GOVERNMENT URGED TO SHORTEN DISTRIBUTION CHAIN OF F&B

Performance of national food & beverages in­dustry today had been disheartening. The fact that F&B industry had not been contributive to the maxi­mum was evident in the rating of competitiveness which was still low. One of the reasons why com­petitiveness of national F&B industry was low was the long distribution chain and high distribution cost. The long distribution chain and high logistics cost put Indonesia’s rating of competitiveness way below Ma­laysia, Brunei Darussalam and Thailand.

To quote report of the Association of Indo­nesian F&B producers (GAPMMI), Indonesia’s com­petitiveness was in the 50th position way below main competitors like Malaysia in 25th position, Bru­nei Darussalam 28^th, and Thailand 38th. Chairman of GAPMMI Adhi S Lukman in Jakarta disclosed in Ja­karta on Tuesday (13/11/2012) that a long and timely distribution system made logistics expenses high. The long distribution chain factor jacked up product price up to 15% which lowered competitiveness of Indone­sian F&B products. Adhi mentioned that in Southeast Asia increased product price was only 7%, in Japan and Malaysia even only 5%.

The low competitiveness of F&B products accounted for deficit in Indonesia’s trade balance. Lest year trade deficit in F&B sector came to USD 908 million. Data of GAPMMI had it that up to May 2012, trade balance in F&B trading posted deficit of USD 170 million, lower than in the same period of previous year at USD 362 million. Adhi reminded that in the free trade ere Indonesia was sitting duck to other countries. The point was that Indonesia’s vast population posed as the biggest market for F&B prod­ucts of other countries. “If imported F&B products were let to flaw in, our deficit would be even wider.” Adhi remarked.

Adhi mentioned that a number of problems which hindrance the national F&B products were among others poor infra-structure which accounted for high logistics cost, undersupply of raw materials, and weak tariff barrier for imported products. The point was to strengthen competitiveness of Indonesia’s F&B products it was necessary to ensure sustainable sup­ply of high quality raw materials whereby to produce high quality and affordable products. Adhi added on that Indonesia’s import tax was liberal, i.e. only 6% to 8%. And yet other countries were protecting their own F&B products by imposing high import tax, for example China 9.1%, Korea 12.1% and India 13%.

Furthermore Adhi disclosed that today around 40% of F&B products in circulation in Indonesia today came from ASEAN countries. Of that 40% around 30% F&B products at the value of Rp 3 billion to Rp 4 billion originated from Malaysia. According to Adhi, the products from Malaysia were mostly light snacks and coffee, He saw that Malaysia’s market share of F&B products in Indonesia was notably high because Indonesia and Malaysia had similar culture and same preference. According to Adhi, Indonesia must be ready to compete or collaborate within ASEAN Free Trade or even any country at all. He rated that Indonesia had great potentials in F&B industry. Fortunately Indonesia excelled in terms of food raw materials. At home in Indonesia, local F&B products still command­ed over the market. In the future ha said, Indonesian F&B producers must build market networking and develop business in ASEAN. “The market potential of ASEAN is great, and this is a golden opportunity to grab” Adhi concluded.

Business News - November 19, 2012