Indonesia market
Republic of Indonesia
Fig. 1 National flag of Republic of Indonesia
Indonesia, officially the Republic of Indonesia is a country in Southeast Asia, between the Indian and Pacific oceans. It is the world's largest island country, with more than seventeen thousand islands, and at 1,904,569 square kilometres (735,358 square miles), the 14th largest by land area and 7th in the combined sea and land area. With over 261 million people, it is the world's 4th most populous country as well as the most populous Muslim-majority country. Java, the world's most populous island is home to more than half of the country's population. Indonesia's economy is the world's 16th largest by nominal GDP and 7th by GDP at PPP. The country is a member of several multilateral organisations, including the UN, WTO, IMF, G20, and a founding member of Non-Aligned Movement, Association of Southeast Asian Nations, Asia-Pacific Economic Cooperation, East Asia Summit, Asian Infrastructure Investment Bank, and Organisation of Islamic Cooperation.
Fig. 2 Map of Republic of Indonesia
Indonesia has a mixed economy in which both the private sector and government play vital roles. The country has the largest economy in Southeast Asia, is a member of the G20, and is classified as a newly industrialised country. As of 2018, it is the world's 16th largest economy by nominal GDP and 7th in terms of GDP at PPP, estimated to be US$1.074 trillion and US$3.481 trillion respectively. Per capita GDP in PPP is US$13,120, while nominal per capita GDP is US$4,116. The debt ratio to GDP is 29.2%. The services are the economy's largest sector and account for 43.6% of GDP (2017), followed by industry (39.3%) and agriculture (13.1%). Since 2009, it has employed more people than other sectors, accounting for 47.1% of the total labour force, followed by agriculture (31.1%) and industry (21.7%). In 2018, the country recorded a trade deficit of US$8.57 billion, with a total export value of $180.06 billion, and import $188.6 billion. Palm oil and coal briquettes are the main exports, with petroleum gas, crude petroleum, rubber and cars making up the majority of other exports. Imports mostly consist of refined and crude petroleum, with telephones, petroleum gas, vehicle parts and wheat covering the majority of additional imports. China, the United States, Japan, Singapore, India, Malaysia, South Korea and Thailand are Indonesia's principal export market and import partners.
1. Introduction to Indonesia
The Indonesian household products market has seen strong growth overall in recent years. The industry is predicted to continue growing at a similar, slightly deceleration ratio for the forecast period. Table 1 shows the market value of household products in Indonesia, the Indonesian household products market had total revenues of $1.9bn in 2014, representing a compound annual growth rate (CAGR) of 5.4% between 2010 and 2014. In comparison, the Chinese and Indian markets grew with CAGRs of 6.3% and 10.9% respectively, over the same period, to reach respective values of $26.1bn and $5.5bn in 2014. The fast-paced economy and rapid urbanization of Indonesia has spurred the growth of an increasingly prosperous urban middle class, which has raised the standard of living and fueled consumption ratios across consumer sectors including the household products market. The textile washing products segment was the market most lucrative in 2014, with total revenues of $1.0bn, equivalent to 52.4% of the market's overall value. The insecticides segment contributed revenues of $0.3bn in 2014, equating to 18.5% of the market's aggregate value. The performance of the market is forecast to follow a similar pattern with an anticipated CAGR of 5.3% for the five-year period 2014 - 2019, which is expected to drive the market to a value of $2.4bn by the end of 2019. Comparatively, the Chinese and Indian markets will grow with CAGRs of 5.8% and 7.2% respectively, over the same period, to reach respective values of $34.5bn and $7.7bn in 2019. The Indonesian household products market grew by 5.4% in 2014 to reach a value of $1,861.5 million. The compound annual growth rate of the market in the period 2010–14 was 5.4%.
Table 1 Indonesia household products market value (2010–19)
2. WDIRC selling
The forecast of WDIRC selling can be shown in Table 2 during the first ten years since product launched. Here the assumptions of households, occupancy ratio, initial sale, selling price, and manufacture cost are 61,157,592, 0.0040%, 2,446, 250 and 200, respectively. The first year is set as the baseline for comparison with the following years, the sale volume, year penetration, revenue, cost and profit are 2,446 (sets), 40 (ppm), 611,576 (USD), 489,261 (USD) and 122,315 (USD), respectively. As we think, the growth rate with years will be 1, 3.13, 6.22, 7.33, 7.51, 7.58, 10.30, 10.35, 11.29 and `14 times over the first year. The year penetration of WDIRC will be from 40 ppm to 560 ppm at the end of tenth year, the totally ownership (penetration) is close to 0.314%, it still is a low penetration ratio in Indonesia even WDIRC listed in market for ten years. However the revenue, manufacture cost and profit these three also present an ascending trend, the profit earned from Indonesia is about $ 1.712 million at the tenth year in an exclusive market, it owns a huge market and profit in this market. Totally according to our prediction and assumption, the selling in Indonesia will be up to 192,543 sets, even this; the penetration ratio is still lower than other consumption electric products such as TV, Refrigerator, Air conditioner, and Wash machine.
Table 2 To estimate the selling of WDIRC in Indonesia
How about the annual growth rate for selling WDIRC in Indonesia market? Fig. 3 shows the result. Here the calculation of revenue can use this equation as “WDIRC’s Revenue = Annual growth rate * Year + Baseline”, the formula can be written in a mathematic equation in Figure. According to this regression by data simulation, the annual growth rate it take about $755.197k per year (r2 =0.9373), in other words, by averaged the annual revenue is $755.197 in Indonesia market for selling WDIRC product.
Fig. 3 To estimation the revenue of WDIRC selling in Indonesia market
3. Rice selling
A ten-years forecast to WFR sale, after WDIRC launched in Indonesia market, is presented in Table 3. The first year since the marketing of WDIRC, online/offline deals for WFR sale are 96,089 kg, here the assumptions of population, rice consumption, sharing of WFR, online buying rate and market sharing are 260,581,100, 147.50, 0.01%, 5.00%, and 50%, respectively. How to calculate the WFR volume by online/offline sale, Eq. 1 is the equation for calculating the WFR sale volume.
Eq. 1 SaleVolume=Population x RiceConsumption x WFRratio x On/OffBuyingRatio x MSharingRatio
(eg. 96,089 = 260,581,100 x 147.5 x 0.0001 x 0.05 x 0.5)
The use rate of WFR is set as 0.00037 kg/person-year. Based on this, we can get the annual revenue is $ 48,045 (WFR priced as $0.5), and the profitability is set to 10%, so the profit that will earn $ 4,804. Changing with the time, the ratio of WDIRC in kitchens will increase and cause the use of WFR increasing. We assumed the series of growth rate (G.R.) by years is 1, 1.03, 4.32, 9.27, 9.65, 15.09, 20.25, 24.84, 27.67 and 32.83. G.R. it is based on the prediction of WDIRC’s growth. By this series of G.R., both revenue and profit, they will also be presented like this serial when the dealing cost of WFR through online/offline transaction is keeping constant. Whatever the cost of online/offline transactions depends on the volume of WFR’s selling, so if the volume with time is scaling up, the dealing cost will be significantly lowered, in other words, the profitability with time will increase more than our prediction. If all hypotheses are true, the profit in tenth year will approach to $ 157,736. Eq. 2 calculates the penetration of WFR which to be used in this country by people. From this indicator (URate of WFR), we can see the level of penetration of WFR, even at the tenth year, the level of WFR use rate in Indonesia is still underestimation, that’s meaningful for us to optimistically think, the use rate of WFR can be easy completed and it will be grew up more than our prediction.
Eq. 2 URate of WFR = SaleVolume of WFR / Population
(eg. 0.00037 = 96,089 / 260,581,100)
Table 3 To estimate the selling of WFR in Indonesia
Regarding the revenue of WFR selling in Indonesia, Fig. 4 shows the result. This is a prediction by data simulation according to our assumption, the regression could be calculated as “WFR’s revenue = Annual growth rate * Year + Baseline”. The result shows the annual growth rate is 178.777k per year (r2=0.978), in other words, the increasing of revenue of WFR selling in Indonesia is 178.777k dollar per year. This growth can help the company to maintain its team in the local market for servicing customers.
Fig. 4 To estimation the revenue of WFR selling in Indonesia market
4. To summarize the revenue and profit
Here according to the estimations above, we summarize the incomes from sales of WDIRC and WFR in Indonesia. Both revenues and profits are presented in Table 4. In the first year, the products of WDIRC and WFR are unfamiliar with Indonesian people; namely the recognition and acceptance aren’t well to local consumers, so on the beginning (1st year) sales would be not good and the totally revenues and profits will be $ 659,620 and $ 127,120, respectively. Both of them will increase with years when selling with good experiences and promotions. Through our forecast, at the end of tenth year, the profits of WDIRC and WFR will be up to $ 1,712,400 and $ 157,736, and the totally profit will be $ 1,870,136, this is a huge profit which be created in Indonesia market by our novel products and services.
Table 4 To estimate both revenues included WDIRC and WFR selling in Indonesia
Totally the revenue of WDIRC and WFR (2W) selling in Indonesia market can be shown in Figure 5. The 2W revenue in first year is $659.620k dollars, after that the growth rate of revenue is $933.974k per year, this is a simple regression by mathematic model to predict the revenue on product selling. In practice, there are other factors that need to be considered much more, it could be higher than this or lower. Whatever by this calculation let us to trust that the market it always be there.
Fig. 5 To estimation the revenue of WDIRC and WFR selling in Indonesia market