Food and beverage industry is an industry that has a fairly high growth rate in Indonesia. The value of investment in this industry reached IDR 32.42 trillion or 9.62% of the total investment in the manufacturing sector Indonesia. Under this condition, food and beverage industry entrepreneurs were targeting sales to reach IDR 1,000 trillion by the end of 2014. If the target is driven by the growth of middle-class consumers and improving national economy, these two factors can be a driving force to achieve sales targets.
Adhi S. Lukman, Chairman of the Indonesian Food and Beverage Association (GAPMMI), in Jakarta, on Friday (October 24), said the food and beverage entrepreneurs targeted investments in the food and beverage sector by the end of this year to grow 10% compared to last year. Adhi said that in 2013, investment that enter Indonesia, either through Foreign Investment (PMA) or Domestic Investment (PMDN) reached almost IDR 40 trillion. For this year, investment is estimated to grow 10%.
Based on data from the investment coordinating Board (BKPM), during January-December 2013, investment in the food and beverage sector that entered through PMA reached USD 2.1 billion or equivalent to IDR 21 trillion (average exchange rate in 2013:IDR 10,000) with 621 projects. While, domestic investment (PMDN) reached IDR 15.08 trillion with 341 projects. So, the total reached IDR 36 trillion. According to Adhi, this year’s investment is still dominated by foreign investment. Because, in the future, the food and beverage market in Indonesia will be increasingly active compared to other ASEAN countries.
Adhi explained that before the implementation of the ASEAN economic Community (AEC) 2015, the food and beverage industry in Indonesia. He said that Japanese investors reasoned that in addition to already saturated market in their country, they considered that Indonesia is predicted to be the largest market in ASEAN in 2015.
Adhi said that there were at least 10 large-scale enterprises that have first entered the Indonesian food and beverage sector, and Japanese companies that have realized investment in Indonesia. The ten investors were, among others, Suntory, Asahi, Glico, Morinaga, Ito En, UHA, Mitsubishi, Yamazaki, and Kanematsu, Most of the Japanese food and beverage companies, Adhi continued, established a joint venture with food and beverage companies that have expanded and will expand their business in Indonesia will be strengthened with the support of the retail sector,” said Adhi.
However, Adhi added, domestic food and beverage industry faced obstacles related to the increase in electricity tariff and regional minimum wage. Electricity tariff hike would make the food and beverage industry (going public), which are in class 13, to experience a 38% increase. Meanwhile, increase in provincial minimum wage (UMP) averagely reaches 9% - 30% in 2014. This makes food and beverage entrepreneurs to make adjustment of the production cost component. Of course, the electricity tariff hike and the increase of UMP were feared to weaken the domestic food and beverage industry in facing AEC 2015.
Additionally, Adhi said, another challenge for foreign investors who want to enter and beverage market in Indonesia is the regulation on “halal” assurance that should be provided to consumers. This is a challenge that makes market competitiveness become more competitive. It said that Japanese investors pay much attention to this matter. Citing data from GAPMMI, growth in food and beverage consumption in Indonesia in 2014 is expected to reach 9.1% with investment growth rate at 7.6% from 2008 to 2014. (E)
Business News - October 29, 2014