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Middle-Class Willing to Spend as Indonesia's Economy Booms
Francezka Nangoy | December 01, 2011

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Consumer and media research company Nielsen has reported that Indonesia’s middle-class consumers have grown more willing to spend as Indonesia’s economy grows.

In 2008, Indonesia’s average per capita income was $2,271, according to the Central Statistics Agency (BPS). But with the economy reaching $700 billion in 2010, average income was $3,000, a level that Goldman Sachs predicted three years ago that the nation would achieve in 2020.

“Indonesia is one of the world’s economic success stories,” Nielsen said on Thursday.

The rapid rise has caused the middle class to spend more on comfort, lifestyle and improving their general quality of living, said Catherine Eddy, managing director for consumers at Nielsen Indonesia.

Nielsen defines middle-class households as those that spend between Rp 1 million and Rp 2 million ($110 and $220) a month for basic needs, such as food, transportation and electricity.

People in this category account for 48 percent of the country’s population of nearly 240 million.

Food still dominates spending, accounting for 37 percent of the total. However, Eddy said that increasing ownership of home appliances like gas stoves and electric rice cookers showed the middle class’s increasing preferences for a comfortable lifestyle.

About 64 percent of middle-class families now have a rice cooker, compared to just 30 percent five years ago. Ownership of DVD players is now at 39 percent, compared to 6 percent in 2006.

The latest Consumer Confidence Index, which is a survey conducted by Danareksa Research Institute, came in at a five-month high of 91.4, which marked a 2 percent rise in November from 89.6 the previous month.

The increase was reportedly spurred in part by consumers’ bullish outlook on the economy and the availability of jobs.