DIFFERENT government regulations across South-east Asia, specifically those governing bank loans, are expected to result in a bleak future for Indonesian convention and conference players as the ASEAN Economic Community is officially formed, predicted the president of the Indonesia Congress and Convention Association (INCCA).
Speaking at the 8th Indonesia MICE Outlook 2016 seminar on December 2 in BSD City, Tangerang, Iqbal Alan Abdullah said: “The way I see it, the business climate will be greyish dark as we enter the AEC era.”
Iqbal explained that the AEC will facilitate the entry of more foreign business event owners and organisers onto Indonesian soil, intensifying competition in the country. To compete effectively, Indonesian business event owners and organisers will need to grow their portfolio of events and to do so, they will require additional funding.
“The problem is, the bank interest rate in Indonesia is 13 per cent while in Singapore, for example, is only three per cent. Furthermore, Indonesian banks require a long list of supporting documents with loan applications. And after all that, companies can only loan up to 40 per cent of the event cost or 50 per cent (for rare cases),” said Iqbal, adding that some banks in other countries need only a letter of appointment for a large event and will grant up to 80 per cent of the event cost.
Ketut Salam, managing director of Pacto Convex, played down Iqbal’s concern, saying that financial institutions are naturally prudent and reputable event companies will have little trouble securing bank loans.
Iqbal’s cautious projections for 2016 also stems from the weakening Indonesian rupiah that has encouraged overseas MICE players to bring their shows to Indonesia, further intensifying competition for business in the country.
Effi Setiabudi, chairman of the Indonesia Exhibition Companies Association, too, expects a greater presence of international exhibition companies in Indonesia, drawn to the country’s “huge population and healthy economy”.
However, Effi has interpreted this development positively, describing it as “good times ahead” for Indonesia’s exhibition sector.
