Thursday, March 15, 2012

The Indonesian "middle-class"

About 100 million Indonesians – about 40% of the population – live on less than US$2 (RM6) a day, the World Bank says. Average wages are a third of China’s.

The number of millionaires will triple to 99,000 by 2015, according to wealth management firm Julius Baer, the quickest pace of any Asian country. Consultancy firm McKinsey sees the number of households earning US$7,000 (RM21,000) a month rising to 25 million by 2020 from around 17 million now. The profile of Indonesia’s new rich has been heavily shaped by the surge in demand from China and India for the country’s commodities. The world price for a tonne of palm oil, of which Indonesia is the largest producer, has more than doubled since 2006, for example. Gold, of which Indonesia is a major producer, has tripled in the same period.

“We believe there are more than 20 billionaires with interests in coal and mineral mines, as well as oil palm plantations in the country,”
said Chan Kwee Him, Indonesia country head of DBS Private Bank.

“The middle class is gaining wealth and becoming extremely rich,” said Jan Richards, managing director and market manager for South-East Asia at J.P. Morgan Private Bank.

But to be part of the Indonesian "middle-class" is to spend between US$2 and US$4 (RM6 and RM12) a day, as does 60 million of Indonesia’s 133 million-strong “middle class."

“I don’t feel middle-class, I feel poor,” said 21-year-old Siti Aisah, who runs a shack selling snacks to construction workers in a Jakarta suburb. She said her family can afford to spend about US$10 (RM30) on good days – "middle-class" by accepted standards.


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