When it comes to controlling COVID-19, the Indonesian government has favoured large-scale social restriction over a national lockdown. This has softened the economic blow and with an infrastructure-led recovery on the cards in 2021, businesses have reason to feel optimistic.
HSBC’s latest Navigator survey asked 200 businesses in Indonesia about current business sentiment and expectations for the future. The survey finds that Indonesian firms are highly confident - more than nine in ten (91%) anticipate growing sales in 2021, of which close to four in five (79%) anticipate higher growth by more than 5% which is close to double the average of the APAC markets and globally (vs. 40% in APAC vs. 42% globally . Nearly half (49%) of companies are more upbeat about their prospects than last year, compared with around one in three in APAC and globally.
Indonesian businesses also see an earlier recovery in profits with almost all (94%) expecting to return to their pre-COVID levels by 2022 (vs. 75% at APAC, 73% globally). Around two-thirds think that this will happen by the end of 2021 (65% vs. 32% both at APAC and globally) and one-fifth (20%) are already ahead or expect to be so by the end of this year.
Confident about the future, businesses in Indonesia are planning to increase financial investments in the next year to secure growth (91% vs. 67% globally), prioritising investment in marketing, product innovation, sales channels, and expansion to new markets.
Eri Budiono, Commercial Banking Director of PT Bank HSBC Indonesia, said: “Companies have proven remarkably resilient in weathering the turmoil wrought by Covid-19. Confronted by a variety of challenges from a resurgence of the pandemic, raising costs, or regulatory certainty, businesses are tackling them by improving the quality of their products and services and collaborating more with industry partners.”
There is also stark optimism around international trade in 2021. Intra-regional trade continues to dominate with eighty-five per cent of Indonesian businesses trading within APAC. Even though seven in ten Indonesian businesses (71%) think international trade has become more difficult in the past year, almost half (45%) believe conditions will ease in 2021. Nearly all (95%) plan to expand their international trading in the next 3-5 years.
Indonesian businesses still feel that protectionism is on the rise, which they combat by competing on price, selling through digital channels and partnering with local companies.
The survey also indicates that Indonesian businesses are taking environmental, social and governance (ESG) matters seriously. 84% of the respondents have plans or have set targets for the broad range of aspects around ESG (vs. 72% globally) and have already implemented measures to monitor performance.
This reflects the fact that 100% of respondents believe a focus on sustainability will help drive sales. Four in ten even think the growth will be above 10%, more than twice the global average. Indonesian businesses believe that improving environmental and ethical sustainability will promote employee well-being, enhance their reputation, contribute to local communities, and increase customer demand.
“I am pleased to see that businesses in Indonesia all recognise that there are multiple opportunities for growing their business from improving environmental and ethical sustainability, and focusing on building back better,” concluded Mr Budiono.
Indeed although in common with the rest of the world, around three-quarters of businesses in Indonesia have undergone changes, for over half (53%) the changes have mostly been short term. Around three-quarters (73%) of companies in Indonesia view innovation as the primary characteristic of asuccessful future business, compared with 44% globally. This is followed by resilience to market changes (54% vs 32% globally).
Meanwhile, businesses believe that becoming more entrepreneurial will attract new customers and increase speed to market. This in turn will lead to significant commercial benefits including increased market share, attracting more investment and enhanced customer loyalty.
To know more HSBC Navigator – Rebuilding beyond 2020, please visit our global HSBC Navigator website