Indonesia's retail sector has become more attractive for Thai companies after its government adopted relaxations on the sector in February 2016, not to mention impressive retail sales growth of over 10 percent per annum. There are also other factors that point to voracious consumption there in the future, e.g., rising purchasing power among urban households and cheaper logistics costs given new infrastructure in the making.
Given appreciable increases in the number of medium- and high-income Indonesians whose monthly pay are north of IDR5 million/month, they may become a lucrative target for Thai businesses. KResearch projects that spending by these consumers will swell 7.7 percent YoY, reaching perhaps IDR93 billion within the next five years. Products selling well now include food and beverages, health products, cosmetics and electrical appliances. With more people having such incomes, Java would seem attractive to companies wishing to tap the Indonesian market. The island has good infrastructure and an advanced retail industry.
Bright prospects exist for Thai consumer products in Indonesia, combined with the stunning growth of the retail sector there, will likely contribute to healthier performance for our exports to the island country. We estimate that our top-ten consumer product shipments to Indonesia will increase 10-14 percent YoY to a total of around USD760-790 million in 2016.
Strategically, companies with no experience in Indonesia may find that an appointment of a trade agent could facilitate their market presence there, while direct contact may be more appropriate for certain merchandise or trade in small volumes.
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