Unspun had to drag himself out of bed but made it to the Amcham Services Committee meeting on Tuesday. It’s Unspun‘s favorite committee meeting because it gives you a great snapshot of how the services-related industry is doing in Indonesia, which is itself a reflection of the Indonesian economy itself.
It is also made up of professionals from the service industries, including security, hotels, movers, international schools, tax consultants, food importers, government consultants and even some NGOs.How the meeting works is that they go round the table asking each participant to update the group on how their sector is faring.
The result for this month’s meeting is fairly expected from the economic turmoil sweeping the world. Down, down down for most sectors. About the only ones who reported doing extremely well are the tax consultants and the private equity consultants.
The tax consultants are doing well because there is a last minute rush to file claims under the Sunset Policy, where the government will forgive you you tax reporting trespasses if you come clean and declare your assets before Dec 31. As one tax consultant explained it, he still has many of clients exercising wishful thinking that somehow they could get away with it if they do not declare their assets. This is very far from the truth as all institutions including banks, insurance companies and those in charge of property will have to provide date to the tax Department regularly from next year. If you don’t come clean now then the Tax Man would come for you one fine day. You can’t run, you can’t hide. So they are all busy filing claims for people and they are hiring as fast as they can fine someone with a pulse and can count past five.
The other people doing very well are the private equity guys. Cash is King and it becomes very evident now when banks have stiopped lending to developers, virtually others whoneed credit to continue their business. The Dollar is also hard to come by as banks try to keep their dollars as much as possible. In this market anyone with money – such as from private equity sources – is ruling the roost and the chap from private equity had everyone in envious thrall as he recounts the projects he was involved in.
Hotels are also having a bad year ahead because of a double whammy with the economy – businessmen are traveling lss and cutting down on all but the essential functions and meetings – and the elections – nobody is booking for any weedings during the election months next year.
Apart from that we are seeing strange spending patterns in the retail sector. Spending by Cand D socio-economic classes are down by as much as 40 percent, while the A&B class spending is up. case of the rich getting richer, the poor getting poorer?
One report from the security sector is that illegal mining is laying waste thousands of hectares of virgin land.Apparently the control on illegal logging has slipped and because of this illegal miners are digging up wherever and whenever they please, leaving land that is environmentally damaged.
Also the Government’s anti-corruption drive is having unintnded consequences. Goods are now stockpiled high in the ports because customs are, leaving the processing to their normal efficiency standards – close to zero – rather than the fastrack incentivized approach. Said one food importer: “If you have a small shipment forget it. No one in customs will take the chance. if, however, you have a big shipment then the risk is worth it and you can clear your goods in a short time.”
Th real estate sector is also taking a big dip because of a lack of credit but one exception is Bali where the real estate sector is apparently still going at it hammer and thongs. Investments are also coming into Bali. After hearing this Unspun headed for straignt Bali, unfortunately not to invest but the meet the foreign bloggers on their Blogging Trip to Pesta Blogger (see previous post).