Jakarta – Shoppers pack the supermarkets in the Indonesian capital these days, car and mobile phone sales are jumping, seven new airlines are ready to hit the skies and companies are reporting solid first quarter profits.
Consumer spending, the government says, will be the main engine behind an up to four percent growth of Gross Domestic Product (GDP) this year after a dismal zero growth last year and minus almost 14 percent the year before that. So what's the problem?
And if as the International Monetary Fund (IMF) says, Indonesia is the country farthest from being able to say it has turned the corner in digging itself out of the dragging regional financial crisis, where is the money coming from?
The first thing to note, analysts caution, is that it is only the few well-off – maybe 20 million people out of the country's 210 million – who are on what can only be described as a spending spree, at least compared to the austerity of 1998-1999.
The rest, the majority, says National Institute of Sciences'economist Thee Kian Wie, are still subsisting, hurting just as much as they were two years ago.
Henry Yusuf, managing director of Danatama Securities, agreed. "The ones who are spending now are mostly the middle to upper class who profit from interest rates or the exchange rate," Yusuf told AFP. Many of the upper crust have US dollar accounts overseas, and are profiting nicely from the fall in the rupiah, he adds.
"On the other side it's the people exporting who earn US dollars, and that's basically it. For the lower class people, they hardly spend, they just buy things for their daily needs. It's quite tough for them right now," Yusuf said.
"The rich in Indonesia," Wie says, "are still very rich," and demand which had been deferred at the height of the crisis is showing itself now that people are slightly more confident.
"Rather than sitting on their money, they are spending it on consumer durables," he said, flocking in their thousands to places like Jakarta's new French hypermarket, Carrefour. "It's astounding the number of people there," he says, adding that he too estimates the moneyed at some 20 million people.
He rejects the idea that the country's ethnic Chinese, brutally targeted in the 1998 riots, are bringing money back into the country in any significant amounts.
"Why should they?" he asks, referring to the volatile security and political situation in Indonesia which has left almost all potential foreign investors glued to the sidelines, and putting their money elsewhere.
In a country where the banking system is still in tatters though, small businesses are keeping enough working capital to keep their operations running, he says.
In addition, 90 percent of all consumer spending in Indonesia is in cash, Visa International country manager Ellyana Fuad told the Jakarta Post this week – a fact that residents joke helps the corruption and counterfeiting industries.
Marie Pangestu of the center for Strategic and International Studies, one of the country's leading economists, says there are still "a lot of people with cash." In addition many of them reaped comfortable profits from astronomically high interest rates introduced during the crisis. "As soon as the [October 1999] elections came about and interest rates started coming down, people started spending," she told AFP.
Official figures reflect the rapid pick-up in production of such commodities as cars, motorcycles, paper, cement and television sets, video recorders, mobile telephones and other electronic goods to meet demand despite a banking system still in rubble.
Motorcycle sales are predicted to rise by 39 percent this year to 800,000 units, car sales are expected to follow. Per capita paper consumption has increased to its pre-crisis level of around 16.5 kilograms a year from 5.5 kilograms, according to the Paper Producers Association (APKI).
Cement production is soaring, seven new airlines have registered to start operations, the Ramayana supermarket chain plans six new outlets, and electronics sales have jumped.
But Pangestu says not to be fooled, and that she is worried. "Companies are using excess capacity, they do need working capital, but they are using retained earnings and suppliers' credits," Pangestu said.
In addition, small and medium sized businesses which had very little debt with the banks, are managing. "Growth based on those variables [is good for] only one or two years. Eventually you will get to where the investment restrictions will be felt.
"We are not out of the woods. There is a real worry about complacency setting in – unless [the government] can push through the reforms, banking and corporate.
"We may be able to get growth, but it is not sustainable," she says pointing to similar earlier patterns of recovery in South Korea and Thailand which were led by a return of consumer spending.
But in their cases, she said, there is "a lot of foreign investment, new investment, including domestic capital, either joint venture partners putting more in shares, and in the case of South Korea mergers and acquisitions."
"That's obviously driving their growth into a more sustainable path ... they have made more progress ... they have more room" than Indonesia, where, she said confidence is "still very low."