Indonesia offers a good market potential for modern retailers. The market generated $8 billion worth of sales in 2008 and is expected to strengthen in the coming years. Competition is very intense and foreign companies are particularly strong in the hypermarket sector. In the Indonesian retail industry, Presidential Regulation No. 112/2007 provides guidance for modern retailers on location, building size, and trading terms. The regulation is however deemed to be relatively weak and does not accommodate some current business models.
With a population of 230 million people, Indonesia is a huge market for the retail sector. Moreover, 80 percent of the average income is spent on consumer products. The strong growth of the modern retail industry has been driven mostly by strong domestic consumption, serving as a primary contributor to the growth of Indonesia’s economy. In 2008, total sales of Indonesia’s developed retail industry reached approximately $8 billion, generated by over 8,000 retail outlets throughout the country. It is estimated that the retail sector will continue to grow by approximately 10 to 15 percent in 2009.
By Henry Sutanto