opportunities will collectively create a new dynamism that can forge a quicker path to progress. Empathy, not sympathy, is the key.

The writer can be contacted at Debnath.Guharoy@roymorgan.com

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