In light of greater regional integration within the ASEAN set to take place in 2015, our company has been active in ensuring that we are prepared to take advantage of new opportunities as well as face the realities of a market more open to competition. The past year has thus seen us focus on developing our IT system with the goal of positioning us to best serve our customers across Indonesia. Through the implementation of new software in all of our branches, this IT system will enable us to better understand the differences in consumer preferences between different parts of the country. When it comes to the building materials industry, consumer needs can vary considerably between cities such as Jakarta, Surabaya and Bali, and it is important for us to be able to adapt our products and services for a more tailored customer experience.

The development of our IT system is being carried out in conjunction with the ongoing expansion of our existing outlets. In Serpong we are in the process of building another floor which will add 1,200 m2. Phase 2 of the construction of our latest outlet in Bogor will add a further 10,000 m2 to existing floor space of 12,000 m2, as a means of meeting the city’s demand for building materials. We plan to complete similar projects at our stores in Kalimalang, Denpasar, Malang and Bandung over the course of the next year, as well as build a new 10,000 m2 distribution centre in Surabaya.

Political uncertainty during the election campaign and its immediate aftermath without doubt forced investors, including those from overseas, to be more wary in approaching the Indonesian market. However, when contacted by international entities taking stock of the impact on the building materials market, I emphasize that these short-term challenges far from outweigh Indonesia’s potential as a consumer base given its sheer size. Based on this outlook, our company has continued to encourage the entry of international construction material brands into Indonesia as a market set to thrive over the long-term. At the same time, I understand their current hesitancy and expect that many will adopt a wait-and-see strategy until more is known about the new administration’s capabilities.

The building materials sector stands to gain considerably from a middle class segment that some project to reach an average annual income of $8,000 USD by 2020. There are big opportunities to be had in serving this segment, particularly as they seek to enjoy a more comfortable life and demonstrate their new socio-economic standing by renovating their homes or building new ones.

It is our expectation that these trends will lead to a consumer base more open to spending on our high quality products, and this builds for a promising future.

Indonesia with its 33 provinces has huge potential for the expansion of our retail outlet network. We are currently focused on the island of Java, in line with its standing as the most commercially developed part of Indonesia, and have seen considerable interest from consumers in towns such as Tasikmalaya, Serang and Cirebon. At present, customers from these places travel to our existing outlets in major cities but have expressed a desire for Depo Bangunan to set up stores even closer to them. In the future we would also like to enter cities such as Makassar, Medan, Palembang as well as those in Kalimantan.

Such is the size of Indonesia’s market that we believe that there is room for more than 100 Depo Bangunan outlets. The challenge in realizing this target is a shortage of human resources with the technical skills to meet our international standard of service; this is particularly true when it comes to tasks such as installation. Moreover, the products that we offer are becoming more high tech and this requires an even more advanced skill set and understanding of the building materials industry.

Many international companies are already operating in Indonesia’s building and construction materials industry. As an example, there are hundreds of paint brands in this country due in large part to how easy it is to make this product. Where international companies can distinguish themselves and where there is still room in the market, is in the manufacture of high quality building materials. Brands with expertise in conducting extensive research and development to add advanced properties to their products are well-positioned to tap into a market now more conscious of the long-term advantages of purchasing premium materials that are more durable.

The entry of foreign companies able to bring in new technology also benefits local businesses, which are motivated to match the latest trends in building materials and are often best-equipped to adapt know-how to the Indonesian market.

Indonesia’s market for building materials is growing, and we are encouraged by recent initiatives carried out by the new government which should have a positive impact not only on our area of business but also on the economy in general. We continue to welcome the participation of foreign companies, whose contribution to meeting local demand is still very much needed.