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Why Western retailers are scrambling to get a foothold in Indonesia

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“I make a decent income, but it’s down to lifestyle,” she says. 

Ms. Mulyadi is just the type of shopper international companies are targeting as they seek to profit from rising wealth in a country where more than half of the economy depends on consumer spending. 

Last month Indonesia beat economists’ expectations by posting second quarter growth 6.4 percent above the same period last year. That makes it the second fastest growing economy among the world’s top 20, just behind China, and the only one where growth is expected to continue.

Despite a rising trade deficit and yawning gap between export revenue and the cost of imports, Indonesia has overcome the global slowdown, mainly through rising investments and soaring domestic spending, driven by Indonesians' growing wealth. 

“Many international brands are wanting to open a store in Indonesia,” says Astri Permatasuri, a marketing manager for Plaza Indonesia mall in Jakarta. “From high-end brands to middle brands, they’re pretty excited because they know this is a very [big] potential market for them.”

Rapidly growing middle class

The reason Indonesia is now drawing attention from investors in the US and Europe is obvious, say analysts: a young, rapidly growing middle class that accounts for more than half the population in a country of 240 million people.

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