Market Monitor - Consumer durables - Indonesia

Market Monitor

  • Indonesië
  • Duurzame consumptiegoederen

31 mrt 2016

The influx of cheaper brands from China has increased competition.

  • The Indonesian consumer durables retail sector has recorded robust growth rates in recent years, driven by a growing middle class with higher household purchasing power. However, in 2015 the pace of growth has decelerated due to economic growth woes and currency depreciation. Despite these, consumer confidence has improved again in early 2016 on the back of fuel price cuts.


  • Businesses’ profit margins are expected to remain stable in 2016 after deteriorating in H2 of 2015. While lower oil prices have helped to decrease logistics and distribution costs, the market is crowded with local and foreign players. The influx of cheaper brands from China has increased competition in the lower and middle segment, but businesses in the high-end segment will continue to experience growth as long as they differentiate themselves and focus on premium goods.


  • Most smaller consumer durables retail businesses still use internal financing or shareholder funds for their working capital, while middle-sized or larger companies use bank loans. Banks are generally open for lending to businesses, especially after the Central Bank lowered the benchmark interest rate in early 2016.


  • The current average payment duration in the industry is 30-60 days. The number of protracted payments is rather low, and non-payments are not expected to increase in the coming months.


  • Our underwriting stance for the industry is generally open, however we assess buyers more prudently in case of lack of financial and other qualitative information, such as strong group backing.



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