INDONESIA RETAIL MARKET: IT'S POTENTIALS AND CHALLENGES FOR FOREIGN RETAIL COMPANIES

Abstract

In the past five years, the economy of Indonesia has been growing so fast, meanwhile, the income of residents are also increasing, and people have more money to afford what they want. In addition, some good policies have been issued by Indonesia government, so more and more international retailers come to Indonesia those looking for commercial opportunities. But not every company can run their business very well in here, because lack of knowledge of Indonesia, so here the researcher analyzes the retail market from several aspects to demonstrate the current situation of Indonesia. This thesis is intended to describe the potentials and challenges for foreign retail companies, so that they could operate their business in Indonesia smoothly. In this thesis, the researcher used qualitative method to analyze the potentials and challenges based on the available secondary data. This research can provide preliminary guidance for foreign retail companies which intend to do business in Indonesia. From this research, they can evaluate the investment climate and balance the benefits and risks they have to take. The findings of this study show that there are seven positive factors that influencing foreign retail companies which intend to do business in Indonesia, they are: annual GDP, GDP-real growth rate, Human Capital, Average Hourly Wage, Low Inflation, Rich Labor Force, and GDP-per capita. However, there are also three negative factors, they are: Inefficient Government Bureaucracy, Poor Infrastructure Condition, and Corruption.