Indonesia’s resilience to the 2008 global financial crisis was unsurprising. The country did learn its lesson well in the aftermath of the the 1997 Asian currency meltdown.
Over the past two years, Indonesia’s plantation companies grew between five and ten percent, with crude palm oil (CPO), leading the way. The country, in 2009, became the world’s largest producer of CPO, with a total output of 19.4 million tons.
Whether upstream or downstream, Indonesian palm oil companies have made a strong effort to become environmentally certified.
Megasurya Mas, a maker of palm oil-based products, is the world’s first palm oil derivative company to obtain a Roundtable on Sustainable Palm Oil (RSPO) certificate.
“I’ve always believed that this sustainability issue, the RSPO certification, is very important. It is not required by regulation to be RSPO-certified, but in places like Europe, if you are not RSPO-certified, people will not buy from you. Our goal is always to be the industry standard,” said Managing Director Bahari Karim.
And in crisis, lies opportunity. “Our turning point was the Asian currency crisis. A lot of companies in Indonesia folded up but we stuck with it. The change of our business model by producing more value added downstream products helped us survive the crisis,” Bahari said.
The Indonesia banking sector has gone from Asia’s weakest to one of its most robust, with strong balance sheets and a rapidly growing consumer sector with many new borrowers.
Between 30 to 35 percent of the population is in the middle income group and the country’s GDP per capita has neared the $3000 mark associated with rising economies.
According to Eugene Keith Galbraith, president commissioner of PT Bank Central Asia Tbk (BCA), the only locally-controlled of the country’s top private banks,“ The Indonesian economy is largely domestic consumption driven, so our sensitivities to the global problems were somewhat minimized. Indonesia is a country which now has a very substantial self–ascribing middle class. It’s not so much that it’s growing. It’s that it has become aware of itself and demand patterns have been changing.”
BCA is the country’s largest transactional bank, responsible for 30 to 40 percent of all payments in the local banking system.
“The bank was the first to introduce ATMs. We have always been in the forefront of commercial application of technologies. We are the first bank to use PCs and we are the only bank in the world with a satellite-based realtime network which links the whole country,” Galbraith said.
Meanwhile, Indonesia’s property sector has benefited from low interest rates and a more prosperous middle class.
President Director of Lippo Karawaci, Ketut Budi Wijaya, sees great potential in this.
“The middle income group has disposable income in excess of $5000. This is the income group that ranges from $5000 to $15,000 per annum. There are big windows opening to us as a first mover to take advantage of this consumer growth,” says Wijaja.
Lippo Karawaci is one of the country’s largest conglomerates and operates $3 billion in assets. Over the next 5 years, the company hopes to acquire $8 billion in assets.
“We benchmark ourselves in terms of performance, governance and best practices. For example, we are the only property company rated by 3 agencies, which are Moody’s, Standard and Poors, and FitchRatings. S&P announced they were upgrading our rating one notch from ‘B’ to ‘B+.’ This is an appreciation not only of the company but also of Indonesia,” Wijaya said.
“We really want to attract multinationals in order to bring international best practices into the organization,” he added.
