LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...

Overview of Indonesia and its EconomyTable 1.7.8 Indonesia and selected Asian countries GNI per capitaGNI per capita—Atlas methodCurrent US dollarsGNI per capita—PPP International dollarsCountry 2000 2001 YoY growth 2004 2005 YoY growthChina . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,740 16.0% 5,890 6,600 12.1%India . . . . . . . . . . . . . . . . . . . . . . . 620 720 16.1% 3,120 3,460 10.9%Indonesia ................... 1,140 1,280 12.3% 3,480 3,720 6.9%Malaysia . . . . . . . . . . . . . . . . . . . . 4,520 4,960 9.7% 9,720 10,320 6.2%Philippines . . . . . . . . . . . . . . . . . . . 1,170 1,300 11.1% 4,950 5,300 7.1%Singapore . . . . . . . . . . . . . . . . . . . 24,760 27,490 11.0% 27,370 29,780 8.8%Thailand. . . . . . . . . . . . . . . . . . . . . 2,490 2,750 10.4% 7,930 8,440 6.4%Vietnam . . . . . . . . . . . . . . . . . . . . . 540 620 14.8% 2,700 3,010 11.5%In current US dollars (Atlas) versus international dollars (PPP). The international dollar is a hypotheticalunit of currency that has the same purchasing power that the U.S. dollar has in the United States at a givenpoint in time.Source: World Bank, World Development Indicators, 20061.7.6 CompetitivenessIn 2006, Indonesia was ranked 50th on the World Economic Forum’s competitiveness scale, the highestrank it has ever achieved and a marked improvement from 2005, when it ranked 69th. The successfulachievements during 2006 were primarily driven by greater confidence in the new administration led bySBY and JK, easier access to bank loans, decreased in lobying power of business groups and a moreeffective anti-trust policy.The following table is the World Economic Forum’s Global Competitive Indexes (GCI) for selected Asianeconomies. While Indonesia may still have considerable ground to make up on some of the moredeveloped countries in the region, the improvement over the past year has been very positive.Table 1.7.9 Global competitiveness index (GCI), 2006GCICountry2006Rank2006Score2005RankChanges2005-2006Taiwan............................................... 13 5.41 8 D (5)South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5.13 19 D (5)Malaysia.............................................. 26 5.11 25 D (1)Thailand.............................................. 35 4.58 33 D (2)India................................................. 43 4.44 45 B 2Indonesia ............................................ 50 4.26 69 B 19China................................................ 54 4.24 48 D (6)Philippines............................................ 71 4.00 73 B 2Vietnam.............................................. 77 3.89 74 D (3)Source: World Economic Forum, 20061.7.7 Interest ratesInterest rates in Indonesia are among the highest in the region, which ultimately impact foreigninvestments and consumer spending. However, anecdotal evidence suggests that the impact of a highinterest rate environment is felt more strongly in the middle-lower and lower income group (or the massmarket) rather than in the higher income group. The middle to upper class group in Indonesia is relativelyresilient to the increase in interest rates due to their lower dependency on bank loans. This can be seen inthe residential property market where a large portion of the buyers in the middle to upper income groupprefers to buy houses or condominiums in cash, rather than through a credit loan from the bank.F-16