A walk through any of Indonesia’s new shopping malls is an attack on the senses. Faced with wall to wall designer outlets and gourmet eateries, consumers are bombarded with incentives to spend money in a particular store. Using a credit card issued by Bank Mandiri in an Italian restaurant gets you 50% off your bill; Citibank’s credit card gives you a 10% discount on clothing bought in a well-known international clothing store; Bank Negara Indonesia (BNI) has a limited offer of a 40% discount at a sushi restaurant.
All the banks in Indonesia with retail-banking outlets want you to have their credit cards. The incentives to do so abound. It’s a similar story to that in many other emerging markets: strong economic growth in the past decade has led to the rise of the middle classes and domestic demand has become an ever more important aspect of the economy. Retail banking is where the competition is in Indonesia – for local as well as foreign banks – with credit cards playing an important role. The capital markets are relatively underdeveloped but will, no doubt, be equally competitive in the future. The bond market is still in its infancy, although corporate and government issuance is increasing.