In 2014, jewellery in Indonesia accrued volume growth of 6 per cent, slightly higher than the 5 per cent volume CAGR seen over the review period. Driven by urbanisation and rising number of middle-income consumers, a higher number of Indonesians became more appearance-conscious, caring more about their image and showing their personality. The trend contributed to strong sales growth of both costume and real jewellery during 2014. Players attempted to drive the category by launching new products, together with pushing competitive pricing promotions and marketing activities, which further benefited the category.

COMPETITIVE LANDSCAPE
The majority of jewellery in the Indonesian market is sold unbranded and the market remains very fragmented, with only a minority of sales accounted for by international and domestic players. In Indonesia, there is vast number of widespread traditional independent gold jewellery shops commonly situated in the traditional markets. Traditional gold shops are normally run privately by independent owners on a smaller scale compared to retail chains of jewellery companies that own multiple stores and are also commonly set up using the franchise system.

PROSPECTS
Over the forecast period, jewellery in Indonesia is anticipated to show a constant value CAGR of 8 per cent. It is likely to see increasing prices of precious metals and stones, causing a lively performance for real jewellery. Moreover, Indonesian people will become more appearance conscious, caring more about their image and personality. The trend will be likely to contribute to sales of both costume and real jewellery. Players will attempt to drive the category by launching new products, together with pushing competitive pricing promotions and marketing activities.

THREAT TO INDIA
Indian local jewellery industry players are facing stiff competition from Indonesian rivals. According to the Free Trade Agreement (FTA) between India and Indonesia, duty on gold jewellery imports from Indonesia is one per cent, whereas if imported from other countries, the duty is 10 per cent. Industry insiders say that every week, 1 tonne of jewellery is imported to India from Indonesia, which is leaving local players non-competitive. “Raw gold attracts 10 per cent duty, and with cess and VAT, levies come to 12 per cent,” said Manish Jain, chairman of the All India Gems and Jewellery Trade Federation. “If you add minimum 4 per cent making charges, then jewellery made from that gold becomes very expensive compared to the ones imported from Indonesia.”

Insiders said that importers also profit by melting jewellery imported from Indonesia and selling it as raw gold. “Even if the jeweller melts jewellery imported from Indonesia and makes a new product, he gets around 8 per cent profit compared to jewellery made of raw gold imported from other countries,” said JayeshVithalani of Vivro Financial Service Pvt Ltd.

Over 80 per cent of gold imported to India is from Switzerland; gold is also imported from UAE, South Africa, and Australia. But in recent times, there has been a surge in imports from Indonesia. Jain said that with imports of jewellery rising from Indonesia, many workers are facing hardships as the demand for making jewellery is falling. According to rough estimates, over 1 crore workforce is engaged in the manufacturing of jewellery in the domestic sector.