With more than 240 million inhabitants, Indonesia is a very attractive prospect to anybody looking to export products to a new market. The country saw income per capita rise from US$550 in 1990 to US$3,000 in 2010.
According to research by financial service providers Nomura, CEIC and the World Bank, the size of Indonesia’s middle class – where the average household’s annual disposable income exceeds US$3,000 – will reach 150 million people by 2014. It’s a big leap from the 50 million people that sat in this group in 2009. For comparison, Thailand is expected to reach almost 50 million and Malaysia half of that. The country’s key industries include natural resources such as petroleum, natural gas and rubber, but mining, the maritime industry as well as apparelare also big business in Indonesia.
However, this increased wealth is as yet unmatched by development in the country’s exhibition marketplace. It’s a significant spoiler for the country with the highest gross domestic product (GDP) in the ASEAN region, according to (Citi Investment Research and Analysis).
As the capital city, Jakarta is the economic and political hub of Indonesia where people can have direct access to resources around the country.
The simple matter is there are precious few venues in the city appropriate for international exhibitions. It has only been in these last few years that the convention and exhibition industry has taken off, and up until a few years ago the demand for large venues has been low.
But this is all about to change. According to Prajna Murdaya, the MD of Jakarta International Expo, one of the two largest venues in the city, Jakarta is the sole gateway to Indonesia and the “vast opportunities” available in the country. He claims Indonesia is not only Southeast Asia’s fastest growing economy and the fourth largest nation in the world, but it is already the largest economy in Southeast Asia.
The demand for large venues is growing as Indonesia is increasingly recognised as a viable destination for exhibitions and international events.
“There are unprecedented opportunities in this country’s current growth phase,” says Murdaya.“Key drivers to growth include a rapidly growing middle class, a tremendous demand for infrastructure and property development, a large manufacturing base, and a strong and steady resources industry. Our own experience reflects this, having recently established several new working partnerships with international event organisers who already realise this country’s potential.”
Some observers claim the country is not yet ready for the large international shows. The necessary infrastructure is not yet in place and many who visit will take with them memories of a road system and traffic situation that could obscure any memories of the event they attended. Murdaya claims there’s still a strong business case for any organiser.
“The infrastructure is adequate but is loaded close to capacity,” he claims. “Almost the entire exhibition infrastructure is managed by the private sector and the handful of major players are concentrated in the three places with the most international activities: Jakarta, Surabaya and Bali.
“However the industry has acknowledged the increase in demand and its members are making adjustments accordingly. There is a noticeable increase in the number of hotel construction projects to support the MICE industry. Transportation is primarily by taxi and private driver and the supply is comparable to any international cities. There is also increasing bus service and hopefully within the next five years there will be a city rail system established whether it will be by monorail or subway. There are talks of putting stations at or near the exhibition halls.
“At this point in time, it is already fairly comfortable and quite pleasurable for foreigners to visit Indonesia.”
One company looking to provide many of these visitors is Tarsus. In the last year the company has partnered with Dyandra Promosindo, organiser of the Indonesian Motor Show, for a new automotive aftermarket exhibition in Jakarta in March 2014, and extended its Labelexpo Global Series into Bali.
In January it acquired 51 per cent of Indonesian exhibition organiser PT Infrastructure Asia (PTIA) from PT Event Pro International. Tarsus will pay an initial £300,000 (US$472m) for its 51 per cent interest in PTIA, with estimated total deferred payments of approximately £1.5m during 2014 and 2015. Its total consideration for 100 per cent of PTIA has been capped at approximately £14m.
“Tarsus sees Indonesia as a key market for the future of exhibitions in Asia,” said Tarsus Group MD Douglas Emslie. “We see the market moving quickly with the growth in the economy, the expanding middle classes, new venues and the entry of the international organisers.
“In total we aim to run eight shows in Indonesia this year.
We believe Indonesia will be the next
big exhibition market and that it will experience rapid consolidation.”
So why have there been so few large venues until now? Jakarta Convention and Exhibition Bureau’s Cynthia Arsani says in the past three years, Indonesia’s economy has developed and Jakarta as the republic’s capital city has become a destination of choice for organisers of trade events. “This fact stimulated the urgency to build more venues as demand to hold events in Jakarta became strong,” she says. “More partnerships have been formed between local and international organisations, which brings a positive education exchange between the two different organisations.”
UBM also has “ambitious plans” for developing its portfolio of exhibitions in Indonesia as part of a broader Southeast Asia expansion plan. As senior vice president of UBM Asia Christopher Eve points out, the company is moving into second editions with several of them.
“We have already held two very successful editions of our Food Ingredients Asia exhibition in Jakarta and in March we will hold the second edition of our pharmaceutical show, CPhI Southeast Asia,” he explains. “We have also launched Concrete Show Southeast Asia, SATTE Indonesia and Indo-Marintec, with more in the pipeline.
“The quality of venues and their management is good, and we are looking forward to the opening of two new venues in Jakarta in the near future. The local stand contractors and other suppliers provide a high quality of service and overall there is a high standard of professionalism in the Indonesian exhibition industry.”
If there are traffic problems now, the government better get moving before the organisers really turn up in force. And they will.
This was first published in Issue 1/2013 of EW. Any comments? Email exhibitionworld@mashmedia.net
