LCLL: Low Cost LED Light, a new trend of lighting

New Era of Lighting Has Come
Few years ago, the demand of LED (light emitting diode) had not yet significantly risen due to its price competitiveness. Energy Saving Lamp (LHE) was much preferred by domestic market and large switching cost from LHE to LED was just another obstacles for consumer to consider. Energy saving lamp has various prices starting from USD 2.1 - USD 3.6, depends on the power capacity from each lamp. 

Source: Various, Processed by PT. Invisindo

At present, LED lamp sought by Philips is offered around USD 13 - USD 19 per piece, still the switching cost remains high, around 4-6 times higher than conventional energy saving lamp (read: CFL based). Chairman of Aperlindo (Indonesia's Electric Lamp Producers), John Manoppo said Indonesia's is starting to switch to LED for the lighting as he predicted the demand of LED could reach 15 million units. 

Capability of Local Producers

LED lamp has way sophisticated technology emphasizing on green environment and durability. LED lamp is claimed to save energy up to 80% and last for 25 years without replacement. At present, there have been 4 local companies that producing LED lamp known as PT. Sinar Angkasa Rungkut with the brand Chiyoda, PT. Pancaran Indonesia Tangerang with the brand Cahaya, PT. Sure Indonesia with the brand Kunang and PT. Sentosa Elektri with the brand KEIBU.

Chiyoda, a LED lamp produced by Sinar Angkasa Rungkut is likely to be offered with USD 2.5 to USD 5 per piece with production capacity of 12,500 pieces per day. The lower the switching cost, the higher possibility to establish economic of scale for LED lamp.  As Philips is offering its LED lamp of USD 13 - USD 19, price competitiveness would set as the main driver to the competition of LED lamp's market in Indonesia. 

Local content of the LED lamp has reached 65% and the remaining are still imported. Glass tube has been able to be produced by local manufacturer and the remaining components are still highly dependent on import product. According to John Manoppo, manufacturers are starting to enter the new era of LED lamp just what energy saving lamp had shown when it was introduced in 2002 and at present, CFL / Energy Saving Lamp leads the lighting market in Indonesia.

HS Code is Underway
To date, Indonesia's government has not yet assigned significant HS Code for LED lamp, its still classified as Energy Saving Lamp which its import tariff is imposed around 15%-25%. Thus, number of LED import remains not traceable. The domestic consumption of LED is predicted around 2 million units until first half of 2013.

John Manoppo added that Indonesia's government would protect the local industry by imposing import scheme plan for LED lamp to 15%-25%. Thus, it is expected that industrialization of LED lamp will gain benefit to self produce LED lamp instead of importing this product with 25% import tariff and eventually would boost an investment opportunity for LED lamp for global and local investor to meet with annual market size of 15 million units of LED lamp in Indonesia. 

Indonesia's Creative Industry and Tourism

Indonesia’s creative economy provides a unique selling point for the country as it seeks to carve out a position in Asia’s highly competitive tourism market. It is a platform that includes a variety of industries, encourages the promotion of Indonesia’s unique and diverse cultural heritage as well as the participation of the local inhabitants to play an active role in the development of their region. However, while the plans on paper are being received positively; coordinated execution of the priorities such as transport infrastructure will be the crucial issue as to whether it succeeds. 

Source: Ministry of Tourism and Economy Creative, Processed by PT. Invisindo

Local development is important but the country has plenty of natural attributes and cultural sites to share with tourists already. Well thought out promotional campaigns that highlight such attributes make a significant impact on tourism numbers as Malaysia has proven and piquing the interest of adventurous travelers who are willing to take on a challenge can raise tourism numbers even in the short term. Indonesia therefore sorely needs to invest in its national image for efforts in other areas such as infrastructure and the creative industries to pay off and ensure tourism plays its rightful role in the nation’s economy.

In Indonesia, creative industry had contributed 7.3% for GDP and 7.76% in employment of workers. Relatively, it was equal with the US and England, and was bigger than Australia, New Zealand, Taiwan, and Singapore. In term of employment, Indonesia was the largest compared to the other 6 countries. With this condition, it was perfectly accurate for Indonesian Government to appoint new department that focused on the administration of creative economy, and it is called the Ministry of Tourism and Creative Economy.

Source: BPS, Processed by PT. Invisindo

In 2011, art goods market gave contribution of Rp 1.61 trillion or 0.3% from total creative industry contribution to Indonesian GDP. Creative economy contribution toward national GDP keeps increasing for the last few year, where in 2010 it contributed Rp 472.8 trillion by absorbing 11.49 million labor foces, and increased to Rp 526 trillion by absorbing 11.51 million labor forces in 2011. It is predicted that it will increase to Rp 573.4 trillion by absorbing 11.57 labor forces by 2012.

Source: Ministry of Tourism and Economy Creative, Processed by PT. Invisindo

Creative industry has bigger GDP contribution comparing to other sectors such as (1) Transportation and Communication; (2) Building; (3) Electricity, Gas, and Clear Water (Indonesian Department of Trade, 2006). During 2002-2006, creative industry absorbed 5.4 million labor forces or around 5.79% from total labor forces in Indonesia. In 2006, creative industry experienced a declining since the falling of crafts, design, fashion, film, video and photography industries. 

Indonesian First Lady Hj. Ani Bambang Yudhoyono asked music industry in Indonesia to develop children’s segment to they can have choice of musics that are suitable with their age. Children need to get more attention through music, this is why it involves musician, industry, special institutions that handle basic education. Indonesia First Lady urged private sectors to user their CSR funds to help facilitating children’s songs program. She believes Indonesia has creativity creating musics for children among young generation in the country. 

Please contact us for further information about insight creative industry and tourism including potential opportunity lies within.

Retail Industry: The Rise of Mid Power Consumer Group

At present, Indonesia has more than 45 million people who are classified as middle class group. Previously, both McKinsey and Roy Morgan Research had conducted yearly research where in 2008, number of middle group consumers were only 28% of the population. This 45 million people are surprisingly surpassed Indonesia's neighboring countries such as Singapore, Malaysia, Vietnam and other South East Asian Countries. 

Source: www.medianesia, processed by www.invisindo.com 

Indonesia's economy growth was 6.2% back in the last quarter of 2012 and slightly stable to 6% in the first quarter of 2013, whilst World Bank and IMF has predicted that Indonesia's economy may slightly down to 5.9% at the end of 2013. Both Bank of Indonesia, Ministry of Trade and Ministry of Finance remains optimistic that the target of 6.2% of economy growth is likely possible to achieve. 

The growth of middle class consumer group is predicted to hit 80 million people within 10 years from now. Market size of retail industry in 2012 was predicted approximately USD 134 billion and would hit to USD 223 billion in 2015. Numbers of blue chip stock sought in Indonesia Stock Exchange shows that Retail King Companies such as MAP (Mitra Adi Perkasa), Hero Supermarket, Ramayana, Matahari have enjoyed 15% of income growth from their business line.

Number of foreign retailers have successfully penetrated into the market has shown how attractive retail market is for both domestic and foreign retailers. Number of Conveniences stores spread at big cities in Indonesia has also indicated the key growth of retail industry. With total supply of 2.8 million m2 and occupancy hits more than 87%, Jakarta has become a bulls' eye target for domestic and foreign retailers, while Bodetabek (Bogor, Depok, Tangerang and Bekasi) have no less interesting with total supply of 1.2 million m2 and occupancy rate hits 83% have caused the Greater's Jakarta as a promising retail market for local and foreign companies.

Average rental price and service charge in Jakarta is around USD 46/month and USD 8.8/month. While Bodetabek has slightly lower price about USD 28.2/month and USD 6.3/month for both rental price and service charge. With the hike of fuel price, parking and electricity fee have caused number of retailers especially shopping mall increased the service charge up to 28% in the first half of 2013. Yet, this middle class group has not yet much affected.

Foreign retailers focus with convenience store business has also become a trend in retail business. Circle-K, 7 Eleven, Lawson and Family Mart have become the trend setter of convenience store as a hangout community for young generation. This step has somehow forced the incumbent mini market such as Indo Maret and Alfa Midi to launch local concept of convenience store known as Indo Maret Point and Alfa Express. Both are offering ready to consume meal, means no cooking only heating. 

Supermarket's business has also become a prominent sector in retail industry. Players such as Hero Supermarket, Diamond, Kemchick, Farmers Market, Ranch Market and Food Hall brought by  MAP have shown that despite of the price competitiveness offered by these companies, supermarket's business remains promising for both local and foreign company. 

Source: Kompas.com 

Hero was the champ in supermarket's business before large hypermarket companies such as Carrefour, Lotte Mart and Hypermart started dominating the market and drove the people to visit larger areas of supermarket which selling food and non-food product (fashion, electronic and others). In the midst of this fierce competition, Hero launched another business to develop its product by cooperate with IKEA, a Swedish foreign retailer in furniture to operate an outlet in Indonesia. First target would be Alam Sutera on more than 40,000m2 spacious area. 

Further article about retail business, please refer to following link:

1. License for Convenience Store

2. Department Store in Indonesia

3. Retail Industry to Achieve USD 13 billion in 2012