Manager’s Report
Market Review
ECONOMIC REVIEW
Indonesia’s Q4 real GDP growth remained unchanged from
the previous quarter at 5.0% YoY, according to Statistics
Indonesia (BPS). Economic growth was at the lowest level
since 2009 as tight monetary policy and soft demand for
)NDONESIA S COMMODITY EXPORTS CONTRIBUTED TO THE WEAK
outturn. Indonesia’s economy growth for 2014 is still
commendable in a much less favourable global economic
environment in view of the world economy growth of 2.6%
in 2014.
Private consumption, or commonly known as household
CONSUMPTION CONTRIBUTED APPROXIMATELY
OF '$0 IN
2014. Despite real growth rate bottoming in Q4 at 5.0% as
a result of a rise in the price of subsidised fuel, household
consumption growth in 2014 overall was surprisingly
resilient. Household consumption growth was 5.3% in 2014
(the same rate as in 2012 and 2013).
The highlight of 2014 was the inauguration of
President Joko Widodo (“President Jokowi”) as the new
Indonesian president in October 2014. His appointment is
perceived as one that is investor friendly. Notably, one of his
key electoral promises was to develop public infrastructure,
enhance domestic industry and create employment.
Structural reforms initiated by President Jokowi’s
ADMINISTRATION ARE EXPECTED TO IMPROVE THE BUSINESS
environment.
Looking ahead, Indonesia’s economy will continue to
receive a boost from the lower oil prices. Signs of headline
inflation have already started to slow to 6.29% YoY in
February 2015 from an average of 7.0% YoY in 2014.
4HIS ALSO MEANT THAT THE MONETARY AUTHORITIES COULD RELAX
their currently tight policy setting. Bank Indonesia (BI,
the central bank) raised its main policy rate, the BI rate,
from 7.5% to 7.75% in November 2014, in response
to the government’s decision to increase the cost of
subsidised fuel.
INDONESIAN KEY ECONOMICS INDICATORS
2014
2013
2012
2011
2010
%CONOMIC GROWTH 9O9 2EAL '$0 GROWTH
Inflation rate
8.4%
8.4%
4.3%
3.8%
7.0%
9EAR END %XCHANGE 2ATE )$2 3'$
!VERAGE %XCHANGE 2ATE )$2 3'$
Interest rate – Central Bank Rate
7.75%
7.5%
5.8%
6.0%
6.8%
10 Year – Indonesian Government Bond Rate
7.8%
8.4%
5.3%
6.0%
7.6%
ECONOMIC DEVELOPMENTS
The move to cut retail fuel price subsidies to realign
GOVERNMENT FUNDS TOWARDS DEVELOPMENT AND WELFARE
related spending by President Jokowi’s administration
in October 2014 was a welcomed one, although this
momentarily weighed on consumer sentiments. In early
January 2015, the government further announced that it
would only subsidise diesel in future, removing the support
that it had previously provided for petrol purchases in a
move aimed at aligning local fuel prices more closely with
those on the global market. This reduced upward pressure
on transport and food costs.
Market sentiment is improving as evidenced in the rebound
OF THE #ONSUMER #ONlDENCE )NDEX h##)v ##) REBOUNDED
sharply to 120.2 in January 2015 from the drop in December
2014 following the subsidised fuel hike. CCI survey released
by the Indonesian central bank revealed that consumers
continued to be optimistic about job opportunities, business
ACTIVITIES AND INCOME EXPECTATIONS AFlRMING THE CONlDENCE
NOTED IN THE INDEX 4HE EXPECTATION OF TAMER INmATION
throughout 2015 will continue to support consumer’s
buoyant mood.
RETAIL INDUSTRY
In 2014, average rental rates in Jakarta increased moderately
by 5.9% as most of the prime retail centres have increased
their base rentals due to the lack of new spaces. As of
31 December 2014, the average base rental rate for
specialty shop units on the ground floor within premium
locations was recorded at IDR678,200 per sqm per month,
an increase of 4.6% YoY. The average service charge was
increased to 13.2% from previous year.
Along with the CCI which rebounded by 3.2% in January
2015 right after its drop in December 2014, the retail sales
INDEX ALSO GREW BY
9O9 IN *ANUARY
INCREASE
after the fuel price hike on 18 November 2014. Retail sales
in Indonesia continue to be resilient and supported by an
INCREASINGLY AFmUENT AND MIDDLE CLASS POPULATION
Sources: Statistics Indonesia (BPS)
"03 REBASED ITS REAL '$0 SERIES TO
FROM PREVIOUSLY
18
LIPPO MALLS INDONESIA RETAIL TRUST ANNUAL REPORT 2014
