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BANK CONSUMER SURVEY (CS)

Nurcahyo Heru Prasetyo Ririn Yuliatiningsih

Directorate of Economic and Monetary Statistics 2

OUTLINE :

I. CONSUMER SUR VEY BA CK GR OUND II. BANK INDONESIA CONSUMER SURVEY ƒ Objective ƒ Coverage ƒ Methodology III. OVERVIEW OF THE RESULTS ƒ CCI, CECI, and CEI movements ƒ Price Expectation movements IV. CONSUMER SURVEY MODIFICATION ƒ coverage ƒ Methodology ƒ Questionnaries V. PROBLEMS IN DATA PROCESSING AND OBSTACLE IN THE FIELD 3

CONSUMER SURVEY BACKGROUND

BANK INDONESIA CONSUMER (Act No. 23 of 1999 concerning Bank Indonesia SURVEY as has been changed into Act No. 3 of 2004, as the central bank shall conduct Consumer expectation : monetary policy in aim to achieve and Economic conditions, maintain the stability of Rupiah Income Job avaibility Price on goods/services Consumption plan Objective : Other macroeconomic indicators ƒ Maintain the stability of Rupiah agaiifinst foreign currency ƒ Manage inflation rate Survey : 1. Business Survey 2. Banking Survey 3. Residential Property Survey 4. Retail Sales Survey 5. Commercial Property Survey Information about the changes 6. Market Pe rcept io n Su rvey in demand and supply side 7. Production Survey 8. Price Monitoring Survey 9. Consumer Survey 4

Consumer survey

Objective : Æ to observe consumer confidence about the current economic condition (compare to 6 months ago) and their expectations (6 months ahead). Æ to observe the trend of consumption from households side Æ to capture expectation of inflation

Coverage: Æ Monthly survey. It has been conducted since October 1999 Æ Cover 18 cities in Indonesia. Sample covers about 4.600 households (middle to upper class) as respon den ts in 18 cctesities (Jaka rta, Baadug,ndung, Sem ar an g, , , , Bandar , , , , , , , , , , Ambon, dan ). 5

Consumer S urvey (CS)

Methodology:

Æ The sampling method is stratified random sampling. The grouping is based on monthly household expenditure. Æ Data collected through interviews by phone (2 cities) and direct visits (16 cities) in particular cities that based on rotated system. Æ Survey is conducted each month from 1st –10th day. Æ The index is calculated by balance score method (net balance + 100). If index > 100 points indicates an optimism (positive responses) and vice versa. 6

Consumer S urvey (CS)

Methodology: Consumer Confidence index (CCI)

Current Economic Condition Index Consumer Expectation Index (CECI)) (CEI)

„ Current income condition „ Expectation of Income „ Appropriate time to buy durable „ Expectation of Economic goods condition „ Current job availability „ Expectation of job availability 7

Characteristic of Respondent Table 1. Grafik 1 & 2. Figure of Respondent in average (2007 up to Population by Pyramid in Indonesia and Social August 2009) Economics Status by Respondent's composition in Legend average (%)

Gender Male 59.1 Female 40.9

Spending for months Rp 1 million up to Rp 3 million 62.2 Rp 3 million up to Rp 5 million 26.5 Above Rp 5 million 11.3

Age

20-40 years old 57.4 Denpasar 12.2 13.7 23 28.8 12.7 7.5 2.5 41-60 years old 38.4 Makasar 1.5 10.9 17.3 22.1 22.1 15.6 10.6 Above 60 years old 4.2 Medan 3.8 15.9 19.6 30.8 22.8 5.3 1.9 Education background 3.7 10.8 15.8 28.7 27.1 11.3 2.5 Senior high 48.9 Under degree 13.1 Surabaya 8.1 10.5 13.8 20.9 25.8 13.5 7.5

Degree 32.8 9.5 14.7 17.9 22.3 21 10 4.6

Post degree 5.2 13.2 16.4 19.8 25.4 18.1 4.1 2.9

Total 4,676 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

A1 [> Rp3.000.001] A2 [Rp2.000.001-3.000.000] B [Rp1.500.001-2.000.000] C1 [Rp1.000.001-1.500.000] C2 [700.001-1.000.000] D [Rp500.001-700.000] E [< Rp500.000] Sourrce : MARS 8

Data Processing

CECI + CEI Consumer Confid ence IdIndex = 2 BS(B.3 + B.6 + B.8) Current Economic Condition Index = 3 BS(B.5 + B.7 + B.2) Consumer Expectation Index = 3 Where; B.3 is current income against 6 months ago B6B.6 is job availability in current time against 6 months ago B.8 is appropriate time to buy durable goods in current time B.5 is income expectation in the next 6 months B.7 is job availability expectation in the next 6 months B.2 is expectation on general economic condition in Indonesia in the next 6 months

Respons Rate By Phone Survey is 8:1 or 12,5% ( in every 8 phone calls, there is 1 available respondent to be interviewed). By Visited is 86,0% (in average), means in every 100 houses visited, there are around 86 respondents are available to be interviewed. 9

SURVEY RESULTS

(Index)

160 OPTIMISTIC

140

Increasing of fuel price (avg 31% and transportation tariff (16, 67‐ 120 30%) on May 2008 Fuel price increase 96% (in average) on Oct 2005

100

Fuel price decrease 9% and 80 13% (in avg) on 12/15/2008, 01 and 15 Jan 2009

Fuel price increase 30%(in avg) on March 2005 60

PESIMISTIC

40 4681012246810122468101224681012246810122468101224681012246810122468

2001

Consumer Confidence Index (CCI) Current Economic Confidence Index (CECI) Consumer Expectation Index (CEI)

ƒ CCI movements is adequate to represent economic condition in Indonesia, especially when there is a shock to the ecomony ƒ Price changes that applies on particular goods are influencing purchasing power, and eventually will impact to household’s consumption. 10

CCI by monthly spending

Index 130

120

110

100

90 Rp 1‐3 million 80 Rp 3 ‐ 5 million > Rp 5 million

70 345678910111212345678910111212345678

2007 2008 2009

ƒ By monthly spending, CCI tends to slightly similar movement, while households with higher spending are more op timi sti c. 11

Price Expectation Movement

(Index) (%,mtm) (Index) (%,mtm t) )

210 3,00 3,00 190

190 2,50 2,50 170 2,00 2,00 170

1,50 150 1501,50

150 1,00 1,00 130 130 0,50 0,50 110 0,00 0,00 110

(0,50) (0,50) 90 90 (1,00) (1,00) 70 70 (1,50) (1,50)

50 (2,00) 50 (2,00)

4 5 6 7 8 9 1011121 2 3 4 5 6 7 8 9 1011121 2 3 4 5 6 7 8 9 1011121 2 3 4 5 6 7 8 9 1011121 2 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Price expectation in the next 3 monthsActual inflation ( % m-t-m) Price expectation in the next 6 monthsActual inflation ( % m-t-m)

The survey confirms that consumers in Indonesia were not able to foresee price movements in long term period 12

BANK INDONESIA CONSUMER SURVEY IMPROVEMENTS

1. Cities coverage : 5 cities ((),1999), 9 cities ((),2001), 15 cities ((y), January 2005), 16 cities (June 2005), and 18 cities (2007). 2. Methodology (net balance Æbalance score) 3. Questionnarie (lii(eliminate price expectatifhion for the next 12 month s)

DATA PROCESSING AND OBSTACLE IN THE FIELD

1. Data entry processing, verification and manually data processing Æ Human error, time consuming. 2. In 2010, Bank Indonesia is concerning to build an online application in order to minimize human error, time and effort efficiency. Another beneficial by online application is systematize database. 3. In technical part, there were obstacles either in phone survey or direct interviews. In general, phone survey usuallyhas lower response rate than direct interviews. Thank you

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