Indonesia not yet shopper's paradise, says developer

Ika Krismantari, The Jakarta Post, Jakarta

There is still a long road to travel before Indonesia can even think of becoming a major Southeast Asian shopping destination, a mall developer has admitted.

"The government needs to fix the chaotic transportation system, develop infrastructure and provide tax incentives for tourists," A. Stevanus Ridwan, a director of publicly listed property developer PT Pakuwon Jati, said Wednesday during a seminar on mall and shopping-center development in Jakarta.

"No one can compete with Singapore in offering services to tourists as it provides tax refunds, while we, on the contrary, oblige visitors to pay more and more," he said.

No wonder therefore, he added, that so many Indonesians went to Singapore to shop.

The Indonesian Shopping Center Developers Association (APPBI) estimates that Indonesian shoppers will spend up to Rp 8 trillion (US$888 million) this year in Singapore, as compared to about Rp 6 trillion in 2003.

To make Indonesia as interesting as Singapore for shoppers, Stevanus said the government needed to do its homework by reviewing such things as the taxes and local government charges on retail sales and services that only served to make Indonesia more expensive for tourists.

He also urged the government to jazz up its campaign promoting Indonesian tourism, which uses the slogan, "Indonesia, Ultimate in Diversity."

"The government doesn't seem to have a focus. It is different with Singapore or even Malaysia, which are very serious about promoting their countries," Stevanus said.

With regard to retail outlet growth, Indonesia currently has one of the highest growth rates in Asia and the Pacific. In the first semester of this year, retail outlet growth in Indonesia reached 17.5 percent, compared to 11.8 percent in China, 12 percent in the Philippines, 8.6 percent in Singapore, and 7 percent in Malaysia.

"This is a sign that Indonesia has the potential to become a shopping destination that provides a wide variety of outlets," Stevanus said.

The Jakarta administration, which has been promoting the city as a shopping destination since 2005, says it is going to review its local government charges so as to make the capital more attractive to visiting overseas shoppers.

"We are aware that there are still problems that dissuade tourists from coming here. However, we will do our best to make the necessary changes," Jakarta deputy governor Fauzi Bowo said.

He added that Jakarta needed up to Rp 110 trillion in investment this year, of which the administration could only provide Rp 9 trillion.

"We hope we can look to the retail industry in Jakarta for help," he told reporters on the sidelines of the seminar.

Of the 90 modern shopping centers in Indonesia, 50 are located in Jakarta. Compared with Bangkok, Thailand, which has a ratio of 1 mall for every 171,000 inhabitants, Jakarta, with a ratio of 1 per 372,000 inhabitants, still had the opportunity to further increase retail space.

However, to lure more investors in the retail sector to Indonesia, Stevanus said the government needed to provide legal certainty, reduce electricity, gas and water costs, and eliminate unnecessary charges.

According to APPBI, at present there are 13 different local government charges that must be paid by developers wishing to build a mall.

Despite all the obstacles, Indonesian Retailers Association (Aprindo) chairman Handaka Santosa said that he was upbeat about growth in the retail industry next year as a lot of foreign retailers were poised to enter the market.

He forecast that by the end of this year there would be a 20 percent increase in retail sales to Rp 50 trillion, as compared to the last year's Rp 42 trillion.
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