Debnath Guharoy, Consultant – If the overall economy is growing at over 6 percent and if foreign investments are on the rise again why isn't the marketplace buoyant? Why is the consumer economy sluggish?
An immediately visible explanation is the impact of higher prices of essentials like rice and now soya beans, regardless of the reasons for those increases. But the bigger, invisible reason is the fact that the growth of the GDP isn't creating a surge in employment, nor increasing wages comparable to inflation.
Most of the growth in the economy is coming from the natural resource sectors, not labor-intensive businesses. The wealth which is being created is remaining in the hands of the affluent few and those who serve them. Starbucks is doing well. The tempe vendor is not. The Roy Morgan Consumer Confidence Index is creeping around the 112 mark.
Even if the increases in the price of consumer essentials were contained at less than 10 percent each year, it would cause real pains to the overwhelming majority of the population.
No wonder the demand for consumer durables like refrigerators is flat. The number of people intending to buy a new motorcycle is stuck at 8 million. The number of people who are cellular subscribers is crawling at around 40 million even though there are millions more who would like to join the club.
For nine out of ten adults in Indonesia, life is always a struggle, financially. At the end of each month, after all the bills are paid, very little is left under the mattress.
Only one in five adults has a bank account and that number is not growing – in fact, it is dipping. Some 27 million Indonesians have bank accounts, about half of these bank with BRI. All the other banks compete for the patronage of the remaining 13 million.
These are Indonesia's financially fortunate minority. Among them are some 1.5 million people with a disposable income, the primary breadwinners for their families. Around one third of them could be deemed "affluent" by any yardstick. A tiny core is among the world's richest. That is the reality.
With the exception of BRI, not even the other state-owned banks are interested in the humble lives of most Indonesians. Their actions and initiatives seem to aim at competing for a share of the existing market, not expanding it.
The number of people with bank accounts is down, the number of people taking loans is also down, but plastic cards are up. The trouble is most bankers are more keen to embrace the "greed is good" credo made famous by Michael Douglas, than they are to emulate Mohamed Yunus' real-life success. There appears to be little shame for the subprime loans crisis that has triggered downward spirals across the world. Thousands of jobs have already gone, billions are being written-off in a mess that could end up costing more than a trillion dollars.
We've seen it all many times before. Who can forget the Internet bubble bursting in 2000? Yet it is the consumer who will pay the price for this callous greed, as usual, not the Asian sovereign funds bailing out these big banks. Fees and rates will go up, to be paid by those who can afford them, who in turn will cause the mark-up of products and services bought by even the poorest of the poor.
The rich will get richer, the poor will get poorer. That gap between the rich and the poor is widening, across the world and in Indonesia.
If there is no surge in new wealth, and if it isn't distributed among more Indonesians, the country's retail banks will continue to seek profits in the relatively small consumer banking market that already exists.
It is no secret, however, that the backbone of any stable economy is small business and that the engine of any economy is consumer spending. Even in the US, more than 60 percent of all spending each year comes from consumers. A smiling George Bush riding an American-made lawnmower was urging US consumers last week to spend the checks they are soon going to receive in the mail, to trick the economy out of a recession.
Those checks will cost US taxpayers US$140 billion, adding to record deficits. There are no guarantees the stimulus will work, and as usual, the talk-show pundits sound clueless.
How many billion rupiah would it take, in the hands of thousands of budding small business owners, to create millions of new jobs across Indonesia? Not too many.
If each and every bank made it their mission to help build small business, not just big businesses, it would be to the mutual gain of all concerned. There is money to be made from those thousands of budding small business owners, as well as the millions of their prospective employees.
There's a universal truth which states that people with more money also borrow more, to build assets. It is time for Indonesia's retail bankers to work harder for their bonuses, and their country.
[The writer can be contacted at Debnath.Guharoy@roymorgan.com.]