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Tag: Indonesia

  • Wings Air to open new route to three cities from Jakarta

    Wings Air to open new route to three cities from Jakarta

    Wings Air, a subsidiary of Indonesia’s largest airline, Lion Air Group, will soon open a new route from Jakarta via Halim Perdanakusuma International Airport to three destinations in one go, namely Bandung, Malang and Makassar.

    “The new route will only be served once every day and will use ATR ‪72-500/600 aircraft that have a capacity of 72 passengers,” said Lion Air Group president director Edward Sirait.

    The route will launch on July 2, with departure from Jakarta scheduled at 1:55 p.m., from Bandung to Malang at 2:15 p.m. and from Malang to Makassar at 4:35 p.m.

    On July 3, the plane will fly back from Makassar to Malang at 6 a.m., then from Malang to Bandung at 7:25 a.m. and from Bandung to Jakarta at 9:35 a.m.

    “Currently, Wings Air flies to more than 86 domestic destinations with more than 293 daily flights and owns 52 ATR ‪72-500/600 aircraft,” Edward added.

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  • Indonesia’s Credit Growth in May Fueled by Abundant 3rd Party Fund Placement

    Indonesia’s Credit Growth in May Fueled by Abundant 3rd Party Fund Placement

    Indonesias banking credits grew 8.71 percent in May 2017, up 0.37 percent from 8.34 percent in the same month last year, according to the Financial Service Authority (OJK). However, the May 2017 credit growth fell 0.76 percent from 9.47 percent a month earlier.

    Although the banking credits in May 2017 grew at a slower pace than in April 2017, OJK believes the credit growth until May 2017 was still relevant to the business plans of banks which have set the target of credit growth for 2017 at 9-12 percent.

    “Compared to last year, it (the credit growth) is better,” Chief of OJKs Board of Commissioners Muliaman Hadad said at the Indonesia Stock Exchange (BEI) Building here on Tuesday.

    The May 2017 credit growth was fueled by abundant third party fund placement which grew by 11.18 percent year-on-year, he said. The amount of credits which were extended to the electricity sector grew 31.05 percent, the construction sector 24 percent, the fisheries sector 11.2 percent and the agricultural sector 10.8 percent.

    Muliaman noted that the expansion of four state-owned banks businesses contributed significantly to the credit growth.  The amount of credits extended by the four state banks, Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Tabungan Negara (BTN), until May 2017 reached 14.81 percent, with third party fund placement growing 16.77 percent.

    However, the banking credit growth did not spread evenly as the amount of credits channeled by private banks grew 4-5 percent. The ratio of non-performing loans remained at 3.07 percent until May 2017.

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  • East Nusa Tenggara urges Garuda to open Kupang-Dili-Darwin flight route

    East Nusa Tenggara urges Garuda to open Kupang-Dili-Darwin flight route

    The East Nusa Tenggara Tourism Office has urged Garuda Indonesia to open Kupang-Dili-Darwin flight route round trip immediately to help boost foreign tourist arrivals to the islands province.

    The head of the Tourism Office, Marius Ardu Jelamu, stated here on Tuesday that in the past year, the number of tourists visiting the province in cruises and chartered aircrafts had increased.

    According to Marius, Kupang-Darwin flights will help travelers in terms of cost and time because it only takes 1.5 hours to reach the destination.

    Marius is optimistic that the Kupang-Timor Leste-Darwin flight would increase the number of tourist arrivals to East Nusa Tenggara, considering the current growing tourism potential in the province.

    East Nusa Tenggara is increasingly attractive to domestic and foreign tourists, especially with regard to the various cultural festivals.

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  • Indonesia sets tariff ranges for online car-hailing services

    Indonesia sets tariff ranges for online car-hailing services

    Indonesia set minimum and maximum tariffs for online car-hailing services in a bid to ensure comparable pricing with conventional transport providers and address complaints of undercutting, sending shares of the nation’s top two taxi firms soaring.

    Ride-hailing services such as US group Uber Technologies Inc, Southeast Asia’s Grab and Indonesia’s GO-JEK have heavily subsidised their drivers in Indonesia in order to gain market share in the country of 250 million people, analysts say.

    The transport ministry said in a statement on Sunday that it had set a tariff range for online car-hailing services of 3,500-6,000 rupiah (S$0.35-S$0.62) per kilometre for the islands of Java, Bali and Sumatra.

    For Kalimantan, Sulawesi, Nusa Tenggara, Maluku and Papua, the range is 3,700-6,500 rupiah per kilometre.

    The regulation kicked in on July 1 and will be evaluated in the next six months, the ministry said. “There has to be a balance between conventional and online transport, so that has to be regulated,” Pudji Hartanto Iskandar, director-general of land transport at the ministry, told by phone.

    The news sent shares of Indonesia’s two biggest taxi operators, PT Blue Bird Tbk and PT Express Transindo Utama Tbk, surging on Monday.

    By 0340 GMT, Blue Bird shares jumped as much as 10.7 per cent, while Express gained as much as 4.3 per cent. The broader Jakarta stock exchange was 0.7 per cent higher.

    Drivers of Blue Bird and Express have called for a ban on ride-hailing services, claiming they were subject to less stringent requirements than conventional taxis.

    Uber said in an emailed statement it had yet to receive a copy of Indonesia’s regulations. “However, we remain committed to working with the government to find a path forward that accommodates the interests of riders and driver partners and supports innovation, competition and customer choice,” Uber said.

    Grab said it is ready to cooperate with the transport ministry and to comply with regulations. “After receiving direction from the government, we will review the policy and make the necessary adjustments to ensure that our driver-partners will still earn the best incomes when using the Grab platform,” it said in an email.

    GO-JEK did not provide an immediate comment. Blue Bird and Express did not immediately respond to requests for comment.

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  • e-retail brands out of the social media loop in SE Asia

    e-retail brands out of the social media loop in SE Asia

    Over 85% of consumers in Singapore, Malaysia and Indonesia, who mention e-retailer brand names in their social media posts don’t tag brand handles, according to Digimind.

    This means brands need to be vigilant in monitoring their brand reputation in the wider social media space to ensure they aren’t missing out on key conversations and trends, and are able to act upon any customer service concerns quickly.

    With the rise of empowered consumers and an increasing adoption of online shopping, e-retailers need to adopt customer-centric strategies in order to thrive. With so much of our daily conversations happening online, data from social media can provide key insights for e-retailers wishing to optimize customer experiences.

    Digimind’s study, Social Shopping in 2017, assessed the state of the e-retail industry in the three countries by monitoring 15 local and regional e-retailers, including Lazada, Zalora, and Berrybenka.

    “It’s no secret that brands who implement customer-centric strategies are excelling. With 2.8 billion active social media users in Southeast Asia, it is crucial for e-retailers to listen to what is being said about their brand, competitors and the industry online,” said Stephen Dale, general manager of APAC at Digimind.

    “Understanding what consumers are saying on social media can provide companies with an arsenal of insights that can be used to develop content strategies, improve customer service, build brand advocacy, and increase sales,” said Dale.

    He added that when analyzed in conjunction with other data such as web page visits and browsing behavior, this can further inform marketing plans and Voice of the Customer programs.

    The study also revealed that while the majority of e-retailer’s followers in the countries studied were on Facebook, consumers were most actively publicly posting their opinions and experiences on e-retailers on Instagram and Twitter.

    This means while Facebook is the ideal channel for brands to communicate with followers, Instagram and Twitter are key channels for community engagement.

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  • Indonesian banks urged to update their IT systems

    Indonesian banks urged to update their IT systems

    Indonesian banks have been urged to update their system of information technology so that they could protect themselves from possible cyber attacks that have become more and more massive.

    Bank Indonesia Governor Agus Martowardojo said here on Monday hackers or virus attackers continued to innovate and find loopholes in the IT system and so banking industry and other financial sectors must update their security standard.

    His statement came in the midst of increasing alertness following global virus attack by so-called “”Petya” after global system of IT routed by “Ransomware Wannacry”.

    “All who use technology applications must use the latest version. The latest version usually has been given features to prevent possible cyber attacks,” Martowardojo said.

    “We must not be offguard. We must be prepared because there will certsinly be other innovations that could disrupt the system,” he said.

    The general chairman of the State-owned Banks Association, Maryono, said that until Monday there had been no report coming from four state-owned banks – three of them controlling banking markets -being attacked by Peyya virus.

    “Usually if one bank is hit and so will the others but so far we have received no teport about it,” he said.

    The chief of PT. Bank Central Asia Tbk. which is the countrys largest private bank said Petya did not disrupt the banking system. Howevet cyber attack has been rife to give a warning for banks to improve their IT security system.

    “We will keep safeguarding it. Thank God there has been no problem so far,” BCA president director Jahja Setiaatmadja said.

    The ministry of informatics and communication has earlier called on the people and heads of institutions to take anticipatory measures against global Ransonware Petya cyber attack by preparing backup and updating their IT security system.

    Indonesias financial industry including capital market is worth more than Rp16,000 trillion and so security system in the industry is a very important pillar to maintain trust and sustainability of the industry which also serves as a source of development funding.

    Petya was first known after infecting the server in Russias biggest oil company and disrupted the operation of a bank in Ukraine and paralyzed computers in multinational shipping and advertising companies.

    Petya-infected computer will show a message telling that the system has been blocked and its owner must pay a tansom of US$300 in the form of Bitcoin.

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  • Lion Air welcomes Indonesia’s first Boeing 737 MAX-8

    Lion Air welcomes Indonesia’s first Boeing 737 MAX-8

    Indonesia’s largest low-cost carrier Lion Air welcomed on Tuesday the arrival of the first of hundreds of Boeing 737 MAX-8 aircraft it ordered from the United States planemaker, paving the way for the company to move forward with its expansion plan.

    The aircraft will be the first of its kind operated by an Indonesian airline.

    Lion Air is part of the Lion Air Group, together with Wings Air, Batik Air, Lion Bizjet, Malaysia-based Malindo Air and Thailand-based Thai Lion Air.

    The aircraft delivery is the second this year for Lion Air Group as Malindo Air earlier welcomed a similar type of aircraft in May.

    “This new aircraft will help us develop our routes to other destinations and to offer affordable air fares,” Lion Air Group public relations manager Andy M. Saladin said in an official statement.

    Lion Air Group has ordered 218 Boeing 737 MAX-8, eight of which will be delivered this year.

    The Boeing 737 MAX-8 can fly for seven and a half hours without refueling and is the first Boeing aircraft to have a double winglet feature.

    Lion Air currently operates 113 aircraft to serve 630 flights to 44 domestic and international destinations.

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  • Indonesia, Swiss to exchange information on finance

    Indonesia, Swiss to exchange information on finance

    The governments of Indonesia and Switzerland have declared the readiness of both countries to implement the Automatic Exchange of Information (AEOI).

    The signing of the joint declaration was undertaken by Director General of Taxes, Ken Dwijugiasteadi, and Swiss Ambassador to Indonesia, Yvonne Baumann, witnessed by the Minister of Finance of the Republic of Indonesia and Members of the Board of Commissioners of the Financial Services Authority here on Tuesday.

    Finance Minister Sri Mulyani stated that it was important for Indonesia to be able to implement AEOI with Switzerland as it was one of the largest financial centers in the world.

    “Financial information obtained from Switzerland and nearly 100 other countries will be used as a tax database to test the compliance rate of taxpayers. It is expected to encourage their awareness to fulfill tax obligations voluntary, especially in reporting their earnings and financial assets abroad which have not been reported,” Sri Mulyani explained.

    Through the joint declaration, Indonesia and Switzerland agreed to exchange financial account information automatically in accordance with the Common Reporting Standard (CRS) starting from 2018, with the first exchange in 2019, protected by data security assurance according to international standards.

    Both jurisdictions also stated that they will share information on the development of CRS implementation in each countrys domestic legislation and affirm the commitment to continue strengthening cooperation in the financial sector.

    The joint declaration is required by Switzerland to enable the Multilateral Competent Authority Agreement (MCAA) to implement AEOl to obtain the Swiss Parliament approval by the end of 2017.

    On May 8, 2017, the Indonesian Government adopted a Government Regulation In lieu of Law No. 1/ 2017 on Access to Financial Information for Tax Interests.

    It regulates the authority of the Directorate General of Taxation to receive and obtain financial information from financial institutions throughout Indonesia and the authority of the Minister of Finance to execute financial information exchange with authorities for other countries or jurisdictions.

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  • Indonesia, Malaysia Muslims call for Starbucks boycott over LGBT stance

    Indonesia, Malaysia Muslims call for Starbucks boycott over LGBT stance

    Muslims in Indonesia and Malaysia were urged to boycott Starbucks on Tuesday (Jul 4) by major Islamic groups accusing the coffee chain of being pro-gay rights, as concerns grow over rising religious conservatism in both nations.

    Leaders from Muhammadiyah, Indonesia’s second biggest mass Muslim organisation, also urged the government to revoke the company’s business licence for its stance on lesbian, gay, bisexual and transgender (LGBT) issues.

    “The ideology, business and view that they support are against our ideology,” Anwar Abbas, Muhammadiyah’s head of economic affairs.

    Another Muhammadiyah leader, Yunahar Ilyas, said the group was calling on “Muslims to not drink in Starbucks so that the income is not used to strengthen LGBT campaigns”.

    The firm is among a slew of US companies to have spoken up against discrimination in the US, with representatives signing a letter to North Carolina’s Republican governor protesting legislation targeting transgender people last year.

    Hardliners and Islamic groups have led a growing backlash against Indonesia’s LGBT community over the past year, which activists believe was triggered by widespread media coverage of a decision in the United States to legalise same-sex marriage.

    The group Pribumi Perkasa Malaysia this week also called on the government to “re-evaluate the trading licence given to companies that support same-sex marriages and LGBT,” spokesman Amini Amir Abdullah said in a statement.

    The Muslim leaders said concerns about Starbucks arose after reading Starbucks chairman’s comment when tackling a shareholder’s complaint in 2013 that the company were losing customers due to the firm’s stance on LGBT.

    At the time, chairman Howard Schultzman, then the chief executive, responded by asking the shareholder to sell the shares.

    Homosexuality has long been taboo in Malaysia, where 60 per cent of the population is Muslim, and where sodomy is a crime punishable by up to 20 years in prison.

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  • Bank Indonesia to issue commercial paper regulation July-end

    Bank Indonesia to issue commercial paper regulation July-end

    Bank Indonesia (BI), Indonesias central bank, will issue a regulation related to the issuance of commercial paper (CP) within two weeks or by the end of July 2017.

    This is following the need by various non-bank corporations to publish the paper as short-term funding for working capital.

    The Head of BIs Finance Market Development Department, Nanang Hendarsyah, said here, Tuesday, that the regulation would regulate CP issuance and trading.

    For technical rules, BI will issue a derivative regulation that will manage the supporting institutions, such as rating agencies and public accounting firms.

    Once the supporting institutions are ready, Nanang remarked, BI would issue a technical regulation for non-bank corporations as issuing institutions.

    “Technical regulations for supporting institutions will be issued in September 2017, while for issuing agencies they will be issued in December 2017,” Nanang revealed.

    The commercial paper issuance is expected to increase this year. The number of non-bank corporations in Indonesia is over 500, and the demand for short-term funds through money market instruments is enormous.

    Previously, BI had also issued a regulation on issuance and trading of instruments for Negotiable Certificate Deposit (NCD).

    Although it is same as commercial paper, as a one-year short-term instrument, NCD is issued by a banking corporation.

    Banks can buy commercial paper in money markets. In addition to banks, investors who can absorb commercial paper include securities companies, individuals, investment managers, pension funds and insurance, through mutual fund products and foreign investors.

  • Garuda opens Kendari-Baubau flight route

    Garuda opens Kendari-Baubau flight route

    The Indonesian flag carrier, Garuda Indonesia, opens a new flight route of Haluoleo airport in Kendari to Betoambari Airport in Baubau, Southeast Sulawesi.

    The first flight was made on Monday afternoon.

    Southeast Sulawesi Governor Nur Alam here on Monday appreciated Garuda for the flight route connecting Kendari and Baubau.

    “This will add and expand our access to air transportation and connectivity in Southeast Sulawesi,” he said.

    The Kendari-Baubau flight, Nur Alam added, will provide a fundamental trust for investors to invest in the province.

    “When Garuda opens flights in an area of course it is because there is great economic potential in that place,” he said.

    The Kendari-Bauban route is available roundtrip every day using ATR 72-600.

  • Donald Trump’s business dealings on Australia’s doorstep revealed

    Donald Trump’s business dealings on Australia’s doorstep revealed

    Donald Trump was running for the US presidency when he personally raised with senior Indonesian politicians the need to have a toll road completed in Indonesia to benefit a massive new resort development in which he later invested.

    A senior Indonesian politician who met Mr Trump in New York in 2015 has revealed that he made clear the project would only go ahead if the toll road was completed.

    “He was saying that it’s impossible without the toll road,” Fadli Zon, the deputy speaker of Indonesia’s Parliament, said.

    Mr Zon, together with the speaker of the Indonesian House of Representatives, Setya Novanto, met then presidential-hopeful Mr Trump at Trump Tower in New York in September 2015 during the presidential primary campaign.

    The meeting, unauthorised by the Indonesian government, was held with the direct assistance of Mr Trump’s new Indonesian business partner, Hary Tanoesoedibjo, known as Hary Tanoe.

    At the time, Mr Trump and Mr Tanoe were in negotiations over the development of a mega-resort and an associated theme park, sky train, and Formula One racing track on a 3000-hectare site on the island of Java, south of the capital Jakarta.

    “He said he really understood well about the situation. For example, this theme park in Bogor area that needs some highway … because sometimes it’s impossible to go there,” Mr Zon said.

    Congested roads in the region can turn the 70-kilometre car ride from Jakarta into a nightmarish two-or-three-hour journey.

    One week after the New York meeting, Mr Trump signed the deal to develop the Trump International Hotel and Tower Lido.

    The construction of the toll road, which had been started then delayed in June 2015, resumed in November.

    The government took over the construction in June 2016 and the first section is due for completion by the end of the year.

    Mr Zon said he estimated that with the impending completion of the toll road, Mr Trump and Mr Tanoe had already tripled their value of the resort land.

    “Yeah. I think the price increase like three times,” he said.

    The President’s latest financial disclosure, released on June 14, stated that the management fees from the Indonesian companies tied to the Bali and Lido resorts had more than doubled.

    The latest disclosure puts the fees at $US380,000 ($A495,000), up from the $US167,000 ($A217,000) he reported in 2016.

    ‘This is a marriage between politicians and business people’

    The head of Human Right Watch Indonesia, Andreas Harsono, said he thought the meeting between the Indonesian politicians and Mr Trump was unethical.

    “It is not appropriate for any business to ask the government to pay for an access toll road into their property,” he told.

    “Unfortunately, it is common in Indonesia. You can change a road direction as you can extend a toll road or bridges or whatever to benefit people who have money, who have interest.

    “This is a marriage between politician and business people.

    “It is common, it is very common in Indonesia.”

    Mr Zon and Mr Novanto were both investigated by a parliamentary ethics committee over whether the meeting with Mr Trump violated strict Indonesian government codes.

    The result of that investigation has never been made public, but both walked away with only a warning.

    In November, two months after the New York meeting, Mr Novanto was embroiled in a massive corruption scandal, accused of attempting to extort a $US4 billion ($A5.2 billion) payment from American mining giant Freeport-McMoRan.

    Mr Novanto denied the accusation, claiming he was “just joking”.

    He was never formally charged.

    Donald Trump’s land in Bali

    Mr Trump and Mr Tanoe’s first controversial Indonesian venture was in Bali.

    The resort, planned as the largest on the island, will overlook one of the most iconic and sacred sites — the Temple of Tanah Lot.

    The existing low-scale Bali Nirwana golf course and resort will close at the end of the month.

    Hundreds of local workers will be laid off and demolition is due to start next month.

    MNC Group bought the Bali Nirwana resort in 2013 from the Bakrie Group, owned by one of the Suharto family’s business associates.

    The Trump Organisation signed up in August 2015 to the redevelopment of the site.

    Not a lot of detail is known about the plans for the second Tanoe/Trump development, Trump International Hotel and Tower Bali.

    When we confronted the local regional governor Ebu Eka Wiryastuti about what had been approved by the local government, she refused to answer questions.

    “I can’t talk about this. I cannot talk about this. At all,” she said.

    “It’s a big complex, more than 100 hectares, to build a hotel, villas, condominiums, also to build a country club — that is also with Mr Trump,” Mr Tanoe told the ABC in January.

    The Trump Organisation will manage the hotel, country clubs and golf courses with the Trump family heavily involved in the project.

    Mr Tanoe outlined the project to the ABC in March and said each of the family members had a different role.

    “Donald Jr is responsible for the overall project. Eric is more on the design and golf, and Ivanka is more on the detail, like the fit-out of the hotel,” he said.

    Mr Harsono has warned that doing business in Indonesia may come at a cost for Mr Trump.

    “I’m not going to say Donald Trump is unethical man, but he is dealing with the worse of Indonesia past, and he is going to deal with the worst of Indonesia future,” he said.

    “I think Donald Trump is going to get his businesses messier and also Indonesia messier.

    “This is going to be a messier place.”

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  • Vietnam beats Thailand, Indonesia with big jump in global innovation ranking

    Vietnam beats Thailand, Indonesia with big jump in global innovation ranking

    The country, at number 47, is now only behind Singapore and Malaysia in Southeast Asia. Vietnam has been named the 47th most innovative economy in the world, its best performance to date, according to this year’s Global Innovation Index report.

    The country jumped 12 spots compared to last year, thanks to its efforts to improve business environment as well as competitiveness.

    Vietnam also ranked first among lower-middle income economies. Among Southeast Asian countries, it overtook Thailand to secure the third place, only behind Singapore and Malaysia.

    Global Innovation Index of Southeast Asian economiesSingapore (7th)Malaysia (37th)Vietnam (47th)Thailand (51st)Brunei (71st)Philippines (73rd)Indonesia (87th)Cambodia (101st)010203040506070Source: Global Innovation Index (GII)

    Knowledge and Technology Outputs, one of the main pillars of the index, was found to be Vietnam’s strong point.

    The country also performed well in Market Sophistication and in Creative Outputs. However, Vietnam’s performance was mediocre in the other pillars that measure institutional framework, human capital, infrastructures and business sophistication.

    “New Asian Tigers — such as Indonesia, the Philippines, and Vietnam — are emerging too, and they increasingly join not only Asian high-tech value chains but also other activities such as ICT offshoring. These and other countries in Asia are also active in improving their innovation performance,” the report said.

    The report, co-published by the World Intellectual Property Organization, Cornell University and the business school INSEAD, surveys the innovation performance of 127 economies around the world.

    Vietnam has been part of the index since its debut in 2007. The country has been climbing up since 2013, after several years of hovering just above the 70th place.

  • 7-Eleven outlets shutdown in Indonesia

    7-Eleven outlets shutdown in Indonesia

    The remaining 141 7-Eleven outlets in Indonesia will cease operations today (Friday), said franchise-owner of the 24-hour convenience store, Indonesia PT Modern Internasional.

    In a statement to the Bursa Efek recently, its Director, Chandra Wijaya, said the decision was taken given the limited resources to support operations and also to the sale and purchase of its shares.

    The company was reported to have agreed to sell the franchise to PT Charoen Pokphand Restu Indonesia but it was called off when both parties failed to reach a consensus on certain matters.

    There were some 175 7-Eleven outlets operating in Jakarta until September last year.

    At the end of 2016, more than 20 stores started closing down as they were not profitable.

    The chain outlets was first introduced in 2008 by PT Modern Internasional’s subsidiary, PT Modern Sevel Indonesia.

    However, PT Modern Internasional’s first quarter results for 2017 revealed that 7-Eleven stores incurred a a 37.17 per cent decline in total sales.

    Meanwhile, Indonesian Trade Minister Enggartiasto Lukita denied allegations that the shutdown in 7-Eleven’s operations displayed weakness in the Indonesian retail sector as many other 24-hour retail outlets were still operating as usual.

    He said the shut down was due to internal problems and the losses experienced by the company.

    Enggartiasto said he would meet the management to obtain more information on the closure of the franchise outlets.

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  • The Challenges For Global Retail Franchises in Indonesia

    The Challenges For Global Retail Franchises in Indonesia

    Research company Spire in 2016 found Indonesia is viewed as the region’s largest franchise industry, with experts predicting at least 60 percent of franchise business operated in Indonesia last year with the majority of foreign franchises.

    Amir Karamoy, Chairman of the National Committee for Franchising and Licenses at the Indonesian Chamber of Commerce and Industry, said regional headquarters based in Indonesia should be encouraged as it benefits the country through taxes and human resource development. But at this stage, Indonesia’s complicated regulations regarding retail businesses and franchises limit foreign involvement, particularly for foreign businesses hoping to base a regional headquarters in the country.

    These regulations, as well as strong competition, can spell trouble for even the biggest global brands. The recent announcement that US convenience store giant 7-Eleven will close its doors in Indonesia has prompted speculation on further reforms.

    Modern Sevel Indonesia (MSI), the local arm of 7-Eleven Indonesia, opened its first store in Bulungan, South Jakarta, in 2009.

    “The business model that 7-Eleven implemented made underlying products such as snacks, beverages and cigarettes popular. This had made several other mini markets struggle to compete,” University of Indonesia academic and businessman Rhenald Kasali said.

    The chain introduced the hang-out concept to Indonesia, which saw young people gather to spend time together and snack, which in turn disrupt traditional models where customers would purchase food and then leave.

    Kasali speculated the Indonesian government does not support the business concept, which could have been a factor in MSI closing all stores by the end of June.

    He said government regulations typically ‘take sides’ in support of older retailers.

    “Sixty percent of 7-Eleven’s income came from youngsters who hang out at the store. 7-Eleven suffered because of bureaucracy and regulators that don’t understand the business model,” Kasali added.

    7-Eleven faced tough questioning from the Ministry of Trade when it first launched about the concept and whether the outlets were convenience stores or restaurants. A government regulation which prohibited the sale of alcohol at convenience stores is also believed to be a factor in the shutdown.

    The convenience store brand is not the first international giant to struggling to do business in Indonesia. Last year Swedish furniture retailer IKEA struggled to keep its franchise in Indonesia due to copyright problems with a firm called IKEA Surabaya.

    The Surabaya-based IKEA had registered the name in 2013, while the Swedish firm had registered in 2013. But Indonesian regulators defended the Surabaya business, saying the Swedish IKEA had been commercially inactive. As a result, Swedish IKEA paid a royalty to the Surabaya IKEA.

    Similarly, French fashion brand Pierre Cardin sued Jakarta businessman Alexander Satyo Wibowo who had been using the name for his brand in Indonesia. Like the IKEA case, the courts sided with the local business and ruled Pierre Cardin had lost the rights to the name due to inactivity.

    Although Pierre Cardin is a famous brand globally, the company registered its name in Indonesia in 2009 while Wibowo registered his brand in 1977. As a result, France’s Pierre Cardin no longer open outlets in Indonesia under that name.

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