Consumer Lifestyles in Indonesia

CONSUMER LIFESTYLES IN INDONESIA

Euromonitor International

December 2012

C O N S U M E R L I F E S T Y L E S I N I N D O N E S I A P a s s p o r t I

E u r o m o n i t o r I n t e r n a t i o n a l

LIST OF CONTENTS AND TABLES

Consumer Habits in Context ......................................................................................................... 1

Current Behaviour Within the Broader Economic Climate ........................................................ 1 Consumer Confidence .............................................................................................................. 2 Misery Index ............................................................................................................................. 2

Chart 1 Consumer Confidence Index 2007-2012 ...................................................... 3 Chart 2 Misery Index 2007-2012 ............................................................................... 3

Learning ....................................................................................................................................... 4

School Life ................................................................................................................................ 4 University Life ........................................................................................................................... 7 Adult Learning .......................................................................................................................... 8

Chart 3 Number of Students in Higher Education and Consumer Expenditure on Education 2006-2011 .............................................................................. 8

Chart 4 Regional Ranking in the growth of the number of University Students 2011 ............................................................................................................. 9

Working Habits ............................................................................................................................. 9

Working Conditions ................................................................................................................... 9 Women in the Workplace ........................................................................................................ 11 Commuting ............................................................................................................................. 12 Alternative Work Options ........................................................................................................ 13 Retirement .............................................................................................................................. 14

Chart 5 Employed and Unemployed Population and Labour Force Participation Rate 2006-2011 ..................................................................... 14

Chart 6 Population Aged 15-64 Compared with Old-Age Dependency Ratio 2000-2020 .................................................................................................. 14

Chart 7 Regional Ranking of Female Employment Rate 2011 ................................ 15

Eating Habits .............................................................................................................................. 15

Dining in .................................................................................................................................. 16 Dining Out ............................................................................................................................... 16 Caf Culture ........................................................................................................................... 18 Snacking Habits ...................................................................................................................... 18 Attitudes Towards Food Trends .............................................................................................. 18

Chart 8 Per Capita Expenditure on Consumer Foodservice by Chained and Independent 2012 ...................................................................................... 19

Chart 9 Regional Ranking of Availability of Fresh Fruit and Vegetables 2011 ........ 19

Drinking Habits ........................................................................................................................... 20

Attitudes Towards Drinking ..................................................................................................... 20 Drinking Inside the Home ....................................................................................................... 21 Drinking Outside the Home ..................................................................................................... 22

Chart 10 Per Capita Consumption of Alcoholic Drinks and Soft Drinks by Category 2012............................................................................................ 22

Chart 11 Regional Ranking of Alcoholic Drinks Consumption: Off-trade vs On-trade 2011 .................................................................................................. 23

Grooming Habits ........................................................................................................................ 24

Attitudes Towards Personal Care ........................................................................................... 24

C O N S U M E R L I F E S T Y L E S I N I N D O N E S I A P a s s p o r t I I


Attitudes Towards Beauty ....................................................................................................... 25 Male Grooming ....................................................................................................................... 26 Use of Hair Care Salons, Spas, Nail and Beauty Parlours ..................................................... 26

Chart 12 Value Sales of Beauty and Personal Care Key Categories 2007-2012 ...... 26 Chart 13 Regional Ranking of Per Capita Sales of Men's Grooming Products

2011 ........................................................................................................... 27

Fashion Habits ........................................................................................................................... 28

Attitudes Towards Clothing ..................................................................................................... 28 Attitudes Towards Footwear ................................................................................................... 29 Attitudes Towards Personal Adornment ................................................................................. 30 Attitudes Towards Accessories/luxury Goods ......................................................................... 30

Chart 14 Consumer Expenditure on Clothing and Footwear 2007-2012 ................... 30 Chart 15 Regional Ranking of Consumer Expenditure on Clothing and

Footwear as a Proportion of Total Consumer Expenditure 2011................ 31

Health and Wellness Habits ....................................................................................................... 31

Public Versus Private Healthcare ........................................................................................... 31 Attitudes To Health and Well-being ........................................................................................ 32 Over-the-counter Versus Prescription-only Medicines (otc Vs Pom) ...................................... 33 Sport and Fitness.................................................................................................................... 33 Obesity ................................................................................................................................... 33

Chart 16 Growth in OTC Expenditure on Pharmaceuticals Compared with Healthy Life Expectancy at Birth 2006-2011 .............................................. 34

Chart 17 Regional Ranking of Obese and Overweight Population 2011 ................... 35

Smoking Habits .......................................................................................................................... 35

Smoking Prevalence ............................................................................................................... 35 Attitudes To Smoking .............................................................................................................. 36

Chart 18 Smoking Prevalence amongst Men and Women 2012............................... 38 Chart 19 Regional Ranking of Smoking Prevalence 2011 ........................................ 38

Shopping Habits ......................................................................................................................... 39

Attitudes To Shopping ............................................................................................................ 39 Main Household Food and Non-food Consumables Shop ...................................................... 40 Top-up Food Shopping ........................................................................................................... 40 Shopping for Big-ticket Items .................................................................................................. 41 Personal Shopping ................................................................................................................. 41 E-commerce and M-commerce .............................................................................................. 42

Chart 20 Importance of Hypermarkets, Supermarkets and Discounters within Grocery Retailing 2012 .............................................................................. 42

Chart 21 Regional Ranking of Sales through Internet Retailing 2011 ....................... 43

Leisure Habits ............................................................................................................................ 44

Staying in ................................................................................................................................ 44 Going Out ............................................................................................................................... 46 Public Holidays, Celebrations and Gift-giving ......................................................................... 46 Culture .................................................................................................................................... 47

Chart 22 Regional Ranking of Consumer Expenditure on Leisure and Recreation as a Proportion of Total Consumer Expenditure 2011 ............. 47

DIY and Gardening Habits.......................................................................................................... 47

Attitudes To DIY...................................................................................................................... 48

C O N S U M E R L I F E S T Y L E S I N I N D O N E S I A P a s s p o r t I I I


Attitudes To Gardening ........................................................................................................... 48

Chart 23 Number of Home Owners and New Dwellings Completed 2007-2012 ....... 49 Chart 24 Regional Ranking of Home Owners as a Proportion of Total

Households 2011 ....................................................................................... 50

Pet Ownership Habits ................................................................................................................. 50

Attitudes To Pet Ownership .................................................................................................... 50

Chart 25 Pet Population and Sales of Pet Food 2007-2012 ..................................... 51 Chart 26 Regional Ranking of Pet Ownership 2011 .................................................. 52

Travel Habits .............................................................................................................................. 53

Getting Around ....................................................................................................................... 53 Use of Public Transport .......................................................................................................... 54 Air Travel ................................................................................................................................ 55

Chart 27 Kilometres Travelled by Road, Rail and Air Compared with Motorway Intensity, Petrol Prices and Number of Scheduled Airline Passengers

Carried 2006-2011 ..................................................................................... 56 Chart 28 Regional Ranking of Possession of Passenger Cars 2011 ........................ 57

Vacation Habits .......................................................................................................................... 58

Attitudes To Taking Holidays .................................................................................................. 58 Main Holiday-taking Trends .................................................................................................... 59 Domestic Versus Foreign Holidays ......................................................................................... 60 Preferred Travel Methods ....................................................................................................... 61

Chart 29 Domestic and Outgoing Tourist Expenditure by Sector 2007-2012 ............ 61 Chart 30 Regional Ranking of Holiday Departures 2011 .......................................... 62

Financial Habits .......................................................................................................................... 63

Attitudes Toward Payment Methods ....................................................................................... 63 Savings ................................................................................................................................... 64 Loans and Mortgages ............................................................................................................. 64

Chart 31 Consumer Lending Compared with Savings and Savings Ratio 2007-2012 ........................................................................................................... 66

Chart 32 Regional Ranking of Financial Cards in Circulation 2011 ........................... 67

C O N S U M E R L I F E S T Y L E S I N I N D O N E S I A P a s s p o r t 1


CONSUMER LIFESTYLES IN INDONESIA

CONSUMER HABITS IN CONTEXT

Current Behaviour Within the Broader Economic Climate

Indonesian GDP, per capita disposable income and purchasing power have enjoyed solid

growth in real terms over the past decade, and consumer confidence has increased on the back

of these gains, evidenced by concurrent increases in per capita consumer expenditure. In 2011,

GDP reached Rp7,427 trillion, up from Rp6,977 trillion in 2010 and Rp6,570 trillion in 2009.

Much of this growth was driven by strong increases in consumer expenditure despite consumers

wrestling with inflation, the lingering effects of the global financial crisis and the impact of the

recently slumping exports market. Government stimulus projects (especially in infrastructure)

also fuelled economic growth.

The impact of the global economic downturn and the European financial crisis on the

Indonesian economy has been muted due to the strength of the Indonesian domestic market,

which in 2010 generated 72% of GDP (exports accounted for 22%). Rising commodity prices

have also cushioned declines in exports, but as demand slows in China, Japan, the EU and the

US, exports are expected to continue to feel the pinch.

Noting Indonesias strong growth, Credit Suisse economist Kun Lung Wu recently told the

Wall Street Journal Indonesia's GDP growth has been remarkably stable and robust in 2011, in

line with our view that Indonesia will remain a beacon of growth in a world where growth is

scarce. The newspaper added Indonesia's stable growth also stands out in comparison to

more volatile and disappointing results from export-dependent neighbours such as the

Philippines and Singapore, highlighting the resilience of its domestic market...Consumption still

accounts for more than half of GDP, at 55.5% in 2011 and 56.6% in 2010.

The strength of the growing economy has been reflected by rises in consumers income and

spending.

In 2012, annual disposable income per capita reached Rp19,158,915, up from Rp18,266,658

in 2011 and Rp17,389,422 in 2010. In turn, consumer expenditure per capita reached

Rp18,133,301 in 2012, up from Rp17,312,085 in 2011 and Rp16,571,877 in 2010. Java, with its

five regions, accounted for nearly 57% of total consumer expenditure in Indonesia in 2010.

While long-term economic growth relies heavily on Indonesias wealth of natural resources and

high levels of direct foreign investment, the most significant driver of growth is expected to be

expenditure by the burgeoning middle class (households with incomes between 75%-125% of

median income). The middle class expanded by 11% between 2005 and 2010, accounting for

nearly 30% of households in 2010.

Despite the good economic news, Indonesia is still home to a very large low-income

population. Indeed, those earning between 0% and 100% of the average gross income,

including unskilled and semi-skilled workers, casual workers, pensioners, students and welfare

recipients, account for approximately 69% of the total population. Poverty and income inequality

are two potential sources of social instability. Unemployment has been compounded by rampant

poverty (13.7% in 2010). The poor tend to be concentrated among rural households, especially

in remote islands where lack of infrastructure and access to markets drives poverty. On the

other hand, as the economy grows and as more opportunities appear on the horizon, this group

is expected to see rising incomes accompanied by increased consumer spending, driving more

economic growth.



A number of structural and other risks will pose challenges to Indonesias economic growth in

the long-term. Socio-political instability, environmental degradation and natural disasters are the

most serious risks and issues such as inflation, out-dated and non-existent infrastructure and

new energy needs are also expected to affect long-term economic expansion. Indonesia is

prone to frequent natural disasters including earthquakes, volcanic eruptions, tsunamis and

floods. Environmental degradation including pollution and forest clearing has compounded the

risks of natural disaster. Between 2005 and 2010, 9 million Indonesians were affected by natural

disasters at a cost of US$7.5 billion, according to international disaster database EM-DAT. As

well, persistent weaknesses in Indonesias primary export markets must also be factored into

any economic risk analysis for Indonesia. As well, corruption is another significant hindrance to

doing business Indonesia and it is a source of resentment among many.

Consumer Confidence

Strong economic growth, increased government spending and rises in per capita disposable

income have all boosted consumer confidence in Indonesia. As well, according to consumer

confidence surveys conducted by Bank Indonesia, lower unemployment and rising job

availability have led many to be highly optimistic about their financial futures. The Bank has also

noted in recent reports that anticipated increases in provincial minimum wages (which will be

implemented in 2013) have also boosted consumers expectations.

Danareksa Research Institute, a unit of state brokerage Danareksa Securities which also

conducts surveys on consumer confidence, recently noted the continued optimism among

consumers, reporting that The increase in consumer confidence was caused mostly by an

improving perception of consumers about the national economy and in regards to job

availability. Furthermore consumers concern over the rising price of food has fallen.

High levels of optimism have been reflected in increased consumer spending. According to a

recent report from the Voice of America, Despite a slump in exports due to lower demand from

Europe and China, Indonesians are propping up the economy through massive spending on

cars, cosmetics and instant noodles.

Misery Index

In 2012, the reading on Indonesias Misery Index (calculated by adding the unemployment

rate to the inflation rate) averaged 10.8%, down from 12% recorded in 2011 and 12.3%

recorded in 2010. The decline was a result of a drop in inflation, which fell from an average of

5.4% in 2011 before reaching 4.5% in 2012. Over the same period, unemployment also

declined, albeit slightly, going from an average of 6.6% in 2011 to 6.3% in 2012.

Inflation has been a challenge for Indonesian consumers, though most believe the

government is doing what it can to keep in under control. However, food prices continue to rise,

particularly for processed foods. As well, the countrys weak currency continues to fuel inflation

rates. Regardless, according to a recent article in the Jakarta Globe, The inflation rate [near the

end of 2012] is still within the central banks target range of 3.5 to 5.5 percent, allowing the bank

room to keep its benchmark interest rate at a record-low 5.75 percent, where it has been since

February [2012].

At the end of 2012, the government announced that unemployment had continued to decline

through the year. The head of the national statistics bureau, Suryamin, told the Jakarta Post

Sectors of agriculture, trade, and industry remain the biggest contributors on reduction of

unemployment rate in Indonesia, adding that most of the sectors in the country have recruited

more workers. The newspaper noted that Indonesian President Susilo Bambang Yudhoyono

has pledged to achieve an economic growth target of 6.6% annually by the end of his term in

2014 through building a massive infrastructure to create more jobs.



However, unemployment continues to be a concern of the government. In December 2012,

the President established a new team headed by Coordinating Minister for the Economy Hatta

Rajasa with a mandate for job creation in an effort to tackle stubborn unemployment rates. The

bottom line is for 2013 and 2014, we will continue to create jobs from the many sectors that we

have. The key is to maintain our growth momentum, said Hatta. We are in talks so that

companies that employ many workers can be given a fiscal incentive. Hatta said there were

500,000 new jobs created each year, but the President has expressed hopes that the new team

can create up to twice as many. The government has pledged to do its part over the next few

years to address job creation by funding the construction of a series of new ports and roads in

addition to boosting enrolment in the military and police force.

At the same time, there has been concern about the rise in unemployment among university

graduates in Indonesia. The Jakarta Globe recently reported on a speech given at the InterStudi

Communications High Learning Institute by Indonesian Manpower Minister Muhaimin Iskandar

who said The paradigm and curriculum of the higher learning institutes must be totally

reviewed. He added that higher education institutes must develop new plans to make their

graduates immediately ready to join the countrys dynamic workforce. Muhaimin said the

curriculum has been aimed at producing as many graduates as possible, while ignoring the

quality of the graduates, causing them to be unprepared to compete in obtaining

employment...He added that if the phenomena continued, Indonesia would be filled with

unemployed intellectuals, reported the newspaper. In particular, observers stress that the

country must readjust it workforce, creating more jobs in the industrial and service sectors while

gradually reducing the number of workers in the agricultural sector.

Chart 1 Consumer Confidence Index 2007-2012

Source: Euromonitor International Note: Consumer Confidence Index measures consumers' levels of optimism regarding current economic

conditions and the direction of the economy.

Chart 2 Misery Index 2007-2012



Source: Euromonitor International Note: Calculated by adding the countrys unemployment rate to its inflation rate.

LEARNING

School Life

The Indonesian education system is the fourth largest in the world. There are roughly 2.6

million teachers in the country, over 250,000 schools and more than 50 million students.

Indonesia has a state system of education that provides for all students up to the age of 14. This

is set to change in 2013 when the government will launch a national programme to provide 12

years of free basic education. Public education is funded by the central government, but funds

are dispersed through regional authorities. Public expenditure on education was 20% of the

2012 budget.

The School Operational Fund (Bantuan Operasional Sekolah) officially provides for the needs

of all students. The programme is credited with helping 70% of students in Indonesia. However,

funding often falls short of actual student needs. For this and other reasons children of low-



income families often drop out of school before completing the mandatory nine years of

education. This is unlikely to change with the provision of 12 years of state education. While net

enrolment for primary school in 2010 stood at 95%, net enrolment for secondary school was

only 58%.

Due to the poor quality of teaching and large class sizes at state education facilities, those

with money normally opt to send their children to private education facilities. Private education in

Indonesia falls under the joint authorities of the Ministry of Religion and the Ministry of

Education. Swasta schools, as they are known, range from internationally affiliated schools at

the top end, which offers the baccalaureate system to their students, to communally run

Madrassas. Entrance fees range accordingly, with Jakarta International School charging

US$21,600 per annum for its 6-12 grade students.

Only 7% of primary schools in Indonesia are private. At the Junior High School level there is a

near parity between state and private schools. Of the 11,306 high schools, 5,984 are private

institutions. The percentage of public schools rises still further to 67% at the senior secondary

school level. Per capita consumer expenditure on education was Rp563,691 in 2011 a 12.5%

growth over the amount spent in 2010.

The Indonesian system of education broadly follows the US system. Kindergarten students

are aged 4-6. Primary school caters for students in the age range of 6-12 (grades 1-6), middle

school from 12-15 (grades 7-9) and high school 15-18 (grades 10-12).

All private school students are expected to take a standardised grading test in sixth grade and

then again in the ninth grade. Admissions to determine the eligibility of students applying for

their establishments uses these scores. The majority of private schools also undertake tests at

the same time, although these tests are set at the discretion of the individual schools. Like the

former O-Level system in the UK, students in the ninth grade face the option of either going to

senior high school that leads onto college or vocational high school.

Most state primary schools operate on a six-day working week, with school starting at 6:30am

and finishing at 1pm. There is a slow move towards a five-day academic week in state schools.

A significant number of state schools do not hold any academic classes on the Saturday

anymore, but rather undertake physical or team-building exercises, holding activities such as

Pramuka, the Indonesian equivalent of scouts.

In urban areas with high population density, some state schools run evening classes

alongside morning classes. Those attending the evening classes are often stigmatised as being

"stupid" or "lazy." There is also the perception that the quality of the teaching received in the

evening classes is inferior to that given during the day.

Private schools normally have a five-day academic week. They start at the same time as state

schools, but will finish at 2 or 3pm. This has important implications with regard to childrens

eating habits as well as leisure activities. Students at state schools tend to snack and then eat at

home, while pupils at private schools will both snack and eat their lunches at school.

Food served in school canteens caters for traditional and more recently Western tastes,

focusing on chicken, rice and soups rather than confectionery products, which have yet to make

significant inroads into educational facilities. Although rates of obesity are rising in Indonesia,

there is not yet a push by parents or education authorities for programmes related to healthy

eating. However, some international private schools do promote healthy eating and attempt to

raise student awareness on this issue.

June is the start of the academic year in Indonesia. The back-to-school market is the time

when parents buy new school supplies, such as calculators, backpacks, stationery, as well as

new attire. School uniform is mandatory in state schools and the majority of private schools in

Indonesia.

In 2012, back-to-school shopping was closely followed by the Idul Fitri holidays, with parents

outfitting their children for the new school year in July and Idul Fitri holiday shopping falling in



August. Ramayana, which operates the Ramayana, Robinson and Cahaya department stores,

expected sales of Rp3 trillion (US$324 million) in the third quarter of 2012, almost twice the

sales target for the second and fourth quarters. The finance director for the chain of department

stores further made the assertion that department stores would become the dominant sales

contributor during the back-to-school and Lebaran season, replacing supermarkets. The

majority of demand from department stores comes from low- and middle-income consumers.

Consumers from this demographic are increasingly turning to department stores for their back-

to-school shopping because of the convenience of being able to buy all goods at one location,

combined with their competitive pricing.

Young Indonesians, especially those in private school are extremely brand-conscious.

Internet and magazines have a huge influence on fashion trends as well as on the educational

establishments that students choose to attend. Regional fashion trends have also been

influencing Indonesian teenagers in 2012. The influence of South Korean Popular music

especially is driving young Indonesian consumers to follow or imitate South Korean fashions.

According to an article published by Viva News in December 2011, the popularity of Korean

fashion is such that young Indonesian consumers are visiting Korean-themed Indonesian

websites to buy fashion accessories. This comes at a time when more and more Korean popular

bands are also including Indonesia in their tours because of their large fan base in the country.

The Go Girl website also offers tips on revenue generating ideas as well as being a venue for

readers to sell products they have created. This is important for many young consumers whose

parents are unable to fully cover the cost of their education, something often taken for granted in

many countries.

Technology products such as laptops and tablets are not strongly associated with back-to-

school shopping. Neither is there a system of government subsidies in place for the purchase of

such items. Students at state schools do not normally take their own laptops to school, whereas

students at private schools are far more likely to do so. Mobile phone use, and increasingly

smart phone use, is common among students from all backgrounds. One of the factors driving

consumer interest in smart phones among young Indonesian consumers is access to social

media such as Facebook and Twitter.

There has been a government drive since 2010 to improve educational standards within state

schools through the use of technology. This programme has had the biggest impact in urban

schools but is part of a national strategy. Teacher training, specifically making teachers

competent and confident with computer software has been combined with providing new

equipment such as projectors into the classroom.

Given the complexities of the education system in Indonesia and the importance of

standardised testing in defining pupils future academic prospects, private tutoring is popular.

There is a recognised correlation between attendance at private schools and private tutoring.

Given the huge demand in Indonesia, it is unsurprising that private tutoring is highly sought

after. Extra-curricular language courses are popular because of the importance many

Indonesians place on the knowledge of a second (English) or even third (Mandarin) language.

English First is one of the market leaders in this sector and has over 60 schools in Indonesia.

They charge upwards of Rp87,500 a session (80 minutes). According to a teacher at one of the

busier English First Academies in Jakarta, almost a third of their classes cater for students doing

extra- curricular learning.

It is not uncommon to see students from state schools walking or cycling home from school.

There are even instances of children as young as eight using mopeds to come and go from

school. As students get older and enter secondary school, an increasing number of them legally

use scooters/ mopeds to drive themselves and their fellow students to and from school. Other

forms of transportation commonly used include buses run by privately owned transport

companies. The majority of public schools have small buses, which are used to pick up and



drop off students. The increase in traffic volumes as parents make the school run shows that

many families often use private transport.

University Life

In 2010 there were 2,766 private tertiary education institutions. Tertiary institutions range in

size from those with only a dozen or so students to those with up to 30,000. In total, there are

5,633,700 students in higher education in the country, with a near parity between male and

females. A recent report published by the World Bank stated that Indonesian Universities remain

unconnected to the needs of the labour market, while a 2010 article in the New York Times

highlighted the disparity in quality of education provided by universities in the country. This is

true of tertiary education institutions generally. Of the 335 universities in Indonesia, only a

handful are recognised for their academic quality: University Indonesia in Jakarta, University

Gadjah Mada in Yogyakarta and the Bandung Institute of Technology. These three universities

also receive the lions share of funding.

While private institutions receive their funding from tuitions and fees, public institutions have

historically received government subsidies and charged minimal fees. However, fees for

students vary greatly between institutions. Monthly living costs vary between Rp500,000 to

Rp1.5 million.

In July 2012, the Indonesian government passed the Higher Education Bill. This bill gives

institutes autonomy over management and finance. Indonesian undergraduate programmes are

also in the process of receiving accreditation from the government. Those that fail to get

accredited will have to merge with other institutions. The bill also provides a provision for foreign

higher education institutes to operate in Indonesia providing they get a licence from the

government and operate in partnership with an Indonesian higher education institute.

The majority of tertiary academic institutions are found on the island of Java and are centred

on the urban centres of Yogyakarta, Surabaya, Bandung and Jakarta. Students from different

parts of the country are generally attracted to certain university cities. Yogyakarta, for example,

has a sizable population of students from the island of Papua, while Surabaya has high

numbers of students from Sulawesi.

Most students live in halls of residence or private accommodation while they are completing

their university studies. After completing their degrees, it is common for females to return to their

parents homes where they will live until they are married.

To finance the costs of their studies, most students take a part-time job during school term, or

seek full-time employment during the school holidays. Part-time jobs that students do that

coincide with term time include working as a private tutor for elementary/ junior high school

students or study groups and waiting at restaurants.

The majority of Indonesian students are not faced with large student debts after they

graduate. There is no institutionalised system for student loans; rather most families have to

bear the financial burdens of their childrens educations. This does have direct implications on

students academic choices.

Students leisure activities vary widely and are dictated and defined by the cities in which they

are studying. For example, while Yogyakarta only has one high-end mall, Jakarta has more than

ten. In Yogyakarta, it is easier to travel out of the city. As a result, students in Yogyakarta hang

out more at small cafes, visit the beach and do activities such as walking and camping, whereas

students in Jakarta will spend more time at the large shopping malls. There are also

commonalities. Indonesian students are technologically savvy and will regularly access social

networking sites such as Facebook and Twitter. It is widely stated, for example, that Indonesia

has the second largest number of Facebook users and the sixth largest number of Twitter users.

However, a study published in the Jakarta Globe in May 2011 found that only 16% of

Indonesians access Facebook daily, compared to the global average of 46%.



The emergence of 7-Eleven as a trendy hangout for students and the young middle class is a

phenomenon that has taken over Jakarta in 2012. Its the new Indonesian lifestyle of 24-hour

convenience, fast food, Twitter and Facebook. The growing middle class is demanding such

services according to Henri Honoris, president director of PT Modern Putra Indonesia, 7-

Elevens Indonesian franchisee. Although other firms have tried to copy its formula, they have

not achieved the same level of success. However, the chain is currently focused solely on

Jakarta, and as of September 2012 is facing licensing issues.

Sporting activities are also extremely popular with university students. Football has an almost

religious following in Indonesia, and despite the time difference, Indonesian students will stay up

to 1am or later to watch games in Europe. This interest in football is transferred onto the futsal

pitches (small five-a-side Astroturf), which are always busy and sometimes overbooked. This

interest in the sport continues through graduation.

According to one university graduate For me, spending around Rp20,000 a week to play

futsal for one or two hours is worth it.

Adult Learning

Given the mismatch between employer expectations and academic training, most businesses

and corporations put their employees through a training scheme subsequent to their hiring.

Some larger businesses, especially international ones, will also pay for their employees to

attend courses as part for their personal development.

Outside of on-the-job training, the largest formally established institution catering for adult

learners in Indonesia is Universitas Terbuka (Open University). The level of student enrolment is

actually relatively high, constituting 11.6% of the total national enrolment. Teachers who are

looking to upgrade their qualifications are the ones that disproportionally use Open University.

Of those enrolled in Open University, 89.5% took education courses.

Chart 3 Number of Students in Higher Education and Consumer Expenditure on Education 2006-2011



Source: Euromonitor International

Chart 4 Regional Ranking in the growth of the number of University Students 2011


WORKING HABITS

Working Conditions

Indonesia has very stringent employment laws as explained in a review by USAID on the

Labour Law in Indonesia published in 2011: Indonesia has "an extensive array of minimal labour

standards, including: minimum wages, set by region; a formal industrial dispute resolution

system; eight work hours per day or forty hours per work, with thirty minutes rest for each four

hours worked; public holidays (twelve days paid per year); maternity leave (three months paid

per year); sick leave (part salary paid for up to twelve months per year); holiday pay (minimum

two weeks paid per year); overtime paid at the hourly rate plus 50% for the first hour and then

double time; severance pay, and a months pay for every year of service, up to a maximum of

four months for long service: prohibitions on gender discrimination in wages; and restriction on

employers rights of termination (permits required from tripartite body involving unions,

management and Ministry of Manpower)."

The Indonesian Labour Code is extremely complex and drawn from disparate sources, some

of which were even enacted before the countrys independence. UU. no. 13, 2003, more

commonly known as the Labour Law, is the most important recent act governing employee

rights and entitlements, health and safety in the workplace and harassment. This law

supersedes previous legislation that contravenes it. In addition to this there is UU. no. 2, 2004,

which focuses largely on termination of contract, and as well as this there are various decrees

issued by the Ministry of Manpower. However, while the law says one thing, reality is something

different entirely. A study on severance pay compliance by the World Bank in 2012 stated that

only 7% of workers in the labour force receive the rights that they are entitled to. The degree of



compliance with existing legislation depends on the issue. While only 7% of terminated workers

received full severance pay, most formal sector workers have health coverage.

Working conditions in Indonesia vary dramatically. Blue-collar jobs in the manufacturing

sector are characterised by low wages and long hours. While conditions in the larger

manufacturing companies normally adhere to the legal requirements, this is not always the case

with the smaller manufacturing plants.

Only about one third of Indonesians work in the formal sector; the rest are employed

informally. Examples of such urban employment include the small stalls selling Indonesian

cuisine that are ubiquitous in all of the major urban centres of the country. In the rural

environment, almost 90% of those employed in the agricultural sector are informal. These

people rarely pay tax and receive little in the way of legal protection.

Most private companies work a five-day week, with employees starting at 8am and finishing

around 5pm. The work pattern unofficially changes over Ramadan, when rush hour starts at

4pm. Civil servants have similar working hours to private companies, although not part of an

official policy, it is well known that most government employees only work a half day on Friday.

Workers in Indonesia normally get a one-hour lunch break. In an office environment,

employees will also take breaks to have a coffee or a cigarette, when they will chat with co-

workers around the kettle or coffee machine. In the informal sector, workers are not guaranteed

breaks. Instead, they will snack when they have the opportunity.

The majority of businesses don't have their own canteens, but a lot of large office towers and

manufacturing complexes do. Out of convenience, workers will use these facilities during their

breaks or for lunch. High-value retail space is often attached to a mall. In such cases,

employees will often eat their lunch at the canteen and their dinner at a restaurant in the mall.

This is especially popular on Friday evenings where colleagues will enjoy a meal and go bowling

or to the cinema to celebrate the end of another week. Malls offer a wider range of food choices,

with plenty of international cuisine. These types of restaurants, as well as cafes, are fashionable

and popular with this demographic.

For smaller offices, employees tend to lunch out, eating at the small food stalls that can be

found lining the streets or restaurants. The eating options available to the employee and the

ease of commuting back and forth within the lunch break are the main determinants that define

choice. Only a small percentage of employees bring food from home. Food stalls sell common

Indonesian favourites such as noodle soup, rice porridge and fried rice. Low-income and lower-

middle-income workers frequent these stalls. In Jakarta, food from such a stall can cost just

Rp5,000, making it affordable for those without a big budget. Just like at schools, vending

machines are not generally available.

Starting level salaries for university graduates in the private sector in Jakarta begin at Rp2.5

million plus. After two or three years employment, the salary will normally double or the

employee will seek other forms of employment offering a wage which is commensurate to their

experience. Although it is illegal to hold down a second job when you are already contracted by

an organisation, a lot of people seek a second source of income or do freelance work when

available if they are on a low wage.

The attitudes towards dress codes vary greatly and follow international norms. Technology

and internet companies by and large take a relaxed approach towards dress codes, following

the lead of Silicon Valley with casual attire. Legal firms and banking on the other hand have very

strict dress codes, expecting employees to wear smart trousers and a smart shirt at the least,

though there is a preference for a suit and tie. In the office environment, a smart casual dress

code is the norm. Price and quality determine the choice of clothing for freelance workers.

Rather than 'Casual Fridays,' where workers dress down, Indonesia has 'Batik Fridays.' This

is an initiative that was started by the government for civil servants. The idea has become

popular in the private sector and has also been taken up by a number of international



companies as well as institutions. This scheme supports the batik clothing industry and

continues to result in new ranges of fashionable clothing that incorporate elements of batik style.

Women in the Workplace

The number of women in the service sector/ office environment has seen a steady increase,

which can be expected to continue. There is a near parity of females in tertiary education. In

2011, 42.2 million women were employed in the Indonesian labour market. However, that figure

equates to only 53.4% of the female workforce, far lower than the 85.9% of males in

employment.

According to a 2011 report produced by the Ministry for Female Empowerment titled

Indonesia Female Profile, 34.1% of women work as entrepreneurs, 21.9% of women run their

own business with their partner, 3.6% of women run their own business independently, 25.3% of

women work in an office environment, 13.3% of women work as freelancers and just 1.2% of

women work in an unpaid role.

Global initiatives towards empowering women are having an effect in Indonesia. Women are

taking up more middle-management positions in companies. While women are working in larger

numbers than ever before, with some notable exceptions there are few females in upper-

management positions.

Women normally wear formal casual business attire. Ankle length skirts, long trousers and

long-sleeved tops are all common. There are two divergent fashion trends that Indonesian

women follow. Firstly, there is Muslim clothing. This is defined primarily by the hijab, which has

become a popular fashion accessory, though not necessarily a sign of religious devotion. A hijab

will be combined with long-sleeved shirts or knee-length skirts as well as dresses. Fashionable

Islamic clothing can be extremely colourful, using strong primary colours, which attracts peoples

attention. The use of a hijab by women in the workplace increases significantly over Ramadan.

The other line of fashion of women in the workplace follows Western office style. Skirts and

dresses that are knee-length or shorter are combined with smart shirts, cardigans or shawls.

These fashion styles are not mutually exclusive and a woman wearing a hijab one day could

very well come into the office wearing a skirt the next. Indonesian women prefer cheaper

Indonesian fashion lines to international brands. Though often a womans wardrobe will have a

few items produced by international brands. The clothing market is extremely fragmented in this

sense.

On their breaks, Indonesian women will normally chat with their friends. The 18-25

demographic is very technologically savvy, so chatting with friends does not necessarily mean

face-to-face interaction. Facebook, e-mail messaging, Blackberry messenger and other forms of

messaging services are all commonly used. Playing on Facebook apps is also a popular way of

passing time. Women in the middle-income bracket will also visit cafes, where they will chat

over coffee.

One of the biggest sources of employment for female workers from the lowest economic

quintiles is in domestic service as a maid or cleaner or as factory workers. Maids are hired both

domestically and internationally. Female domestic workers dominate labour migration from

Indonesia. Roughly 75% of labour migrants are women, though the domestic market for maids

is far larger.

Maids are ubiquitous in Indonesian families. Almost without exception all lower-middle

through to high-income families have at least one maid in their household or someone who

washes clothes if they live in single unit accommodation. Maids normally work from 6am through

to 12pm, though some are hired on a full-time basis. In some cases, maids even live at the

employers home in the 'maid's quarters. This will continue as middle-income families move into

newly created gated residential communities on the outskirts of Jakarta, where maids will not be

able to commute easily.



If the family has a young child, it is more probable that the maid will be hired on a full-time

basis. Maids that only work half a day often hold down two jobs. Being raised in this

environment, a significant number of Indonesians who come from middle-income families never

learn how to cook and are only able to prepare the most basic food themselves. It is common to

hear women in an office complaining if their maid is away and they are suddenly faced with the

task of having to shop for their own groceries and cook for themselves.

If there isn't a maid cooking food, it is common for households to order food to be delivered. In

2011 Indonesian consumers ordered Rp85 billion of take away food, however the informal

sector is almost certainly far larger. Small food stalls have even started utilising technology,

offering delivery services, which can be accessed through their websites. It is equally common

to stop at the side of the street and grab a meal or order something, which will later be eaten at

home.

Commuting

As Indonesia goes through a period of sustained economic growth, so the amount of traffic on

the countrys roads has increased. Buying a car for Indonesian consumers is a sign of entering

the new middle class. Attractive offers by car and motorbike dealerships ensure a steady stream

of customers despite the high vehicle costs. In 2011, the registration of motor vehicles actually

jumped 43%, while the sale of motorbikes fell by 14%. As the disposable incomes of Indonesian

consumers rise, then a family will buy a car in preference to a motorbike.

Due to the cheap price of fuel at US$0.46 a litre, Indonesians favour large SUV's, people

carriers and sedans. Small fuel-efficient cars aren't seen on Indonesian roads. However, the

Jakarta Motor Show that was held in September 2012 exhibited a number of cheap and fuel-

efficient cars, and these were popular according to an article published the same month by the

Jakarta Globe: "Low-cost cars manufactured by Astra International, the largest publicly traded

company in Indonesia, and Tata Motors are the main attraction at the annual Indonesia

International Motor Show in Jakarta". This interest in smaller cars from Indonesian consumers is

partly the result of a more green way of thinking, but a fear that fuel subsidies will be reduced or

removed in the future must also play a part.

Those Indonesian consumers who own a car will use the vehicle to commute to work. The

fact that the majority of cities lack anything resembling an integrated public transportation

system ensures that few consumers will make the switch to public transport.

The system of public transportation that is available to Indonesians in urban areas is a mixture

of public and privately run trains and buses. Though inefficient this system is used by low and

middle-income workers who do not have access to alternative means of transportation. This

means commuters will often have to get on more than one bus to reach their destination, and if

the bus is privately run then this fee will have to be paid multiple times. If public transportation is

unavailable then commuters might have to wait up to an hour to get onto a bus. With the

average bus fare in Jakarta being Rp2,000, not only do the costs quickly add up, but so does

the amount of time it takes to get anywhere.

As a result, the road network for many of Indonesia's cities is already over capacity. There is

a common myth circulating the capital that the roads of Jakarta will achieve total gridlock by

2020. Sitting in a traffic jam for two hours or more a day is a common occurrence for those who

commute to work in the city. Insufficient parking and a failure to adhere to traffic regulations

exacerbate this issue. The governor of Jakarta launched a Wi-Fi service in August 2012 along

the citys busy arteries so that those travelling by car can be entertained as they sit in traffic

jams. Some Indonesian workers, in Jakarta especially, optionally work late and commute back

to home at 8pm or 9pm so as to miss the evening rush hour. Even given this delay in leaving,

there is often little difference in the time a commuter might return home.



Local municipal governments do provide incentives to use alternative means of transport.

Bicycle lanes have become a feature of many of Jakarta's roads, as well as those of other cities.

The heat and humidity, not to mention high levels of pollution, are strong environmental

deterrents though. Also, as previously stated, traffic rules are not normally obeyed, and during

rush hour, cars and motorbikes are likely to take up the bicycle lanes. This is also true of bus

lanes. Despite this, there is a keen biking community in Jakarta and other cities of Indonesia.

Jakarta is planning to both expand its official system of bus ways as well as continue

construction of a previously abandoned mass rapid transit (MRT) system. The first stages of the

MRT will be completed by 2017.

While it would be unfair to characterise all urban centres as suffering from the same

infrastructure problems as Jakarta, the roads of Indonesia's cities are definitely getting busier.

With medium-sized cities expected to see the largest population gains in coming years, this will

become a common problem for commuters in Indonesia.

Alternative Work Options

The Minister of Research and Technology believes that more needs to be done to foster an

entrepreneurial spirit in Indonesia. In a May 2012 article for Forbes, he said that

entrepreneurship is weak due to a cluster of dominant natural resource industries such as

mining and agriculture that have had their way with regulators for too long, difficult access to

capital for small businesses, and poor education for would-be entrepreneurs. The result is one

of the lowest rates of business formation in Asia. A cultural problem also exists, he says, with

Indonesians being less likely to want to start their own businesses.

One of the main problems for Indonesians looking to establish their own businesses is the

difficulty accessing credit from banks. Despite this fact those that do start their own businesses

believe that the current environment is conducive for future growth, according to a September

2012 article in the Jakarta Globe.

The article states that "In line with the countrys growing economy and middle class, 85% of

Indonesian entrepreneurs had their revenue grow in the first six months of the year, compared

to a global average of 68%. A total of 88% of Indonesian entrepreneurs foresaw further revenue

increases in the next six months, compared with an international average of 80%."

In such an environment, you would expect a flexible view on working, but this does not seem

to yet be the case. Some large companies do offer their staff the option of working from home.

This option is used at the employees discretion, but it is not viewed as part of normal working

practice in the sense that at least one day a week an employee would work from home. It seems

that most work is still centred on the office environment. In the short term, this is unlikely to

change.

Part-time employment is rarely a result of a lifestyle choice in Indonesia. One of the most

common professions in which a person is employed on a part-time basis, as previously

discussed, that of housemaids.

In a country where options for employment in rural areas are limited, consumers have looked

abroad for employment. Working as a domestic servant is just one of the many options available

to Indonesian migrant workers. Other popular sources of employment include working on cruise

ships. Money saved is either sent home in the form of remittances to family or saved for when

they return. However, it is not just unskilled labourers who are finding employment abroad.

Increasingly, engineers in the oil industry and workers from other sectors of the economy are

also being offered employment opportunities in the Middle East especially, but also other areas

of the world.



Retirement

The official retirement age in Indonesia is 55 years old. The proportion of the population that

was 65 years and over in 2011 stood at 9.5%, a figure that is set to rise to 11.2% by 2020.

There is no unified system of pensions in Indonesia, although several schemes do exist for

workers. It is estimated that only 3% of the workforce have a private pension scheme. Civil

servants are the most fortunate group as they are automatically enrolled in a pension scheme

and receive a cash lump sum every month after they retire.

As people get older they also move residence. Residential homes and communities are still

not common in Indonesia and are seen by many as taboo. Instead, pensioners often move into

the home of one of their children or return to the place where they were born and grew up. If

they decide to live with their children, then they will take care of their grandchildren during

working hours.

Pensioners who still run a business will be more likely move to a satellite town if they were

previously living in a city. From there they will continue to manage their business while at the

same time having an easier and more relaxed lifestyle.

Chart 5 Employed and Unemployed Population and Labour Force Participation Rate 2006-2011


Chart 6 Population Aged 15-64 Compared with Old-Age Dependency Ratio 2000-2020




Chart 7 Regional Ranking of Female Employment Rate 2011


EATING HABITS



Dining in

The majority of Indonesians, who come from low-income households, continue to dine in for

breakfast and dinner, as this is the most affordable and cost effective option for consumers with

low purchasing power. However, out of necessity consumers will normally eat out for lunch or

whenever they are given a break from work. In rural areas, the lack of venues available to eat

out often makes eating in the only option available.

Meal times follow traditional patterns with people eating their first meal of the day anywhere

from 6:00am onwards; lunch at between 12-2:00pm and dinner from 8:00-10:00pm. The heat of

the day combined with the high humidity and religion account for the early and late mealtimes.

Women are still traditionally viewed as home keepers and so will normally do the cooking. In

middle- and high-income households it is still very common to have a maid who will prepare the

meals for the whole family. As a result, it is not uncommon for young Indonesians, or those

below the age of 30 from medium- and high-income households, to be unable to cook even the

most basic meals. This factor partly accounts for the growing consumer demand for pre-cooked

ready meals.

Staples such as rice, noodles, chicken, fish, shrimp, squid, tofu and tempe (both tofu and

tempe are made from soybeans) are used in traditional Indonesian meals. In Eastern Indonesia,

traditional food includes such staples such as yucca and plantain, but these are now viewed as

food for poor people, and consumers will now buy rice over these other goods if they have the

money. Given how arid and prone to drought parts of eastern Indonesia are, government and

non-governmental programmes have tried to reintroduce yucca and plantain back into the

popular diet, but with mixed success.

Most consumers continue to cook traditional dishes in the home. It is rare for Indonesians to

experiment with the type of food that they cook. Furthermore, the demographic most likely to

experiment and try different things (young middle- and high-income Indonesians) are the very

same demographic that are least likely to know how to cook. The types of cuisine that are

popularly cooked in the home reflect the cultural diversity of Indonesia.

Dining Out

The per-capita spending on dining out in 2012 was a mere Rp1,372 million, a small amount

when making comparisons with other Asian countries such as Malaysia, Thailand and

Singapore. With an increase in consumer spending, alongside economic and cultural

developments, there have recently been more incentives for dining out. The expectations for

entertainment and living standards for Indonesian citizens are rising, and its emerging youth-

dominated middle class has helped to encourage this trend.

Although many Indonesians still cook at home as common practice out of both social tradition

and ease of expenditure, there is a growing affinity and appreciation for restaurants and take-

away style businesses. The greatest concentration of these can be found within the larger cities

of Indonesia, and their abundance continues to increase as new businesses are set up and

chains extended to reach out to new consumers. This development should come as no surprise

to the outside observer: Although Indonesian families are traditionally very large and thus tend

to allow for someone to be at home to cook food when necessary, workers who must commute

to their jobs or who have little time in their breaks must have some access to food. Pre-packed

lunches taken from home are one option for the average consumer, but in Indonesia there

appears to be a preference to dine out when having lunch rather than bringing food from home.

Dispensaries of fast food, especially street vendors and self-service cafeterias are two notable

business models, which benefit the average consumer, especially for workers during the lunch

time period. There are numerous street stalls available in Indonesian cities which offer up a wide

variety of different meals, be they traditional Indonesian cuisine or an Indonesian takes on



international dishes. The variety of food makes visiting these stalls more enjoyable and

interesting for consumers as well as cheap.

For the most part, choosing to eat out is done for reasons associated with leisure, as it serves

well as a social activity. Street vendors bridge the gap in the market between leisure and

necessity, and they also provide a valuable service that could not usually be provided for by

restaurants in quite the same manner. The average worker may not have the time or funds to

pay daily visits to restaurants for their lunch break, whereas street vendors are an entirely more

economical option with regard to time and finances.

As well as from street kiosks and restaurants, Indonesian consumers have access to a

number of other alternatives when they are hungry. A very limited number of self-service

cafeterias can be found across Indonesia, although they are most suited to serve communities

that exist within towns or cities.

Self-service cafeterias are especially popular amongst the student demographic, which seeks

to gain access to both fast and affordable meals. These establishments offer not only a wide

variety of affordable meals but also include the added bonus of not having to wait for the meal to

be cooked and prepared. These advantages have made cafeterias popular amongst students in

Indonesia.

Many universities and colleges already have some form of self-service cafeteria on campus

for student use. There are, of course, many other consumers who go to self-service cafeterias

when eating out. These include shoppers, who frequent Carrefour services to take a break

between shopping trips. Carrefour cafeterias are common within hypermarkets and shopping

malls such as Central Park Mall in Jakarta. These malls seek to promote themselves as

lifestyle centres, and large portions of the buildings are dedicated to food services rather than

other forms of retail outlet. In 2011, 52% of self-service cafeterias operated within malls or large

shopping complexes.

While street kiosks cannot always facilitate the needs of customers who wish to stay and dine,

those who wish to have a cheap and nutritious sit-down meal without the frills of a restaurant

can turn to the cafeteria format for comfort in dining. In 2011, 72% of meals purchased from

these businesses were eaten on the premises. The option to take away food is nevertheless

becoming more popular, and one possible reason for this is that while students may wish to eat

good and cheap food, they cannot always spare the time to do so away from their work. There

has been an unusual phenomenon wherein stalls and kiosks began to set up operations near

these establishments to sell beverages to those leaving the cafeterias. Customers would enter

the cafeteria, buy a meal to eat and purchase drinks at a kiosk instead. This is because the

kiosks offered a wider variety of beverages such as freshly made juice or because the

beverages were generally cheaper at these stalls.

Bars and cafes also attract a certain amount of consumer interest within Indonesia. These

establishments may well be more expensive than self-service cafeterias, but serve as a far more

desirable option for those who wish to have a more private dining experience. The quality of

food in these establishments will generally surpass that of some cafeterias, as the food will be

prepared on less of an industrial scale. Bars in particular offer the service of easy access to

alcoholic beverages with a meal in a more accepting environment designed to cater for this

need. In a similar vein to self-service cafeterias, almost 38% of cafes and bars were believed to

operate within shopping complexes, making them an attractive stopping-off point for shoppers

and students. Along with restaurants, these businesses are likely to attract a higher class of

clientele, as their equivalent products will tend to exist within a more costly price range. These

are particularly attractive to middle-class families, as visiting a restaurant is often done for the

social element rather than for eating alone, and the expense would be unaffordable to those on

a lower income when other cheaper, social dining opportunities are available.



Caf Culture

Coffee shops are a popular social hangout for the growing young middle class. Free Wi-Fi, a

relaxed ambience and the option of nice coffee and food are the main reason for their

popularity. In 2011, there were 3,618 cafes and bars in the country with a combined sales of

almost Rp33 trillion. The vast majority (94.5%) are independent outlets, although chain outlets

such as Starbucks and Dunkin Donuts are also extremely popular.

According to an article on anneahira.com, a blog that documents food trends in Indonesia,

drinking coffee has changed from being a past time of old men and blue-collar workers into a

fashionable experience for business executives and young professionals. The trend, which has

made coffee fashionable, has also made coffee shops a popular place to meet friends.

Given that coffee shops are viewed as social hangouts, the purchase of food along with a

coffee is to be expected. Coffee shops normally offer a variety of Western-style sweet and

savoury snacks. These include items like quiche, cinnamon rolls, chocolate cookies and waffles.

Specialist coffee shops and even coffee chains such as Excelso Cafe are becoming

increasingly popular among young middle- and high-income Indonesians who have developed a

taste for something more refined in the way of coffee. The 15% growth in demand recorded in

2011 attests to the popularity of such venues with Indonesian consumers. An indication of the

growing popularity of discerning coffee lovers was the first Indonesian Coffee Festival that was

held in Bali in September 2012.

Visiting a caf in Indonesia is viewed by consumers as a break from work or school, but it is

also a popular place for business meetings and homework clubs. The informal relaxed

atmosphere of these venues accounts for much of this.

Snacking Habits

With less time to make home-cooked snacks, buying packaged snacks, which are seen as

indulgence food by Indonesians, has become extremely popular. Indonesians have traditionally

favoured fried savoury snacks, which are still extremely popular, but Western-style snack food is

becoming more popular with consumers. In 2011, overall demand for sweet and savoury sales

snack food rose by 13% to reach Rp10.9 trillion.

According to a popular Kompas food forum, the five most popular snacks with Indonesian

consumers are cheese sticks, stik lidi (an Indonesian snack made from flour that comes in salty

or spicy flavours), tempe (fried fermented soybean), momogi (an Indonesian brand of snack that

comes in chocolate, cheese, BBQ, spicy and corn flavours) and fried cassava crackers.

However, while these types of Western snack food have become more popular, young

middle-class health-conscious Indonesians are seeking alternative foods to satisfy their craving

for a quick snack. Demand for healthy snack bars grew by over 50% in the period 2011 to 2012,

attesting to the popularity of this new type of snack food with Indonesian consumers.

Traditional snack foods and snack food outlets continue to enjoy strong demand from

Indonesian consumers. Domestically produced sweet and savoury nuts are popular with

Indonesians of all income groups. The production of fruit snacks has long been a tradition in

Indonesia, and the rise in the availability of affordable machinery for local producers has made

them more widely available in both urban and rural areas.

Attitudes Towards Food Trends

As a mainly Muslim country, Indonesia forbids the consumption of certain foods. Pork

products, for example, are considered taboo. Many Muslims also prefer halal foodstuffs,

although many consumers show only nominal preference for halal over non-halal meat. While

pork is considered taboo for Muslims, it is prized by Chinese Indonesians and is a staple of

Christian and Buddhist cooking.



Animal welfare is not a big issue with most Indonesian consumers. In June of 2011, a report

on the inhumane slaughter of cattle that was aired on Australian TV caused a public outcry in

Australia and resulted in a temporary ban on the export of live cattle to Indonesia. However,

there was hardly a ripple of complaint from Indonesian consumers.

Organic and GM free food are becoming popular with some middle- and upper-income

consumers. It is possible to find vegetarian or organic restaurants in many of the larger urban

centres of Indonesia, and especially in areas frequented by tourists such as Ubud in Bali or

urban centres such as Yogyakarta with a large student population.

According to an article by ghiboo.com, a popular lifestyle and entertainment website,

Indonesian consumers are moving towards organic products. They state that there is a trend in

the restaurant industry to highlight dishes where organic foods are used. Melilea, a producer of

organic products, also makes this assertion, stating on their website that Indonesians are eating

more organic food as consumers become more health conscious.

Chart 8 Per Capita Expenditure on Consumer Foodservice by Chained and Independent 2012


Chart 9 Regional Ranking of Availability of Fresh Fruit and Vegetables 2011




DRINKING HABITS

Attitudes Towards Drinking

The Government maintains strict restrictions on the importation, distribution and sale of

alcohol both at the national and regional levels. In Indonesia, alcoholic drinks are classified

under three categories: Class A are drinks with an alcohol content of less than 5%; class B have

between 5% and 20% alcohol; and class C are spirits with 20 to 55% alcohol. Class A drinks

can be bought almost anywhere, while class B and C drinks can only be purchased at licenced

facilities such as night clubs, restaurants and duty-free shops.

Since the implementation of the regional autonomy system of government in 1999, regional

governments across the country have passed more than 9,000 by-laws, more than 60 of which

limit the sale of alcohol or make the sale of alcohol a criminal offence. Aceh in Sumatra was the

first to pass such a by-law, while the most recent example is the regency of Tasikmalaya in

West Java.

A review of these regional by-laws that actually contradict national legislation in January 2012

resulted in demonstrations by hard-line Islamic groups in Jakarta. The Home Affairs Ministry

concluded the review without making any amendments to these by-laws.

While in some parts of the country the sale of alcohol is illegal, Indonesia generally has quite

a relaxed attitude towards drinking. Drinking patterns often follow religious lines. So in Bali

(Hindu) and Northern Sulawesi (Christian), drinking of alcohol has strong historical and social

roots and is commonly accepted. A 2012 survey on Global Alcohol Consumption by the World

Health Organisation showed that between 2001 and 2005, alcohol consumption was stable, with

only 4.3% of male students drinking alcohol in the past 30 days.

Beer is the cheapest and most widely available alcoholic drink, and it contributes to over 90%

of overall alcohol consumption. Local brands such as Bintang and Anker beer are the preferred

choice of consumers, but over the past two years, premium European beers such as

Hoegaarden have become more popular with middle- and upper-class consumers. Though not



available in rural areas, these beers are sold at bars and some off licences in urban areas of

Jakarta and parts of Bali.

Due to the high cost of alcohol, there is a booming black market. A number of traditional

alcohols such as Arak, Brem, Tuak and Lapen are produced in Indonesia. These drinks are

locally produced home brews, and despite the danger of alcohol poisoning are extremely

popular with Indonesians from low-income families who are unable to afford the high cost of

beer or other spirits. However, it is not only this demographic that is purchasing alcohol illegally.

According to the Australia Business Council, about 90% of all alcohols and wines sold in Bali in

2009 were coming into the country illegally to avoid the 200% duties and taxes that the

government imposes. Premium alcohol can be illegally purchased at official duty-free off

licences that are theoretically only for those with diplomatic passports.

Premium brands are valued among Indonesians. This is not just an issue of quality, but also

the prestige that they confer on the purchaser. For example, at some drinking venues it is only

possible to get a table if you buy a bottle of premium brand spirits. The purchase of a bottle of

spirits at a nightclub also has similar associations, especially as the cost of a bottle will exceed

US$100.

Attitudes towards drinking are changing. It is also not only at clubs and bars that Indonesians

are drinking premium alcohol. Having a glass of wine with a meal for example is even done by

those who would otherwise not drink. The demand for premium alcohol has been unaffected by

a rise in sales tax and is still dominated by international brands and products. Moreover as

venues selling wine and spirits become more common in urban areas, so consumption of spirits

and wine becomes more popular with Indonesian consumers.

The growth of bars and nightclubs has made drinking alcohol an increasingly acceptable

social norm. In Indonesia's large cities, it is now a common sight to see bars full of Indonesians

drinking alcohol on a Thursday, Friday and Saturday night. However, as only a very small

percentage of the Indonesian population does drink, going to a bar does not necessarily equate

to drinking alcohol as many women will go to bars and clubs for the social scene rather than to

consume alcohol.

Given that tap water is unsafe to drink, it is unsurprising that bottled water plays such a

disproportionally large role in Indonesian households. While Indonesians will buy the smaller

bottles of water if they are doing sports, it is the large gallon containers that are ubiquitous in

every Indonesian home, with a family of five going through at least a gallon a week. Even when

given the option of cheaper alternatives to bottled water, such as Air Rahmat (a product

developed by the US Centre for Disease Control that was introduced to Indonesia in 2008 as an

affordable alternative to bottled water) Indonesians continue to buy the same products.

Following water, it is local favourites such as Sosro, which produces bottled tea, that are still

firm favourites with Indonesians. These cold teas are sold by almost every street vendor and

found in all corner shops and supermarkets across Indonesia.

Drinking milk products has become more common among health-aware middle- and upper-

income consumers. Flavoured milk is especially popular, and demand for these products

increased by 19% in 2011 compared to 2010.

Drinking Inside the Home

Drinking in Indonesia is primarily a social thing, and it is more common for Indonesians to

drink when they go out than it is for them to drink at home. There are lifestyle changes

happening though. Some Indonesians will on occasion enjoy a glass of wine or some type of

spirit such as whiskey when they are at home.

For lower-income Indonesians, drinking at home with friends is definitely a cost saving

activity. Although it is common for Indonesians to drink beer in such situations, it would be much

more likely that Indonesians from this demographic would be consuming home-made liquor.



The type of alcohol a person buys to drink at home will determine where they would make

their purchase. For spirits and wines, consumers would normally go to an upscale specialist

retailer such as a wine specialist or upscale supermarkets such as Ranch Market. In rural areas,

it is hard if not impossible to buy spirits from a legal vendor. There is now also a retailer based in

Bali that advertises on Facebook and offers an alcohol delivery service. There are also online

retail websites offering premium alcoholic products in Jakarta, including

wineshopindonesia.com, but buying online is not yet common.

Indonesians sometimes also drink at home in order to celebrate a special event such as a

birthday or anniversary. However, even then it is more probable that they would hold such

celebrations in a public space or at a private event hosted outside of the home.

Drinking Outside the Home

The popularity of going out for a drink in Indonesia varies by demographic. Going out drinking

is not a family thing in Indonesia. Young Indonesians are the ones most likely to drink and

therefore go out to drink. Part of the attraction of this is the act of going out and being seen. In

this sense, the choice of venue is hugely significant.

Upp

Consumer Lifestyles in Indonesia

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Transcript of Consumer Lifestyles in Indonesia