A short visit to Indonesia to seek to quickly assimilate a view on the market and the potential for future activity connected to the UK across the creative economy.
The trip was undertaken on behalf of UKTI and linked to British Council, given their strategic focus on the country, and the MoU signed by UK & Indonesia on a mutual promotion of the creative industries (Nov 2012)
Defined as one of the “CIVETS” – a group of six emerging economies displaying significant economic potential – Indonesia is recognised as a fast growing market and is increasingly the focus of strategic attention by both Governments and corporates alike. After all McKinsey forecasts it will grow from 16th largest to 7th largest world economy by 2030.
Matching the trajectory of other emerging economies there is a boom in digital communications: internet access is rising at an annual rate of 20%, and 100 million Indonesians will be connected to it by 2016; already, 60% of Indonesian adults own a mobile phone and 47M people are active on Facebook, the dominant social platform (Twitter also has high penetration). Perhaps one of Indonesia’s biggest assets is that more than 60% of its 240 million population is under 35 years old.
By definition it is only possible to gain a limited insight from a short visit but across the few days of my itinerary I was struck by a series of themes (many of which are common across emerging economies):
Some key themes
- Aspirational consumer growth – visible everywhere, from brand profiling to shopping culture it is clear that there is a growing middle class (c.45M people) who wish to define themselves. Referrals to social strata and position, not just in business demographics but also social conversation, show a keen awareness of economic status.
- Challenged infrastructure – the impacts of economic development are not universally being matched by infrastructure, this is most obvious in the chronic congestion which plagues Jakarta (Four meetings per day are the maximum possible was the entirely proven advice I received)
- Religion as strong and overt societal influence – there is a strong sense of the pervading influence of religious belief, for example the broadcasters change the tone of programming across their entire output during Ramadan
- Fast emerging digital economy – as noted above this is based on mobile as much as online and is currently at entry level, but clearly about to rapidly expand
- Localisation – it is very clear that the market demands localised content across media channels, whether homegrown Sinetron “soaps” or bought in formats remade for an Indonesian audience. For UKTI this requires consideration within any trade and market entry discussions.
- Cost benefit – at present the key external sales point within the media space concentrates on cost saving and outsource potential, reflected in subsequent conversations in Singapore. There is a positive trajectory on talent so this will change over time towards output quality rather than price.
There are significant challenges in the marketplace, not least around piracy, but a tangible sense of potential for explosive growth in the creative economy within the next 5 years – generating opportunities in retail, consumer engagement and in the medium term, mobile products (whether games, ad tech, apps etc) and e-commerce – with the caveat on localisation
At this stage the capacity building focus of the British Council is generating interesting connections and results – for example working with the Femina Group in developing local fashion designers to an international audience – and their planned initiatives in Bandung working with the nascent digital cluster will be worth watching.
In fact that sums up the current position across the creative economy in Indonesia well – not likely to explode onto the international scene right away, but definitely one to watch.
NB: The photo at the top is entirely misleading. This roundabout was perma-gridlocked all week, but then came the genuine surprise of car free Sunday (well, Sunday morning at least), and suddenly there was a joyous riot of cycling.