Attracted by the promising prospects of Indonesia's domestic consumption (with per capita GDP rising strongly), a total of about 100 foreign franchises will enter the Indonesian market in 2013. The most popular investment destination of these franchises is Indonesia's culinary sector. The majority of franchises originate from the United States. Others include those from South Korea, Japan, Australia and Europe. In 2013 so far, more than 170 foreign franchises received approval from the government.

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According to a Bank Indonesia report that was released on Monday (19/08), consumer confidence in Indonesia has weakened after the government decided to raise prices of subsidized fuels in June 2013. The country's consumer confidence index fell 8.7 points to 108¹ in July from 117 points in June. Higher fuel prices led to higher transportation costs that subsequently made many retailers increase prices of products, thus impacting on Indonesian households' purchasing power. In July, the annual inflation rate accelerated to 8.61 percent.

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President of Indonesia, Susilo Bambang Yudhoyono, mentioned in his speech ahead of the Independence Day that Indonesia's per capita GDP is expected to rise to USD $5,000 by 2014. An increasing per capita GDP triggers domestic consumption among Indonesia's rapidly expanding middle class segment and thus forms a catalyst for economic activity in the country. As can be seen in the table below, Indonesia's per capita GDP grew steadily between 2006 and 2012. In 2010, it hit the important level of USD $3,000.

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Data from Indonesia´s central bank, Bank Indonesia, indicate that Indonesia´s retail sales grew 14.8 percent in June 2013 compared to the same month last year. The growth was higher than expected. Previously, a survey among Indonesian retailers showed that a growth rate of 10.8 percent was expected in June. In May 2013, retail sales had climbed about 12 percent (YoY). As such, these numbers are evidence of growing domestic consumption led by the country´s rapidly expanding middle class.

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According to research conducted by Nielsen Indonesia, Indonesia's middle class is the world's most optimistic middle class segment in the second quarter of 2013. Indonesia leads the Nielsen Global Survey of Consumer Confidence and Spending Intentions index with 124 points, followed by the Philippines (121 points) and India (118 points). The average global consumer index stands at 94 points. It is interesting to note that Asian countries top the index. The emerging Asia Pacific region is far above the 94-points average with 105 points.

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Electronic City Indonesia (ECI), a leading electronics retailer in Indonesia, plans to conduct an initial public offering (IPO) on the Indonesia Stock Exchange (IDX) in June 2013. According to the company's website, Electronic City is Indonesia's first modern electronic convenience store, specialized in selling electronic products for Indonesia's middle class and elite. Through the IPO, the company hopes to raise about USD $150 million which will be used for capital expenditure.

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Indocement Tunggal Prakarsa is the second largest cement producer of Indonesia in terms of market share. Its operations are spread across factories in West Java and South Kalimantan, comprising a total of 12 plants. At end 2012, Indocement’s total installed design capacity was 18.6 million tons of cement per year. Indocement offers a diversified range of cement products which are sold under the “Tiga Roda” brand. Indonesia's cement sector has shown a steep increase in domestic cement production and consumption.

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Indonesia, with a population of approximately 267 million, is the largest market for the Food Service Industry in the ASEAN region. With rising incomes amongst the growing middle class and changes in lifestyles, the Food Service Industry in Indonesia is expected to show a compounded annual growth rate (CAGR) between 2018 and 2023 of 7.06 percent.

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The Coca Cola Company (TCCC) and its Australia-based subsidiary Coca Cola Amatil (CCA) launched two new production lines at the Coca Cola Amatil Indonesia plant located in Bekasi (West Java) at the start of the week, part of a USD $500 million investment package that will materialize over the next 4 years. TCCC, the US-based multinational beverage manufacturer, is eager to expand its business activities in Indonesia as it considers Indonesia a dynamic and promising market as well as one of the growth engines to achieve its long-term targets.

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Investment in Indonesia’s processed food and beverage industry is expected to grow at least ten percent to IDR 55 trillion (USD $4.6 billion) in 2015 from an estimated investment realization of IDR 50 trillion in 2014. Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (GAPMMI), said that investments in this sector have been solid due to rising consumption of food and beverages in Southeast Asia’s largest economy. Particularly foreign investments have been strong in 2014 and are expected to continue next year.

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Today, Indonesian president-elect Joko Widodo (commonly referred to as Jokowi) and Facebook CEO Mark Zuckerberg met in Jakarta to discuss how Facebook can be utilized for the benefit of the people and how the social media network can support Indonesian micro businesses. With nearly 70 million, Indonesia contains the world’s fourth-largest Facebook community. With a total population that numbers about 250 million people, a burgeoning middle class and relatively low Internet penetration, there remains a large untapped potential.

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Property stocks listed on the Indonesia Stock Exchange (IDX) have outperformed all other stocks between the first trading day of 2014 up to 29 August 2014. The IDX’ property sector category rose 37.6 percent in the indicated period, whereas the benchmark stock index (Jakarta Composite Index, abbreviated IHSG) - which involves all stocks traded on the IDX - climbed 18.7 percent over the same period. On the IDX, stocks are placed in ten sectoral categories. The second-best performing sectoral index was finance (+24.5 percent).

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A total of twenty Japanese companies engaged in the food and beverage industry are exploring investment opportunities in Indonesia. According to research conducted by the Japan International Cooperation Agency (JICA), the food and beverage industry of Indonesia is regarded as a lucrative investment opportunity by these companies. If realized, these foreign direct investments could be worth between USD $400 million to USD $1 billion. However, JICA’s research did not mention any names of the Japanese companies.

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The central bank of Indonesia (Bank Indonesia) expects Indonesia’s economy to grow by 5.3 percent in the second quarter of 2014. If realized, it means that gross domestic product (GDP) of Southeast Asia’s largest economy will accelerate from the disappointing GDP growth result recorded in the first quarter of 2014 (5.21 percent). Perry Warjiyo, Deputy Governor at Bank Indonesia, said that growth in Q2-2014 will be primarily supported by household consumption and investments which traditionally peak in the second quarter.

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Although Indonesia is the world's largest archipelago, contains an abundance of commodities and has the world's fourth-largest population, the country's export and import figures are still small compared to the world's leading exporting and importing countries (see table below). There are many - and much smaller - countries that post much more impressive import and export data. In terms of exports, Indonesia is too dependent on commodities (accounting for around 60 percent of all exports) causing problems in times of price downswings.

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Indonesia's residential property market has shown robust growth in recent years as demand from the country's rapidly expanding middle class for mid-level and luxury property increased steadily amid a low interest rate environment and robust national economic growth. Demand for property is also backed by high consumer confidence as a recent Nielsen survey shows that Indonesians are among the world's most confident consumers. Indonesians' consumer confidence was at a four-year high in the fourth quarter of 2013.

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The mysterious disappearance of Malaysia Airlines flight MH370 on Saturday 7 March 2014 reminds us that flying does not go without risks. Although it is popularly said that flying in an airplane is safer than driving in a car - and despite the fact that Malaysia Airlines is a world-class airline - it is worth taking a closer look at the current state of aviation in the Asia Pacific, Indonesia in particular, as air traffic in the Asia Pacific has been booming (and budget airlines mushroomed) in recent years due to the expanding middle class.

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