T

he old order is changing, so quickly, in so many ways. As those changes unfold, some are struggling to accept reality. Everybody else is getting on with their lives.

Jean-Claude Trichet, the outgoing chairman of the European Central Bank is looking for money from Beijing. He says it is “normal” to seek Chinese investment in Europe. On camera, he said the ECB wasn’t going there “cap in hand”. If you watched him, you would feel sorry for him as I did. He has nowhere else to go to raise the money he knows the ECB will need, beyond Greece. But he is having difficulty accepting the fact that the old colonials are running out of money. If his Chinese hosts had invited him for talks in Shanghai, the irony would probably have been lost on the Frenchman. Klaus Regling, the German chief executive of the EFSF has travelled to Beijing where he is reportedly seeking a pledge of US$100 billion. Very nice, thank you. Not chop-chop, as in yesteryear.

Here in Indonesia, another remarkable change has taken place without any fanfare. So remarkable, you could call it a quiet revolution. It’s no secret that life for most Indonesians is a struggle on most days. Forever, the average Main Income Earner has barely been able to pay the bills for his household, all by himself. As the chart illustrates, this has been a fundamental reality, always. That’s why half of all homes have a second-income earner. For the overwhelming majority of these two-income homes it is an economic necessity, not a lifestyle choice. Most of the earnings, one, two or more, are spent on paying for everyday essentials.

But in the 12 months July 2010 to June 2011, the pressure on the household budget has been visibly easing. For over a year, the gap between income and expenditure has increasingly widened each quarter. As at the end June 2011, the average breadwinner brought home Rp 1.45 million for the month. Three months ago, in March, it was Rp 1,385,000. A year ago, in June, it was Rp 1,117,000. The corresponding household expenditure figures were Rp 1,105,000, Rp 1,156,000 and Rp 1,109,000. Even if numbers don’t excite you, that is amazing. Considering there has never been a noticeable gap between income and expenditure, it is the consistency of this continuing phenomenon that is most reassuring.

Equally important is the fact that this gap has been widening across all socio-economic strata. In other words, conscious efforts are being made to keep expenses down despite inflationary pressure, even as the breadwinner’s earnings have climbed up, month after month. Not just at the top-end of society, but across all echelons.

Time for a reality check. Nobody would quarrel with the fact that these are still very humble sums of money, both income and expenditure. Modest though they are, the implications are immense. In the kaleidoscope of everyday life, it is fascinating to see the myriad images come together so neatly. Take Consumer Confidence, for instance. As the gap continued to widen, confidence shot upward month after month, breaking previous records each time. In tandem, people who believed “now is a good time to buy a major household item” kept on climbing too. Now, for the first time, more than half of all Indonesians agree.

As a consequence of all these economic developments, Indonesia is slowly returning to one of its cultural roots. More mothers, more housewives are staying home to take care of home, hearth and family. Because they can afford to. For the first time ever, we are now witnessing a gradual decline in the number of working housewives. Those who had concluded that more and more Indonesians were embracing the two-income household as a lifestyle choice simply need to think again. It is now easy to see that more wives had joined the workforce to help their husbands pay the bills. Now, in better times, they have agreed to stay at home. In that sense, we are witnessing a return to the very core of Indonesia’s cultural values.

What are the implications to the marketers of goods and services? Across the board, from shampoo to savings accounts, from meat to motorcycles, the signs are writ large. We can see a consistency in the trends, we can see the improvements taking root across all
sections of society. This is significant, say in comparison to the Indian juggernaut. There, new wealth is unfortunately being hoarded by the elite with negligible improvement in key indicators like more jobs and better wages. Indonesia is doing much better, on both counts. For investors looking for consistent growth in mass-market products and services, Indonesia is one big happy hunting ground. Nowhere else to go but up.

These conclusions are based on Roy Morgan Single Source, the country’s largest syndicated survey with over 25,000 Indonesian respondents annually, projected to reflect almost 90% of the population over the age of 14. That is a universe of over 150 million people. The results are updated every 90 days but the opinions expressed in this column are my own.

The writer can be contacted at debnath.guharoy@roymorgan.com.