Consumer Lifestyles in Indonesia

CONSUMER LIFESTYLES IN INDONESIA
Euromonitor International December 2012
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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 Chart 2 Consumer Confidence Index 2007-2012 ...................................................... 3 Misery Index 2007-2012 ............................................................................... 3
Learning ....................................................................................................................................... 4 School Life ................................................................................................................................ 4 University Life ........................................................................................................................... 7 Adult Learning .......................................................................................................................... 8 Chart 3 Chart 4 Number of Students in Higher Education and Consumer Expenditure on Education 2006-2011 .............................................................................. 8 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 Chart 6 Chart 7 Employed and Unemployed Population and Labour Force Participation Rate 2006-2011 ..................................................................... 14 Population Aged 15-64 Compared with Old-Age Dependency Ratio 2000-2020 .................................................................................................. 14 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 Chart 9 Per Capita Expenditure on Consumer Foodservice by Chained and Independent 2012 ...................................................................................... 19 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 Chart 11 Per Capita Consumption of Alcoholic Drinks and Soft Drinks by Category 2012............................................................................................ 22 Regional Ranking of Alcoholic Drinks Consumption: Off-trade vs Ontrade 2011 .................................................................................................. 23
Grooming Habits ........................................................................................................................ 24 Attitudes Towards Personal Care ........................................................................................... 24
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Attitudes Towards Beauty ....................................................................................................... 25 Male Grooming ....................................................................................................................... 26 Use of Hair Care Salons, Spas, Nail and Beauty Parlours ..................................................... 26 Chart 12 Chart 13 Value Sales of Beauty and Personal Care Key Categories 2007-2012 ...... 26 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 Chart 15 Consumer Expenditure on Clothing and Footwear 2007-2012................... 30 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 Chart 17 Growth in OTC Expenditure on Pharmaceuticals Compared with Healthy Life Expectancy at Birth 2006-2011 .............................................. 34 Regional Ranking of Obese and Overweight Population 2011 ................... 35
Smoking Habits .......................................................................................................................... 35 Smoking Prevalence ............................................................................................................... 35 Attitudes To Smoking.............................................................................................................. 36 Chart 18 Chart 19 Smoking Prevalence amongst Men and Women 2012............................... 38 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 Chart 21 Importance of Hypermarkets, Supermarkets and Discounters within Grocery Retailing 2012 .............................................................................. 42 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
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Attitudes To Gardening ........................................................................................................... 48 Chart 23 Chart 24 Number of Home Owners and New Dwellings Completed 2007-2012 ....... 49 Regional Ranking of Home Owners as a Proportion of Total Households 2011 ....................................................................................... 50
Pet Ownership Habits ................................................................................................................. 50 Attitudes To Pet Ownership .................................................................................................... 50 Chart 25 Chart 26 Pet Population and Sales of Pet Food 2007-2012 ..................................... 51 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 Regional Ranking of Possession of Passenger Cars 2011 ........................ 57
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Vacation Habits .......................................................................................................................... 58 Attitudes To Taking Holidays .................................................................................................. 58 Main Holiday-taking Trends .................................................................................................... 59 Domestic Versus Foreign Holidays ......................................................................................... 60 Preferred Travel Methods ....................................................................................................... 61 Chart 29 Chart 30 Domestic and Outgoing Tourist Expenditure by Sector 2007-2012 ............ 61 Regional Ranking of Holiday Departures 2011 .......................................... 62
Financial Habits .......................................................................................................................... 63 Attitudes Toward Payment Methods ....................................................................................... 63 Savings ................................................................................................................................... 64 Loans and Mortgages ............................................................................................................. 64 Chart 31 Chart 32 Consumer Lending Compared with Savings and Savings Ratio 20072012 ........................................................................................................... 66 Regional Ranking of Financial Cards in Circulation 2011 ........................... 67
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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.
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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 expectat ions. 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.
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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 th e 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: Note:
Euromonitor International Consumer Confidence Index measures consumers' levels of optimism regarding current economic conditions and the direction of the economy.
Chart 2
Misery Index 2007-2012
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Source: Note:
Euromonitor International 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-
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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
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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 backto-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-toschool 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
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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%.
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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 Mode rn Putra Indonesia, 7Elevens 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 aroun d 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
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Chart 4
Regional Ranking in the growth of the number of University Students 2011
Source:
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
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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 coworkers 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 lowermiddle-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
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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 uppermanagement 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.
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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 fuelefficient 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.
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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.
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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
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Chart 6
Population Aged 15-64 Compared with Old-Age Dependency Ratio 20002020
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Chart 7
Regional Ranking of Female Employment Rate 2011
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EATING HABITS
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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 youthdominated 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 takeaway 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
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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.
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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.
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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
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Chart 9
Regional Ranking of Availability of Fresh Fruit and Vegetables 2011
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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
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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 upperincome 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.
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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. Upper- and middle-income Indonesians normally go to bars, upscale drink specialists (where customers are given the option of dining as well as drinking) and nightclubs. In the large metropolitan areas, there is an increasing choice of bars and restaurants that specifically target upper-income consumers. Fine dining is popular among upper- and middle-income Indonesians. These restaurants often serve wine by either the glass or the bottle to accompany meals. Although many restaurants have an extensive selection of alcohol, many local people choose sweet red wines, whatever the food. The price of alcohol at these venues means that if middle-income Indonesians do go they often only have one drink (the price of a glass of beer is about Rp30,000, while a large bottle of beer that is the same as three glasses can be bought for the same price at cheaper venues). Cocktails and drinks like Baileys are popular with women that do drink because of their sweet taste. It is rare for Indonesian women to drink more than a glass of beer because many do not like the flavour. Bars are normally busiest on Friday and Saturday night when office workers do not have to think about going to work the next morning. Other busy times are evenings preceding public holidays. The middle- and upper-income demographics normally go out to drink once or twice a week in small groups comprising friends or work colleagues. People often do some form of social activity such as bowling before going to a bar and then possibly moving on to a nightclub. A popular place where young Indonesians, especially students, hang out and drink is 7Eleven. The popularity of these places revolves around the fact that they are always open until late night and they offer seating, free Wi-Fi and competitive pricing for alcohol. 7-Eleven stores are normally busiest at 6-10pm. When they go to a 7-Eleven, younger Indonesians often stay for the evening. If they buy alcohol, it will be common to share a large bottle of beer rather than buy separate bottles. Women will normally have a bottled alcoholic fruit juice if they drink at all. Although there is legislation banning smoking in public places, this is largely ignored. Regardless of whether the venue is inside or out, men will normally smoke. Chart 10 Per Capita Consumption of Alcoholic Drinks and Soft Drinks by Category 2012
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Chart 11
Regional Ranking of Alcoholic Drinks Consumption: Off-trade vs On-trade 2011
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GROOMING HABITS Attitudes Towards Personal Care

Consumer demand for personal grooming products is increasing significantly and will continue to do so for the foreseeable future. Growing disposable income (expected to continue through to 2020) combined with greater knowledge and awareness of beauty products that are currently not well established in Indonesian households will be the two main factors driving demand. Overall expenditure on beauty and personal care products grew to Rp28.7 trillion in 2012, an increase of 36.5% over 2007. Demand for basic categories of beauty products has shown the highest growth as consumers from low income households who previously saw beauty products as a luxury are finally able to afford them. Products in high demand include skin care, hair care and bath and shower products such as soaps, shampoos, conditioners and body wash. Often demand for these products with low-income consumers is stimulated by the small unit size and low cost per unit. For example small sachets of shampoo and conditioner are commonly sold in corner shops and convenience stores. These small sachets are affordable for consumers from low-income households who would otherwise be unable to afford the larger bottles of shampoo. The grooming products that are most in demand by consumers are the ones that help users attain long held social perceptions of beauty. Skin whitening and anti-ageing products are two such examples. Demand for skin care products grew by 126% in the period of 2007-2012, which gives an indication of just how essential these products are considered amongst Indonesian consumers.
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Dental care in Indonesia remains low. A study by Unilever on consumer habits and attitudes concluded that only 34% of Indonesians brushed their teeth before going to sleep. Despite this fact healthy white teeth are seen as beautiful in Indonesia. As a result teeth-whitening services and dental care is important to consumers. The high levels of male smokers in the country are one of the reasons for the popularity of teeth whitening products. Consumers from high and middle-income families will often consider having their teeth professionally whitened at a dentist, a luxury not available to those from low-income households. The establishment of stalls in leading malls in Jakarta offering teeth whitening services is a reflection of this growing demand. When buying products consumers have a preference for high value foreign brands. Part of the attraction with these brands is that they are perceived as being of better quality than domestically produced products.
Attitudes Towards Beauty

Indonesian attitudes towards beauty are the result of a mixture of traditional ideals and international trends. Rather than directly impacting Indonesian perceptions of beauty, celebrity culture in Indonesia is more a reflection of what is perceived as beautiful, it is rare that a celebrity will directly set a trend. Popular stars and fashion icons from countries as varied, as Japan, Korea and the United States are all held up as examples of what it is to be beautiful. The regional examples of Japan and Korea are more in line with traditional perceptions of beauty within Indonesia. One of the specific areas where these attitudes converge is the link between pale skin and beauty. That pale skin is considered beautiful is a view long held by Indonesians (that the agricultural sector is still a significant employer will ensure these perceptions are upheld for the foreseeable future). These views are reinforced within the country because of the popular stereotype that Indonesians from the East of the archipelago (where skin colour is darkest) are lazy and under developed. The desire for white skin has impacts on all aspects of Indonesian consumers lives as well as spending habits; not sun bathing; walking with umbrellas to avoid getting a tan; wearing jackets, long sleeve trousers and gloves when driving motorbikes; the addition of bleach to sunscreen. There are notable celebrities who are breaking this trend, with people such as Agnes Monica actively tanning and exercising regularly in order to look beautiful. However it is still unclear if this is the start of a long-term trend that will mimic Western perceptions of beauty or if the regional influences will prevail. Looking young is important for Indonesian consumers and affects their attitude towards personal care and beauty. Middle-aged consumers have the highest level of disposable income out of any age bracket. This means that at the same time as getting old starts to become a concern they have the money available to buy anti-ageing skin creams and hair dyes. The World Society of Anti-Ageing Medicine actually recognised Indonesia as the centre in development and progress of anti-ageing medicines in 2012, when it decided to host its annual conference in the country. This is a reflection of the increasing importance and sophistication of Indonesian consumers who are looking to buy the best anti-ageing products available on the market. Glasses and contact lenses are two other popular beauty accessories in Indonesia. Coloured contact lenses (blue is a favourite) are especially popular with young female consumers. Part of the attraction of coloured contact lenses is that they make you look different and stand out from the crowd. As a beauty and fashion accessory glasses are worn because they are perceived as making the person wearing them look more intelligent and refined. Plastic surgery in Indonesia is still rare, but there is a view that consumer habits in regional countries such as South Korea will influence Indonesians. There are a number of national celebrities who have undergone plastic surgery. The most common form of plastic surgery is
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breast enlargements and nose jobs (the shape of the nose is considered to be a determinant of beauty).
Male Grooming
Men tend to be focused on basic washing and shaving products. However, demand for other grooming products has been on the rise since 2010; male skin care products registered a 12% growth from 2009 to 2010 rising to 14% in period over 2010 to 2011. One key factor that has influenced Indonesian males is mens style and health magazines. The website felikaito.bogspot.com attributes this to a growing awareness and demand for male specific health and beauty products. The use of male grooming products is seen as part of a larger picture, and blogs discussing male grooming products will also talk about other lifestyle choices, such as eating more fruit to ensure healthy looking skin and doing regular exercise. This has resulted in an increased demand in skin care products. Skin whitening products are an important part of this, as males with lighter skin colour are considered more handsome than those with darker pigmentation. Although there is a wide range of literature on mens health and grooming products that is commercially produced (in the form of magazines), consumer driven content is more limited. There are very few websites or blogs in Indonesian focusing specifically on male grooming. There is significantly less demand for male grooming products from rural consumers.
Use of Hair Care Salons, Spas, Nail and Beauty Parlours

Having a massage is common for consumers of both genders. Traditionally a local masseuse would be hired who would visit a persons house. However as the disposable income of Indonesians rise, people in urban centres are turning more to private spas and health centres that offer a range of amenities including saunas. Top end spas will also offer other services such as facials and pedicures. Spa massages have become a new trend in Jakarta. The popularity of these services is seen as directly related to the increased stress associated with work and commuting. As a result consumers are more inclined to pamper themselves with massages and beauty therapies and this is not just a Jakarta phenomenon. Speciality spas or beauty treatment centres are still rare. According to plusku.com, a spa health and beauty website, it is still rare to find a salon that exclusively offers manicures and nail care to consumers. These services are normally offered in combination with other things such as haircuts or massages. Chart 12 Value Sales of Beauty and Personal Care Key Categories 2007-2012
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Chart 13
Regional Ranking of Per Capita Sales of Men's Grooming Products 2011
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FASHION HABITS Attitudes Towards Clothing

Exposure to international culture has led urban Indonesians to demonstrate a strong affinity, not only for Western-style clothing, but also Middle Eastern and East Asian trends. As a result Indonesian fashion by and large follows international trends, with local designers adapting these themes to incorporate aspects of traditional culture. This is true of both Muslim and non-Muslim fashion lines. Many of the celebrity icons within Indonesia, such as pop and film stars, are often considered to imitate current Western trends. Indeed, it is often the case that celebrity icons are seen to be the leaders in fashion, sporting the next up-and-coming designs. Aside from pop and film stars, a more direct influence on current fashion trends can be found in the work of supermodels such as Kimmy Jayanti. According to an article by Centro, one of Indonesias largest department stores, Kimmy is often seen wearing ripped or faded denim jeans, and has demonstrated a unique and daring attitude in her professional work. This attitude has led in part to her popularity amongst fashion designers as well as her admiration amongst the public. This trend of celebrity and fashion icons sporting Western designs is likely to be one of the stronger contributing factors for the popularity of Western fashion within Indonesia, as consumers will often try and imitate their favoured celebrities. The prevailing clothing style in Indonesia is generally considered to be reasonably conservative. This is especially true of male fashion in Indonesia. On the website themensworld.com an article on mens fashion stated; "when it comes to fashion men are not too adventurous. Most Indonesian men will only pay attention to the clothes they wear in a formal setting." As a result mens fashion hasn't seen s ignificant changes. For formal occasions men will normally wear pants and a fabric or batik shirt, or alternatively a suit and tie. With so many local fashion houses and tailors it is more likely that a suit or for that matter other types of formal clothing will be purchased from an independent store rather than a chain/ leading fashion brand. For casual events men will normally wear jeans, cargo pants or even just shorts with a t-shirt or buttoned up shirt. However, modern lifestyle trends do mean that male fashion choices are a reflection of social status. Given that male fashion is conservative, international brands are seen as a way of standing out for those with money. Ralph Lauren Polo Shirts and Columbia Khaki shorts are popular for those wanting to stand out a bit from the crowd. A Ralph Lauren Polo Shirt is normally accessorised with an expensive watch to complete the look. For Indonesian males that pay close attention to the latest trends, it is Korean fashion that is considered to be at the forefront in 2012. This style looks to combine trench coat and blazers with smart trousers and quality shoes. This fashion is definitely in vogue with metrosexual Indonesians. The choice of colours are still conservative, with navy blue, army green and plaid motifs all being popular. The popularity of high quality jeans, as well as other fashionable apparel amongst Indonesian men and women, has resulted in a phenomenon wherein many travel abroad so as to buy foreign-brand goods. This is also as the result of a broader trend wherein Indonesians are travelling abroad more often. It is already a well-established trend within the country for Indonesians to buy their clothing from manufacturing centres such as Bandung, where items of clothing can be purchased cheaply. Female fashion in Indonesia is continually evolving. One particularly attractive element about Indonesian female fashion is its diversity, which can be attributed to its broad social roots. The two main female fashion trends in Indonesia are East Asian/ Western and Middle Eastern. Items of Middle Eastern clothing that are popular with Indonesian consumers include the hijab and
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robes, whereas Western/ East Asian female fashion would include items like light summer dresses and short skirts and blouses. What is certainly true is that Muslim clothing and Muslim fashion has become more popular with Indonesian consumers. According to an article by the Jakarta globe, Indonesia is beginning to be recognised as a Mecca for Muslim-wear designs and is a strong producer of such goods. Fashion designer Irina Mutiara stated that she feels that Indonesia may well be seen as the Muslim fashion equivalent of Paris for International Muslim Vogue. In recent years the hijab, a traditional female Muslim garment, has seen a huge increase in its popularity. While the hijab had only usually been used for religious purposes alone, evolutions within Indonesias fashion culture have allowed it an additional function or status, that of a fashion accessory. In the article for the Jakarta Globe, Sarfilianty Anggiani described the hijab as a hot fashion trend which not only allows women to respect their religious beliefs but also allows them to look chic. The popularity of Muslim fashion with consumers is one facet of the growing influences of Islam from the Middle East, particularly Saudi Arabia, which is not only changing consumer lifestyles in Indonesia, but has impacts on all aspects of peoples lives in the country. In relation to fashion, the popularity of Muslim clothing with consumers is expected to increase over the coming years, with designers hoping that Indonesia will be driving Muslim fashion by 2020. While this is a popular statement on Indonesian websites, there are no comparable statements of Indonesia becoming a "Western" style fashion centre, like Milan, New York or London. As Muslim and Western fashion trends collide, Indonesia has been faced with an almost unprecedented opportunity to diversify and further develop its established fashion trends. Jakarta Fashion Week is a well-recognised event, which not only focuses on the current trends in Indonesian fashion, but also attempts to push the boundaries and speculate on the future of Indonesian fashion. In recent years, Jakarta Fashion Week has experimented with a fusion of Western and Indonesian fashion with varying degrees of success. The event in 2012 has encouraged designers to push this even further than before, seeking to mix traditional styles of batik and kebaya with more modern and entirely new designs to create exciting products for the young consumer market.
Attitudes Towards Footwear

Footwear is very important for young Indonesians, especially those within the middle and high-income brackets. Indonesia itself is one of the largest producers of footwear in the world, and produces a diverse range of fashionable and functional items for the national and international market. In 2011 consumers spent Rp35,324 billion on footwear a small growth over 2010 of 1.7%. Despite Indonesias economic developments, revenue in footwear has not drastically increased in 2012; according to the Indonesian Footwear Association, sales in footwear have remained somewhat stagnant. According to an Antara Jawa Barat news agency report in 2012 there is a growing popularity within the Indonesian consumer market for Chinese shoes. Unlike a fair proportion of Indonesias footwear manufacturing processes, Chinese shoes are largely machine-made, and therefore cheaper. Many native Indonesians choose to purchase new footwear on an annual basis, during the Ramadan season, and such purchases are more often chosen after careful consideration and planning rather than that of an impulse buy. In a typical urban environment, consumers will shop for footwear in a department store, choosing the particular store to best match their budget. There are also a wide variety of independent stores that sell footwear, which may be found in either traditional markets or large shopping complexes. Indonesias performance in the production of footwear has granted it an abundance of cheap, local goods. These are generally very popular amongst Indonesian consumers, although some consumers will demand a far higher quality in their footwear, as well as a more refined brand
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design. These consumers are less likely to be troubled by the additional cost of the higher tier of goods, and as such, have access to a broader range of fashionable items. Although they are denied the higher tier range of products, consumers from lower-income families still have access to a reasonably large range of fashionable items. Research shows that within Indonesia, non-sports footwear outperforms sports footwear in demand for both men and women. While women consumers account for a larger portion of total footwear sales in Indonesia, they also spend far less on sports footwear than men. In general, smart shoes are reserved for formal occasions and office use, while Indonesians favour other shoes, such as sandals, for general use. Sandals are more suited to the climate in Indonesia than heavy boots, for example, but sandals are rarely seen as more fashionable than shoes.
Attitudes Towards Personal Adornment

Although gold and silver jewellery is historically favoured, according to an article on Kabarindo.com, around 20,000 jewellery designs were presented for examination at the Surabaya International Jewellery Exhibition in 2011. The participating designers included 94 designers from Indonesia, as well as foreign jewellery makers and companies. During the exhibition, certain demonstrations were held to highlight the popularity in new and upcoming trends. These trends showed a preference for silver over gold because of the high price of gold. Items containing pearls or diamonds, as well as other valuable gemstones were all popular. There is a long cultural history of tattooing in parts of Indonesia, however, tattoos are not common among mainstream Indonesian consumers, who normally want to blend in rather than stand out. The same is true of piercings, which outside of ear piercings are uncommon.
Attitudes Towards Accessories/luxury Goods

According to an article in the Jakarta Globe in March 2012, wealthy Indonesians, normally rely on overseas trips to Hong Kong and Singapore to satisfy their yen for high-end jewellery, clothing and other accessories, but political stability and a thriving economy focused on improving infrastructure is boosting demand for luxury goods at home. LVMH has plans to open 20 to 22 new Sephora cosmetics outlets in Indonesia over the next two or three years.Within Indonesian culture, gold jewellery is favoured not only for its aesthetic qualities, but also as an investment. Gold jewellery may be sold in emergency situations in exchange for a cash payment, and buyers are relatively easy to find. This aspect makes gold particularly attractive to low to middle-income Indonesians, who are less likely to have as adequate financial security as higher-income families. As gold prices continue to increase, consumers are more readily turning their attention to the cheaper alternative of silver jewellery. Many middle- and lower-class Indonesians are beginning to consider silver jewellery to be an acceptable alternative. High-end luxury jewellery is almost exclusively sold to women, and female consumers will purchase such accessories for their fashionable worth, or for cultural reasons. Luxury timepieces, unlike most other forms of jewellery, are attractive to both male and female consumers. Demand for luxury timepieces in 2012 reached Rp165 billion up by 9.3% over the previous year. For many consumers, luxury timepieces are considered a useful fashion item for demonstrating their high status. Chart 14 Consumer Expenditure on Clothing and Footwear 2007-2012
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Chart 15
Regional Ranking of Consumer Expenditure on Clothing and Footwear as a Proportion of Total Consumer Expenditure 2011
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HEALTH AND WELLNESS HABITS Public Versus Private Healthcare

The Indonesian Government wants to provide a system of universal health insurance coverage for all of its citizens, according to the 2010 census. Legislation to help achieve these goals includes a 2008 health insurance plan known as Jakesmas. Military personal and civil servants are covered by government health insurance policies, while all Indonesian employees
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should be given health insurance coverage by employers according to the labour code. However, while this is the theory, the reality is somewhat different. With such a large informal workforce, the majority of Indonesian workers do not receive any form of medical health insurance. Furthermore, insurance cover when available does not cover the full cost of hospital visits, meaning that medical expenses quickly mount up when someone becomes sick. New legislation implemented by the provincial government of Jakarta is designed to allow low-income Indonesians to ensure access to subsidised/ free treatment and, more importantly, free prescriptions. In Indonesia, there are two systems of healthcare, a subsidised system of public healthcare and private healthcare. However, the distinction between public and private healthcare in Indonesia is quite blurred, with the majority of healthcare professionals actually engaged in the delivery of both public and private healthcare services. Overall, the private sector is the dominant provider of care, accounting for 67% of all hospital in-patients in 2010. As an archipelagic nation, Indonesia faces problems in its aim of achieving large-scale and consistent universal healthcare coverage. Consumers living in rural or remote areas often have problems accessing formal clinics and qualified health practitioners. The World Health Organization has identified major deficiencies in the number of healthcare workers in Indonesia: Decentralization is one of many factors exacerbating long -standing problems with poor distribution and reportedly low productivity and quality of health workers. This in turn impacts on the quality, efficiency and equity of health care provision. A limited number of health workers affects the health service in Indonesia. At the level of primary healthcare, Indonesia is regarded as having an adequate provision of professionals and services, with one public health centre for every 30,000 people. However, this can be misleading, as there are large variations in the level of cover throughout the country. Private healthcare, by and large, skips over rural areas completely and is centred upon the large urban centres of Java and some of the other main islands such as Bali. The best of the private hospitals, which normally have an international affiliation, are exclusively found in Bali and Jakarta. The quality of healthcare in Indonesia is perceived as poor. The former head of the Doctors Association, Dr. Kartono Mohammad, was quoted as telling a group of journalists that "Indonesia has no healthcare system" because "there is no quality control," according to a 2010 article in Time magazine. Even in the private sector, where the quality of doctors is generally superior, there are plenty of scare stories, with misdiagnosis being all too common. With approximately 2% of the fiscal budget spent on healthcare in Indonesia in 2012, there is still a long way to go before there will be significant improvement in the overall system. As a result, older Indonesians from middle and high-income demographics frequently travel abroad for healthcare services. According to globalsehat.com, an Indonesian healthcare website, Indonesian consumers spend Rp6.2 trillion every year on healthcare, with 3%-5% of Indonesians going to hospitals in Singapore if they have a problem. This figure does not include Indonesians seeking medical treatment in Malaysia and China.
Attitudes To Health and Well-being

A growing awareness of good health and well-being among Indonesian consumers has created demand for organic foods and naturally healthy foods. In fact, this back-to-nature mentality has also led to a preference for herbal dietary supplements. Awareness of health issues is highest among middle and high-income Indonesians living in urban environments. Low-income Indonesians are by and large ignorant of these issues, but then so is a large cross section of the emerging middle class. Large trade shows, such as the Herbal and Health Food Indonesia exhibition held annually in Jakarta for the last eight years, point to the growing demand by health-conscious consumers for
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health foods. Although there have been no public health initiatives in 2012 to promote vitamin and dietary supplements, direct selling from friends as well as testimonials from celebrities and information garnered from media sources has increased consumer demand for these products.
Over-the-counter Versus Prescription-only Medicines (otc Vs Pom)

Home medication is the only practical option for many Indonesians who are living in remote and/or rural areas. With many coming from a low-income background with poor public services and infrastructure, access to the internet or other repositories of knowledge is normally limited. As a result self-medication is normally only used for easily treatable or easily identifiable problems. Given the option, most Indonesians will visit a doctor to seek a medical opinion over selftreatment. In this sense, self-treatment is more a result of financial circumstance than a lifestyle choice. Prescription medicines can be bought over the counter in most pharmacies, although according to Indonesian law, a prescription from a certified doctor is needed. Patients visiting a public hospital are more likely to be prescribed cheap generic drugs than branded ones. The opposite is true of patients visiting public hospitals. Hospital dispensaries make a commission from the sale of branded drugs, and Indonesian doctors often over-prescribe medication. Low-income consumers who are unable to afford the cost of branded drugs will often turn to informal street vendors that sell counterfeit or expired drugs at discount prices.
Sport and Fitness

The growth of sport and leisure facilities and gyms has been rapid in urban centres. A growing awareness of health and appearance, particularly among young urban males, is driving this trend. At the moment, there have only been small-scale drives by local government to promote sporting activities. However, whether they participate in them or not, Indonesian consumers love sport. According to mostpopularsports.net, which conducted a poll on Indonesian consumers internet use and browsing habits, the most popular sports (in order of preference) are football, basketball, wrestling, motor sports and water sports. However, the three most popular sports that Indonesians participate in are badminton, football and table tennis. Football has a huge national following, with young consumers staying up until 1am or later to watch live football matches from Europe. Soccer stars are idolised by sports fans. However, while eleven-a-side football is popular to watch, five-a-side football is more commonly played. This is because five-a-side pitches are easy to find in urban areas. Going to the gym is also a popular activity with young urban consumers. In the larger urban centres, there are gyms catering for almost every income demographic. However, it is mostly young middle- and high-income consumers that frequent the gym. Most gyms offer a range of free classes to their members. Popular classes include yoga and contemporary dance.
Obesity
Obesity has never been a significant problem in Indonesia, but changing diets brought about by lifestyle changes have resulted in higher obesity rates, a problem most acute in children. According to a 2010 article in the Jakarta Post, "obesity among children in Indonesia has doubled in the last decade. The Health Ministry says that in 2007, the prevalence of obesity among children between the age of six and 14 was 9.5% among boys and 6.4% among girls. These figures are much higher than the 4% recorded in 1990. Furthermore, while childhood obesity rates are rising, ignorance about obesity remains a major issue that still needs to be overcome. The same article stated that "even though the number of obese children has been
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increasing at alarming rates, the government and the public remain unaware of the severity of the problem." This includes parental ignorance concerning the link between obesity and other health problems such as hypertension, diabetes and respiratory problems. The percentage of obese people aged 15 and over reached 3.2% of the population in 2011. The number of overweight people aged 15 and over stood at 16.8% of the population. A study conducted by the Ministry of Health in 2010 reported that obesity among children below the age of five stood at 14%. Higher disposable incomes, particularly among low-income Indonesians, will mean that this trend of rising rates of childhood obesity will continue unless there is an improvement in education about healthy eating habits. A nutritionist from the Bogor Institute of Agriculture discussed the problem in a 2012 report by the Jakarta Post: They dont realize that obesity is an on-going problem. It starts with under nutrition and is then followed by other problems, such as stunting, obesity and non-communicable diseases. Poor diet is only partly to blame. A lack of exercise among young children is a significant contributing factor. The 2007 Basic Health Research report found that 70% of 10-14 year olds were not getting enough exercise and were spending more time at home sitting in front of the TV. Slimming teas, diets and weight-loss supplements are all used by Indonesian consumers trying to deal with obesity issues. The country has even seen a mushrooming in the number of weight-loss clinics being set up in urban areas. The flip side of child obesity is child malnutrition. The Health Ministry estimates that 36% of children are stunted as a result of a lack of vital micronutrients in their diet. This is a particularly large problem in rural areas where a lack of education about food nutrition and a healthy diet, compounds the problem. Overall, malnourishment was estimated to affect 17.9% of Indonesians in 2010. Chart 16 Growth in OTC Expenditure on Pharmaceuticals Compared with Healthy Life Expectancy at Birth 2006-2011
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Chart 17
Regional Ranking of Obese and Overweight Population 2011
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SMOKING HABITS Smoking Prevalence

Indonesia indisputably has one of the highest smoking rates globally. In 2011, there were in excess of 61.4 million smokers, and this number is rising. A report by the Global Adult Tobacco Survey entitled Global Adult Tobacco Survey: Indonesia Report 2011 sheds further light on smoking rates in Indonesia and consumer preferences. The results of the survey gained significant global media coverage. The survey found that "tobacco consumption in Indonesia has increased significantly in the last two decades due to several factors, such as the growth of the population, the relatively cheap price of cigarettes, and aggressive marketing of tobacco industries. Community Based Surveys such as National Socioeconomic Survey, Baseline Health Research and Global Adult Tobacco Survey show significant increase of ac tive male cigarette smokers in Indonesia. In 2012 adult male smoking rates were 66.5% of the total population a 5.6% increase since 2007. The report places Indonesia second only to Russia in terms of the percentage of the national population that smokes. For Indonesians, the fact that so many males smoke will not come as a surprise. However, smoking rates among women have also been increasing year on year. In 2012, 5.9% of adult women smoked, a rise of 14.3% since 2007. Most female smokers live in urban areas, where smoking is becoming more acceptable for them. While these figures show a growth in numbers, there is still a stigma surrounding female
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smokers. Moreover, while lifestyle changes make smoking more acceptable to women in urban areas, a growing awareness of health issues surrounding smoking has meant a slower growth in the number of male smokers. The legal minimum age for smokers is 18. Like much smoking related legislation, these rules remain largely unenforced. It is a common sight to see Indonesian school children smoking after they have finished classes for the day. The 2009 Global Youth Tobacco Survey found that 20% of minors smoked and that 78.1% of youths are exposed to second-hand smoke in public spaces and 72.4% in the home. The survey also stated that a third of all kids try a cigarette before the age of 10. In a country where over 60% of men smoke, over 80% of them started as a child. However, according to the survey, even if youth are exposed to cigarettes at a young age, they only start smoking regularly when they are 17, the same age that children start to be viewed as adults by their parents.
Attitudes To Smoking
The most popular type of cigarette in Indonesia is the ubiquitous clove cigarette that releases a sweet smell when smoked. These are popularly known as kretek cigarettes, which 30.5% of smokers prefer. It is interesting to note that only 2.3% of women smoke kretek, compared to 60.9% of males. The high tar content and strong flavour are two factors that explain this relatively poor uptake. However, while kretek cigarettes are the most popular, the majority of Indonesian smokers are not loyal to any brand and will smoke any type of cigarette (kretek, white cigarette or hand rolled) available. The popularity of kretek cigarettes increases through the age groups. Of the 15-24 year olds interviewed in the Global Adult Tobacco survey, only 25.2% preferred kretek. This rose to 34.6% for 25-44 year olds and then again to 35.2% for 35-64 year olds, but declined to only 21.5% for the 65 and older demographic. Part of the popularity of kretek cigarettes, apart from their long history in the country, is linked to the spiciness of Indonesian cuisine. Smoking a kretek cigarette after a meal is thought to soothe the mouth and to relieve the discomfort associated with spicy food. As a result, it is very common to see Indonesians light up a kretek cigarette immediately after they have finished eating. Hand-rolled tobacco is the next most popular with Indonesian smoker. Approximately 4.7% of smokers in 2011 used hand-rolled tobacco. Smoking hand-rolled tobacco is most common in rural areas. This is primarily because it is significantly cheaper than machine-manufactured cigarettes, and low incomes are common among rural consumers. A lack of health awareness is also a factor. As a result of the cost, low-tar cigarettes are not popular with rural Indonesian smokers. Tar heavy, mild cigarettes are extremely popular with young Indonesians (3.7 million users in 2011). These cigarettes include the brands A Mild, Star Mild and U Mild. The brands portray the image of a modern lifestyle, which is popular with urban Indonesians of all age groups and genders. Those with a college education are more likely than those with only primary level of education to smoke these cigarettes. People, who smoke these cigarettes, smoke more on average than those who smoke kretek or hand-rolled tobacco (14.7 cigarettes a day compared to 11.8 for Kretek and hand-rolled). When Indonesians do smoke, they smoke quite heavily. The average number of cigarettes smoked per day is 12 sticks (13 sticks for men and 8 for women). While smoking cigarettes is popular among younger consumers, the demographic most likely to habitually smoke cigarettes are actually 45-64 year olds, according to the Global Adult Tobacco Survey: Indonesia Report 2011. It also stated that overall 29.2% are daily smokers and 5.6% are occasional smokers. The prevalence of daily smoking is highest in the 45-64 years age group (33.5%).
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The popularity of smoking has a relation to type of employment or, alternatively, lack of employment opportunities. Those most likely to smoke are self-employed (43.4%). They, along with the unemployed, are also most likely to have the occasional cigarette (6.9% of selfemployed smoke on occasion compared to 7% of those unemployed). Those who are unemployed or have a low income are most likely to buy individual cigarettes. The sale of individual cigarettes is extremely common in small corner shops and at street vendors. Levels of education affect rates of smoking. Indonesians with a college or university degree are not only less likely to smoke compared to those with only a primary education (27.6% compared to 38%), if they do smoke, they also start smoking when they're older (19.5 years as opposed to 17.5). It is estimated that 16.6 million Indonesians with a high school degree or more smoke, while 43.3 million Indonesians with a secondary education or less smoke. There has been a long tradition of smoking cigars in Indonesia, which is a result of the Dutch colonialist period. While most popular with expatriates, upper-income Indonesians are also taking up the habit, which is seen as a status symbol. The growing popularity of cigars is also the result of increased business links between China (where cigar smoking has become a status symbol) and Indonesia. In line with the fact that cigars are seen as a status symbol, there has been a boom in the number of cigar shops and lounges, as well as cigar smoking clubs, which are disproportionally to be found in five-star hotels and expensive malls that cater to a high-income clientele. Those consumers who smoke cigars are most likely to smoke them in such a location. It would be highly unusual to see someone smoking a cigar in an inexpensive bar. There are also locally produced cigar brands that cater for the low- and middle- income Indonesian market. While smoking pipes is not popular in Indonesia, neither is the relatively new phenomenon of electric cigarettes, which only 0.3% of Indonesian smokers have tried. Shisha smoking on the other hand is increasingly popular and trendy, especially in cities like Jakarta. There are a number of shisha cafes in Jakarta, specifically in the areas of Menteng and Kemang. Both are expensive areas of the city, and the shisha cafes cater to this young upper- to middle-income crowd. Shisha smoking has become popular with middle-lower-income Indonesians as well. The number of venues catering to these consumers is continually increasing. Cultural influence picked up when going abroad further expands the popularity of this trend. Indonesians smoke heavily both in and out of the home. Some 67.7% of smokers in Indonesia have their first cigarette within one hour of waking up. That 78.4% of adults are exposed to second-hand smoke in the home reflects how common and socially acceptable smoking is in this environment. Smoking in the workplace is not unusual either, with 51.3% of workers exposed to second-hand smoke in the workplace. Despite legislation that makes it illegal to smoke in public places, notable areas where people are exposed to second-hand smoke include government buildings, health-care facilities, restaurants and public transport. In fact, there are few places where Indonesians do not smoke. Not only do Indonesians smoke in ever increasing numbers, there are also more Indonesians than ever trying to quit, according to the Global Adult Tobacco Survey: Indonesia Report 2011. The report states that among current and former tobacco smokers, approximately one third (30.4%) made an attempt to quit in the past 12 months. More women made quit attempts than men (44.6% and 29.8%, respectively). The 70.7% of smokers who try to quit do so without any type of assistance. Only 13.6% of Indonesian smokers use patches or some other method to help quit smoking, while 7% seek counselling to help them quit, and just 0.4% has used prescription medication. Knowledge of and access to products and methods to help quit are more common in urban areas, where 16.9% of people have used quitting products compared to 9.7% in rural areas. The Indonesian government has developed a roadmap focused on the tobacco industry. According to the roadmap, Indonesia, will only start to prioritise health over tax revenues and
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employment between 2016 and 2020. Thus, there are no policies in place to deter consumers from smoking in the mid-term. When the government does attempt to implement anti-tobacco legislation, the tobacco industry exerts pressure on the political process through its economic influence as well as the role it plays in the labour market. A prime example of this is discussed in a Jakarta Globe article that covered a demonstration against smoking related legislation in July 2012. The articles reported that thousands of tobacco farmers rallied in front of the Health Ministrys office on Tuesday urging the government to snuff out an anti-smoking bill that they say will slash profits. The regulation, titled Tobacco Impact Control, would require cigarette packs to feature a graphic warning on their cover, limit tobacco advertising and regulate smoking in buildings. A recent anti-smoking demonstration held in September 2012 against the World Tobacco Exhibition, on the other hand, only managed to attract hundreds of demonstrators. The local government in Jakarta has already started to implement some aspects of smoking control as there is a ban on smoking in public places in the city as well as in sections of buildings. However, this legislation is largely ignored outside of premium hotels, restaurants and commercial properties such as malls. Chart 18 Smoking Prevalence amongst Men and Women 2012
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Chart 19
Regional Ranking of Smoking Prevalence 2011
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SHOPPING HABITS Attitudes To Shopping

Shopping is viewed as a leisure pursuit in the countrys largest urban centres, where consumers prefer malls to the high street. The fact that malls are indoor and air-conditioned accounts for their popularity compared to a hot, humid and polluted high street. In fact, there is a link between air conditioning and the exclusivity of the mall: High-end malls are so cold that shoppers need to put on a sweater. This has long been the case in places such as Jakarta, where rapid development, poor urban planning and corruption has resulted in the demolition of public space and its replacement with large shopping centres, apartment complexes and office towers. Malls are a culture in Jakarta and its possible to do everything in one place and spend half a day inside. For example: go to the bank, go ice skating, have lunch and then watch a movie followed by a visit to a cafe, work out at a gym and then go to the supermarket. With some of the largest malls in South East Asia, Jakarta malls have something for every class of Indonesian consumer. Since the expansion of chained franchises and modern retailing stores into areas outside of Java such as Medan, Makassar, Manado, Balikpapan and Denpassar as well as second-tier cities in Java like Solo, spending a day in a mall has become an accessible leisure time activity for more Indonesians. Given that the majority of these chain franchises and large malls are newly established, they have quickly become the cool places to be seen at, especially for young middle- and high-income consumers with disposable income and plenty of leisure time. However, the role of shopping malls as a popular social venue does not translate into correspondingly high sales for clothes retailers. In fact, due to the high price of clothing and other goods a lot of consumers will just enjoy window shopping and do most of their shopping at independent stores or traditional markets. E-commerce is likely to change consumers shopping habits, but this hasn't happened yet. Although online retailing is slowly growing with the presence of online market places such as kaskus.com and tokobagus.com, consumers still prefer to go to a shop to buy their goods.
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What consumers will do, however, is research products online before they go to retail stores, and this is especially the case with young technologically savvy middle- and high-income consumers. Online forums and review sites play a part in consumer choice, with the result that consumers sometimes have more in-depth knowledge of the goods that they want to purchase than the sales staff. One of the major changes that are affecting Indonesians shopping habits is already underway in Jakarta. A move to newly established middle-class suburbs that lie within commuting distance of the city, means that the large urban malls are now harder to access for middle-income consumers. As a result, consumers are increasingly turning to small independent shops and minimarkets.
Main Household Food and Non-food Consumables Shop

Income and location (urban/rural) are the main determinants that define shopping habits for household consumables. Those from low-income households will shop at local markets, corner shops, or if they are from lower middle income households cheap supermarkets such as Tip Top. Consumers from middle and high-income households either send the maid to do their shopping in the market or, if they do shopping themselves, they go to the supermarket. Supermarkets also cater for the different income levels with places like Ranch Market, which offer a wide range of international and local products being favoured by high-income consumers. High- and middle-income consumers are also more likely to shop at speciality stores such as bakers, grocers and butchers but also speciality ethnic groceries such as Sogo Supermarket, which sells Japanese products. Hero, which has a smaller selection of international products and caters more for those interested in cooking Indonesian dishes, is the preferred choice for middle-income Indonesians. In 2011, 74% of the goods purchased in supermarkets were consumables, the remaining 26% being non-consumables. The total number of supermarkets in Indonesia has actually fallen by 17% between 2008 and 2011 (from 1,477 in 2008 to 1,299 in 2011). However, despite this, supermarket sales have been rising. In 2011, revenue from supermarkets reached Rp44.4 billion, up from Rp37. 8 billion in 2010. This means that when Indonesians are shopping, they are either spending more or more people are buying their groceries and other goods at supermarkets. However, recent trends show that consumers have a preference for minimarkets and hypermarkets over supermarkets. Hypermarkets, which are far larger than supermarkets, carry a wide range of budget-priced products have become more popular for families making their weekly or monthly shopping trips. This shows that price, especially for large shopping trips, is more important than convenience. However, with minimarkets offering both, consumers are still inclined to shop locally.
Top-up Food Shopping

Minimarkets have become the most popular place to go top-up shopping. They are popular because they offer consumers convenient and hygienic modern stores with most of the essential daily products consumers need. These are all important factors for young middle-income consumers who are living life on the go. According to a June 2012 article by Reuters, the number of minimarts jumped 63% between 2008 and 2011. In an interview with Reuters, Vivi Itovia, a 26-year-old receptionist at the Kemplinski Hotel in Central Jakarta, said "I get all I need from minimarkets or 7-Eleven, which have become a must-go place for young people."
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Minimarkets in Indonesia do not normally sell any fresh produce but just staples such as rice and noodles and cooking oil. In conjunction with these products, they also sell food cooked on the premises (hotdogs, for example), ready meals and snacks, products that are becoming more popular with all consumers. According to the same article, a director of Ramayana, which runs a supermarket chain as well as department stores, stated that the proliferation of minimarkets and their competitive pricing has resulted in pressure on the Ramayana supermarket business.
Shopping for Big-ticket Items

The use of consumer credit for the purchase of big-ticket items is increasingly common. In 2011, consumer credit posted a 25% annual rise. The purchase of big-ticket items on credit cards led to a 22% increase in outstanding balance of payments with Indonesian consumers. The most popular big-ticket items purchased on credit are automobiles and motorbikes, with automotive loans being far easier to obtain than home mortgages. Glodok Market in Jakarta is the most popular and referred place to buy consumer electronics in the city. A search on Google for 'where to buy consumer electronics' will return an almost 100% first page referral rate for Glodok Market. Glodok Market is a specialist electronic store offering competitively priced electronic goods. Competitive pricing is a major factor for consumers, especially from the growing middle class, who have increasing levels of disposable income. Technologically savvy young middle- and high-income consumers are increasingly using ecommerce to buy electronic appliances and other domestic goods. In 2011, the value of electronic appliances bought online grew by 48%. This is an unsurprising trend given that these same consumers do most of their research on electronic appliances they want to buy using this medium. How energy efficient electronic appliances are is a key factor for Indonesian consumers when they are considering what electronic appliances to buy. This is because of energy restrictions placed on small apartments means that consumers have to be conscious of energy use. Even then, consumers often exceed their electricity limits because of the number of electrical appliances they own. For example, it might only be possible to have the air conditioner on in one room if the washing machine is running and the TV and computer are on. According to a 2012 article by okezone.com, Indonesian consumers are showing a preference for minimalist styles of furniture and appliances. This preference is partly as a result of the smaller houses and apartments that are being built.
Personal Shopping
As the Indonesian economy has continued to expand along with the purchasing power of consumers, so has the demand for all types of household products, clothing and luxury goods. Indonesia is expected to post 4.6% retail sales growth in 2012. Credit is one of the means by which Indonesian consumers are acquiring these goods. According to lojai.com, an online department store, its revenues have been growing at a rate of 100% a year because they are offering products on credit. It is this preference for credit that is currently a defining characteristic of Indonesian consumers who are living in a country with a growing economy and are seeing a corresponding increase in disposable income. The influence of celebrities on consumer shopping habits is significant according to galeriukm.com, a business inspiration website. From a report it commissioned, it found that a growing number of online businesses use celebrity endorsement to promote their websites and products.
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Low-income consumers are most likely to make trade-offs between the cost of a product and the quality when they are buying domestic goods and clothing. Second-hand clothing from countries like Korea and Japan is also a popular option for low-income Indonesians. Bandung, a city in Java which is known for its textile and clothing industry, has a large number of secondhand clothing retailers. Consumer demand for clothing continues to fuel growth of the clothing and textile sectors in Indonesia, as higher purchasing power gives Indonesians more discretionary spending. Rather than large chain shops, markets and independent retailers are the most popular place to buy clothing and footwear with Indonesian consumers. Competitive pricing is a key factor for lowand middle-income Indonesians.
E-commerce and M-commerce

As the number of internet users in Indonesia grows, so does the number of people using the internet for e-commerce. In 2011, e-commerce posted value growth of 45% over 2010. The best performing products were electronic consumer goods, with a 48% increase in demand. However, the overall value of internet retailing is still very small when compared to store-based retailers, with grocery products recording the smallest percentage of overall sales. In Indonesia, m-commerce is still considered a relatively new concept. However, with the boom of mobile phone usage, banks have been pushing SMS-based technology for mobile banking purposes. For instance, consumers can already pay for many of their utility bills using m-commerce, but a lack of consumer knowledge of these services is restricting usage. At the moment, most consumers are using ATMs to make these types of transactions. As more consumers switch up to smart phones, which registered growth of 32.4% in 2009-2010, there will be a corresponding increase in the value of m-commerce. The current value of m-commerce in Indonesia stood at Rp39 billion in 2011. Chart 20 Importance of Hypermarkets, Supermarkets and Discounters within Grocery Retailing 2012
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Chart 21
Regional Ranking of Sales through Internet Retailing 2011
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LEISURE HABITS Staying in

One of the most popular leisure activities in the home is watching television. A television can be found in almost every home in the country regardless of income. Television channels cater for the different income groups. Metro TV is more targeted at the middle-class audience, for example, while RCTI focuses more on the lower-income group. A report titled Mapping the Media Landscape in Contemporary Indonesia identified the most popular programming for the Indonesian audience as being soap operas as well as sensational news. However, even though some channels target the middle- and higher-income audience, it is just as likely that they will be watching international channels as local stations. Attitudes towards watching TV in urban areas of Indonesia change with age and household income. As well as a TV, young Indonesians from the middle- and high-income demographics who live alone are likely to own a games console and a DVD player. Time spent in front of a television will be split between the three mediums. The popularity of DVDs and consoles in these demographics is largely the result of the availability of pirated software, games and videos. At Rp7,000 a DVD and with a PS3 or X-box 360 games costing as little as Rp30,000, even low-income households can afford a games console. However, outside of large urban areas, the difficulty of acquiring pirated DVDs and other games means that consoles and DVD players are not as popular. Only wealthy individuals can afford the price of original games. It is still unusual for people in the 18-25 years old demographic to own a laptop or computer without a television. Slower internet speed outside of Jakarta means it is difficult if not impossible to stream online content. As the fibre optic network expands, initially throughout Java, then slowly throughout Indonesia, consumer habits are likely to change. This is just one example of a factor that causes disparities in distribution and access to media between different provinces and regions within the country. Mapping the Media Landscape in
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Contemporary Indonesia stated that "There is a stunning gap in the media infrastructure distribution between developed provinces and those less developed in the eastern part of the country. This gap concerns not only the fast-growing new and digitalised media which require particular kinds of internet access, but also access to conventional media such as newspapers and television, which is still unavailable for most citizens living in remote and less developed areas." A lack of established infrastructure for the provision of media and internet means that consumers are searching for a connection through other means. One of which is the smart phone, which has had a huge impact on consumer leisure lifestyles. Indonesian's are extremely brand-conscious, and the ownership of a smart phone is a definite status symbol. Also, the monthly cost of connecting to the internet is high and speeds are slow, meaning that a smartphone with internet capabilities is becoming the preferred method for Indonesians to go online. Smartphones are seeing large demand, even in the young (25 and under) low-income market. Blackberry Messenger and Facebook accessed on the move are often used by Indonesian workers in preference over older and more conventional forms of communication such as email. It is estimated that 64% of internet users in Indonesia actually connect through social media. It is common for Indonesians from the middle- and high-income demographics to own more than one smartphone. This is ostensibly because each phone is for a different network, but the fact that phones are a status symbol certainly plays a part. With no access to contract phones, Indonesian's will buy phones either brand new, or from a second hand retailer. As one of the most affordable leisure activities, printed media has become increasingly popular with Indonesian consumers. This can be seen from the continued growth of the print media industry, with 1,076 companies publishing printed material in 2010 compared to 1,036 in 2009. Unlike other forms of media, print media is accessible all over the country. According to a report that maps the media landscape in Indonesia: "The distribution of print media, particularly newspapers, has been quite even across Indonesia. The number of print media publications available in each province, be it newspaper or tabloid, is still growing year by year, proving that print media remains one of the most accessible forms of media for citizens." One of the most common stereotypes of Europeans and Australians by Indonesians is that they read so many books when they are on holiday or relaxing. Reading books is not seen as a traditional Indonesian past time. Rather lighter reading, such as magazines and newspapers are more popular. This is changing, with Indonesians reading more books, but they are more comfortable with an easy novel than anything else. Gramedia is one of the largest distributors of print media in Indonesia. One of the most popular genres of books is teenage literature written by young Indonesian writers. These are popular with young Indonesian readers because of the realistic plots and easy-reading style. For these self-same reasons, romance novels have gained popularity amongst young adult readers. Harlequin Enterprises Limited, famous for their romance and historical novels have translated many of their works into Indonesian and even managed to attract their own dedicated readership base. There is also a growing market for fantasy-themed books. These young-adult novels are considered exciting because of the fantastical plots, quirky characters and magical events. Helped by the Harry Potter series, these days there have been countless fantasythemed books that have been translated into Indonesian. Some of these authors have gained a strong following among young adult and readers. People living in larger homes, disproportionally middle-aged people from the middle-income demographic or high-income individuals are more likely to invite friends and family into their homes. Those people living in small single-occupancy apartments, on the other hand, are more likely to meet their friends out of the house.
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Indonesians have historically had a lot of children, and in the 40 years and older demographic, it is not uncommon for a person to have up to ten siblings. Given the importance of extended families, people often have relatives over for dinner or a BBQ. Also, inviting friends and work colleagues over for dinner or to share a cup of ice tea are all common activities across incomes.
Going Out
Consumers in Indonesia enjoy a wide variety of outdoor leisure activities. One of the prime determinants of what type of activities people undertake is the range of facilities available to them, combined with their income. In terms of leisure facilities, there are significant variations between regions, as well as between urban and rural locations. In Jakarta and Bandung, for example, people from middle- and high-income demographics enjoy a wide range of activities, including eating out, going to cafes and going to the cinema. Fridays and weekends are the most popular time for these activities to take place. The 18-25 years demographic is more likely to visit a gym and do activities such as yoga, weight lifting or dance classes. Other popular activities for this age group include going to the cinema or simply hanging around in malls. Going out to nightclubs and drinking is also popular with many young people. High- and middle-income families might do activities like visit a leisure complex or a swimming pool, visit relatives, and visit shopping malls. Doing sporting activities together as a family used to be very popular, but this trend has become less fashionable. There are no specific types of out-of-the-home activities that are enjoyed exclusively enjoyed by pensioners. Examples of popular activities enjoyed by this demographic include walking, light exercise and eating out. In regions where leisure facilities were previously limited, fads occur as new venues appear. For example, going to Dunkin Donuts may suddenly become popular among high- and middle income Indonesians when a new outlet opens. Given financial restrictions, 18-25 year olds from low-income households enjoy a more restrictive range of activities. This is the same over all age demographics for low-income households. However, there are some activities that are unique to low-income households. One of these is playing chess or dominos on street corners. Middle-aged males do this type of activity, though young children often gather around to watch.
Public Holidays, Celebrations and Gift-giving

Indonesia officially has 12 days of public holiday each year. The most important are the end of the holy month of Ramadan (Eid al Fitri), Eid al Ada, Chinese New Year, Christmas and more recently Valentine's Day. The peak season for retailers in Indonesia coincides with Ramadan and lasts until the start of Eid al-Fitri. In Indonesia Eid al-Fitri is a time when Muslim's traditionally return to the place they were born and grew up. It is also a time of gift giving. All Indonesian employees should receive the equivalent of two months basic salary, which goes towards buying presents. The gifts will either be cash or presents (consumables and electric appliances or toys, for example). In 2012 Multiply, an online marketplace, held a virtual shopping festival that targeted the Ramadan holidays (the first online festival it held received 8 million page hits). This is a sign of the times, reflecting a growth in online retailing. Indonesias Christians have similar customs of giving gifts to family and friends for Ch ristmas. The same can be said of Chinese New Year for Indonesians of Chinese descent. For Chinese New Year, people often exchange food hampers or Moon cakes.
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For big celebrations such as a birthday, graduation, engagement or other significant events in a persons life, it is traditional for Indonesians to have a meal with friends. The person who is celebrating the event will pay for the food and drink. This custom is often a source of confusion for non-Indonesians. Giving greetings cards is common practice in Indonesia. Greetings cards may be given to people on their birthday, for retirement and if they are unwell.
Culture
Indonesia is a country with a rich and diverse cultural heritage. Each of the main islands has a number of unique cultures and individual languages. Some, like the island of Papua, have hundreds of different languages and cultures. The main cultures that have influenced Indonesian society come from the Middle East and the Far East, creating a mixture of Buddhist, Hindu, Muslim and animist beliefs. More recently, this was overlaid with aspects of Protestant Christian culture, a result of Dutch colonialism, which has had the most cultural impact on Eastern Indonesia. With a change to regional governance at the turn of the century, Indonesia s provinces are each trying to develop local tourism and so have been establishing festivals, promoting aspects of local culture as well as highlighting tourist destinations. While some centres have focused on local cultures, such as the tradition of bull racing in Madura, Bali has focused on literature festivals, while Jakarta has a Jazz festival and various film festivals throughout the year. Chart 22 Regional Ranking of Consumer Expenditure on Leisure and Recreation as a Proportion of Total Consumer Expenditure 2011
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DIY AND GARDENING HABITS
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Attitudes To DIY
High levels of consumer confidence and a strong stable Rupiah have led many Indonesians to invest in new homes and apartments. As a result of this, the property market experienced robust growth although this has slowed since 2009 due to the global financial crisis. With urbanisation continuing to drive the development of new properties in the cities and the suburbs, property prices are expected to continue rising. Riding on the back of this property boom has been the home improvement sector, which has seen strong consumer demand for home improvement products. Most new urban housing developments and apartment complexes in Indonesia have between one and four bedrooms. The growing Indonesian middle class who are the ones disproportionately purchasing these properties have shown a significant interest in home improvement, as a result many home and lifestyle magazines have sprung up as a response to this new interest. According to fauzirohimi.com, a website that covers issues related to home improvements, Indonesian consumers have shown a preference for simple modern and minimalist designs in 2012. These designs can incorporate or combine aspects of European, Japanese and modern ethnic styles. Bright colours, both for wall paints and household furnishings have proven to be popular as well. Another website discussing interior design trends in Indonesia is duniaproduk.com. The focus of a lot of the articles on the website is on how to best utilise the limited space available within a modern home. Popular articles focus on spatial arrangements, choice of furniture and colour selection. Another topic discussed is the removal of interior walls within the home, following an open plan layout. This indicates that consumers are willing to consider structural alterations to a home in order to improve its aesthetic properties. When undertaking home improvements consumers are conservative spenders. A normal household will start with the essentials such as furniture and storage units. Home furnishings are in high demand and the relatively high cost of individual items meant that growth in consumer spending on these items increased by 6.8% in the period 2010-2011. Once essential items have been purchased subsequent home improvements tend to be focused on what is affordable and meets the needs of the growing middle class. This generally includes upgrading the bathroom (retiling for example) or buying more/ new lighting fixtures (lighting fixtures actually recorded the highest growth in demand, 26% in the period 2010 to 2011, but makes up a small share of the overall spending on home improvements). As most new households, especially apartments have limits on energy consumption consumers are extremely conscious of energy use. As a result energy saving light bulbs and energy efficient products are particularly popular. Middle class consumers are extremely image conscious and prefer modern designs to more traditional looks. A move by the international chain Ikea to establish a store in the country by 2014 has already attracted significant consumer interest (a Facebook pag e called Ikea in Indonesia!!! has nearly 10,000 likes). The idea of a superstore that sells low-cost but modern home goods is obviously attractive to an Indonesian middle class that is very cost conscious and has a preference for making incremental home improvements rather than purchasing bigticket items or taking on high cost upgrades. Although undertaking home improvements is popular with consumers, Do It Yourself culture is not yet considered a mainstream phenomenon in the country. Cheap labour and services mean that most Indonesians outsource the DIY aspect of home improvements to handymen. Instead of DIY, it is indoor home furnishings that Indonesian consumers are most interested in.
Attitudes To Gardening
Gardening has become more popular in Indonesia despite the property market, where apartments and small homes have led the way in both first and second tier cities. In dense
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urban areas most homes lack a garden. However, new housing developments in the suburbs of major cities normally have a front and back garden, while new apartment complexes often have roof gardens. However, few Indonesians, particularly in urban areas do gardening as a hobby, rather they will pay people to take care of their gardens for them if they own (most gardens are owned by middle to upper income households, while most middle to lower middle income earners live in apartments or small homes without space for a garden). Gardening is seen as an expensive hobby and is primarily cultivated by the elderly population, resulting in limited awareness of gardening practices and products, which can be seen to play out in the relatively low but stable growth rates in the gardening sector when compared to other household improvement markets. While gardening is still seen as a hobby for older persons, there are local initiatives that are trying to give gardening a broader appeal within urban centres. One such group is Indonesia's Gardening Thousands that runs programmes across various cities in Indonesia, but particularly Java. The group tries to find land in urban areas that can be farmed communally, essentially as allotments. According to a September 2012 article posted in republika.co.id, Indonesia's Gardening Thousands has had its greatest success in the city of Solo, where 12 hectares of land is being communally farmed. According to the article the benefits of allotment gardening include "providing healthy food and preserving the environment." This statement is indicative of a growing awareness of different aspects of a "healthy lifestyle" with certain groups of Indonesia consumers. In Indonesia there are 25 NGO's who run similar allotment programmes in urban areas, however this organisation appears to be the biggest and the most successful. It has actively utilised social media such as Twitter (10,435 people follow their account) to create awareness of the organisation and to spread awareness about their activities. Roof gardens have become popular, especially with developers constructing large apartment complexes because of the lack of parks and other green areas in urban areas. This is trend is most well established in Jakarta. A significant number of newly constructed apartment complexes aimed at high and medium income consumers incorporate a roof garden into the building plans. According to satulingkar.com a conference between architects and building contractors that took place in November 2012roof gardens are considered to have the following functions; " they act as an ecological balance, are aesthetically pleasing, act as a temperature control balance, have hydrological benefits, are a place where food crops can be cultivated." For developers they also have direct benefits, such as reducing heat absorption and energy consumption. Popular roof garden designs in Indonesia incorporate natural fibre such as bamboo as well as short grasses where people can sit down and relax. Poor soil quality in many of the newly constructed homes in urban locations means that consumers who are interested in gardening or want to have a garden have to find ways to improve the soil quality. Indonesians often use watering equipment to not only water lawns, gardens and potted plants, but also to wash their cars, motorcycles, driveways and the exterior of houses. Chart 23 Number of Home Owners and New Dwellings Completed 2007-2012
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Chart 24
Regional Ranking of Home Owners as a Proportion of Total Households 2011
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PET OWNERSHIP HABITS Attitudes To Pet Ownership

In 2012, there were 15.5 million pets, of which 10.9% were cats and 2.6% were dogs. The number of cats has grown by 33% and the numbers of dogs by 10.7% over the period 2007 to 2012. Expenditure on dog and cat food grew by a whopping 65% over the same period. This increase in spending on pet-care products for dog and cats is partly explained by the growing number of pet clubs in the country. The most popular pets by far are fish, primarily because they need the least attention, and as an archipelagic nation, tropical fish are cheap and easy to acquire. A small percentage of pet owners also keep reptiles and small mammals. Other types of pets kept include small mammals such as monkeys and endangered and illegally trafficked loris. In rural areas, it is likely that these animals are kept as pets because their parents were hunted for food. However, it is
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increasingly common that these animals are taken from their natural habitat and sold in some of the large illegal markets prevalent in urban areas. Bird keeping used to be one of the most popular pastimes in Indonesia. However, levels of bird ownership have been declining. According to research published on birdlife.org, 57.6% of Indonesian households in six of the principle urban centres of Java and Bali had owned a bird in the last ten years, while 35.7% of households currently owned a bird. The popularity of birds, especially songbirds, is attributed to their aesthetic qualities, according to the same website. Cats and dogs are becoming more popular. For religious reasons, cat ownership is far more common than dog ownership. Dog ownership has traditionally been restricted to Indonesian Christians or Indonesians of Chinese descent. However, international trends in pet ownership have been changing the consumer habits of young urban Muslim Indonesians, who have started to buy and own pure breed dogs, which are seen as a status symbol. While attitudes are changing, knowledge of pet healthcare lags behind. People who own dogs will almost never take them for a walk or ensure that they have regular exercise. Instead, they are locked up in the front yard and occasionally allowed into the home. High-income dog owners may choose to use a dog walking service. Certain cities are viewed as more pet friendly than others. Jakarta, for example, is viewed as not being pet friendly, especially for dog owners. Dogs Day Out, a dog-lovers association had to close its Jakarta chapter in 2010 because of a lack of interest. Meanwhile, membership of the group increased steadily in Bali and Bandung. According to a 2010 article in the Jakarta Post, a lack of public parks and poor air quality impede dogs activities in the city. Not to mention the lack of public understanding about dogs. Pure-breed dogs and cats are seen as status symbols, and consumers spend money on special shampoos and other grooming products for these animals. Pure-breed cats and dogs dont come cheap. A spaniel can cost as much as Rp12 million. The demand for pet accessories has led to the opening of more specialist pet stores. One example of this is PetStyle, a high-end boutique for dogs located in central Jakarta. The shop only sells imported pet goods and pet clothing. Though consumer habits towards pet ownership in Indonesia are changing there is still a widespread fear of dogs, especially among Muslim females, who are likely to cross the road when they see a dog being walked. The increased consumer spending by Indonesians on pet care is accounted for primarily by the growing levels of cat and dog ownership, a growing awareness among pet owners of health issues and rising levels of disposable income. As disposable income rises, so does consumer spending on pet care. Consumers from low-income households are more likely to adopt a cat off the street, feed it rice and use newspaper instead of cat litter. The number of vets as well as veterinary units has been increasing significantly but, relative to population size coverage, is extremely low. In 2012, there were 8,625 vets and 2,695 veterinary clinics. These clinics are mostly to be found in the large urban centres, where consumers also have better access to pet-care products and pet foods. The same cannot be said for Indonesians living in rural areas or smaller urban centres. As a result many pet-owners in rural areas or smaller urban centres turn to the internet to purchase pet products. These companies have a significant presence on social networking sites such as Facebook, Kaskus Forum and Twitter. Chart 25 Pet Population and Sales of Pet Food 2007-2012
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Chart 26
Regional Ranking of Pet Ownership 2011
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TRAVEL HABITS Getting Around

Cars have become an intrinsic part of Indonesian culture, as well as an expression of wealth. Mercedez-Benz, Jeep, BMW (sales were up 45% in 2012 over 2011) and other luxury vehicles are all popular with high-middle- and high-income Indonesians. For those with a lot of money, sleek Italian sports cars, British-made Bentleys or Land Rovers are all in fashion. According to a July 2012 article in the New York Times, there is a six-month waiting list to buy a Lamborghini. This desire to own luxury cars at whatever price is highlighted by the whopping 300% import duty on vehicles, making the ownership of a car significantly more expensive than in Europe and most of the rest of the world. For Indonesian consumers looking for luxury cars, brand certainly matters, which accounts for the desire to own Japanese, European and American vehicles. Only a very small number of consumers are interested in vehicle modification. Easy credit has made such luxuries affordable for the growing middle class. In an effort to clamp down on easy credit and reduce consumer borrowing, the government imposed a new regulation calling for a minimum down payment of 30% on cars and 25% on motorbikes. There are fears that purchasing power, specifically of young Indonesian families interested in buying a car, may be reduced as a result of this policy. Previously, consumers could drive away with a new car with only a 10% deposit. This is expected to put a strain on consumer finances, according to a September 2012 article by the BBC, especially with regard motorbikes, which is the form of transport purchased by low-income Indonesians. The sale of motorbikes fell by 14% in 2011 compared to 2010. Despite recent consumer interest in cheap fuel-efficient cars, demand for large SUVs, family sedans and large people carriers remains strong. This is partly the result of the cheap price of fuel, which costs as little as US$0.46 a litre. The increase in deposits demanded by car retailers has made Indonesians turn to domestic brands, which have been overshadowed by imported brands. In May 2012, students from a
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vocational school gained national attention for producing a locally made sports utility vehicle, which the mayor of Surakarta bought to replace his official vehicle. According to an article in the Jakarta Post in the same month, "the sports utility vehicle Kiat Esemka which stands for Kiat Motor workshop and vocational school (SMK) assembled by students of state-run SMK 2 Surakarta, seems to have not only stimulated talks of developing a national car but has also prompted the public to look at similar locally manufactured cars, which so far have never come to centre stage". Demand for domestically produced vehicles could grow if the vehicles are of a good enough quality because the price would be extremely competitive in absence of the 300% import tax. Given the high cost of new cars, the value of second-hand cars is correspondingly high. This makes buying a second-hand vehicle actually less attractive to first-time buyers who need credit to purchase a car. As a result, many Indonesians collect cars rather than sell them, seeing them as a high-value asset that will show little depreciation. In 2011, car ownership rates were highest on the island of Java: 15% of households owned a car in West Java, 11.3% in East Java, 9.5% in the Greater Jakarta regency and 9.1% in Central Java. The next highest rate of car ownership is in North Sumatra, where 4.8% of households own a car. Outside of Java, motorbike ownership is more common than car ownership.
Use of Public Transport

Public transport available in urban and rural areas is a mixture of public and privately run trains, buses and ferry services. Though inefficient, this system is used by low- and middleincome workers who do not have access to alternative means of transportation. Indonesia has four unconnected railway systems, one in Java and three in Sumatra. This is complemented by 300 public ports, which allow for nautical travel between the islands of the archipelago. Approximately 14 million people a year use ferries to travel between islands or along coastal areas of the country. Buses are the most popular form of public transport within Indonesia, both for short journeys within urban areas and for longer journeys. When travelling between islands, low-income Indonesians often use a combination of different forms of transport. Taxis and motorbike taxis are also widely used by medium- and high-income Indonesians within urban areas as an alternative to buses. There is also an executive sleeper train service that middle- income travellers use for long-distance journeys within Java or Sumatra if they choose not to fly. The fleet of 348 trains that service Indonesia's railways is antiquated, with the average age of the fleet being 30 years old. However, sleeper carriages are comfortable, air conditioned and have modern utilities such as flat-screen TVs. Passenger transport accounts for 83% of the total revenues of the Indonesian railway. The travelling public do not only use trains for long-haul journeys. In the Jakarta area, they also use them for the commute to and from work. At Rp2,000 a ticket, the price is still unaffordable for many low-income Indonesians, who will sit on the roof of the train instead. In rural areas, public transport is limited, intermittent or non-existent. The World Bank estimates six million people lack any reliable access to motorised transport network and that a further 11 million people live in remote communities without direct access to the all-season road network. This has a direct impact on consumers basic livelihoods, access to goods, education, healthcare, clean water and other basic services. It is in these isolated rural areas that 42% of the road network, which is currently unpaved, is to be found.
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Air Travel
Indonesia is a country of 17,000 islands, and it takes almost six hours to fly from the eastern tip to the western tip of the county. Thus, air travel is possibly the best choice for commuters wanting to travel around the country. However, these logistical factors make the establishment and maintenance of transport links both difficult and costly. The air transportation infrastructure is perceived to insufficient and underfunded, a belief linked to the countrys poor air safety record. Air safety is, however, slowly improving. In July 2011, president of the International Civil Aviation Organisation (ICAO) Roberto Gonzales expressed his satisfaction that 80% of ICAO findings had been implemented. This improvement in safety has meant that national airline Garuda was removed from the EU watch list (which effectively bans listed carriers from entering EU airspace), but many other Indonesian carriers have yet to be removed. In 2010, Indonesia ranked 63 out of 125 countries rated for air transport infrastructure, with a score of 4.7 out of seven by Skytrax, a figure well below the regional average. Moreover, with consumer demand for air transport leading to 20% per year annual growth rates, Indonesia is struggling to provide the number of qualified mechanics, pilots, traffic controllers or even large enough airports to deal with demand. A prime example of the difficulties that the Indonesian aviation industry is facing is Jakarta's main airport. The Soekarno-Hatta International Airport was originally designed to accommodate 22 million passengers annually, in 2011, it served 44 million passengers, and by 2015, it is expected to serve 54 million. As a result, the airport is looking to undertake a Rp11.7 trillion renovation set for completion in 2017. Similar plans are underway in Bali, with a Rp1.9 trillion expansion and upgrade to the airport, which is due to be finished by 2013. These two airports are the countrys main entry and exit points. Bali, along with Makassar, also serves as a regional air transport hub. Given the high volume of passengers into these two primary entry points into Indonesia, lowcost carriers have opened routes via other cities such as Yogyakarta and Bandung, which are both serviced by Air Asia. However, although these airports have become international destinations, the retail options available are limited in the extreme. On site, shops mostly sell textiles and other local products or food. Soekarno-Hatta Airport is the notable exception to this rule. Even with low-cost carriers, only a small percentage of consumers can currently afford the cost of air travel. This equates to roughly 10% of the population, or 24.6 million people, according to a July 2011 article by the Jakarta Globe. Still, even with such a low percentage of consumers choosing air travel, this amounts to a large number of domestic passengers. In an article written by the Global Travel Industry News in December 2011, Emirsyah Satar, chairman of the Indonesia Air Carriers Association, is quoted as saying that Garuda expected total airline traffic "to increase 18 percent this year, from 53 million passengers in 2010, and should rise 18 percent in 2012." In the 2011 January-October period, Indonesian airlines carried 55.98 million passengers, while the number of domestic passengers that Garuda carried increased by 44% over the same period. This number of passengers will continue to increase as the disposable income of Indonesian consumers rises. However, this does not necessarily mean the amount of money spent on a trip will correspondingly increase. According to a study by Accor on business traveller habits, though the number of business trips had increased from 6 in January-June 2011 to 10 in the same period in 2012, less was spent per trip. Approximately nine out of ten of these trips were domestic. The rate at which demand for air travel is expected to grow over the coming years is well illustrated by the increase in the size of airline fleets. In November 2011, Lion Air raised eyebrows by signing a US$21.7 billion deal for 230 Boeing 737 aircraft. This follows a US$18 billion deal with Airbus by Air Asia, the Malaysian carrier that has a strong presence in
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Indonesia. These two companies, along with Merpati, Citilink (Garudas low-cost carrier), Sirwijaya and Mandala, are some of the most popular carriers with Indonesian consumers. Growth in the countrys tourism market is also spurring airlines to expand. Indonesian carrier PT Lion Mentari Airlines is considering purchasing additional aircraft from Airbus SAS and Boeing Company as it adds flights in a region where air travel is expected to grow more than 6.4 percent annually through 2031. With the lack of infrastructure and high demand for flights, the number of seaplanes in Indonesia is expected to rise. According to a September 2012 article by Reuters: At the moment, seaplanes in Indonesia are limited to niche charter flights for high-end tourism and mining, but their use could spread to serve the needs of a fast-growing economy and to beat the lack of transport infrastructure. Peak season for air travel in Indonesia is around August with the onset of the dry season. Other peak times revolve around religious holidays such as Christmas and Idul Fitri. Given the high consumer demand for flights, ticket prices can rise significantly. Then, even Indonesians who would normally fly for business or holidays might choose trains or even private transport over air travel. With the availability of low-cost carriers offering cheap airfare to national and international destinations, Indonesians are more inclined to take short weekend breaks. The most popular international destinations are Malaysia and Singapore, though the low cost of flights to Vietnam makes this an attractive and affordable holiday destination too. Chart 27 Kilometres Travelled by Road, Rail and Air Compared with Motorway Intensity, Petrol Prices and Number of Scheduled Airline Passengers Carried 2006-2011
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Chart 28
Regional Ranking of Possession of Passenger Cars 2011
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VACATION HABITS Attitudes To Taking Holidays

Indonesian employees are guaranteed 12 days of paid leave per year plus 13 days of public holidays (there are public holidays for each of the four main religions in Indonesia, Islam, Christianity, Buddhism and Hindu, as well as Independence Day). If a public holiday lands on a Saturday or Sunday, workers are entitled to receive a days holiday on one of thei r work days. However, not all companies abide by the official guidelines regarding stipulated holiday leave for workers. The percentage of people taking the holiday leave to which they are entitled has been growing, albeit slowly, since 2006. Unaffected by the global recession and with rising disposable incomes, Indonesians have been feeling more confident about taking holidays. However, consumer trends have been changing, with older people more likely to holiday and younger consumers more inclined to do so. The demographic most likely to take holidays is 35-49 year olds, 27.2% of whom went on holiday in 2011 (this percentage has been steadily declining from a 2006 level of 27.8%), while the opposite is true of the 25-34 year old demographic, some 23.8% of which took a holiday in 2011 compared with 22.9% in 2006. The overall number of Indonesians taking a holiday in 2011 rose 2.9% over 2010. However, spending by domestic tourists remains relatively low, with just Rp244,400 spent per trip in 2011, reflecting the low levels of disposable income that the majority of Indonesians have at their disposal. January through to March and the month of October are the least favoured times to take a holiday. The most popular times to go on leave correspond to the religious holidays, with December being nominally the most popular month to go on holiday, with 9.9% of workers taking a break in 2011. However, this figure should be treated with caution as the busiest holiday season for Indonesians is known to be Eid al Fitri, which fell in September in 2012, when a road trip from Jakarta to Yogyakarta took an average of 46 hours instead of the normal ten.
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Still, this type of travel is closer to visiting friends and relations (VFR) tourism than classic leisure tourism.
Main Holiday-taking Trends

The attitude of Indonesian consumers to taking a holiday is a reflection of consumer confidence and the state of the economy. The 2.9% growth in the number of Indonesian consumers going on holiday reflects Indonesia's continued economic growth and the rising levels of disposable income, particularly for young people from the growing middle class. With large extended families, traditional Indonesian holidays have centred on coming together, returning to the village or town where they were born or short weekend trips close to where they reside. This has remained largely unchanged for Indonesians from low-income households, which accounts for the popularity of East Java (14,997,100 visits by domestic tourists in 2011), West Java (13,572,000 visits by domestic tourists in 2011) and Central Java (9,675,700 visits by domestic tourists in 2011). This style of holidaying is still popular with the middle- and even high-income Indonesians from Jakarta, for example, who will visit Puncak or Bandung (both in the highlands of Java) for a weekend away from the heat, pollution and humidity. According to the website Rileks.com, a popular Indonesian leisure and travel forum, the main reason that Indonesians go on holiday are to relieve stress and escape from work, to experience something outside of routine, to strengthen relations between family and/or friends and just to have some fun. According to data collected by Trip Advisor in 2012, Indonesian consumers were most interested in travelling domestically. This is perhaps unsurprising given the wide range of activities available at home, with a diverse range of cultures, many amazing beaches, national parks, historical monuments, volcanoes, theme parks and tourist cities such as Bandung, Surakarta and Yogyakarta. Attitudes towards holidaying have been changing; both in terms of the types of locations that are popular and the distance people are willing to travel to get there. These changes are being brought about by the younger generation (25-34), who have higher levels of disposable income and have been influenced by holiday patterns of international tourists. For example, visiting the beach and going diving have become extremely popular past times for middle- and high-income Indonesians. Indonesia holds the world record for the highest number of divers (2,400) diving in one location. There is a large diving community in Indonesia, centred on websites such as kapalselam.org. The popularity of diving has increased significantly since 2007, when the Deep and Extreme Indonesia convention was first held. The show now sees itself as "as a representation of all underwater and ocean related activities in Indonesia, which showcase diving, adventure travel and water sport industry." This accounts for the popularity of Pulau Seribu, a group of tourism islands located just outside of Jakarta, which has become an alternative weekend tourist destination for young Indonesians. Certain stigmas, particularly with regard to skin colour and tanning, affect the types of activities Indonesians do while on a seaside holiday. For example, if Indonesians visit a beach they will sit in the shade of a tree rather than under direct sunlight as they don't want to look like a farmer who has been out in the sun all day. Yet, such ideas are changing, with famous pop stars such as Agnes Monica being well known for tanning, a trend that can be expected to grow, albeit slowly, as more and more Indonesians follow international trends. This is already apparent in Bali, the number one international tourism destination in Indonesia, where it is a common sight to see young Balinese men lounging around on the beach with surfboards, an icebox full of beers and deep tans. Older Indonesians from middle- and high-income demographics will often travel/ take holidays abroad for healthcare reasons. According to globalsehat.com, Indonesian consumers spend
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Rp6.2 trillion every year on healthcare abroad. According to the website, 3-5% of Indonesians go to Singapore for their healthcare needs.. Young Indonesians are increasingly cutting out third parties when buying plane tickets and travel accommodation. Websites that offer user reviews are a popular way of finding accommodation, although consumers are not using internet booking for accommodation as much as flights (in 2011, only 3% of travel accommodation was booked online compared to 11% for flights).
Domestic Versus Foreign Holidays

The most popular holiday destination for domestic tourism in Indonesia in 2011 was East Java, which was visited by almost 15 million people. With 264 national parks, 307 cultural attractions and 192 other tourist attractions, it is both easily accessible and has lots to offer. The popularity of East Java also attests to the general Indonesian preference to holidaying locally. With the highest population of any island in Indonesia, East Java is indeed a local travel destination. West Java had 13.6 million domestic visits, and central Java had 9.7 million domestic visits in 2011. These travel destinations are extremely popular with low-income Indonesians, who still constitute the majority of the population of the country. While middle- and high-income Indonesians also visit East Java on holiday, higher disposable income means that they are able to use low-cost carriers to travel further should they choose to. Even though Indonesians are first and foremost interested in travelling domestically, the poor infrastructure, large area and high cost of travel make many international destinations cheaper and more appealing. For example, it can cost as little as Rp200,000 for a single trip to Singapore from Jakarta, but it will cost Rp3 million or upwards for a one-way plane ticket to Jayapura. Cost is a prime factor, making destinations such as Singapore, Malaysia and Vietnam affordable locations. Despite this, Indonesians took a total of 52.4 million domestic holidays in 2011. They also went on 15.6 million business trips. The most popular international travel destinations among Indonesians, according to the survey by Trip Advisor, were (in order of preference): the US, Singapore, China, Malaysia, Thailand, Japan, Italy, England and France. According to 2011 data collected by Garuda on passenger numbers, Singapore and Malaysia are the two most popular actual travel destinations for Indonesian consumers. Young middle- and high-income Indonesians are not only looking to travel abroad but are also combining the experience with finding an education abroad with Australia, the US, Malaysia, Japan and Germany the most popular countries. All of these countries are also popular holiday destinations for the growing travel community of young Indonesians. Popular online communities for backpackers or travellers, which are widely used for domestic and international travel, include keluarrumah.com. These travel communities will arrange budget trips for their members, both domestically as well as internationally. The most popular holiday destinations for Indonesians are Singapore, Malaysia and Australia. According to a 2012 study by Skyscanner, there was a 44% increase in the number of Indonesians searching for flights to Singapore and Malaysia around the time of Ramadan (a time when Indonesian Muslims would traditionally choose not to travel). For older Indonesian Muslims, going on Hajj will often be the first time they have travelled abroad. In 2012, over 211,000 Indonesian Muslims left the country between September 21 and October 26 from airports all around the country. Hajj is extremely popular and important for Indonesian Muslim's from all demographics and with disposable incomes rising, more and more people are saving up to visit Saudi Arabia. The trip is officially organised through the Ministry of Religion, and there are currently more than 1.2 million persons on the waiting list to visit Saudi Arabia.
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Preferred Travel Methods

Rail is the preferred means of travelling for Indonesians who are going on holiday, with 30,882,800 trips by domestic tourists in 2011. This form of transport is relatively quick and efficient, which makes it a great option for low- and medium-income Indonesians going on holiday in Java. However, this option is only available to those who have decided to go on holiday in either Java or Sumatra (none of the other islands of Indonesia has a rail network). While rail transport is popular with low- and middle-income Indonesians, low-cost carriers have given those with sufficient disposable income the ability to travel further and faster than ever before. Low-cost carriers have become increasingly popular with Indonesians who have limited time to travel but want to travel further. For long distance journeys in Indonesia, flying is not only the most convenient option but also sometimes the only viable option given time constraints. In total, 13.4 million domestic tourists used airplanes to go to holiday destinations in 2011, with the figure expected to rise to 14 million in 2012. As these low-cost carriers expand, they are opening up new domestic and international routes. Indonesians now have the option of flying directly to Kuala Lumpur from Bandung or Yogyakarta, making international travel an option for many consumers. This means that people can and are making weekend trips to Singapore or Kuala Lumpur to visit friends and family or to just do a bit of sightseeing. Intercity buses are the least popular form of transport for domestic tourists. However, in total, almost 5 million trips were made by domestic tourists in 2011 using ground transport. The services offered are safe and dependable for those on a tight budget with plenty of time on their hands. Chart 29 Domestic and Outgoing Tourist Expenditure by Sector 2007-2012
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Chart 30
Regional Ranking of Holiday Departures 2011
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FINANCIAL HABITS Attitudes Toward Payment Methods

With strong economic growth, as well as sustained gains in both per capita consumer income, rising disposable income and consumer confidence in the banking sector, the country has been witnessing a shift from cash to financial card as the preferred means of payment. Financial cards are already starting to erode the dominance of cash and this trend is expected to continue, led by the use of debit cards to withdraw cash from ATMs. Debit cards and prepaid cards have helped shift perceptions of card-based transactions, which had been viewed negatively due to the fact they were made on credit rather than cash held. The implementation of anti-fraud EVM technology into credit and debit cards has boosted consumer confidence in financial cards. The Indonesian Government has begun encouraging banks to issue multi-function financial cards, believing the increased efficiency and practicality will increase consumer usage of cards. The widest variety of options exists within the closed loop prepaid card segment, which Indonesias large unbanked population is taking up as a shortcut to non -cash payments. Banks had already begun integrating debit, credit and prepaid functions into one card in 2011. Mobile phone usage in Indonesia exploded between 2006-2011, with 250 million handsets in use by 2011. However, the vast majority of these phones are basic models and lacks the functionality of high-end smart phones. Nevertheless, banks have pushed SMS based technology for mobile banking purposes (such as checking balances). Urban Indonesians are leading more and more mobile lifestyles and are keen on upgrading to smartphones when money allows. While mobile commerce has not yet taken off, largely due to the fact that banks have not pushed it and limits on the functionality of most phones, strong gains are likely in the long term as more and more Indonesians who are already use sms technology for mobile banking switch to smart phones. This trend will also be driven by the fact that many Indonesians do not have internet connections at home and primarily access the web through their phones. Increased consumer education for both mobile banking and m-commerce
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opportunities is a necessary component for more online banking services to be utilised. For example many consumers are not aware that they can pay for many utilities bills with the mcommerce segment of the mobile banking services offered by their banks. In 2011, many Indonesians used ATMs to make these types of payments, which will become less common as more Indonesians switch over to mobile platforms for these payments. Strong demand is expected in mobile banking, and as more banks develop the m-commerce options within their services, similar growth is expected in mobile commerce with revenues reaching Rp39.0 billion in 2011. Much of the increased consumer demand for these services will be driven by consumers upgrading to smartphones. As of 2011 however, the majority of payments were still made in cash. The World Bank estimates that only 50% of Indonesian consumers have access to formal financial services. Although Bank Indonesia has undertaken a number of initiatives, such as Tabunganku (My Savings), to help Indonesias poor gain access to financial services and cr edit, these initiatives have had mixed results.
Savings
Indonesian consumers continue to register low savings rates in line with historical trends, however moderate growth in savings is expected by 2020 as the population ages and young consumers, who dominate the Indonesian economic landscape, begin planning for their future. Government finances will remain healthy by both global and regional standards, with moderate risk of long-term deterioration through increased pension and healthcare costs associated with an ageing population. According to an August 2012 article in arabnew.com, the role of Islamic finance in Indonesia is growing significantly. This is especially true of savings accounts, but also lending. The Financing to Deposit Ratio (FDR) of the Indonesian Islamic banking industry was 101.2 per cent for the last decade, but in April 2011 it stood at an impressive 95.2%, reflecting the increasing role of Islamic banks as financial intermediaries in Indonesia. Although 50% of Indonesians lack access to financial savings, an October 2012 article in the Jakarta Post emphasised the importance of financial literacy training in improving and increasing consumer access to financial services. When awareness of financial services was increased, the study found that use of financial services also increased accordingly. As a result the Government of Indonesia has initiated trainings, specifically with groups such as migrant workers to raise their awareness of what financial services are available to them. This is particularly important for a group, which has an estimated income of US$7 billion annually, but only a limited number of who use financial services.
Loans and Mortgages

Consumer credit has continued record rates of expansion through 2011 (25% annual rise in gross lending). The expansion of consumer credit has led to simultaneous growth in consumer credit outstanding balances, which notched-up a record increase 22% in 2011. From 2006-2011 annual gross consumer lending tripled. However, relative to regional standards, levels of credit remain relatively low. According to an October 2012 article by the Jakarta Globe, bank loans valued at Rp2,415 trillion amounted to less than 30% of the countrys 2011 gross domestic product, a small ratio that reflected the slow progress in channelling wealth back into the economy. Compared to Thailand and Malaysia where bank loans are more than 100% of GDP, this is a relatively low figure. Regulations designed to protect creditors have made loans more difficult to obtain, particularly for small and medium sized businesses, consumer credit has continued record rates of expansion through 2011 (25% annual rise in gross lending), a double digit annual growth that
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has continued into 2012 with more Indonesians accepting interest bearing lending practices despite the fact that it is controversial within Islam (the majority of Indonesian consumers are Muslim). Consumer credit outstanding balances will not grow, as rapidly due to the short repayment period for many consumer loans and increasing popularity of lower interest automotive and mortgage loans over higher interest vehicles, however growth will still remain strong. The expansion of consumer credit has led simultaneous growth in consumer credit outstanding balances, which notched-up a record increase 22% in 2011. From 2006-2011 annual gross consumer lending tripled. Banks have expanded lending to consumers who have snapped up debt in order to finance their purchases on the back of strong economic growth and a strong Rupiah, which have buoyed confidence levels in both lenders and consumers. Rising disposable incomes and increased consciousness of consumer lending practices amongst Indonesians have reduced the proportion of non-performing loans in the consumer credit sector. The Indonesian government has supported growth in consumer credit by lowering interest rates in 2010 and 2011. Credit card lending led the charge in 2011, recording the strongest growth in gross consumer lending. Indonesians have grown more comfortable using debit and credit cards to withdraw cash and make payments. Over the past several years, banks have simplified the application process and offered rewards and benefits to consumers for using credit cards, helping to boost demand in credit card lending. However this has started to stabilise as most people who can, already have access to credit services. Growth in consumer credit has been driven by the expanded issuance and use of credit cards, however the largest portion of gross consumer lending remains automobile loans, which like credit cards, have witnessed double-digit annual growth over the past five years driven by strong consumer demand. Automotive loans (dominated by motorcycle loans) accounted for the largest segment of gross lending and outstanding balances in real terms in 2011. Auto loans are simpler to obtain than home mortgages, and the lack of adequate public transit infrastructure and need for mobility drives demand for private automobiles. This is a trend that stands in contrast to most other countries, where mortgage loans for housing are the most sought after form of consumer credit. The growing middle class, as well as income gains in the lower class, has driven demand for motorcycles, which are a preferred means of transportation in Indonesias dense cities. Demand for cars has also increased amongst middle-class and upper class families. Recently a simplified application process for both types of vehicles has increased gross lending and outstanding balances. In 2010-2011, an estimated 80% of automobiles were purchased on credit. More and more Indonesians, especially from Indonesia's small towns who were previously unable to access automobile loans are boosting demand for these services and a 12% annual growth in gross lending and 10% annual growth in outstanding balances is expected in 2012. In April 2012, the Government of Indonesia issued new regulations capping loans for houses at 70% of the value of the property and requiring a minimum down payment of 25% of the value of a car or 20% of the value of a motorbike. This has seriously dented demand as consumers are put off from buying new vehicles. Adira Dinamika, which only lends for vehicles, expects to disburse Rp28 trillion this year, down from an earlier target of Rp35 trillion, due to the rules, Mendrofa said. This comes from a September article in the Jakarta Globe, five months after the new legislation was implemented. According to the same article this move has resulted in an increased interest in sharia compliant lending schemes by Indonesian consumers seeking loans for their houses or automobiles. PT Adira Dinamika Multi Finance, the nations largest, started a business complying with the Muslim faith in July and expects it to eventually account for as
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much as 20% of operations. The consumer interest in sharia-compliant loans comes because these are seen as more competitive. Home loans have experienced similar double-digit growth like automotive loans; though make up a smaller share of the gross loans. Home mortgage loans recorded strong growth over the 2006-2011 period, recording annual double-digit growth in both gross loans and outstanding balances, with the latter outpacing the former due to lower interest rates. The development of new credit vehicles for mortgages as well as the rise of a culture of home ownership as an investment has driven growth in the sector. Reduced interest rates and a trend towards smaller families and smaller homes have also seen more demand for mortgage loans. Robust gains in the broader economy and per capita income levels, as well as new regulations to simplify the mortgage application process, which are expected from the government, continue to boost consumer demand for home mortgages. The 2011 Law on Housing and Settlements is just one example that was passed to protect consumers from abusive lending practices. Education lending lags behind with slow but steady growth primarily due to the fact that few banks offer such loans and most consumers are not aware of their availability. As the disposable income of Indonesians continues to rise, the education loans sector is predicted to grow. In fact, education lending is predicted to record the highest growth rates in both gross lending and outstanding balances in the period 2011-2016 as more and more students enrol into tertiary education. Durable goods loans are non-existent in Indonesia. With no banks or financial institutions offering such products, consumers finance purchases of durables with credit cards. Chart 31 Consumer Lending Compared with Savings and Savings Ratio 2007-2012
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Chart 32
Regional Ranking of Financial Cards in Circulation 2011
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Consumer Lifestyles in Indonesia

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Consumer Lifestyles in Indonesia

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CONSUMER LIFESTYLES IN INDONESIA

Euromonitor International December 2012