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Tag: Indonesia

  • Lawson to open 450 stores in Japan this year

    Lawson to open 450 stores in Japan this year

    Even though Japan’s convenience store sector faces numerous challenges, the country’s second-largest operator, Lawson, plans to open another 450 stores this year, the company’s CEO has revealed.

    Genichi Tamatsuka said there are 55,000 convenience stores in Japan but the market has not yet reached saturation point.

    He sees massive potential for growth because of demographic and other social changes that are altering consumers’ buying behaviour.

    “Whereas people used to go to a big supermarket and prepare meals for a family of four or five, now they’re busier, they’re older, and they prefer to buy in a small neighbourhood store,” he explained.

    Lawson currently runs a network of 12,000 stores – soon to be expanded – and, combined with its logistical muscle, Tamatsuka expressed confidence that it would be able to meet the needs of these “combini” neighbourhood stores.

    “With our scale of 12,000 stores, our supply chain and platform, we can supply food and necessities to these neighbourhoods,” he said.

    Expansion overseas is another source of potential growth, he indicated, considering the value placed on the high level of customer service provided by Japanese retailers.

    Lawson has 500 stores in China and has also started up operations in Thailand, Indonesia and the Philippines.

    Despite Tamatsuka’s confidence, research group Euromonitor earlier this year published a more downbeat assessment of Japan’s retail landscape.

    “Japanese grocery retailers are expected to face numerous challenges imposed by such factors as changing demographics and operational difficulties,” it warned.

    However, in what could be seen as endorsement of Tamatsuka’s expansion strategy, the report went on to say, “in order to fight against such negative circumstances, grocery retailers may attempt to expand in size and diversify business portfolios”.

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  • Hero to open more stores to boost revenues

    Hero to open more stores to boost revenues

    Retail company PT Hero Supermarket (Hero) will spend up to Rp 640 billion (US$48 million) this year for business expansion with retail plans to open stores in several cities across the country.

    The move will be made to restore the company’s disappointing financial performance earlier this year.

    Hero, which operates hypermarkets, supermarkets, convenience stores, drug stores and furniture stores, plans to open four Giant Ekstra hypermarkets and six mid-sized Giant Ekspres supermarkets in several regions, including Bangka and Lombok. Arief Istanto, a director with Hero, said each Giant Ekstra would cost between Rp 100 billion and Rp 150 billion while the Giant Ekspres would cost about Rp 20 billion. It means the company will allocate between Rp 440 billion and Rp 640 billion in capital expenditure to build the stores this year.

    Arif said the company aimed to improve its financial performance and hoped to book profits like it did in previous years. The company will use its internal funds for the expansion.

    “We would like to expand our network so that it can attract more customers. Thus, our top line will also increase,” he said after an extraordinary shareholders’ meeting on Tuesday. At the meeting, they agreed not to disburse the Rp 43.75 billion in dividends to shareholders and instead spend it on the company’s business expansion plan.

    Hero Supermarket previously suffered Rp 33.19 billion in net losses during the first quarter of this year amid a 14 percent increase in net revenues of Rp 3.57 trillion, making it the worst performer in the country’s retail industry.

    Last year, the company saw its net profit dive to Rp 43.75 billion from Rp 671.13 billion in 2013. A 13.94 percent increase in revenues, which stood at Rp 13.56 trillion at that time, could not ease the ballooning operating expenses, which hit Rp 3.31 trillion.

    “Our 2014 financial results were disappointing with weak sales growth and a significant increase in operating costs across all businesses as well as higher overhead and store pre-opening costs,” Stephane Deutsch, Hero’s president director, said in a statement.

    In 2014, the company launched a flagship furniture store under Swedish brand IKEA in Alam Sutera, Tangerang, Banten, some 25 kilometers west of Jakarta’s city center.

    Arief confirmed Hero has planned to build five more IKEA stores in the future as the company was upbeat about the prospects of the franchise furniture store.

    “At the moment, we are looking for land for the second store. It is supposed to be done this year,” Arief said, adding that the second store would be located in Greater Jakarta.

    According to him, IKEA has contributed around Rp 200 billion to Hero’s revenues in the first quarter of this year,

    Hero says it hopes to book 30 to 40 percent growth in revenues during the fasting month of Ramadhan this year. The company currently operates 33 Hero supermarket stores, 341 Guardian healthcare stores, 98 Starmart convenience stores, 53 Giant Ekstra stores, 121 Giant Ekspres stores, two Jason supermarket stores and one IKEA store.

  • Jakarta Great Sale Casts Its Net Beyond Indonesia

    Jakarta Great Sale Casts Its Net Beyond Indonesia

    Last month, Jakarta celebrated its 488th anniversary. The capital, which was established by Indonesian national hero, Fatahillah, in 1527, is definitely getting old. But despite being home to more than 10 million people, the city never slows down.

    New high-rises pop up on every corner of the city. And each of them outdoes the previous in size and grandeur. Major developments are currently underway, promising that the city is on track to become one of the most glam and sophisticated in Southeast Asia.

    To celebrate its birthday, the city’s modern landmarks and shopping malls again present the Festival Jakarta Great Sale (FJGS). FJGS has been held annually since 2008.

    “FJGS has always been an important highlight of the city,” said Ellen Hidayat, chairwoman of the executive committee of FJGS 2015. “And it’s going to be much bigger and better this year.”

    This year, the event is organized by Association of Shopping Mall Management in Indonesia (APPBI), in collaboration with 12 other shopping and tourism-related associations in the country.

    Until mid-July this year, 78 malls in Jakarta will offer discounts on their merchandise by up to 70 percent.

    The event is also supported by Jakarta’s Tourism Office and featured in its official calendar of events.

    “Our office fully supports FJGS,” said Purba Hutapea, chief of Jakarta’s Tourism Office. “We hope to attract more local and international tourists with the event.”

    Jakarta is targeted to attract three million tourists this year — a 25 percent increase on tourist arrivals last year, which were about 2.4 million.

    “And FJGS is indeed a great way to attract more visitors to the city,” said Purba.

    Among the top five international tourists visiting Jakarta are Malaysians, Chinese, Singaporeans, Japanese and South Koreans. And their main reason of visit is to go shopping.

    “Malaysians love our Muslim attire, as they have very good quality at affordable prices,” said the chief of the tourism office.

    Besides Malaysians, according to Purba, the Chinese, Japanese and South Koreans are currently eyeing our fashion products.

    FJGS is also targeting Indonesian shoppers.

    “Indonesians have a habit of going to Singapore for shopping, as Singapore usually offers more products of international brands at cheaper prices,” said Ellen Hidayat. “But it’s a different story this year.”

    Ellen and her team have recently surveyed the malls in Singapore during the currently ongoing The Great Singapore Sale.

    “With today’s foreign exchange rate [between the Singaporean dollar and the rupiah], the prices of the branded products in Jakarta are actually a lot cheaper,” said Ellen. “So, this year, we hope that the locals will choose to shop in Jakarta instead of going to Singapore.”

    Ellen believes that FJGS and a series of fun activities organized in the malls during the event will see an increase in visitors by 30-40 percent to the city’s malls.

    The executive committee of FJGS 2015 hopes to achieve a total transactions of Rp 14.3 trillion this year, or about a 10 percent increase from last year’s transactions of Rp 13 trillion.

    It seems a high aim during Indonesia’s current economic slow-down, but the chief of Jakarta’s economic bureau, Adi Ariantara, remains optimistic.

    “FJGS, which is held during the school holiday season, as well as the fasting month, will surely encourage people to spend more,” said Adi. “And hopefully, it will also instigate positive economic growth for us.”

    A series of attractive events have been prepared to draw more visitors to the malls during FJGS 2015.

    One of them is Jakarta’s iconic Midnight Shopping events. During FJGS this year, a total of 19 shopping malls will take turns to hold ‘Midnight Shopping’ on weekends.

    “It’s one of the most awaited events during FJGS, as the malls will usually offer a series of entertainment, as well as special prizes for shoppers,” said Ellen.

    This year, Jakarta’s shopping malls also open their doors to traditional craftsmen and small-to-medium enterprises (SMEs) belonging to the National Handicraft Council (Dekranasda) of Jakarta.

    During FJGS 2015, these craftsmen and SMEs are allowed to offer their products at stalls dedicated to them along the corridors of the malls.

    This year, BayWalk Mall, Puri Indah Mall and Grand Indonesia Shopping Town will host these craftsmen and SMEs.

    “In the future, Dekranasda will work together with all shopping malls in Jakarta and encourage them to dedicate a special section within their malls for the craftsmen and SMEs in their regions,” said Veronica Basuki Tjahaja Purnama, chairwoman of Dekranasda Jakarta.

    But the excitement of FJGS 2015 is not only felt within the glitzy malls and shopping centers of Jakarta.

    For the first time ever, the event will also be held in traditional wet markets in Jakarta.

    “We want every layer of the community to feel the excitement of FJGS,” said Djangga Lubis, director of PD Pasar Jaya, government-owned company that manages traditional wet markets in Jakarta.

    There are currently 153 traditional wet markets in Jakarta. But only 10 are featured in FJGS this year.

    “These 10 markets are those that are most ready, in terms of cleanliness and comfort, to present the ‘Pasar Murah’ (Affordable Market) bazaars during FJGS this year,” said Djangga. “And these 10 markets also represent Jakarta’s five main regions.

    Among the 10 wet markets are Pasar Santa in South Jakarta, Pasar Gembrong in Central Jakarta, Pasar Pos Pengumben in West Jakarta, Pasar Cibubur in East Jakarta and Pasar Koja Baru in North Jakarta.

    During FJGS 2015, these traditional wet markets will take turns to present ‘Pasar Murah’ on weekends.

    The items offered during Pasar Murah are staple food items, including rice, eggs and meat. These items will be offered discounts of about 20 percent.

    It seems that FJGS is indeed getting more solid this year. Unfortunately, the growth of shopping destinations has yet to be supported by proper infrastructure development that could further push the city to become a destination that is on par with neighboring countries such as Singapore.

    Recognizing this issues, Jakarta Governor Basuki Tjahaja Purnama ensured during the opening night of FJGS 2015 that projects are underway.

    “We’ve just designed seven routes for the Light Rapid Transportation (LRT), which will connect major shopping centers and hotels in Jakarta,” said Basuki. “We’re also buying a lot of new buses for Jakarta as we plan to provide 24-hour bus transportation in the capital,” said Basuki.

    Ahok also plans to develop 12 new traditional markets in Jakarta to accommodate street-side peddlers.

    “On top of these traditional markets, we’ll also build apartments for rent at affordable prices for the peddlers,” he said.

    With these plans, Jakarta promises to be a much nicer city to visit and live in.

    “We’re planning to save Rp 10-15 trillion from corruption each year and use the money to build more infrastructure, parks and public facilities for Jakarta,” said the governor.

    “Once they are in place, we can confidently announce that Jakarta is a shopping paradise to the whole world,” said Basuki.

  • Garuda Indonesia partners with China’s CFM International over the airline’s 737 MAX Fleet

    Garuda Indonesia partners with China’s CFM International over the airline’s 737 MAX Fleet

    State-run flag-carrier PT Garuda Indonesia Tbk (GIAA) and China’s CFM International have announced the expansion of their long-term partnership, under which, CFM will provide support for the airline’s future fleet revitalization program.

    Under the arrangement, Garuda is committed to purchase 50 Boeing 737 MAX 8 aircraft, which will be powered by CFM LEAP-1B engines.

    “The Next-Generation 737 with CFM56-7B engines is the backbone of our current fleet and this order for the 737 MAX shows our continued commitment to providing our passengers with the most modern, fuel efficient aircraft/engine combination available today,” said Arif Wibowo, President Director and Chief Executive Officer of Garuda Indonesia.

    Garuda Indonesia is a long-time CFM customer and began operating the CFM56-3-powered Boeing 737-300 in the late 1990s. Today, the airline’s fleet includes approximately 80 CFM-powered 737 aircraft in service or on order.

    “We are pleased that Garuda Indonesia has continued to place its trust in CFM,” said Max York, Regional General Manager of Sales for CFM International.

    The LEAP engine is to be the most advanced, reliable, fuel-efficient powerplant for the new generation of single-aisle aircraft.

    Garuda said the lower weight and higher durability these components provide will result in a 15 percent improvement in fuel efficiency, with an equivalent reduction in CO2 emissions; a 50 per cent margin to new emissions regulations; a dramatically lower noise signature; CFM’s industry-leading reliability and low overall operating costs.

    Garuda announced in October 2014 the airline’s intent to purchase 50 737 MAX 8 aircraft. The agreement is part of the airliner’s revitalization program in order to provide its passengers with the best possible experience with the youngest fleet in the sky and to support the airline’s future plan to further expand its network globally.

    The airliner currently operates more than 90 Boeing airplanes, including Next-Generation versions of the 737, 777-300ERs and 747-400s.

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  • Indonesia’s Bank Mandiri partners ASCO, Tunas for multifinance biz JV

    Indonesia’s Bank Mandiri partners ASCO, Tunas for multifinance biz JV

    PT Bank Mandiri Tbk (BMRI), the largest bank by assets in Indonesia, is planning to tap the growing automotive credit market through a joint venture (JV) with a multifinance firm PT Mandiri Utama Finance (MUF).

    The bank plans to collaborate with automotive distribution company ASCO Automotive and Tunas Group for establishing the JV company. In the new JV, Bank Mandiri will hold 51 per cent, while US ASCO will hold 37 per cent stake and Tunas Group 12 per cent.

    MUF expects the new JV firm to begin operations in September.

    MUF was established in January 2015 as a leasing sub unit of Bank Mandiri, which has 10 subsidiaries, including Syariah lender PT Bank Syariah Mandiri (BSM), securities firm PT Mandiri Sekuritas and life insurer firm PT AXA Mandiri Financial Services.

    Hery Gunadi, Consumer Banking Director for the bank told that Bank Mandiri intends to capture market share of 30 per cent by 2018. Currently, the bank has around 10 per cent market share in the multi finance sector.

    MUF plans to open between five and eight branches (Jakarta, Bandung and Surabaya) in the second half of this year.

    Meanwhile, Mandiri Tunas Finance will provide financing for car, heavy equipment and motorcycles, while Mandiri Utama Finance will focus on new and used car and motorcycle financing, said Gunadi.

    President Director and CEO Group of Bank Mandiri, Budi Gunadi Sadikin added that the potential market for automotive credit could reach Rp200 trillion ($14.93 billion) this year with estimated car sales around 1 million units and motorcycle 8 million units.

    “There are a lot of multifinance firms that are encountering funding difficulties. This creates opportunities for us to enter (the financing) business. At present, income contribution from multifinance business, on average grows, by around 31 per cent per annum; and it is the third largest income contribution from subsidiaries after AXA Mandiri and Bank Syariah Mandiri,” he said.

    ASCO Automotive and Tunas Group are among largest automotive distributors in the country. ASCO Automotive, previously called Adira Mobil, was jointly established by former CEO of PT Astra International Tbk (ASII) Teddy P Rahmat and former CEO of financing firm PT Adira Finance TbkStanley Setia Atmadja in 1989.

    Tunas Group was established by businessman Anton Setiawan in early 1970s. In 1980, he establishedPT Tunas Ridean Tbk (TURI) as holding company of Tunas Group and listed the firm in 1995. In 2009, Bank Mandiri acquired 51 per cent shares of PT Tunas Financindo Sarana, a subsidiary of Tunas Group and later changed the company’s name to PT Mandiri Tunas Finance (MTF).

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  • Indonesia’s Telkomsel collaborates with Trikomsel for handset bundling deals

    Indonesia’s Telkomsel collaborates with Trikomsel for handset bundling deals

    The largest mobile operator in Indonesia, PT Telekomunikasi Selular (Telkomsel), unit of state-run telecom operator PT Telkom Indonesia Tbk (TLKM), has joined hands with gadget store operator PT Trikomsel Oke Tbk (TRIO) to launch a device bundling program to drive the growth in smartphone users, the company said in a statement.

    The device bundling program includes, Lenovo Vibe X2, Xiaomi Redmi 2 and Xiaomi Mi 4i with cash back and data package promotion. In addition. Telkomsel also launched device bundling program for BlackBerry Classic, Samsung Galaxy S6 edge and LG G4 to attract high value customers.

    Since December 2014, Telkomsel has successfully rolled-out 4G LTE services to support the data services in Jakarta, Bali, Bandung, Surabaya and Medan using the 900Mhz spectrum. The operators are in the midst of rearranging their 1800Mhz spectrum and expected to be completed by the end of the year.

    To signify the completion of spectrum rearrangement in areas outside Java, Telkomsel launched 4G LTE services using 1800Mhz spectrum in Makassar and Lombok in July 2015. To date, the operator has more than 1,000 4G LTE BTS serving the seven key cities.

    In the first half of 2015, Telkom as a group has spent Rp11.9 trillion ($888.06 million) in capital expenditure (capex), of which Rp5.8 trillion was for Telkomsel and the remaining Rp6.1 trillion was for Telkom and other subsidiaries.

    Telkom’s capex was mainly utilised for deploying access and backbone infrastructure to support the broadband services, while Telkomsel’s capex was mainly utilized for radio access network. Other subsidiaries’ capex was utilised for towera, property, data center, and project international cable systems.

    In first half of the year, Telkomsel reported that net profit rose 14.7 per cent from previous year (Rp8.81 trillion to Rp10.11 trillion). While the company revenues rose 13 per cent from Rp31.33 trillion to Rp35.40 trillion in first semester of 2015.

    Revenue from prepaid customers accounted for 84.9 per cent with Rp30.04 trillion of Telkomsel’s total revenue mainly driven by prepaid subscriber base, high increase in data usage and data revenue as well as continued growth in voice and SMS revenues.

    Postpaid revenue increased by 13.5 per cent to Rp2.78 trillion mainly driven by the increase in the postpaid customer base which grew by 16.6 per cent to 3 million subscribers. Revenue from postpaid customers contributed 7.9 per cent to the total revenue.

    Telkomsel continued aggressive network deployment with 11,495 new BTS installed in an effort to maintain leading network supply to strengthen mobile broadband experience. Around 90 per cent of new BTSs were 3G/4G BTS.

  • Blue Bird to use Honda Mobilio taxis

    Blue Bird to use Honda Mobilio taxis

    Taxi operator Blue Bird Group will add the Honda Mobilio multi-purpose vehicle to its fleet in September.

    Blue Bird public relations manager Teguh Wijayanto said the new taxis would charge the regular fare. “The fare will be the same as the regular taxis,” said Teguh as quoted by kompas.com, adding that the Honda Mobilio taxis would be part of its regular fleet, not for its Silver Bird executive service.

    Blue Bird did not reveal the number of Mobilios to be used as taxis as it was still testing the cars.

    Currently, Blue Bird uses five-seater sedans as taxis. The seven-seater Mobilio will be able to carry up to six passengers.

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  • Dairy Farm Indonesia reviews struggling Starmart

    Dairy Farm Indonesia reviews struggling Starmart

    Dairy Farm Indonesia is reviewing the future of its Starmart convenience store chain after closing nearly a third of its stores in the latest half year.

    The chain has been hit hard by the Indonesian government’s moves to limit the sale of alcohol, banning liquor sales in c-stores in April.

    Since then, Hong Kong headquartered Dairy Farm Indonesia subsidiary PT Hero Supermarket group has closed 39 stores leaving just 95.

    “A detailed strategic review of this business is currently being undertaken,” the company said in its earnings statement released Tuesday.

    The company said the closures would improve the profitability of the banner, but its prospects do not appear bright.

    PT Hero operates 641 stores in all, including 53 Giant Ekstra hypermarkets, 155 Hero Supermarkets and Giant Ekspres stores, 337 Guardian health and beauty stores and one Ikea.

    Overall, the group experienced a 15 per cent increase in revenue in the first half year, with gross profit up nine per cent, but it still posted a net loss of Rp 32 billion (HK$18.4 million).

    Food and health & beauty sales, showed strong like for like growth in the half year, despite a soft trading environment, and Ikea showed “very promising” early trading figures, the company said.

    “Despite the sales momentum, profitability was negatively impacted by outpacing costs resulting from minimum wage increases, stocktake improvements and store rationalisations. Strong actions on energy saving and productivity are being taken to mitigate the impact of increasing costs. In Food, investment in price has led to a reduction in the gross profit margin.”Besides the Starmart closures, PT Hero shuttered another 24 stores across its brands.

    Stephane Deutsch, president director, said in food, the company was concentrating on increasing fresh produce sales.

    “This has helped to increase like for like sales, especially in Giant where progress is being made on growing its market share. Action is also being taken to improve the efficiency of the supply chain.”

    The hypermarket operation, Giant Ekstra, and the supermarket operation, Giant Ekspres, are both taking steps to improve the customer shopping experience in selected stores prior to rolling out the initiative more broadly across the country, he said.

    “The upscale format, Hero Supermarket, is continuing to enhance its offer across the fresh, imported and exclusive ranges to provide a more distinctive choice for customers.”

    In Health and Beauty, Guardian’s store expansion program is “progressing well” alongside the introduction of refreshed branding and increasing private label development, leading to further improvements in like for like sales.

    “The strategic partnership with the local pharmacy operator Apotik Melawai, which combines their local pharmacy strengths with the broader health and beauty offering of Guardian, is showing encouraging results.”

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  • Yokohama at new Indonesia auto show

    Yokohama at new Indonesia auto show

    Yokohama Rubber Co. Ltd. is gearing up to participate in the new Gaikindo Indonesia International Auto Show 2015.

    The event is scheduled for Aug. 20‒30 in South Tangerang, in Indonesia’s BSD City. Yokohama said it will be represented at the show by its Indonesian sales agent, PT Yhi Indonesia, which twice previously represented the tire maker at the separate Indonesia International Motor Show. Gaikindo is the Association of Indonesia Automotive Industries, and this is its first auto show, according to Yokohama.

    In keeping with the theme of “Delivering the Future,” Yokohama said its booth will feature displays that “appeal to the high driving and environmental performance” provided by its tires’ latest technologies.xa

    Considering the huge demand for eco cars and SUVs in Indonesia, the tire maker said it will display its fuel-efficient BluEarth tires suitable for use with eco cars and the company’s Geolandar line of SUV tires, as well as its flagship Advan brand.

    In addition, the booth will include a panel of Chelsea FC soccer players promoting the tire maker’s partnership, announced earlier this month, with England’s Premier League football club.

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  • Bali prime residential prices up 15% last year

    Bali prime residential prices up 15% last year

    Prime residential prices on Bali surged 15 per cent last year, the most among comparable destinations tracked by broker Knight Frank LLP. The cost of villas on the Spanish island of Ibiza climbed 5 per cent and those in Italy’s autonomous region of Sardinia fell 8 per cent, the report said.

    Bali’s gains are set to continue as Indonesia’s government this week begins to discuss revising rules to allow foreigners to directly own luxury apartments in the archipelago, with hopes of implementing changes within two to three months.

    Mr Nathan Ryan, owner of property brokerage Bali Realty, expects interest from China and Singapore once the revisions are made.

    “Asian buyers are no doubt a sleeping giant for Indonesia,” Mr Ryan said from Kerobokan, an area north of Kuta known for its surf and nightlife. “These buyers have plenty of money, but they are turned away by the leasehold property options, as they would prefer to be able to buy freehold.”

    Currently, foreigners can get around the ban against owning real estate in Indonesia by using local citizens as proxies or by structuring the purchase as a long-term lease.

    The government will coordinate with the immigration and tax offices to draft the revisions, Coordinating Minister for Economic Affairs Sofyan Djalil said last Thursday

    Under the proposed amendments, foreigners will be allowed to buy only luxury apartments and not landed property.

    Property prices in Jakarta rose 11 per cent in March from a year earlier, Knight Frank data shows. That is the biggest gain in Asia after Bengaluru in India, where real estate costs climbed 13.6 per cent.

    “If you look at how close Jakarta is to Singapore and given that a lot of Singaporeans also work in Indonesia, there will be interest from Singaporeans,” said Ms Christine Li, director of research for Singapore at Cushman & Wakefield.

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  • Indonesia tariff ‘own goal’

    Indonesia tariff ‘own goal’

    Indonesia’s hapless government has embarked on a sudden tariff program experts agree will damage its economy and fuel inflation.

    Having just a month ago reduced taxes on luxury goods to encourage its people to spend more at home and less in overseas destinations like Singapore, now the government has slapped a range of tariffs on some 1000 popular goods categories, including cars, condoms, candy, alcohol, coffee and carpets.

    It says the move will stimulate local manufacturing by making imported goods less expensive.

    But economists – basing their comments on a long history of economic governance by Asian countries – agree the move will simply reduce spending and fuel inflation. It’s an economic own goal punishing its citizens and effectively subsidising inefficient, poor quality local producers.

    “Imposing this is out of alignment with the economic integration agenda and a step backward from the global trend of most economies forging free trade agreements towards lower tariffs, if not zero,” said Victor Tay, COO of the Singapore Business Federation.

    “Indonesia has the largest population in Asean and is also a net importer of many products.”

    Tay said imposing such barriers may protect local industry in the short term, but in the longer term might lead to local manufacturers being unable to improve their competitiveness against other regional suppliers.

    “This will not serve the greater business community well, especially if other countries start erecting their own barriers on a reciprocal basis,” he said.

    Indonesian university economist A. Prasetyantoko, concurred: “Higher import taxes would reduce the supply of goods and increase domestic prices, which would in turn further weaken buying power, then economic growth.”

    The new tariffs include:

    • 20 per cent on imported tea and coffee, raised from five per cent.
    • 30 per cent on meat, up from five per cent.
    • 50 per cent on cars, up from between 10 per cent and 40 per cent.
    • 15-20 per cent on confectionery, up from 10 per cent.
    • 150 per cent on imported liquor, previously 125,000 rupiah ($9.30) per litre.

    As one commentator in Singapore observed, the new tariffs are likely to make some Indonesians shift to having a coffee at a local coffee shop instead of at Starbucks.

    Justifying the increases, Heru Pambudi, customs and excise tax director-general, said: “Domestic industry is being overwhelmed by the flows of imported goods. We need to curb these flows so domestic products would not be outnumbered.”

  • Indonesians pressure the country’s largest telco to lower data costs

    Indonesians pressure the country’s largest telco to lower data costs

    Indonesians are pissed off about Telkomsel’s data package pricing policy. While they’re considered expensive for Jakartans, Telkomsel – Indonesia’s state-owned and largest mobile carrier – charges up to twice as much for the same amount of data if you happen to live in a bad “zone.”

    To protest this, activist Djali Gafur started a petition called “Internet for the people“. It has already accumulated over 10,000 signatures.

    Telkomsel divides the archipelago into 12 districts. Jakarta, as well as most parts of Java and the surrounding islands are in Zone 1, and tariffs actually go up as the areas get more remote. West Papua’s Raja Ampat district, for example, is in Zone 12.

    “We in Zone 12 don’t have a choice,” says Gafur in the petition on Change.org. It’s true because Telkomsel is often the sole carrier in remote areas. The others don’t even bother because the infrastructure costs outweigh the opportunities.

    Gafur demands that people in his area get access to the internet for an equal price, so that they too can participate in things like education, tourism, government, and creative industries online. “If [the connection] is a little slow, that doesn’t even matter so much,” he adds.

    Indonesia’s ICT Minister Rudiantara has since responded to the petition, and met with Telkomsel’s president director to discuss the matter, according to local media.

    Rudiantara said that the government is looking into subsidizing Telkomsel in areas where it is the only operator on the ground, supported by the Universal Service Obligation (USO) fund.

    The USO in its current form has been in place since 2005. Mobile phone carriers operating in Indonesia have to contribute 1.25 percent of their gross revenue into a shared pool, which non-profit government agencyBP3TI deploys toward connectivity programs in remote areas.

    Apparently, BP3TI is not quick enough to keep up with the demand for affordable mobile internet connectivity in the remote parts of Indonesia.

    Indonesia currently has no regulation on data tariffs, but according to Rudiantara, discussions on this will take place in 2016. In order to allocate funds from the USO to support Telkomsel in said remote zones, USO’s structure has to be changed. That will take time. For now, it’s up to Telkomsel to respond to the increasing frustration from people in zone 12.

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  • Electronic City invests online

    Electronic City invests online

    Indonesian appliance retailer PT Electronic City is to invest US$15 million on strengthening its online shopping site and to develop its back end IT infrastructure.

    It will also open another seven stores this financial year and renovate some of its existing outlets.

    Electronic City has 70 stores across Indonesia, operating in 22 cities in 15 provinces.

    The 14 year old company, which listed two years ago, has reported a stunning 600 per cent year on year increase in sales through its eCommerce site during the month-long Ramadan fasting season.

    The overall business is budgeting for 10 per cent revenue growth this year, its stores selling IT and office equipment, mobile devices, home appliances and audiovisual equipment. It holds a share of about 41 per cent of the Indonesian appliances market.

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  • Mitsubishi Shifts Focus to Smaller, Emerging Economies

    Mitsubishi Shifts Focus to Smaller, Emerging Economies

    With its decision to end auto production in the U.S., where Detroit’s Big Three and global giants dominate, Mitsubishi Motors Corp. has become the latest second-tier car maker to shift its focus away from crowded, mature markets to smaller emerging economies where there is less competition and more chance to grow.

    Japan’s sixth-biggest car maker—which produces about 1.1 million cars a year—said last week that it is ending production at its only U.S. plant, in Normal, Ill. At the same time, Mitsubishi Motors is ramping up its operations in Southeast Asia, building a plant in Indonesia and starting production this year at a factory in the Philippines that the company acquired from Ford Motor Co.
    Other small auto makers have taken a similar approach, including Suzuki Motor Corp., which largely withdrew from the U.S. market in 2012 to concentrate on places such as India, where it is the market leader, and Daihatsu Motor Co., which abandoned the U.S. two decades ago to focus on markets such as Indonesia.

    “We have a long history in Thailand, Indonesia and the Philippines, a larger market share compared to other regions, and a strong brand image, which are very big advantages,” Mitsubishi Motors Chief Executive Osamu Masuko said in an interview earlier this year.

    The expanding population and growth potential in the region are also attractive, he said. In addition to fast-growing markets such as Indonesia, he cited future prospects in countries such as Myanmar, Cambodia and Laos, which until now have barely featured in auto makers’ global strategies.

    Mitsubishi Motors will continue selling cars in the U.S. by importing vehicles from Thailand and Japan, a move analysts say will likely boost profitability because a weakening yen is letting Japanese auto makers make vehicles more cheaply at home than in the U.S.

    The U.S. factory, however, last year produced fewer than one-third of the 222,000 vehicles it made at its peak in 2000, because of slow sales in the U.S. as well as dwindling exports to Russia. Mitsubishi Motors said Monday that it would work with the United Auto Workers union, which represents employees at the Illinois plant, to try to find a buyer.

    “The reality is that the scale of the [U.S.] plant is very small compared with manufacturing plants of other companies,” Mitsubishi Motors’ president and chief operating officer, Tetsuro Aikawa, said during a news conference Monday. “It was becoming clear that the plant didn’t have an economic rationale.”

    Mitsubishi Motors’ shift highlights the economic realities for smaller car makers, some of which are choosing to concentrate their limited financial resources on emerging markets to tap demand for new cars. That focus lets the car makers design and build models better suited to consumers in their selected markets. Mitsubishi, for example, is developing a new compact multipurpose vehicle for Indonesia, where such cars, with high capacity and low operating costs, are popular.

    Emerging markets also tend to have fewer competitors than mature ones. Although Japanese car makers, led by Toyota Motor Corp., have been operating in Southeast Asia for decades and dominate the market, U.S. and German auto makers have struggled. In Indonesia, Japanese auto makers together hold about 90% of the market share. This year, General Motors Co. shut its assembly plant in Indonesia. It is now shifting strategy to team with a Chinese joint-venture partner, SAIC Motor Corp., to manufacture and sell low-cost minivans in Southeast Asia’s most populous nation.

    In recent years, Mitsubishi Motors has been increasingly oriented toward Southeast Asia, which now accounts for roughly 20% of the auto maker’s annual global sales. Thailand, where Mitsubishi has three factories, has become an export hub for the company.

    Shares in Mitsubishi Motors rose 5.5% on Monday, as analysts said the company could reap savings by ending U.S. production. Mitsubishi currently manufactures the Outlander Sport at the U.S. plant, but it plans to shift output of that model to a plant in Japan.

    Masataka Kunugimoto, an analyst at Nomura Securities, estimates that costs to make the Outlander Sport in Japan would likely be at least ¥200,000 ($1,615) lower per vehicle than in the U.S., because of a weaker yen.

    Some analysts say that if the yen strengthens, Mitsubishi Motors might pull out of the U.S. altogether.

    “If current foreign-exchange levels continue, it can continue exporting” from Japan to the U.S., said Koji Endo, an automotive analyst at Advanced Research Japan. “But in the case that the yen strengthens again in the future, there’s a possibility that it won’t be able to export.”

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  • Hong Kong + Indonesian Fashion Meet at “Batik Crossover”

    Hong Kong + Indonesian Fashion Meet at “Batik Crossover”

    “In Style – Hong Kong”, a large-scale promotion organised by the Hong Kong Trade Development Council (HKTDC), is coming to Jakarta 14-20 September 2015. The promotion will showcase a range of Hong Kong lifestyle products as well as business services to Indonesian entrepreneurs and consumers.

    The innovative “Batik Crossover” display is a highlight of the week-long “In Style – Hong Kong” promotion, which also includes a product expo for trade buyers at the Jakarta Convention Center 17-19 September 2015, a citywide retail and gourmet promotion at venues across Jakarta for consumers and a symposium with various business networking activities as well as a high-level Gala Dinner for Indonesian businesses.

    Symbol of Collaboration

    Six collections by renowned Hong Kong designers will feature in “Batik Crossover”, with works created from the traditional Indonesian fabric. The designs by Lulu Cheung, Walter Kong with Jessica Lau, Walter Ma, Aries Sin, Harrison Wong and Cecilia Yau will be unveiled at the Fashion Hong Kong catwalk show during the Gala Dinner (by-invitation only) on 17 September, before going on public display at Grand Indonesia Shopping Town.

    “‘Batik Crossover’ is about combining a fine Indonesian craft with Hong Kong fashion design talent, symbolising the ‘In Style – Hong Kong’ theme of style, creativity, and collaboration between Indonesia and Hong Kong. We believe this initiative would be inspirational to Indonesian consumers,” said HKTDC Director of Product Promotion, Stephen Liang.

    Lulu Cheung – Indonesian Roots

    Bandung-born Hong Kong fashion designer Lulu Cheung’s love of batik dates back to her early childhood, when she wore casual clothing made from the material. Today, the renowned designer’s bond with the fabric is being rekindled through her “Batik Crossover” collection.

    “This is my first try at batik design. I will mix Hong Kong and Indonesian fashion cultures to create a contemporary look. I hope I can also give the cloth a new, impactful look,” said Ms Cheung, who, at the age of five, moved to Hong Kong with her family. “I’ve long been fascinated with batik, even keeping two batik moulds for many years as art pieces.

    “Batik is one of the core elements of Indonesian art and culture. The printing and colour represent part of the country’s culture and contemporary arts trends. In the past, the most natural dyes and colours and the most original methods were used to make the patterns. My mum told us batik colours would never fade.”

    Ms Cheung designs a wide range of womenswear, from casual to formal wear, Her clients include Hong Kong models such as as Kathy Chow, Eunice Chan, Vanessa Yeung and Janet Ma. Since her first runway show at Hong Kong Fashion Week in 1989, she extended her catwalk rounds internationally and has received multiple awards, including the International Fashion Editors’ Best Hong Kong Collection Award at Hong Kong Fashion Week in 1996, and the Certificate of Merit for Excellence in Fashion Design at Hong Kong Fashion Week in 1992 and 1994. Ms Cheung was named one of the Ten Outstanding Designers at the Hong Kong Art & Design Festival in 2006.

    Walter Kong and Jessica Lau – Fairy-tale Fantasy

    “Batik is something new to us. The fabric has a strong cultural element, but we’d like to integrate different cultures into our collection as well. The fabric is quite light, colourful and energetic. Because of its colour, it actually is quite feminine,” said Jessica Lau.

    “Our batik pieces will be based on our latest collection inspired by the Nutcracker. They are surreal, colourful and comfortable and flatter the female body. Our target customers are career women,” Walter Kong added.

    Mr Kong and Ms Lau design contemporary east-west fusion womenswear that can be easily mixed and matched for various occasions. They have dressed Hong Kong actresses including Aimee Chan and Grace Chan, both former “Miss Hong Kong” winners. Mr Kong was the 2007 Overall Winner of the HKTDC-organised Young Designers’ Contest. Ms Lau, a Central Saint Martins College of Art and Design graduate, was named “Best Emerging Fashion Designer 2009” in London by Artstalker creative group.

    Walter Ma – Attention to Detail

    Veteran designer Walter Ma will use batik in his evening gown designs. “The material is very comfortable, but it needs adapting to be used in evening gowns, so my collection will feature batik detail rather than being made totally with batik. The design concept is mainly beading and embroidery,” said Mr Ma.

    Mr Ma designs a wide range of fashion, including womenswear and menswear. He was honoured with the Merit Award at the Design Gallery show staged at the Hong Kong Fashion Week for Fall/Winter 1996. In 1997, he was awarded the “Energetic and Creativity Award” of Porsche Design and the “Artist of the Year Awards 1997 – Fashion Designer”. His clientele has featured internationally acclaimed Hong Kong actors and actresses, including Maggie Cheung, Andy Lau and Aaron Kwok.

    Aries Sin – Futuristic & Fun

    Aries Sin aims to give batik a modern twist. “I’m still learning about batik. There’s lots of potential in using this fabric in different ways. I have picked one that has a picture on it. I think it will match my collection,” said Ms Sin.

    “I will try to make it more international. I will use a contemporary way to present the material, and use the fabric in a more futuristic way, so maybe you can see something fun in the collection. And it’s going to be unisex.”

    Ms Sin’s unisex pieces have been worn by renowned Hong Kong singers including Miriam Yeung, Denise Ho and Andy Hui. In 2013, she was named by Perspective magazine as one of “40 under 40” design talents, and won the bronze award at the “Design for Asia Awards 2013” organised by the Hong Kong Design Centre.

    Harrison Wong – Casual Charm

    Harrison Wong is getting creative with the traditional material. “The batik technique of wax-resistant dyeing gives the cloth a beautiful pattern and colour, and it feels good, too. I will turn this traditional fabric with traditional pattern, into a contemporary street fashion look for men, which is a challenge. I guess the design will be interesting,” said Mr Wong.

    The menswear specialist was Overall Winner at the Hong Kong Young Designers’ Contest and captured a Special Award at the Asian Fashion Grand Prix Contest (organised by Association of Total Fashion in Japan) in 1996. With a Master’s degree with distinction from the London College of Fashion, Mr Wong has designed women’s and men’s seasonal collections for international runways in New York, Milan, Shanghai, Taipei, Sydney and Hong Kong.

    Cecilia Yau – Creative Classic

    Cecilia Yau’s inspiration came from her childhood journeys. “The theme for my collection will be ‘A Midsummer Night’s Dream’, inspired by my Southeast Asian travels as a child when, during the hot evenings, I would imagine myself being part of Shakespeare’s play, ‘A Midsummer Night’s Dream’,” said Ms Yau, a young yet experienced and well-known award-winning designer specialising in bridal wear and haute couture.

    “The batik I am going to use features deep blue, purple and golden yellow colours, with the latter resembling moonlight. Batik is versatile and I will use it in an unconventional way. My design will feature 3D cutting, representing a romantic and elegant rendition of the Shakespearean classic.”

    Graduating with a degree with distinction from ESMOD International in Paris, Ms Yau was Overall Winner of the Hong Kong Young Fashion Designers’ Contest and winner of the Hong Kong Fashions Association Creative Award in 1999. The Hong Kong Communication Art Centre recognised her as one of The Ten Outstanding Designers in 2008, and the Outstanding Greater China Designs Winner in 2013 and 2014. She was named among the “Ten Outstanding Young Persons” in 2013. Ms Yau has participated in various large-scale fashion shows including the Fukuoka Asia Fashion Festival, the Shanghai Fashion Festival and New York Fashion Week. Her celebrity clients include former Miss Hong Kong Michelle Reis, Hong Kong singer Linda Wong, and Chinese mainland actresses Huang Yi and Irene Wang.

    In addition to “Batik Crossover”, Mr Kong and Ms Lau, as well as Ms Sin and Mr Wong will also be exhibitors at the “In Style – Hong Kong” Expo (17-19 September).

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