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

Overview of Indonesia and its EconomyFrom 1986 to the mid 1990s, the growth of the tourism industry accelerated sharply, as did touristspending. Aided by a relatively stable socio-economic and political climate, international visitor numbersreached around 5 million per annum. In 2003, international arrivals to Indonesia declined by over 10%,affected by the bombings in Bali in October 2002. However, the number of tourist arrivals in Indonesiarecovered in 2004.In 2004 tourist arrivals for holiday purposes accounted for 53% of total arrivals, while business visitorsaccounted for around 40%. Repeat visits accounted for over 80% of total arrivals, reflecting visitorsatisfaction with the country as a destination area, as well as ongoing business commitments in Indonesia.Table 1.9.1 International visitors to Indonesia, 2000-2005—growth of arrivals, expenditure &length of stayYearAverageexpenditure/personInternationalvisitors Per visit Per day(US$)Average stayin day(s)Foreignexchangeincome(million US$)2000 . . . . . . . . . . . . . . . . . . . . . . . . . 5,064,217 1,135.18 92.59 12.3 5,748.82001 . . . . . . . . . . . . . . . . . . . . . . . . . 5,153,620 1,053.36 100.42 10.5 5,396.32002 . . . . . . . . . . . . . . . . . . . . . . . . . 5,033,400 893.26 91.29 9.8 4,305.62003 . . . . . . . . . . . . . . . . . . . . . . . . . 4,467,021 903.74 93.27 9.7 4,037.02004 . . . . . . . . . . . . . . . . . . . . . . . . . 5,321,165 901.66 95.17 9.5 4,797.92005 . . . . . . . . . . . . . . . . . . . . . . . . . 5,002,101 904.00 99.86 9.1 4,521.9Source: Ministry of Culture and Tourism, Republic of IndonesiaIncreased stability will continue to underpin future tourism growth.1.10 Economic outlook and implications for the retail marketThe domestic trade (retail and wholesale) and hotel and restaurant sectors accounted for 15.7% of realGDP in 2005. Growth in these sectors in recent years has been broadly in line with the overall rate ofgrowth in GDP. This trend should continue, leading to strong growth in line with the short-term outlook forthe Indonesian economy.The move towards democracy and a more favourable investment environment have resulted in Indonesiaheading towards a stronger economic foundation, aimed at regaining its pre-1998 position as one of the‘Tiger’ economies of the region. In the longer term, with its vast population, abundant labour and naturalresources, Indonesia is well placed to be a future growth economy. Economic growth over the past fewyears, particularly growth of the middle income group, has opened up considerable opportunities in theretail market and is expected to continue in the future.Drivers of the retail market over the short to medium term include:• Population growth• Untapped potential markets, both geographic and demographic• Growing middle class (more urban population, modern lifestyle)• Consumer spending being a predominant component of Indonesia’s GDP structure• Long-term positive economic outlook (“the next eleven” according to Goldman Sachs 2005 report)F-21