Indonesia Watch: Big Brands Thrive in Jakarta

JAKARTA (TheStreet) -- Here at More Coffee Please in the financial district, electronica plays in the background while guys in designer specs and pressed shorts sit with Macs and Lenovo laptops. They might work in the giant black glass tower outside the cafe doors.

Behind me, plastics are being fed onto a bonfire rimmed by partly demolished single-story shacks. Chickens wander the garbage-lined paths along with idle children.I recognized the contrast right off from my time in Beijing. I also know how it will unfold: The slum will disappear under pressure to build out a financial district that's flush with foreign multinationals as moneyed business people pack the Indonesian capital.

Like Beijing, where I lived seven years, Jakarta has crept across on a coastal plain crowded largely by opportunity seekers from around the country, people for example who make a few rupiah guiding cars through traffic time-waster jams. Many in the city of 9 million have earned enough money that they need and they have real estate, cars and high-end smartphones to prove it.

So like its Chinese peer, Indonesia's biggest city has drawn multinationals to grow along with a wealthy urban consumer population unfazed by 8.8% inflation.

Billboards along the city's main arteries tout smartphones by Samsung Electronics ( SSNLF) and Sony ( SNE), while locals also boast preferences for devices from BlackBerry ( BBRY) and HTC Corp.

Tablets are also in vogue, especially for people who must sweat through the traffic jams but can let someone else drive. According to an eyeball survey of Jakarta's roads this week, they're most likely to be riding in a vehicle made by Honda ( HMC) or Toyota ( TM).

Meals of rice or noodles in the slum cost about 50 cents. For those who can put out $5 instead, the mall next door to More Coffee Please is a who's who of American fast food: McDonald's ( MCD) and Yum Brands' ( YUM) Pizza Hut to name just two.

Consumption in the city's estimated 130 shopping malls also favors name-brand clothing. Behind the malls loom construction and real estate firms, largely local but including also big overseas peers such as Shangri-La Asia ( SHALY) apartments.

"MNCs (multi-national companies) that appeal to the upper class will continue to do well despite the high inflationary environment," says Brian Sheley, managing director of Cascade Asia Advisors, a risk assessment and strategic advisory firm focused on Southeast Asia "Brand appeal is incredibly powerful here. Jakarta has a deeply embedded shopping culture and affinity for branded products, from clothing to restaurants and everything in-between."

Consumer spending averaged $24.5 billion from 2000 to 2013, not massive but still a sizable chunk of the $878 billion national economy.

Although the city declared itself "closed" in the 1970s, suburbs around it have hurtled onward, bringing the metro area to about 28 million people. Some commute as far as long as three hours per day per direction due largely to the traffic jams that are just as common in Beijing.

With parts of Jakarta below sea level, flooding looms as a chronic problem, as do sewage treatment and depletion of underground drinking water.

Indonesian officials talk big about sustainable development, the latest pronouncements timed for the Asia Pacific Economic Cooperation meeting in Bali this week. But Beijing has expandeddespite years of warnings by slow-growth advocates. I predict the same for Jakarta.

At the time of publication, the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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