Lifestyle and Tourism Industry Culinary & Cafe | Cinemas | Fashion | Spa & Sport Center | Digital Industry | 10 Tourism Destinations
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Supported by: Indonesia Investment Opportunities in Lifestyle and Tourism Industry Culinary & Cafe | Cinemas | Fashion | Spa & Sport Center | Digital Industry | 10 Tourism Destinations Provided for Regional Investment Forum (RIF), Yogyakarta –Indonesia, 14-15 March 2018 INDONESIA ECONOMIC OUTLOOK WHY INDONESIA GDP Ranking 2016 GDP Ranking 2016, PPP Growth of lifestyle, digital era & tourism (in US$ billion) (in US$ billion) among the rise of Middle Class United States 18,624 China 21,451 President of Indonesia, China 11,199 United States 18,624 Joko Widodo reiterated Japan 4,940 India 8,718 that nowadays Indonesia is Germany 3,478 Japan 5,267 entering lifestyle and digitalization era. Lifestyle United… 2,648 Germany 4,041 era is driven by the rise of France 2,465 Russian Federation 3,397 middle class, in the world India 2,264 Brazil 3,147 and Indonesia. Italy 1,859 Indonesia 3,037 According to McKinsey, by 2030 Indonesia will be home to an Brazil 1,796 United Kingdom 2,828 estimated 90 million additional consumers with considerable Canada 1,530 France 2,774 spending power, enabling Indonesia’s consuming class stronger Korea, Rep. 1,411 Italy 2,324 than any other countries in the world apart from China and India. Russian… 1,283 Mexico 2,280 These is a signal for international business to consider new Spain 1,237 Turkey 1,941 opportunities in Indonesia. Australia 1,205 Korea, Rep. 1,832 World Bank also highlighted that following a massive reduction in Mexico 1,047 Saudi Arabia 1,760 Indonesia’s poverty rate in the last two decades, one in every five Indonesia 932 Spain 1,693 Indonesians now belongs to the middle-class group. Another 45 Iran, Islamic Rep. percent are part of an aspiring group who are no longer poor or Turkey 864 1,605 vulnerable to poverty, and members of this “aspiring class” have Netherlands 777 Canada 1,598 yet to reach the level of economic security and lifestyle of the Switzerland 669 Thailand 1,167 middle class. Saudi Arabia 646 Australia 1,129 Source: World Bank, 2018 Source: World Bank, 2018 3 Indonesia in 2050 th th GDP at PPP Rangkings (Projection for 2030 and 2050) Indonesia rises from 8 in 2016 to 4 in 2050. 2016 2030 2050 Rebecca Harding, CEO of Delta Economics predicted that after PPP Rank GDP at PPP Projected GDP Projected GDP at Country Country Country around 2018, growth could get back on track both in China and (2016 US$bn) at PPP(US$bn) PPP(US$bn) in emerging Asia more generally, in part because China will be 1 China 21,269 China 38,008 China 58,499 pushing its productive capacity into other lower cost places like 2 United States 18,562 United States 23,475 India 44,128 3 India 8,721 India 19,511 United States 34,102 Vietnam, Indonesia, the Philippines and maybe also Myanmar. 4 Japan 4,932 Japan 5,606 Indonesia 10,502 5 Germany 3,979 Indonesia 5,424 Brazil 7.540 According to PWC analysis (PWC, 2015), western companies will 6 Russia 3,745 Russia 4,736 Russia 7,131 likely see a change in the way they do business in the Asian 7 Brazil 3,135 Germany 4,707 Mexico 6,863 region. Rising costs will mean that many off-shored jobs are likely 8 Indonesia 3,028 Brazil 4,439 Japan 6,779 to exit China over time and move to other cheaper economies United such as Vietnam, Bangladesh, Philippines and Indonesia, whilst 9 2,788 Mexico 3,661 Germany 6,138 Kingdom Chinese exporters will find themselves competing more on the United 10 France 2,737 3,638 United Kingdom 5,369 basis of quality rather than price in their key US and EU export Kingdom market. Source: How will the global economic order change by 2050, PwC, 2017 World Bank’s Economic Growth Projection Indonesia in 2045 Country 2017 2018 2019 2020 Demographics China 6.8 6.4↓ 6.3↓ 6.2↓ • Population 309 million Cambodia 6.8 6.9↑ 6.7↓ 6.7 • Working- age population: 52% Philippines 6.7 6.7 6.7 6.5↓ • Urban population: 75% Vietnam 6.7 6.5↓ 6.5 6.5 • Laos 6.7 6.6↓ 6.9↑ 6.9 Middle class population: 80% Myanmar 6.4 6.7↑ 6.9↑ 6.9 Economy Malaysia 5.8 5.2↓ 5.0↓ 4.7↓ • Income per capita : US$ 29,300 Indonesia 5.1 5.3↑ 5.3 5.3 • Share economy from service Fiji 3.8 3.5↓ 3.3↓ 3.2↓ sectors: 73% Thailand 3.5 3.6↑ 3.5↓ 3.4↓ Source: World Bank, 2018 4 WHY LIFESTYLE INDUSTRY Mckinsey research shows Indonesian consuming class will grow almost double in 10 years since 2010 Indonesian consumption shifting not only 265 280 280 spending on goods (non-leisure), but also to 240 145 110 experience… 180 Bellow 195 The rise of Indonesia’s middle class is already affecting Indonesian Consuming class 135 170 lifestyle, and changing their spending behavior. Nowadays, 85 Indonesian consumption shifting from goods (non-leisure) to Consuming class 45 experience (leisure economy) (Head of BPS, 2017). The drivers of 2010 20203 2030 in 5-6% 2030 in 7% GDP leisure economy in Indonesia are: GDP scenario scenario Additional people in 40 90 125 . Consumption as lifestyle The consuming class . From goods to experience . More stress, more travelling INDONESIAN MIDDLE CLASS SPENDING (US$ BILLION) . Low cost tourism 2011 2030 . And e-travel effect… Financial services 85 565 Food and beverage 73 194 In lifestyle era, national economic growth can be driven by Leisure 26 105 commodity lifestyle (for example coffee, cacao, cinnamon, palm Apparel 22 57 sugar, nutmeg, textile and apparel, cosmetics, furniture, etc.) and Education 14 42 services lifestyle (such as tourism, entertainment, wellness, Transportation 13 30 restaurant) (Chairman of BKPM, 2017). Housing and utilities 11 26 Source: Canback Global Income Distribution Telecommunications 8 19 Database; Indonesia’s Central Bureau of Statistics, Beauty and cosmetics 6 16 Mckinsey Consumer and Shopper Insight Indonesia Study, 2011, Mckinsey Global Growth Model; Health care 4 13 Mckinsey Global Institute analysis 5 CREATIVE ECONOMY & LIFESTYLE INDUSTRY OUTLOOK CREATIVE ECONOMY OUTLOOK CREATIVE ECONOMY INDONESIA 2016 Contribution on Creative Economy is dominated by 3 largest sector such as Culinary, Fashion and Craft, representing 74,81% of total Contribution to Indonesian GDP (in IDR Trillion) creative economy 7,44% 7,39% 1.86 7,43% 922.59 0.17 7,42% 852.56 7,41% 784.87 8.27 7,43% 708.27 Culinary 7,66% 638.39 581.54 Fashion 525.96 15.4 Craft 41.4 TV & Radio App & Game Developer Film, Animation, & Video 18.01 2010 2011 2012 2013 2014 2015 2016 Indonesia is the 3rd largest country contributors on creative economy to GDP in 2016 Top 5 Largest Province (Share of Total Creative Economy) 1 Yogyakarta 16,12% United States of America South Korea Russia 2 Bali 12,57% Indonesia Singapore Philippines Canada 11,12 % 8,67% 7,44% 6,06% 5,70% 4,92% 4,50% 3 West Java 11,81% 4 East Java 9,37% 5 North Sumatera 4,47% Source: BEKRAF, 2018 7 CREATIVE ECONOMY OUTLOOK CREATIVE ECONOMY INDONESIA 2016 Top 5 Export Destinations Distribution of Creative Business in Indonesia (Total: 8,2 million creative business in 2016) Export # Country (in US$ Billion) Sumatera Sulawesi, Maluku & Papua United States of 1 6,04 17.94% Kalimantan 6,53% America 4,95% 2 Switzerland 2,08 3 Japan 1,35 4 Singapore 1,22 5 Germany 0,88 Bali & Nusa Tenggara Java 5,21%% 3,23% 65,37% Export Growth In 2016 (US$ 20 billion) Indonesia Key labor market indicators February August February August February August Key Indicators 2013 2013 2014 2014 2015 2015 Labor Market in Creative Total Population (millions) 247,7 249,4 251 252,7 254,4 256 Economy Population aged 15 years and over (millions) 178,1 180 181,2 183 184,6 186,1 • Manpower 16,91 million Economically active (millions) 123,2 120,2 125,3 121,9 128,3 122,4 people (14,26%) Employed (millions) 115,9 112,8 118,2 114,6 120,8 114,8 Employment to Population Ratio (%) 65,15 62,70% 65,20% 62,60% 65,50% 61,70% Source: ADB, 2016 Source: BEKRAF, 2018 8 Indonesia Abundant of 1 Lifestyle Commodity Lifestyle Commodities Chocolate remain the most favorite snack in the world I want to emphasize that lifestyle Rank Snacks Global Average commodity plays an important part in 1 Chocolate 69% the lifestyle industry. Nowadays; we 2 Fresh Fruit 62% have coffee, we have cocoa - President Joko Widodo. 3 Vegetables 52% 4 Cookies/Biscuits 51% 5 Bread/Sandwich 50% 6 Yogurt 50% 7 Cheese 46% Global demand for cocoa is on the rise due to the rising demand from 8 Chips/Crips 44% new market such as India and China. 9 Nuts/Seeds 41% 70% of Indonesia’s total cocoa production comes from South Sulawesi. 10 Gum/Ice Cream 33% Source: Nielsen, 2014 The market started to grow beyond people who were just needs-based and into a lifestyle choice. Production of cocoa beans in Indonesia from 2012/2013 to 2016/2017 (in 1000 tons) th 410 Indonesia is the 3 Largest Cocoa producer with 375 annual capacity around 770,500 metric tons. 325 320 330 Indonesia is the 4th Largest Coffee producer with annual capacity around 660,000 metric tons 2012/2013 2013/2014 2014/2015 2015/2016* 2016/2017** Source: Statista, 2018 10 Indonesia: Paradise of Specialty Coffee Top 10 Coffee Producer Arabika Gayo Capacity # Province Million Tons 1 South Sumatera 129.7 Arabika Lintong Arabika Mandailing 2 Lampung 128 Arabika Solok 3 North Sumatera 54.9 Robusta Masurai Liberika Liberika Arabika Arabika 4 East Java 53.4 Jambi Pangkalan Bun Mamasa Napu Arabika Bengkulu Robusta Arabika 5 Bengkulu 49.2 Arabika Robusta Kepahiang Liwa Papua 6 Aceh 47 Enrekang Arabika Arabika Robusta 7 South Sulawesi 34.9 Dieng Ijen Karawang Arabika Arabika Arabika 8 West Sumatera 29.1 Robusta & Java Preanger Kintamani Flores 9 East Nusatenggara 18.5 Arabika Cibulao Arabika Arabika Arabika 10 Central Java 15.3 Bowongso Temanggung Argopuro Besides the production of regular coffee, Indonesia also produces several specialty coffees.