Industry and Retail
From The Report: Indonesia 2012
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Efforts are under way to transition the economy from one based on the export of raw materials, particularly hydrocarbons, to more advanced production. Recent trends show that this push is gaining traction, as Indonesia’s GDP grew 6.1% in 2010 despite a 2.3% contraction in the oil and gas sectors. The country aims to become an industrialised country by 2025. To facilitate this transformation, state planners have identified six core sectors capable of contributing significantly to Indonesia’s GDP, and divided the country into six “economic corridors” that will focus on a specific set of industries for which they are most suited. Infrastructure development will be key to industry’s success.

This section includes interviews with Sudhamek AWS, President Director, GarudaFood; John Gledhill, President Director, HM Sampoerna; and Suryo Sulisto, Chairman, Indonesia Chamber of Commerce (KADIN); and a viewpoint by Fransiscus Welirang, Director, Indofood.

Articles from this Chapter

Overview

A stronger foundation: The focus remains on becoming an industry-based economy
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With economic growth of 6.1% in 2010 and widespread predictions of continued expansion in 2011, Indonesia’s industrial sector is attracting more attention from international investors than ever before. The country is also making a major effort both to shift away from resource-based industries to more value-added sectors, and to boost its fundamental economic infrastructure in ways that will directly benefit investors. With six new economic corridors and six priority industry groups established,…

Interview

Sudhamek AWS, President Director, GarudaFood: Interview
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Interview:Sudhamek AWS To what extent is growth within the food and beverage industry able to continue rising? SUDHAMEK AWS: The growth that we have experienced is very much sustainable over the medium term. Moreover, it is one of the most stable industries in the country. The official GDP growth in 2012 is expected to be around 6.5%. Moreover, growth is no longer restricted to Java. In fact, the ratio of consumption between Java and other islands has narrowed from 65:35 to 48:52. This represents…

Interview

John Gledhill, President Director, HM Sampoerna: Interview
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Interview:John Gledhill Do you think international investors are aware of the ease of doing business in Indonesia? JOHN GLEDHILL: There is a misperception about the level to which barriers to investment exist, and these obstacles are often overstated. The fact is that there has been a lot of foreign investment in Indonesia, and it is steadily increasing. Most of the major international oil and gas companies already have a significant presence, and long-term investors such as us, Unilever…

Analysis

An evolving tradition: Traditional tobacco products continue to lead the segment
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With its internationally famous clove cigarettes, known as kretek, and an expanding domestic market, Indonesia is a centre for many global tobacco companies. The industry provides employment and income for tens of thousands of people, from growers to hand-rollers and retailers. With an estimated 60% of adult males smoking and a population of 240m overall, Indonesia is also the third-largest market for tobacco products in the world, making tobacco a major part of the nation’s economy. Around…

Analysis

A matter of choice: Growing disposable income is creating demand for new products
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Another recent beneficiary of Indonesia’s rapid economic growth has been the consumer goods industry, with domestic demand rising significantly for food and beverage (F&B), pharmaceuticals, cosmetics, textiles and footwear, and tobacco products (see analysis). Exports have also been growing, with the bar increasingly high for Indonesian producers as they seek to meet regulatory and food safety standards in Western markets. These are challenging and potentially highly rewarding times for…

Analysis

Roadrunners: Buying an automobile is an option for increasing numbers of citizens
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With demand growing for all kinds of vehicles, Indonesia’s automotive sector is fast becoming a major international player. As economic expansion puts more money in people’s pockets and bank lending becomes open to an increasing numbers of citizens, vehicle sales look set to continue a rapid rise for many years to come. Meanwhile, Indonesia’s international status as an automotive centre is being enhanced by the continually diminishing trade barriers in the ASEAN and overall Asia-Pacific…

Analysis

Plug in, switch on: The market for electronics is growing quickly
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Both manufacturing and retail is growing in Indonesia, due to a burgeoning domestic market and increasing cost competitiveness. But to make the sector competitive with rivals from ASEAN and other Asian countries, the government needs to improve the investment regime. “The country’s overall atmosphere for investment is positive, garnering the attention of a number of electronics manufacturers that are considering expanding their operations in Indonesia,” Kim Weon Dae, president director…

Viewpoint

Fransiscus Welirang, Director, Indofood, on how best to diversify food sources and obtain food security
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Issues related to food security are a result of the way in which we define and think about food security. In the past, the National Food Logistics Agency was preoccupied only with the logistics of delivering six basic commodities. However, since 2003, when the agency became Perum Bulog, its priorities changed and now it is essentially only concerned with controlling and stabilising the price of one commodity: rice. The cost and availability of rice is now how this country defines food security,…

Overview

New demands: Expansion continues, while the sector begins to feel the impact of the ASEAN-China free trade agreement
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With sustained economic growth putting more money in Indonesians’ pockets than ever before (GDP expanded 6% in 2010 and is expected to rise around 6.5% in 2011) the country’s retail sector is experiencing solid expansion. Indeed, the retail sector as a whole grew 12% in 2010, with many businesses pushing ahead with outlet expansion. This wave has also spread beyond the traditional economic centres of Jakarta and Java to include many provincial cities. Behind this are some profound demographic…