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Jakarta Post

Urban Chat: Patriotically going on a spending spree

A common conversation topic nowadays is how slow the economy has become

Lynda Ibrahim (The Jakarta Post)
Jakarta
Sat, May 28, 2016

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Urban Chat: Patriotically going on a spending spree

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common conversation topic nowadays is how slow the economy has become. Friends in media and showbusiness find it difficult to get publicity and sponsorship; pals in fast-moving consumer goods and telecommunications (typically happy to shell out dough) report cutbacks on non-pivotal promotions because sales have been slow.

A slowdown in consumer spending is not exactly news. My contacts in retail have whined, in varying degrees, about missing targets as far back as Idul Fitri last year — a trend that continued through the subsequent Christmas and Chinese New Year.

One argument says consumers have shifted to online shopping, where goodies are more varied in type and price. While that’s possible, I haven’t seen the numbers to conclude that the missing buyers from physical stores have all migrated to their online counterparts. Going by consumer confidence reports for the past year, lower consumption is the likely reality.

For a few investments in the real sector that I have, lower purchasing power and stretched-out terms of payment are all too much of a reality. As my income comes solely from contract jobs and dividends, instead of steady paychecks, I myself ended up cutting back on expenses.

My father criticized this decision as we compared notes on our investment portfolios recently, when I moaned about the state of our economy. He said if the downturn bothered me that much, I shouldn’t have made it worse by spending less. Then he threw me the classic after-all-that-education-I-paid-for-I-still-had-to-explain-this-to-you eye-roll.

Okay, okay — so on my way to earning business degrees, which admittedly Dad paid for, I did learn early on that consumption forms the basic ingredient for economic growth. The other key factors are invariably savings, investments and government spending. How so? Consumer spending drives business, which enables producers to not only run their businesses but also expand (read: commit investments). If consumption is miniscule, businessmen have no reason to expand or invest — no matter how low the interest given by banks for business loans is.

How much does consumption impact on our growth? A few years ago economist Chatib Basri, then finance minister, was widely quoted in media citing 55 percent as consumption’s contribution to our economy (Google his “Belanja Pangkal Kaya” write-up). Even if the percentage has changed recently, I don’t suppose it has so much as to eliminate consumption as the formidable driver of our economy — which means, with just a little hike in consumption, the economy as a whole will grow considerably.

The government, for their part, recently started to spend on infrastructure developments. While this is great, it takes a while for the effect to trickle down to much of the real sector. Our consumption, on the other hand, will carry more instant effects. So, you want us to get out of this downturn? Shop.

Now, while it may seem imprudent to spend when your income doesn’t come according to a certain schedule, like for us freelancers, it isn’t that hard to sit and work out a sensible spending budget.

Moreover, a large chunk of urbanites do enjoy steady paychecks and thus have no reasons to curtail spending. I always suspect an intangible part of the consumer confidence rate is psychological connection — people around complain of economic woes so you start feeling you’re having some too. Chances are you’re not. So why not spend more?

And in Jakarta in this last week before Ramadhan there are plenty shopping opportunities being offered by local talent. There’s the first Muslim Fashion Festival (Muffest), organized by the newly formed Indonesia Fashion Chamber, a growing group of seasoned designers who during their time at previous fashion organizations have successfully run the Indonesia Islamic Fashion Fair for years.

Held in Istora Senayan, Muffest is featuring dozens of Indonesian labels, some of which are critically acclaimed like NurZahra, which in March 2014 became the first ever modest fashion label to grace Tokyo Fashion Week.

Another event worth checking out is Fashion Link Ramadhan Market, a collaboration with Jakarta Fashion Week (JFW) organizers and Senayan City, featuring the most promising local designers groomed by JFW in recent years.

Naturally consumption does not comprise only purchasing new wardrobe items. You can also spend on food, books, furniture, white goods, renovations, travel and services like spa and car maintenance.

Develop a hobby and dedicate a leisure budget to it. You don’t even need to buy new things — you can spend on preloved or vintage merchandise and still get the economy rolling.

Now, travel especially, is one sure way to spur growth far beyond your postcode. Idul Fitri is a much-awaiting break for many Indonesians, not just to visit family but also to travel.

Step out of your comfort zone. Try new destinations that aren’t yet popular and sample their cuisine and crafts. There is a growing number of domestic adventure tours to some of Indonesia’s most remote and jaw-dropping corners — like Kakaban Trip, with whom my pals and I went island hopping in East Kalimantan and East Nusa Tenggara last year and who I can recommend for their professionalism.

So put this down, and get out there. Shop, eat, travel. Let your budget, not contagious negative sentiments, dictate your spending. This time of year in Indonesia, really, spending is patriotic. It’s for the economy. Be merry and go on your spending spree.

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Lynda Ibrahim is a Jakarta-based writer with a penchant for purple, pussycats and pop culture.

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