BRIC or BIIC? The Emergence of Indonesia

Nov 19 2010

“Ada asap, ada api” (Indonesian proverb meaning ‘where there’s smoke, there’s fire’)

Business Week‘s latest edition argues that Indonesia should replace Russia in the short list of the world’s most eligible emerging markets, and I agree.

Indonesia’s economy has grown steadily at around 6% a year for the last several years, even through the financial crisis, with an economy which is largely self-reliant (hence it’s shock absorbency). It has a growing and young population, and a resource rich and diverse geography.  [The official population is currently at 238 million, estimated to grow by another 50 million before 2050, and with more than half the population under 30 years old.]  These are all good reasons for Indonesia to be considered an emerging world power, without comparisons to Russia which reinforce the view (ageing and shrinking population and unstable economy).

In terms of market research Indonesia is still a small market at around USD 78 million.  However, it has grown exponentially in recent years, with the fastest absolute growth in Asia in 2008-9 (around 20% or 16% after inflation), and from a base of 37 million in 2006 has doubled in three years. Growth is continuing in 2010, and will do in the coming years as the industry develops to meet the demands of businesses in the world’s fourth largest population.

Like the overall economy, the market research industry is largely domestic with 75% of market research revenues from domestic companies and 95% of work focused on the local market.  Compared with other markets, the industry is dominated by FMCG businesses and particularly beverage, cosmetic and tobacco sectors which are almost twice the size of most countries.  It is also dominated by face-to-face interviewing (over 40% of research), with internet penetration still very low, although mobile penetration is high as I have written previously. However, the industry is innovative and savvy as I found out yesterday at an MRSS breakfast seminar which discussed the use of innovative diaries to record children’s behaviours in rural households in Java.

I was lucky to live in Jakarta for four years, as my introduction to the joys of Asia.  Indonesia is a naturally beautiful and diverse archipelago of almost 18,000 islands with the friendliest people I know.  It represents a huge opportunity for market research, and I intend to be back there as often as I can!


The BRIC Debate: Drop Russia, Add Indonesia? in Business Week, 22-28 November

One response so far

  1. couldnt agree more.they seem to have the right momentum behind them and of course political stability for now.on tourism front still some doubts given recent wave of terrorist attacks but again russia’s got chechnaya to deal with.

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