Aprindo: There Are Opportunities to Develop Retail Businesses Outside Java

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Chairperson of the Indonesian Retail Entrepreneurs Association (Aprindo) Roy Mandel said there was an opportunity to develop a Retail Business outside Java. According to him, the development of the retail sector is currently still based in cities in Java. "We predict it can (expand) outside Java," he said when contacted by Tempo, yesterday.

Some big cities in eastern Indonesia have potential. Areas such as Lombok, Ambon, Papua and Kalimantan can be considered by business people to relocate their shops or business units. "Growth (retail) can be dominated outside of Java," Roy said.

Responding to the closure of a number of retail stores in big cities in 2017, Roy said the move was part of a business strategy. He considered one of the reasons retailers closed stores was because of consumer changes. The recolation step, on the other hand, is mentioned by Roy because there are shops that are considered to be unproductive. "It could be because the community is saturated or the area has become a commercial area," he said.

Corporate Secretary of PT Ramayana Lestari Sentosa Tbk Setiadi Surya assessed that expansion outside Java can be done. However, according to him, the economic driver in the regions outside Java is still dominated by the plantation or mining sector. Until now Ramayana has not planned to expand beyond Java. "We want to focus on Jabodetabek and still on Java," said Setiadi.

However, continued Setiadi, infrastructure development being pushed by the government could be a driver of the development of the retail sector or business outside Java. He hopes that the completed infrastructure project can have an impact on the retail sector.

Mirae Asset Sekuritas Indonesia analyst Christine Natasya estimates that the retail outlook in 2018 will be bright because there is government support. One indicator is the Ministry of Social spending which increased 138 percent year-on-year to Rp 41,3 trillion in the 2018 APBN. "This is expected to help lower-income household spending," he said.

Coupled with the absence of electricity tariff adjustments, Christine predicts an improvement in purchasing power in the community. Not only that, the increase of the 2018 minimum wage which is higher than 2017 will be a positive factor for consumer purchasing power.

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