December 16, 2024
JAKARTA – The retirement business remains underdeveloped in Indonesia, but experts say the aging population at home and abroad means the time to invest is now.
According to the World Health Organization, the number of people aged 60 years and older was 1 billion in 2019 and is expected to reach 2.1 billion by 2050.
Indonesia’s senior population is projected to reach 74 million by 2050, or about 25 percent of the total population. According to the Statistic Indonesia’s (BPS) National Socioeconomic Survey (SUSENAS), Indonesia currently has 29.7 million elderly, making up roughly 10.75 percent of the population.
BPS classifies a population as aged when more than 7 percent of the people are elderly, which means Indonesia already falls into that category.
According to a report published by property agency Colliers Indonesia in May, the domestic senior housing sector “remains relatively undeveloped”, largely due to cultural values of respect and devotion to one’s parents.
Moreover, Indonesia’s population is still comparatively young, making the sector “unattractive to developers and investors at this time”, leading to a limited supply of senior housing.
The report also highlighted that senior housing development is unevenly distributed across the archipelago and remains concentrated in the Greater Jakarta area.
Colliers senior associate director Ferry Salanto told The Jakarta Post on Tuesday that other regions and big cities in Indonesia also had growth potential in the senior housing industry, notably Bali, which could leverage its appeal as an attractive destination for foreign retirees.
“Bali’s biggest market [for senior housing] is [customers] from overseas,” he said.
He further emphasized that the senior living ecosystem could be built in any area by developing its supporting facilities to accommodate senior living. “So, sell the property and services altogether in one package. It could be anywhere [in the country],” he suggested.
Herman Kwik, chairman of the Indonesian Senior Living Association (ASLI), also pointed to foreign senior citizens as a potential market for areas like Bali, while the increasing number of elderly in Indonesia would bring opportunities for the overall domestic industry.
“Bali is known for its tourism, so for a stay and visit [for foreign seniors], I think the potential lies in Bali,” he said to the Post on Tuesday.
Herman added that, while many sectors in Bali had tapped into the potential by offering hotel services targeting foreign seniors, these may not meet all their needs. Therefore, it could expand the industry by also investing more in retirement homes with adequate senior living facilities.
The senior housing industry in the country has existed for more than a decade, he noted, but it remains relatively small and has shown only modest growth so far.
“But we see this as a starting point. Moving forward, we will thrive faster than in the past ten years, considering the rising consumer awareness about commercial [solutions] and shifts in family culture and lifestyle,” Herman said.
“Demand will also increase in the next five to ten years, but it is not yet apparent,” Herman said, encouraging more investors to enter the industry, even if it meant starting small, because “when [the growth] booms, it will come big and fast”.
He also urged the government to implement clearer regulations, streamline permit procedures and provide tax incentives to boost investments in the sector.
In addition, he suggested targeted subsidies for those most in need, encouraging the population that could afford private-sector retirement services to consider switching to commercial solutions.
I Dewa Gede Karma Wisana, head of the University of Indonesia’s Demographic Institute, explained the implications of Indonesia’s demographic trends of a decreasing mortality rate, increasing life expectancy and lower fertility rate.
This demographic transition will result in a demographic bonus, with a larger proportion of the population aged 15 to 64. Over time, this population will age, eventually leading to a surge in the elderly population.
Older Indonesians without health or retirement protections are expected to stay in the workforce but are likely to rely on informal jobs, resulting in unstable incomes and increased vulnerability to serious health issues.
“But if the senior citizens have assets and sufficient retirement protection, they can have a good quality of life and enjoy their retirement,” he told the Post on Thursday.
Dewa pointed to opportunities despite the challenging impacts, including the “silver economy” and “silver opportunities”, which are expected to drive demand for goods and services related to senior living.
“Geriatric clinics within hospitals will be crucial. Demand for long-term care and caregivers will emerge,” he said.
Furthermore, in the finance sector, the opportunity could be maximized by offering pension funds and guarantee programs. If managed and regulated properly, this would bring a “second bonus” for Indonesia.
“The potential has to be developed from now on,” he noted.
Dewa emphasized the need for the government to identify senior citizens’ needs and characteristics to provide effective services and protection, as well as strengthening health services for the elderly and exploring community- and family-based programs to ensure their welfare.
The government recently acknowledged the growing potential of the segment, with Coordinating Human Development and Culture Minister Pratikno saying that the silver economy could stimulate growth in many sectors.
“In the silver economy, the specific needs of the elderly population, such as health equipment, rehabilitation therapy and senior-friendly public services open a great potential for investment and innovation,” he said in a press release on Dec. 5.