ASEAN Food Industry indonesia

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The Impact of ASEAN Economic Community 2015 to the Food Industry, an Indonesian perspective, 73-page slide presentation.

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ASEAN Food Industry indonesia

  1. 1. THE IMPACT OF AEC 2015 TO THE ASEAN FOOD INDUSTRY INDONESIA PERSPECTIVE ADHI LUKMAN Chairman of GAPMMI (INDONESIAN FOOD & BEVERAGES ASSOCIATION) FOOD INGREDIENTS ASIA UBM (ASIA),9/17/2011 THAILAND, 21 SEPTEMBER 2011 1
  2. 2. F I Asia in Indonesia 20109/17/2011 2
  3. 3. The Indonesian Strategic Planning, Economy and F&B Industry Development
  4. 4. INDONESIA 2011FACTS: Indonesia is an Archipelago Country with strategic geographic location and strong global presence Total land area Indonesia is around 1.922.570 km² and sea area is around 3.257.483 km² Second biggest coastline in the world with 54.716 km. +/- 13.000 Islands 237.6 millions populations (SUSENAS 2010), with socio economic level :12% high, 40% medium, 48% low class Average population growth within last 10 years 1,49 % Dynamic and youthful population (55% < 25 years old) 49.7 % Women, 50.3% Man (SUSENAS 2010) Population distribution : Java 57,49%, Sumatera 21,3%, Sulawesi 7,31%, Kalimantan 5,8%, Bali /Nusa Tenggara 5,5%, and Maluku/Papua 2,6% (SUSENAS 2010) Estimates 30 millions Peoples have strong buying power 58% living in rural area and 42% in urban 87% Moslem: Hallal & Thoyyiban 480 ethnics Average expenditure for food per capita 45.69%(urban) and 58.57% (rural), with average 50.62% (BPS, 2009) Rice as a main staple food Abundance of natural resources
  5. 5. 3. STRATEGIC GEOGRAPHIC LOCATION… Leading ASEAN Indonesia lies strategically in theintersection of the Pacific Ocean, alongthe Malacca Straits and the Indian ocean Over half of all international shippingtravel through Indonesian waters The only country in South-east Asiathat is a member of G-20Chairman of ASEAN in 2011 An active and strong voice ofdeveloping countries in globaldiscussions on issues around climatechange, global economy architecture,etc. ASEAN Source: Supply Chain Leaders
  6. 6. THE NEW VISION OF INDONESIAGovernment set a Master Plan to accelerate economic development, called MP3EI (The Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development). And targeted to be 12 largest in the World in 2025. Stepping up to Global Influence.... ~ 8 largest ~ 12 largest 8 – 9 % per annum 5 – 6 % per annum
  7. 7. The Action Plan strategy ACTION PLAN (up to 2014) LOGICAL FRAMEWORK OF THE MASTERPLAN
  8. 8. F&B is one of the main economic activities in MP3EI framework F&B 22 Main Economic Activities9/17/2011 8
  9. 9. In line with Government Strategy, Indonesian Chambers of Commerce & Industry (KADIN) set a grand strategy called FI-FTW FRAMEWORK OF GROWTH STRATEGY FEED INDONESIA - FEED THE WORLD Foreign Exchange & Sustainable National Food Security Food Self- Self- Labor Force sufficiency Mango, Orange, Rice, Soybean, Palm Oil, Tea Cattle and Tuna and Banana and Corn, Sugar Coffee, Cocoa Poultry Shrimp Horticulture Main Commodity Grand Strategy Development of Agriculture Sector Into a Competitive and Sustainable Self- Sufficiency and Promotion of the Prime Commodities to Become the World’s Choice Panning Improvement Funding Increase Productivity Increase Value Added &• Improve the Spatial Planning • Support the Agriculture • Develop Natural Resources and Marketing Competent Human Resources • Develop Domestic and Export• Develop the Infrastructure Sector • Develop and Implement Eco Green Markets• Focus on Prime Commodities / • Establish an Agriculture Technology and R & D • Build Indonesia’s Product Image Develop Bank • Provide access to the Technology and Manage the Non- Tariff the Competitiveness • Strengthen the non Barrier Banking Institutions • Develop Downstream Industry (Cooperatives & LKM) • Harmonization and Synchronization of Policies (Focused, Brief, Clear, Direct and Consistent) • Roadmap (Integrated Upstream – Downstream, Focus on Superior Products With High Value Added) • Accurate and Updated Data Management 9
  10. 10. Key Strengths 2007 2008 2009 2010 2011* 2012*GDP gowth (y-o-y, %) 6.3 6.0 4.5 6.1 6.5** 6.7***Nominal GDP (current prices (Rptrillions) 3,951 4,949 5,604 6,423 7,019 8,373***GDP per capita (current prices, US$) 1,938 2,270 2,590 3,005 3,520 3,906Population (mill) 225.6 228.5 231.4 237.6 243.7 249.0Open unemployment rate (%) 9.8 8.6 7.9 7.6 7.0 6.7***Inflation rate (%, year end) 6.6 11.2 2.8 7.0 4.61*** 5.3***BI rate (%, year end) 8.00 9.25 6.50 6.50 6.75** 6.50Fiscal balance (% of GDP) -1.3 -0.1 -1.6 -1.0 -1.2 -1.5Public debt (% of GDP) 35.2 33.0 29.5 28.3 26.4 25.0Currrency (Rp/US$, average) 9,163 9,756 10,356 9,080 8,514** 8,800***Current account balance (% of GDP) 2.4 0.1 1.9 1.2 1.0 1.0 123.2**Reserves (US$ billions) 56.9 52.1 66.1 96.2 * 130.0S&Ps Rating BB- BB- BB- BB BB+ BBB- **Semester 1 – 2011 ***July 2011 (President speech 16 August 2011, RAPBN 2012) . Source: Bappenas, BPS
  11. 11. Steady GDP growth5.5 6.3 6.1 6.1 6.5 5.7 6.2 5.8 6.5 6.5 6.5 4.506 07 08 09 10 est Q1 Q2 Q3 Q4 Q1 Q2 11 10 10 10 10 11 11 Source: BPS, Bank of Indonesia
  12. 12. Passing GDP per capita USD 3000 Break USD 4000 Break USD 3000 Break USD 2000 Break USD 100086 87 88 89 90 91 92 93 94 95 96 97 98 99 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Source: BPS
  13. 13. Inflation is kept low January – July 2011 inflation rate at 4.61 % 18.0 16.0 14.0 12.0 Food Material 10.0 Processed Food % 8.0 6.0 General 4.0 2.0 - 2005 2006 2007 2008 2009 2010 Year9/17/2011 13 Source: BPS, Kemenperin
  14. 14. F&B industry is dominated by Small and Home Industry (SME’s), however they only contributed less than 15%Are they ready to survive in the competition of global market? Category % Output % Number of establishment Big & Medium 86,79 0.52 Small 5,69 5,71 Home Industry 7,52 93,77 Source : BPS, Sensus 2008
  15. 15. F&B industry output is estimated at about USD 80 billion Year RP (Trillions) 2007 402 2008 526,6 2009 586 2010 605 2011* 684 *Target, estimated growth 5 – 13 % OUTPUT F&B (BPS, estimated by GAPMMI):
  16. 16. 2011 F&B industrial growth estimated at 9.34% The sector that always kept positive growth within last 5 years Industrial growth 2011 (y-o-y semester 1) Sector Growth (%) 2005 2006 2007 2008 2009 2010 2011*Economic Growth 5,69 5,50 6,35 6,01 4,58 6,10 6,49Manufacturing industry 4.60 4.59 4.67 3.66 2.11 4.53 6.10Non Oil & Gas Industry 5,86 5,27 5,15 4,05 2,56 5,09 6,61F&B + Tobacco 2.75 7.21 5.05 2.34 11.29 2.73 9.34Wood & Other Forest Industry (0.92) (0.66) (1.74) 3.45 (1.46) (3.50) 3.01Paper & Printing 2.39 2.09 5.79 (1.48) 6.27 1.64 3.87Fertilizer, Chemicals & Rubber 8.77 4.48 5.69 4.46 1.51 5.17 6.62Cement & Non-Metal Mineral 3.81 0.53 3.40 (1.49) (0.63) 2.16 5.66Textile, Leather & Footwear 1.31 1.23 (3.68) (3.64) 0.53 1.74 8.03Base Metal, Iron & Steel (3.70) 4.73 1.69 (2.05) (4.53) 2.56 15.48Transport equipment, Machinery & Equipment 12.38 7.55 9.73 9.79 (2.94) 10.35 4.41Others 2.61 3.62 (2.82) (0.96) 3.13 2.98 6.21 Source : BPS dan Kementerian Perindustrian
  17. 17. Modern packaged food has grown double digit in 2011 Retail Audit: Indonesia Total Grocery | Food Department 8,357 8,542 8,155 8,129 7,960 7,632 7,677 7,916 7,498 7,775 8,0857,099 7,268 7,181 7,198 7,442 7,462 6,727 9.8 11.7 8.2 11.8 12.4 7.1 12.7 10.9 13.9 10.9 11.9 10.8 11.9 13.38.8 8.4 9.6 1.5Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- 10 10 10 10 10 10 10 10 10 10 10 10 11 11 11 11 11 11 Sales Growth vs. Last Year Sales Value (in billion) Source: Nielsen Indonesia
  18. 18. F&B categories have been growing steadyRetail Audit: Indonesia Grocery | Top 10 | Volume & Value Growth % | Jan-Jun 2011 vs. YA Instant Noodles -0.4 6.8 5.7 Powder Milk 6.3 12.8 Coffee 16.5 4.3 Volume Growth % Biscuit 7.0 4.4 Value Growth % Detergent 2.0 21.3 Cooking Oil 45.9 3.8 Sweetened Condensed Milk 6.3 5.3 Shampoo 13.6 -0.4 Toilet Soap 6.4 2.0 Skincare 11.3 Source: Nielsen Indonesia
  19. 19. Convenient and Healthy categories grow fasterRetail Audit: Indonesia Grocery | Top 20 | Volume & Value Growth % | Jan-Jun 2011 vs. YA Tea-RTD 11.0 12.2 Liquid Milk 13.5 17.1 Snack -0.4 5.5 Toothpaste 5.5 14.7 Baby Diapers 22.9 Volume Growth % 27.0 Stock Soup 1.6 6.6 Value Growth % Insecticides 1.5 -1.1 Energy Drink 0.5 2.1 -6.9 Non Powder Detergent 0.4 Cologne 1.9 8.6 Source: Nielsen Indonesia
  20. 20. F&B manufacturing sector has increased contribution Contribution by Sector in Manufacturing Industry 2005 – 2010 (%)F&B and Tobacco Source : BPS, 2011
  21. 21. Food industry is ranked 2nd in domestic investment realization and Investment Realization By Sector Year 2010 In Indonesia 5th in FDI realization Food Crops and Plantation Food Industry Transportations, Storage & Telecommunications Electricity, Gas & Water Supply Other Services (US$. billion) Transportations, Storage & Telecommunications Mining Electricity, Gas & Water Supply Real Estate, Industrial Estate & Office Building (US$. billion) Food Industry Domestic Investment: Food Crops & Plantation (208 projects worth US$ 3,22 billion); Food Industry (46 projects worth US$ 1,84 billion); Transportations, Storage & Telecommunications (238 projects worth US$ 1,55 billion); Electricity, Gas & Water Supply (47 projects worth US$ 0,55 billion); and Other Services (92 projects worth US$ 0,37 billion). Foreign Investment: Transportations, Storage &Telecommunications (154 projects worth US$. 5.0 billion); Mining (298 projects worth US$. 2.2 billion); Electricity, Gas & Water Supply (59 projects worth US$. 1.4 billion); Real Estate, Industrial Estate & Office Building (89 projects worth US$. 1.1 billion), and Food Industry (250 projects worth US$. 1.0 billion). Source : BKPM(US$ 1 = IDR 8.900,-) 21
  22. 22. Domestic food industry has realized 1.7T IDR investment in Q1 2011 and higher investment in Q2 2011 - 2.9T IDR Sector Q1 Sector Q2 (Trillions Rp)/ (Trillions % Rp)/ %Transport, Storage & 4.3/30.9 Food Crops and 3.1/ 16.6Communication PlantationNon Metal Mineral 2.3/ 16.7 Food Industry 2.9/15.2IndustryFood Industry 1.7/ 12 Paper & Printing Industry 2.7/ 14.1Electricity, Gas, and 1.6/ 11.6 Metal, Machinery & 1.9/ 10.3Water Electronic IndustryFood Crops and 1.4/ 9.9 Transport, Storage & 1.7 / 9Plantation CommunicationOthers 4.3/ 30.9 Others 6.6/ 34.9 9/17/2011 Source : BKPM 22
  23. 23. FDI Food Industry sector reached USD 0.3B in Q1 2011 and add USD 0.27B in Q2 2011 Sector Q1 Sector Q2 (USD (USD Billions)/ % Billions)/ %Mining 1.0/ 23.2 Mining 1.5/ 31.5Electricity, Gas, and 0.6/ 13.8 Chemical & 0.6/ 13.0Water Pharmaceutical industryTransport, Storage & 0.6/ 13.5 Metal, Machinery & 0.5/ 11.4Communication Electronic IndustryFood Crops and 0.4/ 9.6 Transport, Storage & 0.5/ 9.6Plantation CommunicationFood Industry 0.3/ 6.8 Trade & Repairs 0.4/ 7.9Others 1.4/ 33.1 Others 1.3/ 26.6 (Food Industry) (0.27/ 5.5) 9/17/2011 23 Source : BKPM
  24. 24. Singapore, Netherland and USA are top 3 foreign direct investor Singapore US$ 0.8 B Others Netherland US$ 2.2 B $ 0.6 B USA US$ 0.6 B South Korea Japan US$ 0.2 B US$ 0.4 B Source : BKPM
  25. 25. Ratings (Period of Year)No. Countries 2010-2012 2009-2011 2008-2010 World Investment Prospects Survey 2008 –1. China 1 1 1 2012 of “the most attractive economies for2. India 2 3 2 the location of FDI” conducted by the United3. Brazil 3 4 5 Nations Conference on Trade and4. USA 4 2 3 Development (UNCTAD)5. Russia 5 5 46. Mexico 6 12 117. Inggris 7 6 12 Indonesia was ranked 9th as major8. Vietnam 8 11 6 destination for FDI. This result was based 9. Indonesia 9 9 8 on UNCTAD survey whose respondents are10. Germany 10 7 7 executives of Transnational Corporations11. Thailand 11 n/a n/a (TNC) from developed and/or developing12. Poland 12 13 13 countries. UNCTAD consists of 19313. Australia 13 8 n/a member economies or countries.14. France 14 14 1515. Malaysia 15 n/a n/a16. Japan 16 n/a n/a17. Canada 17 10 10 Source: World Investment Prospects Survey 2010 – 2012, UNCTAD18. Chile 18 n/a n/a19. South Afrika 19 n/a n/a 2520. Spain 20 n/a n/a
  26. 26. Key Challenges: Natural resources potential, Changes inConsumers habit & Market , Food Safety, Regulation & Trade Channel Development
  27. 27. Indonesia has a huge potential resources of Agriculture Commodity. Position Rank in The World as follow: Rank (in the World, by Quantity) Agro Commodity 1 Kapokseed in Shell, Cloves ,Palm oil, Palm kernels, Kapok Fibre, Cinnamon (canella), Coconuts Leeks, other alliaceous veg, Vanilla 2 Cocoa beans, Nuts nes, Beans green, Natural rubber, Pepper (Piper spp.) 3 Roots and Tubers nes, Rice paddy, Papayas, Sugar crops nes, Ginger , Other bird eggs,in shell 4 Manila Fibre (Abaca), Avocados, Pineapples, Coffee green, Chillies and peppers green, Sweet potatoes, Cassava, Mangoes, mangosteens, guavas, Fruit, tropical fresh nes 5 Maize, Fruit Fresh Nes ,Spinach, Nutmeg, mace and cardamoms , Arecanuts 6 Bananas, Cashew nuts with shell, Tobacco unmanufactured, Eggplants (aubergines) 7 Tea , Indigenous Chicken Meat, Cabbages and other brassicas 8 Maize green, Groundnuts with shell , Hen eggs in shell 9 Indigenous Goat Meat 10 Oranges, Cucumbers and gherkins, Beans dry, Mushrooms and truffles, Indigenous Buffalo Meat Source: FAO Statistical Yearbook 20099/17/2011 27
  28. 28. Production of some potential commodities in Indonesia Commodity Target 2010 Achievement 2010 World Rank (millions mTon) (millions mTon)Rice, paddy 34,9 36,3 3Corn 16,5 17,8 8Soybean 1,0 0,908*** 11White Crystal Sugar 3,3 2,7 3Refined Sugar 1,5 2,4 n.aCPO 23,6 19,8 1Tea 0,154 0,150 7Coffee 0,754 0,680 4Cocoa 0,855 0.661 2Black Pepper n.a 0.022** 2Nutmeg n.a 0.0075** 1Chili n.a 1,3** 4Fruit & vegetable n.a 9,096 15Milk n.a 1,238 65Chicken meat n.a 1,527*** 7Hen Egg n.a 1,059*** 8Cow meat n.a 408 19Fish & Seafood 9,7 10,862 1 in South East Asia**** Based on FAO Statistical Yearbook 2009 , KADIN and other sources ** estimated 9/17/2011 ***FAO, 2009 28 ****SEAFDEC, 2008
  29. 29. However, still need to import some commodities to fulfill National requirement COMMODITY +/- PER YEAR (MTON)* WHEAT 4.669.475** CORN 1.500.000 SOYBEAN 900.000 GREEN BEAN 300.000 CASSAVA (dried) 900.000 GROUNDNUTS 195.000 MILK 2.700.000 BEEF 75.000 Raw Sugar 2.400.000 SALT for consumption 775.011** (depend on seasons) *estimated **2010 9/17/2011 29
  30. 30. The Global CompetitivenessIndex 2010-2011 rankings and2009-2010 comparisons (139Countries)Unfortunately,Indonesia GCI in the #54 of 139 Countries inthe year 2010/2011,even better than year2009/2010.Challenges forIndonesia to improvecompetitiveness © 2011 World Economic Forum
  31. 31. The GlobalCompetitivenessIndex 2010-2011 rankingsWithin Developing Asia &ASEANIndonesia in rank # 5within ASEAN © 2011 World Economic Forum 9/17/2011 31
  32. 32. Challenges ahead for food industry is that market & consumer is changed •INFORMATION ERA(CONNECTED & TECHNOLOGY) •EDUCATION •SOCIAL STATUS & LIFE STYLE Point of “New Consumerism” view/food •HEALTH CONCIOUS value •RELIGIOUS •DISTRIBUTION •CONVENIENCE 32
  33. 33. TREND INFORMATION ERAWith digital/communication technology development will make the world to be more connectedDigital technology change all aspect of life styleEvery incident quickly known around the world  Consumers behaviors Some cases in food business: •Dioxin , Ukrainian Presidential candidate (2004) •Melamine case in China (2008) •PDMS and TBHQ (anti-foaming agent) Mc-nugget in China (2010) •Nitrite milk scandal in China (2011) •EHEC cucumber in Germany (2011) •DEHP in Food Products Taiwan (2011)E-purchase, e-procurement & e-trade change marketing system  accelerating e- e- order process & salesDigital promotion , website, Hoax ,etc boosting sales & knowledge . But, sometimes also spread misleading information (black campaign) quickly and will impact to sales 9/17/2011 33
  34. 34. Education changed lifestyleEDUCATION, SOCIAL STATUS & LIFE STYLE, HEALTH CONSCIOUS & RELIGIOUS:More educated, well-knowledge  higher desire well-Higher social status & lifestyle  higher demand of high end product  “new consumerism”More health conscious  promotion claim: • High fiber, • Low cholesterol, • Added vitamin, mineral, Omega-3, etc Omega- • Nutrition Facts • Functional foodHigher awareness of religiosity  Hallal, etcAwareness of Food SafetyThen, food business is regulated more strict in all over the world. More developed the country, more strict the regulation 9/17/2011 34
  35. 35. “New consumerism”Willingness to pay little extra for quality as a force that encourages product differentiation and thereby feeds investment in production and marketing of new goods Murphy, Shleifer and Vishny (1989) Source: The Rise of Asia’s Middle Class
  36. 36. Educated Consumers are more aware of Packaging labelNutritionFactsWasteconcerned Hallal 9/17/2011 36
  37. 37. Challenges on Food Quality and SafetyEven though No Value If Not Safe•Delicious•High Nutrition garbage •Food Safety •Quality Standard •Healthy & Functional Food •Back to Nature consideration •Food Additives concern Local & Global •Label Trade •Hallal/ Khouzier •Convenience 37
  38. 38. Concerning about Quality & Food Safety Integrated System (Traceability) FROM FARM TO FORK FROM STABLE TO TABLE HACCPProduction facility Farming Post Processing Consumer Distribution Market Harvest’s handling GFP GMP GDP GRP GCP GHPPre Harvest Harvest Post Harvest Mutual Recognition Arrangement (MRA) Notes : HACCP = HAZARD ANALYSIS CRITICAL CONTROL POINT GFP = Good Farming Practices GDP = Good Distribution Practices GHP = Good Handling Practices GRP = Good Retailing Practices GMP = Good Manufacturing Practices GCP = Good Catering Practices 38
  39. 39. Food Safety Critical Point • Low quality raw material Low quality Careless handling, etc Management •Low processing cond. choosing low material bad sanitation low processing, handling,etcSAFE VS COST •Bad packaging choose wrong pack bad packaging process,etc • Bad storage/ distribution/ retail bad temperature control bad humidity control Food Safety bad handling,etc. 39
  40. 40. Food Safety is important with higher Socio Economic StatusDeveloped Countries have talked about Food Safety , while some other Underdeveloped Countries still talking about Food Availability People’s WelfareTransformation of the social status will Indonesia status? encourage the Food Safety ASEAN status? business potential Food Acceptability Food Accessibility Food Availability
  41. 41. Indonesian Middle Class has grown 50 million since 2003 to become 131 million people in 2010 Expenditure 2003 2010 Class (US$ per day) (%) population (%) population < $ 1,25 21.9 14.0 Low $ 1,25 – $ 2 40.3 29.3 $2-$4 32.1 36.5 $4-$6 3.9 11.7 Middle 37.6 54.5 $ 6 - $ 10 1.3 5.0 $ 10 - $ 20 0.3 1.3 High > $ 20 0.1 0.2 Source: Susenas, BPS, World Bank report 2011By 2025, Indonesia will be among six major emerging economies to account for more than halfof all global growth, says a new World Bank report. Other emerging economies include Brazil,China, India, South Korea, and Russia, and as economic power shifts, these countries will helpdrive growth in lower income countries through more commercial and financial transactions.With a growing middle class in developing countries, consumption trends are likely tostrengthen, and eventually become a source of sustained global growth"The Rise of Asias Middle Class 2010" by ADB : within last 10 years, middle class growth very fast from 25% or 45 millions in 1999 to become 42.7% or 93 millions in 2009. While poor people decreased from 171 millions to 123 millions.
  42. 42. Lifestyle changes demand a change in product, services and distribution system, etc.DISTRIBUTION, CONVENIENCE :Consumers demand more quick services, comfortable & convenience store store Growth of modern market is higher than traditionalYoung family , small family, & working people  changing habits of consumptionChanging style & size of packaging 9/17/2011 42
  43. 43. Indonesia market is dominated by traditional stores and both are growing in numbers Shop type Universe 2010 Hypermarket 154 Supermarket 1,076 Minimarket 16,922 Impulse 108,567 Provision stores 2,297,592 Pasar Food Prep 12,936 Pasar RTC 6,134 Semi Retailer 55,120 Source: Nielsen Indonesia
  44. 44. However in term of sales value, modern contribute to about 25% of the market Trade Channel Contribution | Total 56 Categories – including cigarette 76.2 74.5 82.9 82.1 81.5 80.7 80.4 80.8 79.8 25.5% 23.8 25.5 17.1 17.9 18.5 19.3 19.5 19.3 20.217.1% 2002 2003 2004 2005 2006 2007 2008 2009* 2010* Traditional Stores Modern Stores *55 Cats (Jaguar) + Cigarette (Legacy) Source: Nielsen Indonesia
  45. 45. YTD 2011 modern channel is still driver of the growth of total market Trade Channel Value (Rp) Growth | Total 55 Categories | YTD 2011 vs. YA Total 11.1 Indonesia Modern 15.6 TradeTraditional 8.2 Stores Source: Nielsen Indonesia
  46. 46. FMCG is shifting to modern distributionTraditional Market Modern Trade/Mini Market 9/17/2011 46
  47. 47. However for fresh food, the wet market is still a preferred channel by consumerTraditional Market Traditional Market Modern Market Old Style New Style •The art of purchase with bargain More hygienic, convenience Fixed Price •Interaction Seller - Buyer 9/17/2011 47
  48. 48. Some of Modern Super Market/ Hypermarket in Indonesia Foreign investor enter to Indonesian market because of potential market. Indonesia is #4 largest population in the world. Soon, Metro Germany will enter to Indonesia market9/17/2011 48
  49. 49. Modern premise may influence but not necessary eliminate traditional Traditional Modern / Global Lifestyle for modern Young generation 9/17/2011 49
  50. 50. A New Trend, new demand more convenient &services for Consumers24 hours Mini Market is combined 24 hours Gasoline Station with Miniwith Café shop (upstairs) Market 24 hours with Wi-Fi services 9/17/2011 50
  51. 51. INDONESIA REGULATION , RELATED TO FOOD INDUSTRY, QUALITY & FOOD SAFETY UU No. 2/ 1966 : Hygiene Law UU No. 2 /1981 : Metrology Law Decree of Ministry of Health 722/Menkes/Per/88: Food Ingredients UU No. 7 /1996 : Food Law UU No. 8 /1999 : Consumer Protection Law PP No. 69/1999 : Label & Advertisement PP No.102/2000 : National Standard UU No. 18 /2002 : National System for Research & Development and Technology Law Decree of Ministry of Industry & Trade No.753/MPP/Kep/11/2002: Monitoring SNI Local Government Decree DKI No.8/2004: Food Safety PP No. 28/2004 : Food Safety, Quality & Food Nutrition PP No. 68/2004 : Food Security SK Ka. BPOM nomor 11/ 2004 : General Guidance for Food Labeling Decree of Ministry of Industry RI 24/M-IND/PER/5/2006 : Production Monitoring & the Usage of Hazardous Material for Industry UU N0. 18/2009 : Livestock & Animal health Per Ka BPOM No. HK.00.06.1.52.4011 28Oct09 : Determination Limit of Microbial and chemical contaminants in food UU No. 36/2009 : Health Law Decree of Ministry of Industry 24/M-IND/Per/2/2010: Tara Code on Food Label and Plastic Packaging Recycling Decree of Ministry of Industry 75/M-IND/PER/7/2010: Mandatory of GOOD MANUFACTURING PRACTICES SE Ka. BPOM HK.05.01.1.52.09.10.8502 : Application of Food Label Terms Regulation from Ministry of Trade (Trade Goods Monitoring)RECALL Regulation from Ministry of Agriculture, Ministry of Fishery & Marine Affairs (S & P, etc) 51
  52. 52. Protection for Consumers 1. Liability to obtain Distribution Licenses from BPOM/NADFC* (before selling to market) : A. No MD : For Domestic Product B. No PIRT : For Domestic Product (SME’s) C. No ML : For Import Product 2. Mandatory use Label in Bahasa Indonesia 3. HALLAL : Voluntary 4. Market Monitoring/Control: A. BPOM (National) & Balai POM (Province & District) B. Direktorat Pengawasan Barang Beredar (Ministry of Trade) C. Tim Terpadu Pengawasan Barang Beredar (Tim TPBB) (Trade Minister Decree No: 780/M-DAG/KEP/10/2008. (Task Force to control Goods in Market) Import Monitoring1. Trade Minister Decree No. 56/2008 , jo. No. 60/2008, jo. No. 23/2010 : Import Product under Control (including Food Product) through Specific Port (Belawan ,Medan; Tanjung Priok ,Jakarta; Tanjung Emas ,Semarang; Tanjung Perak, Surabaya; Soekarno Hatta , Makassar; Dumai, Dumai; Jayapura and Internasional Airport). Expired 31 December 2010 and extended by2. Trade Minister Decree No.57/2010 (expired 31 December 2012)3. Trade Minister Decree No.54/M-DAG/PER/10/2009 , 45/M-DAG/PER/9/2009, 17/M- DAG/PER/3/2010 (Import Requirement :API, IT, IP, etc) *NADFC = National Agency of Drug and Food Control
  53. 53. Towards Global Market & AEC 2015
  54. 54. EVOLUTION OF TRADE IN THE WORLDGlobal Condition of Food Trade:• Borderless• Less Tariff Barrier• More non-tariff barrier/measure on Food safety and quality• Food Regulation as a protection to Consumers & Local Industry• Product competitiveness is depend on how to manage Food Safety as an advantage to the market
  55. 55. NAFTA Population: 445 million Main Regional FTA JAPAN GDP: US$15.857 trillion Population: 127 million EU CHINA GDP PPP: US$ 4.29 trillion Population: 491 million Population: 1.330 billion GDP: US$ 14.38 trillion GDP PPP: US$ 6.991 trillion Japan-Korea-China FTA FTA Canada – Chile 1997 (under negotiation) FTA : Chile – Mexico 1999 FTA : USA – Chile 2004 FTA : USA – Singapore 2004 FTA : USA – Australia 2005 Japan-Korea FTA (under negotiation) FTA : Mexico – Japan 2005 FTA : Chile – Brunei – NZ – EU Singapore 2006 27 countries Japan-Mexico EPA expanding to (signed agreement) NAFTA Eastern Europe U.S.A., EU-MEXICO Canada, FTA Mexico ACP-EU ASEAN-Japan Countries in Africa Comprehensive expanding to and the Caribbean Economic Partnership Latin America (approx. 70 (AJCEP) Japan- under negotiation countries) SAPTA Japan’s Bilaterals:Mexico EPA Bangladesh, Bhutan,(signed agreement) India, Maldives, • Japan-Singapore EPA Nepal, Pakistan, Sri • Japan-Philippines EPA Lanka • Japan-Thailand EPA FTAA AFTA • Japan-Malaysia EPA Indonesia, Malaysia, • Japan-Indonesia EPA (by 2005) MERCOSUR Philippines, Singapore, Argentina, Brazil, Thailand, Brunei, Vietnam, Paraguay, Uruguay Laos, Myanmar, Cambodia India - ASEAN FTA ASEAN II – CECA China - ASEAN FTA Population: 575.5 million Australia-New Zealand-ASEAN FTA GDP: US$ 3.431 billion Korea - ASEAN FTASource : CIA Factbook(2007)
  56. 56. Bilateral Negotiation and Preparation (in progress)1. Indonesia - EFTA 1. Trade in Goods (TIG)President RI and President 2. Rules of Origin (ROO)Switzerland, July 8th 2008 3. Trade Remedies2. Indonesia – India 4. Trade in Services (TIS)President RI – President of India,Jan 2011 5. Intellectual Property Rights (IPR)3. Indonesia – Australia 6. Government ProcurementPresident RI and President of 7. Technical Cooperation / CapacityAustralia, Nov 2nd 2010 Building4. Indonesia – EU 8. Other IssuesPresident RI and President of EUCommission, Dec 2009 9. Legal Text 56
  57. 57. AEC 2015Single market Highly Region of Integration and competitive equitable into the global production region economic economy base development
  58. 58. POPULATION 0F ASEAN PLUS into one big region, will transform market to be a huge potential in the world (more than 50% of population in the world)Rank Country / Territory Population Date of estimate % of World population Source4 Indonesia 237,556,363 May 2010 3.42% 2010 Indonesian Census12 Philippines 94,013,200 Mid-2010 1.35% National Statistics Office medium projection13 Vietnam 87,375,000 2011 1.26% Official estimate19 Thailand 67,041,000 July 1, 2010 0.97% Key Statistics of Thailand, 2009, (Population projections). National Statistics Office of Thailand26 Myanmar 47,963,000 2010 0.73% UN estimate for 201044 Malaysia 27,565,821 2010 0.4% The 2010 Population and Housing Census (Census 2010)69 Cambodia 13,395,682 March 3, 2008 0.19% Cambodian 2008 Census104 Laos 6,230,200 2010 0.09% Official estimate116 Singapore 5,076,700 June 30, 2010 0.073% Statistics Singapore173 Brunei 399,000 2010 0.006% UN estimate for 20101 Chinan2 1,339,724,852 November 1, 2010 19.3% 2010 China Census2 India 1,210,193,422 March 1, 2011 17.44% Provisional 2011 Indian Census result10 Japan 127,950,000 June 1, 2011 1.84% Official Japan Statistics Bureau25 South Korea 48,988,833 2011 0.71% Statistics Korea51 Australian5 22,688,987 August 26, 2011 0.33% Australian Official Population Clock123 New Zealand 4,414,700 August 26, 2011 0.064% Official New Zealand Population clock
  59. 59. List of ASEAN countries GDP (nominal), International Monetary Fund 2010 estimates. GDP Rank Country (millions of USD) — World 62,909,274 Contribution of — Peoples Republic of China 5,878,257 ASEAN Plus: — Japan 5,458,87229.60 % of the World GDP — South Korea 1,007,084 — ASEAN 1,843,846 1 Indonesia 706,735 2 Thailand 318,850 3 Malaysia 237,959 Huge 4 Singapore 222,699 Potential 5 6 Philippines Vietnam 188,719 103,574 7 Burma 35,646 8 Brunei 11,963 9 Cambodia 11,360 10 Laos 6,341 9/17/2011 59
  60. 60. Import of Packaged Food Product through Special Port Zone. Unfortunately, data showed that import value is increased significantly Perubahan total Jan - Total Jan - Des Total Jan - Juni Total Jan - Juni NEGARA % % % Mei 2011 vs Jan - Juni 2010 2010 2011 2010 (%)SINGAPORE 18,594,124.95 8.61% 7,557,698.96 7.76% 8,885,102.96 7.89% 17.56%MALAYSIA 36,560,417.14 16.92% 15,805,997.71 16.24% 27,817,515.12 24.70% 75.99%THAILAND 34,263,024.06 15.86% 14,069,305.50 14.45% 11,470,218.87 10.18% -18.47%VIETNAM 806,493.46 0.37% 167,311.81 0.17% 1,444,108.13 1.28% 763.12%PHILIPPINES 10,124,127.46 4.69% 5,254,819.12 5.40% 6,604,477.15 5.86% 25.68%sub total 100,348,187.07 46.45% 42,855,133.10 44.02% 56,221,422.23 49.91% 31.19%CHINA 31,121,990.92 14.40% 15,086,438.47 15.50% 14,506,477.82 12.88% -3.84%HONGKONG 8,073,001.67 3.74% 4,019,169.73 4.13% - 0.00% -100.00%sub total 39,194,992.59 18.14% 19,105,608.20 19.63% 14,506,477.82 12.88% -24.07%NEGARA LAINNYA 76,508,033.60 35.41% 35382502.49 36.35% 41,910,527.14 37.21% 18.45%TOTAL 216,051,213.26 100.00% 97,343,243.79 100.00% 112,638,427.19 100.00% 15.71% Source : Kemendag 9/17/2011 60
  61. 61. All F&B Trade between INDONESIA - ASEANTrade value is still very small compared to its potential Export ImportNo. COUNTRY 2010 Jan-May 2011 2010 Jan-May 2011 Value (US$) Value (US$) Value (US$) Value (US$) 1BRUNEI DARUSSALAM 10,058,998 5,481,151 0 0 2CAMBODIA 173,427,484 76,937,038 684,169 217,800 3LAO 0 0 0 0 4MALAYSIA 881,372,960 383,393,955 301,014,176 156,217,386 5MYANMAR 1,887,581 2,362,399 0 0 6PHILIPPINES 290,964,189 100,154,459 16,129,712 10,012,868 7SINGAPORE 280,046,449 101,187,340 68,544,628 29,956,561 8THAILAND 105,898,492 53,510,761 625,369,913 501,344,088 9VIET NAM 93,159,927 36,941,605 6,816,953 5,639,511 Total 1,836,816,080 759,968,708 1,018,559,551 703,388,214 Source: BPS, calculated by Ministry of Trade•Still plenty of ROOM to improve Trade and exploit the Potential•Keep developing new product & innovation to produce Added Value Product, exotic, etc. Thus this kind of exhibition is valuable to be visited , exploring new items , more competitive items substitution, etc. 9/17/2011 61
  62. 62. PROCESSED FOODS ITEMS IMPORTED BY INDONESIA FROM ASEAN 2006-2011 (as of 23 Aug 2011) Malaysia products dominate the products imported in Indonesia Food Category PHIL MAL SIN THAI VIET TOTAL ASEAN*1. Dairy products and analogues 34 187 47 44 2 3142. Fats, oils and Fat emulsions - 39 68 4 - 1113. Edible ices - 22 - 1 - 234. Fruits and vegetables 6 172 112 259 1 5505. Confectionery 37 788 44 152 17 1,0386. Cereals and cereal products 43 1,362 157 232 16 1,8107. Bakery wares - 1 3 - 1 58. Meat and meat products - 90 19 - 8 1179. Fish and fish products 1 186 33 76 2 29810. Eggs and egg products - - - - - -11. Sweeteners, including honey 11 9 3 2 - 2512. Salts, spices, soups, sauces, salads, protein products 4 260 202 120 14 60013. Foodstuffs intended for particular nutritional uses 15 35 5 17 - 7214. Beverages, excluding dairy products 21 687 287 89 6 1,09015. Ready-to-eat savouries 7 458 79 190 7 74116. Composite foods 3 8 27 - 2 40 TOTAL FOOD ITEMS IMPORTED 182 4,304 1,086 1,186 76 6,834 62Source: BPOM, 2011
  63. 63. PROCESSED FOODS ITEMS IMPORTED BY INDONESIAFrom ASEAN & Other Countries 2006-2011 (as of 23 Aug 2011; BPOM, 2011) ASEAN product take portion of 32.92 % Food Category ASEAN Others Total 1. Dairy products and analogues 314 575 889 2. Fats, oils and Fat emulsions 111 383 494 3. Edible ices 23 27 50 4. Fruits and vegetables 550 1,453 2,003 5. Confectionery 1,038 1,841 2,879 6. Cereals and cereal products 1,810 3,035 4,845 7. Bakery wares 5 4 9 8. Meat and meat products 117 101 218 9. Fish and fish products 298 159 457 10. Eggs and egg products - 4 4 11. Sweeteners, including honey 25 118 143 12. Salts, spices, soups, sauces, salads, protein products 600 1,283 1,883 13. Foodstuffs intended for particular nutritional uses 72 175 247 14. Beverages, excluding dairy products 1,090 3,816 4,906 15. Ready-to-eat savouries 741 744 1,485 16. Composite foods 40 209 249 Total Food Items imported 6,834 13,927 20,761 63 (%) 32.92 67.08 100.00
  64. 64. Export – Import F&B Product between Indonesia - ChinaComparing with ASEAN. The trade value Indonesia -China is smaller than it’spotential Value US$ Trade JAN-MAR JAN-MAR 2006 2007 2008 2009 2010 10 11Export 5,100,866 9,201,490 8,318,669 10,183,313 20,961,439 3,473,220 3,476,354Import 59,304,091 65,719,433 84,002,073 45,095,424 60,183,481 12,699,837 9,963,402Source: BPS (calculated by Data Centre Ministry of Trade)During his visit to Indonesia last April, Excellency PM Wen Jiabao talked about trade relations betweenIndonesia - China in the context of ACFTA:“Strengthen Good-Neighbourly Relations and Deepen Mutually Beneficial Cooperation”. “Entering thenew century, our two countries have enjoyed frequent high-level exchanges, deepening political mutualtrust and fast growing business cooperation. The establishment of the strategic partnership in 2005brought our bilateral relations to a new stage. Last year, two-way trade approached 43 billion U.S.dollars, making China one of Indonesia’s major trading partners and export markets” 9/17/2011 64
  65. 65. ASEAN Balance of trade with selected trading partner countriesASEAN trade with China has always been in deficit, also with Japan before turning into a modest surplus in2006 & 2007.On the other hand, ASEAN has maintained trade surplus with theUSA,EU25,Australia,NewZealand,India,Canada and Pakistan since 1998. 65 Source: ASEAN Secretariat (2010)
  66. 66. Intra and Extra Trade ASEANAbout 25% trade is Intra-ASEAN. Means , ASEAN is still more tradedependence with Extra-ASEAN. Hope to bigger trade Intra-ASEAN afterAECSource : http://www.aseansec.org/22073.htm, 66
  67. 67. To prepare Single Market & Production Base in AEC 2015, ASEAN formed ACCSQ Structure to evaluate all aspect trade, and PFPWG for food & foodstuff has been formed ASEAN Economic Minister Meeting ASEAN Senior Economic Official Meeting (SEOM) ASEAN Consultative Committee on Standards and Quality (ACCSQ) WG 1 WG 2 WG 3 JSC EE MRA ACC PPWG PFPWG APWG TMHSPWG Working Working Working Joint Sectoral ASEAN Pharmaceutic Prepared Automotive Traditional Group on Committee for Cosmetic al Product Foodstuff Medicines Standards Group Group on ASEAN Committee Working Product and Health and Mutual Accreditatio Legal Sectoral MRA Product Working Supplements Recognition n and Metrology for Electrical Group Working Arrangement Conformity and Electronic Group Product s (MRAS) Assessment Equipment Group Working GroupAspect to be Identified: WBPWG RBPWG MDPWG• Food Safety Wood-Based Rubber-Based Medical Devices Product Product• Labeling Working Working Product Group Group Working• Registration Group• Hallal 9/17/2011 67• Specific Requirements
  68. 68. HARMONIZATION & STANDARD IN ASEAN TOWARDS AEC 2015 1st & 2nd Commodity Priority have been decided to implement ASEAN Standards1st Commodity Priorities 2nd Commodity Priorities•HS 1704; GSFA 05.2, 05.2.1, •HS 1702 ; GSFA 11.2 05.2.2, 5.2.3, 05.4 •HS 1704; GSFA 05.3•HS 1904; GSFA 06.3, 06.7 •HS 1805; GSFA 05.1.1•HS 2007; GSFA 04.1.2.5 •HS 1903; GSFA 06.0, 06.2.1, 06.2.2 •HS 1905; GSFA 07.0, 07.1, 07.1.1, 07.1.1.1, 07.1.1.2, 07.1.2, 07.1.3, 07.1.4, 07.1.5, 07.1.6, 07.2, 07.2.1, 07.2.2, 07.2.3 •HS 2001; GSFA 04.2.2.3, 04.1.2.3 •HS 2006; GSFA 04.1.2.6; 04.1.2.5 (except nuts), 04.1.2.7, 04.1.2.11 •HS 2008; GSFA 04.1.2.2 (Except nuts and sweetening matter) •HS 2101; GSFA 14.1.5 (excluding cocoa) •HS 2103; GSFA 12.6 Harmonization of Food Standard will impact to Food Business (especially to SME’s) & Consumer’s behavior 9/17/2011 68
  69. 69. ConclusionIndonesia in AEC 2015 Actions to improve
  70. 70. Business Potential • Indonesia is strategic, with stable economic growth. • Potential , with GDP growth and Population • Potential for investment , to optimize natural resources and produce Added Value Product • F&B industry kept positive growing . In terms of number establishment, is Indonesia dominated by SME’s, but value by Big – Medium enterprises Market • Market is dominated by Traditional market but Modern trade is growing faster • Middle class has grown fast Potential • Consumers will potentially change to increase the business • More educated & changed Life style • “New consumerism” • More concerned about Food safety & Health • Hallal concerned (more religious) Consumers9/17/2011 70
  71. 71. WHAT TO DO INDONESIA in ASEAN • Trade Intra-ASEAN is smaller than Extra-ASEAN • Huge potential because of natural resources, Population & GDP (including ASEAN Plus) • Optimizing business & sources potential for mutual benefit • Expanding INVESTMENT to explore Huge Natural Resources , combining with Advanced Technology owned by ASEAN Countries to produce more VALUE ADDED PRODUCT, as a basis production to be more competitive inAEC 2015 global market • Improving Trade Value and open for more MARKET ACCESS • Need more understanding and tolerance about standard & procedures. Trying to harmonize & standardize to be a Production base & Single Market9/17/2011 71
  72. 72. WHAT TO DO INDONESIA in ASEAN • Need to build MRA to reduce Trade Barriers • Eliminating NON-TARIFF MEASURE as much as possible , without ignoring FOOD SAFETY StandardCooperation • Economic Partnership to minimize constraint of social status differences/gap, among especially SME’s in the Country • CAPACITY BUILDING for SME’s Industry to understand about global market, standard, Countries and market integration NEED A CLOSER COOPERATION INDONESIA – ASEAN towards AEC 2015 9/17/2011 72
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