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

Retail Market Overview2. RETAIL MARKET OVERVIEWOver the past five years, the retail market in Indonesia has grown in line with the country’s GDP growth.The steady growth in consumer purchasing power and the implementation of regional autonomy laws havesupported the development of the industry, thus providing more opportunities for retailers to expand theirbusinesses into new areas. The relaxation of government policies relating to foreign investment has seen amarked increase in foreign retailers and investors particularly in Jakarta and other large cities such asSurabaya, Medan, Bandung and Denpasar.With the largest population in the South East Asian region and an affluent and growing urban middle class,currently estimated at around 66 million people, Indonesia has significant potential for future retaildevelopment and growth.2.1 Retail sales growth—historical and forecastThe retail sector was the first sector to recover from the economic crisis in 1998, with retail trade increasingby over 60% in 1999. This rapid recovery was driven predominantly by strong domestic consumption, andserved also as a primary driver of Indonesia’s economic growth.Since then, nominal retail sales growth has averaged 11% per annum, with this rate forecast to continueover the next five years (to 2011). The two major drivers are low forecast inflation and interest rates. In realterms, retail sales are expected to grow by an average of 5.9% per annum between 2007 and 2011.Figure 2.1.2: Retail sales (US$M) (current prices), 1994-2011Source: EIU$USM300,000250,000200,000150,000100,00050,0000Historical Retail SalesForecast Retail SalesGrowth1994 1996 1998 2000 2002 2004 2006 2008 2010Year80%60%40%20%0%-20%-40%-60%-80%% GrowthF-22