Analysis: Yet another record-setting jump in consumer confidence
The KADIN-Roy Morgan Consumer Confidence index jumped up, yet again, in the month of November. Touching 154.5, the rating climbed by 3.9 points to another new record high since surveying began in 2005. Confidence is now 9.3 points higher than it was a year ago in November 2011 when it stood at 145.2.
This month’s gain was driven by two major indicators. The first, increasing confidence in future economic conditions in Indonesia. The second, increasing confidence that now is a “good time to buy” major household items.
A large and increasing majority of Indonesians, now 92 percent up 4 points, expect Indonesia will have “good times” economically over the next five years. This is now at the highest level ever recorded, compared to only 8 percent, down 4 points, who expect “bad times” economically.
In terms of the short term economy, 82 percent up 2 points, expect Indonesia will have “good times” financially during the next 12 months. This compares most favorably to the 17 percent down 3 points who think we have “bad times” ahead of us.
Today, 61 percent of Indonesians say “now is a good time to buy” major household items. Up by another 3 points over the previous month, this too is a new record high. In contrast, 34 percent down 2 points, believe “now is a bad time to buy” major household items. This is the lowest level for over seven years, ever since June 2005. Coincidentally, but not surprisingly, the number for “main income earners” who earn less than Rp 1 million (US$103.73) each month as a percentage of all principal breadwinners, is exactly 34 percent. Spare a thought for them, Indonesia’s under-privileged, who continue to do it tough each month. These are the extended families, with multiple earners helping several generations under the same roof eke out an existence. For them, it is never a good time to buy a big-ticket item for the home.
But some of them also believe their lot will improve. That’s because 67 percent of Indonesians, up 1 point, expect their family to be “better off” financially this time next year. In comparison, only 2 percent down 2 points, expect to be “worse off” financially. As for the here and now, a robust 42 percent down 2 points, continue to say their family is “better off” financially than a year ago. A mere 10 percent of the population down 1 point, feel their family is “worse off” financially than a year ago. Most of them hail from the poorest sections of our society. The good news is that this measurement is also at the lowest level ever recorded. For the rest, about half the population, the situation today is neither better nor worse. That’s the perception. More often than not, perception is reality.
Commenting on the latest KADIN-Roy Morgan Consumer Confidence results, KADIN chairman Suryo Sulisto said yesterday: “Exports are down. Commodity prices are down. But Indonesia’s consumer economy keeps on pushing forward. The local consumer continues to behave as if the global financial crisis is an alien, foreign, anything-but-Indonesian problem. It is this kind of confidence, this kind of spending that puts Indonesia’s consumer economy in a class of its own. Where else would anybody want to invest?”
That is a good question for many prospective investors, both local and foreign, to mull over. Those who read yesterday’s supplement on Indonesia’s economic outlook published by this newspaper would also conclude there isn’t another marketplace quite like Indonesia.
Investors came in droves during 2012. Foreign Direct Investments were at record levels, at pace with consumer confidence. Much of those investments were in new factories, assembly lines and offices for consumer goods and services. This year’s history looks set to repeat itself next year. If it does, we can expect these good times to keep on rolling at least for Indonesia. That will make the slogan “Remarkable Indonesia” ring true again. On the world stage, Indonesia’s consumer economy will be one of very few exceptions. Among G20 nations, it is the exception. Everywhere you look, there is opportunity.
Even Indonesia’s problems are opportunities, more so because they are not insurmountable. The country’s central bank, Bank Indonesia, has kept a firm hand on the till and moving it in the right direction as and when required. The military has conducted itself with grace, silent in the barracks, lending a helping hand when called upon to assist the people. The media has kept a watchful eye on the goings-on, exposing the rich and powerful. If the judiciary, the legislature, the police and the provincial bureaucracies did their jobs to similar standards, the nation would be in better shape. If infrastructure development and the fight against corruption get the attention they deserve, the results would put Indonesia at the top of the heap of major developing economies. These are all big “ifs” but the wish-list is neither long nor daunting. Democracy has taken root firmly in Indonesia. Lamentably, it has brought with it all of its systemic evils.
The monthly KADIN-Roy Morgan Indonesian Consumer Confidence Rating is based on 2,069 face-to-face interviews conducted throughout Indonesia, not just a handful of cities. The survey includes the Top 21 cities, smaller cities and towns as well as many more villages in the rural hinterland, reflecting all of Indonesia. Men and women aged 14 and over were randomly selected during the month of November 2012.
The writer can be contacted at [email protected]
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