ASEAN Food Industry indonesia

ADHI LUKMAN

THE IMPACT OF AEC 2015 TO THE ASEAN FOOD INDUSTRYINDONESIA PERSPECTIVE

9/17/2011 1

FOOD INGREDIENTS ASIA

UBM (ASIA),

THAILAND, 21 SEPTEMBER 2011

Chairman of GAPMMI

(INDONESIAN FOOD & BEVERAGES ASSOCIATION)

F I Asia in Indonesia 2010

9/17/2011 2

The Indonesian Strategic Planning, The Indonesian Strategic Planning, Economy and F&B Industry

Development

FACTS: 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%,

INDONESIA 2011

49.7 % Women, 50.3% Man (SUSENAS 2010) Population distribution : Java 57,49%, Sumatera 21,3%,

Sulawesi 7,31%, Kalimantan 5,8%, Bali /Nusa Tenggara5,5%, 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

3. STRATEGIC GEOGRAPHIC LOCATION…

Indonesia lies strategically in the intersection of the Pacific Ocean, along the Malacca Straits and the Indian ocean

Over half of all international shipping travel through Indonesian waters

Leading ASEAN

The only country in South-east Asia that is a member of G-20

Chairman of ASEAN in 2011

An active and strong voice of developing countries in global discussions on issues around climate change, global economy architecture, etc.

Source: Supply Chain Leaders

ASEAN

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....

~ 12 largest ~ 12 largest

~ 8 largest ~ 8 largest

8 – 9 % per annum 5 – 6 % per annum

LOGICAL

ACTION PLAN(up to 2014)

The Action Plan strategy

LOGICAL FRAMEWORK

OF THE MASTERPLAN

22 Main

F & B

F&B is one of the main economic activities in MP3EI framework

9/17/2011 8

22 Main Economic Activities

FRAMEWORK OF GROWTH STRATEGYFRAMEWORK OF GROWTH STRATEGY

FEED INDONESIA - FEED THE WORLD

Sustainable National Food SecuritySustainable National Food Security

Rice, Soybean,Corn, Sugar

Palm Oil, TeaCoffee, Cocoa

Mango, Orange, Banana andHorticulture

Cattle andPoultry

Tuna andShrimp

Foreign ExchangeForeign Exchange&&

Labor ForceLabor ForceFood SelfFood Self--sufficiencysufficiency

Main Commodity

Grand StrategyDevelopment of Agriculture Sector Into a Competitive and

In line with Government Strategy, Indonesian Chambers of Commerce & Industry (KADIN) set a grand strategy called FI-FTW

9

Increase Value Added & Marketing

• Develop Domestic and Export Markets

• Build Indonesia’s Product Image and Manage the Non- Tariff Barrier

• Develop Downstream Industry

Funding• Support the Agriculture

Sector• Establish an Agriculture

Bank• Strengthen the non

Banking Institutions(Cooperatives & LKM)

Panning Improvement• Improve the Spatial Planning • Develop the Infrastructure• Focus on Prime Commodities /

Developthe Competitiveness

Increase Productivity• Develop Natural Resources and

Competent Human Resources• Develop and Implement Eco Green

Technology and R & D• Provide access to the Technology

• 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

Development of Agriculture Sector Into a Competitive andSustainable Self- Sufficiency and Promotion of thePrime Commodities to Become the World’s Choice

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 (Rp trillions) 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 3,906

Population (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** 6.50

Key Strengths

Fiscal 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 25.0

Currrency (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

Reserves (US$ billions) 56.9 52.1 66.1 96.2123.2**

* 130.0S&P's Rating BB- BB- BB- BB BB+ BBB-

**Semester 1 – 2011***July 2011 (President speech 16 August 2011, RAPBN 2012) . Source: Bappenas, BPS

Steady GDP growth

5.56.3 6.1

4.56.1 6.5 5.7 6.2 5.8 6.5 6.56.5

06 07 08 '09 '10 est'11

Q1'10

Q2'10

Q3'10

Q4'10

Q1'11

Q2'11

Source: BPS, Bank of Indonesia

Passing GDP per capita USD 3000

Break USD 4000

Break USD 3000

86 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

Break USD 1000

Break USD 2000

USD 3000

Source: BPS

Inflation is kept low

6.0 8.0

10.0 12.0 14.0 16.0 18.0

%

Food Material

Processed Food

General

January – July 2011 inflation rate at 4.61 %

9/17/20119/17/2011 1313Source: BPS, Kemenperin

-2.0 4.0 6.0

2005 2006 2007 2008 2009 2010

Year

General

Category % Output % Number of establishment

Big & Medium 86,79 0.52

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?

Small 5,69 5,71

Home Industry 7,52 93,77

Source : BPS, Sensus 2008

Year RP (Trillions)2007 402 2008 526,62009 586

F&B industry output is estimated at about USD 80 billion

OUTPUT F&B (BPS, estimated by GAPMMI):

2009 5862010 605

2011* 684

*Target, estimated growth 5 – 13 %

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 6,49

Manufacturing industry 4.60 4.59 4.67 3.66 2.11 4.53 6.10

Non Oil & Gas Industry 5,86 5,27 5,15 4,05 2,56 5,09 6,61

F&B + Tobacco 2.75 7.21 5.05 2.34 11.29 2.73 9.34

Wood & Other Forest Industry (0.92) (0.66) (1.74) 3.45 (1.46) (3.50) 3.01

2011 F&B industrial growth estimated at 9.34%The sector that always kept positive growth within last 5 years

Source : BPS dan Kementerian Perindustrian

Wood & Other Forest Industry (0.92) (0.66) (1.74) 3.45 (1.46) (3.50) 3.01

Paper & Printing 2.39 2.09 5.79 (1.48) 6.27 1.64 3.87

Fertilizer, Chemicals & Rubber 8.77 4.48 5.69 4.46 1.51 5.17 6.62

Cement & Non-Metal Mineral 3.81 0.53 3.40 (1.49) (0.63) 2.16 5.66

Textile, Leather & Footwear 1.31 1.23 (3.68) (3.64) 0.53 1.74 8.03

Base Metal, Iron & Steel (3.70) 4.73 1.69 (2.05) (4.53) 2.56 15.48

Transport equipment, Machinery & Equipment 12.38 7.55 9.73 9.79 (2.94) 10.35 4.41

Others 2.61 3.62 (2.82) (0.96) 3.13 2.98 6.21

7,099

8,3577,498 7,775 8,129

8,542 8,1557,960

7,4628,085

7,4427,9167,632

6,7277,268 7,181

7,6777,198

Modern packaged food has grown double digit in 2011

Retail Audit: Indonesia Total Grocery | Food Department

8.8 8.4 9.6 9.8 11.78.2

11.8 12.47.1

1.5

12.7 10.9 13.9 10.9 11.9 10.8 11.9 13.3

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-10

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Sales Growth vs. Last Year Sales Value (in billion)

Source: Nielsen Indonesia

-0.4

12.8

4.3

4.4

6.3

16.5

5.76.8

7.0Volume Growth %

Value Growth %

Retail Audit: Indonesia Grocery | Top 10 | Volume & Value Growth % | Jan-Jun 2011 vs. YA

Instant Noodles

Powder Milk

Coffee

Biscuit

Detergent

F&B categories have been growing steady

4.4

21.3

3.8

5.3

-0.4

2.0

2.0

45.9

13.6

6.4

11.3

6.3

Value Growth %Detergent

Cooking Oil

Sweetened Condensed Milk

Shampoo

Toilet Soap

Skincare


11.0

-0.4

5.5

22.9

17.1

5.5

13.5

27.0

14.7

12.2

Volume Growth %

Tea-RTD

Liquid Milk

Snack

Toothpaste

Baby Diapers

Retail Audit: Indonesia Grocery | Top 20 | Volume & Value Growth % | Jan-Jun 2011 vs. YA

Convenient and Healthy categories grow faster

1.6

1.5

0.5

-6.9

1.9

-1.1

8.6

0.4

2.1

6.6

27.0

Value Growth %Stock Soup

Insecticides

Energy Drink

Non Powder Detergent

Cologne


Contribution by Sector in Manufacturing Industry 2005 – 2010 (%)

F&B manufacturing sector has increased contribution

Source : BPS, 2011

F&B and Tobacco

Investment Realization By Sector Year 2010 In Indonesia

Transportations, Storage &Telecommunications

(US$. billion)

Food Crops and Plantation

Food Industry

Transportations, Storage &Telecommunications

Electricity, Gas & Water Supply Other Services

Food industry is ranked 2nd in domestic investment realization and 5th in FDI realization

21

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 (47projects worth US$ 0,55 billion); and Other Services (92 projects worth US$ 0,37 billion).

Foreign Investment:Transportations, Storage &Telecommunications (154 projects worth US$. 5.0 billion); Mining (298 projects worth US$. 2.2billion); 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).

(US$ 1 = IDR 8.900,-)

(US$. billion)

Telecommunications

Mining

Electricity, Gas & Water Supply

Real Estate, Industrial Estate &Office Building

Food Industry

Source : BKPM

Domestic food industry has realized 1.7T IDR investment in Q1 2011 and higher investment in Q2 2011 - 2.9T IDR

Sector Q1 (Trillions Rp)/

%

Sector Q2(Trillions Rp)/ %

Transport, Storage & Communication

4.3/30.9 Food Crops and Plantation

3.1/ 16.6

Non Metal Mineral 2.3/ 16.7 Food Industry 2.9/15.2

9/17/2011 22Source : BKPM

Non Metal Mineral Industry

2.3/ 16.7 Food Industry 2.9/15.2

Food Industry 1.7/ 12 Paper & Printing Industry 2.7/ 14.1

Electricity, Gas, and Water

1.6/ 11.6 Metal, Machinery & Electronic Industry

1.9/ 10.3


1.4/ 9.9 Transport, Storage & Communication

1.7 / 9

Others 4.3/ 30.9 Others 6.6/ 34.9

Sector Q1 (USD

Billions)/ %

Sector Q2(USD

Billions)/ %

Mining 1.0/ 23.2 Mining 1.5/ 31.5

Electricity, Gas, and Water

0.6/ 13.8 Chemical & Pharmaceutical industry

0.6/ 13.0

FDI Food Industry sector reached USD 0.3B in Q1 2011 and add USD 0.27B in Q2 2011

9/17/2011 23

Water Pharmaceutical industry

Transport, Storage & Communication

0.6/ 13.5 Metal, Machinery & Electronic Industry

0.5/ 11.4


0.4/ 9.6 Transport, Storage & Communication

0.5/ 9.6

Food Industry 0.3/ 6.8 Trade & Repairs 0.4/ 7.9

Others 1.4/ 33.1 Others(Food Industry)

1.3/ 26.6(0.27/ 5.5)

Source : BKPM

OthersUS$ 2.2 B

Netherland$ 0.6 B

SingaporeUS$ 0.8 B

Singapore, Netherland and USA are top 3 foreign direct investor

JapanUS$ 0.4 B

USAUS$ 0.6 B

South KoreaUS$ 0.2 B

Source : BKPM

World Investment Prospects Survey 2008 –2012 of “the most attractive economies for the location of FDI” conducted by the United Nations Conference on Trade and Development (UNCTAD)

No. CountriesRatings (Period of Year)

2010-2012 2009-2011 2008-20101. China 1 1 12. India 2 3 23. Brazil 3 4 54. USA 4 2 35. Russia 5 5 46. Mexico 6 12 117. Inggris 7 6 128. Vietnam 8 11 6

9. Indonesia 9 9 8

Indonesia was ranked 9th as major destination for FDI. This result was based on UNCTAD survey whose respondents are

25

10. Germany 10 7 711. Thailand 11 n/a n/a12. Poland 12 13 1313. Australia 13 8 n/a14. France 14 14 1515. Malaysia 15 n/a n/a16. Japan 16 n/a n/a17. Canada 17 10 1018. Chile 18 n/a n/a19. South Afrika 19 n/a n/a20. Spain 20 n/a n/a

9. Indonesia 9 9 8 on UNCTAD survey whose respondents are executives of Transnational Corporations (TNC) from developed and/or developing countries. UNCTAD consists of 193 member economies or countries.

Source: World Investment Prospects Survey 2010 – 2012, UNCTAD

Key Challenges:Key Challenges:Natural resources potential, Changes in

Consumers habit & Market , Food Safety, Regulation & Trade Channel

Development

Indonesia has a huge potential resources of Agriculture Commodity. Position Rank in The World as follow:

Rank (in the World, by Quantity) Agro Commodity1 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

9/17/2011 27

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 Meat10 Oranges, Cucumbers and gherkins, Beans dry, Mushrooms and

truffles, Indigenous Buffalo MeatSource: FAO Statistical Yearbook 2009

Commodity Target 2010(millions mTon)

Achievement 2010(millions mTon)

World Rank

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 2

Production of some potential commodities in Indonesia

9/17/2011 28

Cocoa 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***FAO, 2009****SEAFDEC, 2008

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

9/17/2011 29

GROUNDNUTS 195.000

MILK 2.700.000

BEEF 75.000

Raw Sugar 2.400.000

SALT for consumption(depend on seasons)

775.011**

*estimated**2010

The Global Competitiveness Index 2010-2011 rankings and 2009-2010 comparisons (139 Countries)

Unfortunately, Indonesia GCI in the # 54 of 139 Countries in the year 2010/2011, even better than year

© 2011 World Economic Forum

even better than year 2009/2010.Challenges for Indonesia to improve competitiveness

Indonesia in rank # 5 within ASEAN

The Global Competitiveness Index 2010-2011 rankings Within Developing Asia & ASEAN

9/17/2011 31

© 2011 World Economic Forum

••INFORMATION ERA INFORMATION ERA (CONNECTED & TECHNOLOGY)(CONNECTED & TECHNOLOGY)

••EDUCATIONEDUCATION••SOCIAL STATUS & LIFE STYLESOCIAL STATUS & LIFE STYLE

“New Consumerism”“New Consumerism”Point of Point of

view/food view/food

Challenges ahead for food industry is that market & consumer is changed

3232

••SOCIAL STATUS & LIFE STYLESOCIAL STATUS & LIFE STYLE“New Consumerism”“New Consumerism”••HEALTH CONCIOUSHEALTH CONCIOUS

••RELIGIOUSRELIGIOUS••DISTRIBUTIONDISTRIBUTION••CONVENIENCECONVENIENCE

view/food view/food valuevalue

Digital technology change all aspect of life styleDigital technology change all aspect of life styleEvery incident quickly known around the world Every incident quickly known around the world Consumers behaviorsConsumers behaviors

Some cases in food business:Some cases in food business:••Dioxin , Dioxin , Ukrainian Presidential candidate (2004)••Melamine case in China (2008)Melamine case in China (2008)•PDMS and TBHQ (anti-foaming agent) Mc-nugget in China (2010)••Nitrite milk scandal in China (2011)Nitrite milk scandal in China (2011)

TREND INFORMATION ERA With digital/communication technology development will make the world to be more

connected

9/17/2011 33

••Nitrite milk scandal in China (2011)Nitrite milk scandal in China (2011)••EHEC cucumber in Germany (2011)EHEC cucumber in Germany (2011)••DEHP in Food Products Taiwan (2011)DEHP in Food Products Taiwan (2011)

EE--purchase, epurchase, e--procurement & eprocurement & e--trade change marketing system trade change marketing system accelerating accelerating order process & salesorder process & sales

Digital promotion , website, Hoax ,etcDigital promotion , website, Hoax ,etc boosting sales & knowledge boosting sales & knowledge . But, . But, sometimes also spread misleading information (black campaign) quickly and will sometimes also spread misleading information (black campaign) quickly and will impact to sales impact to sales

EDUCATION, SOCIAL STATUS & LIFE STYLE, HEALTH CONSCIOUS & RELIGIOUS:EDUCATION, SOCIAL STATUS & LIFE STYLE, HEALTH CONSCIOUS & RELIGIOUS:More educated, wellMore educated, well--knowledge knowledge higher desirehigher desireHigher social status & lifestyleHigher social status & lifestyle higher demand of high end product higher demand of high end product “new consumerism”“new consumerism”More health conscious More health conscious promotion claim:promotion claim:

•• High fiber, High fiber,

Education changed lifestyle

9/17/2011 34

•• High fiber, High fiber, •• Low cholesterol, Low cholesterol, •• Added vitamin, mineral, OmegaAdded vitamin, mineral, Omega--3, etc3, etc•• Nutrition FactsNutrition Facts•• Functional food Functional food

Higher Higher awareness of religiosity awareness of religiosity Hallal, etcHallal, etcAwareness of Food SafetyAwareness of Food SafetyThen, food business is regulated more strict in all over the world. More developed Then, food business is regulated more strict in all over the world. More developed

the country, more strict the regulationthe country, more strict the regulation

“New consumerism”

Willingness to pay little extra for quality as a force that encourages product differentiation and thereby feeds investment in production and thereby feeds investment in production and

marketing of new goods

Murphy, Shleifer and Vishny (1989)

Source: The Rise of Asia’s Middle Class

Educated Consumers are more aware of Packaging label

9/17/2011 36

Nutrition Facts

Hallal

Waste concerned

Even though

•Delicious

•High Nutrition

If Not SafeNo Value

Challenges on Food Quality and Safety

3737

•Food Safety•Quality Standard •Healthy & Functional Food•Back to Nature •Food Additives concern•Label•Hallal/ Khouzier•Convenience

Local & Global Trade

consideration

garbage

Concerning about Quality & Food Safety Integrated System (Traceability)

HACCPProduction

facility

Farming Post Harvest’shandling

Processing Distribution Market Consumer

FROM FARM

FROM STABLE

TO FORK

TO TABLE

3838

Notes : HACCP = HAZARD ANALYSIS CRITICAL CONTROL POINTGFP = Good Farming Practices GDP = Good Distribution PracticesGHP = Good Handling Practices GRP = Good Retailing PracticesGMP = Good Manufacturing Practices GCP = Good Catering Practices

handling

GFPGHP

GMP GDP GRP GCP

Harvest Post Harvest

Mutual Recognition Arrangement (MRA)Pre Harvest

•• Low quality raw materialLow quality raw materialLow qualityLow quality

Careless handling, etcCareless handling, etc

••Low processing cond.Low processing cond.choosing low materialchoosing low material

bad sanitationbad sanitationlow processing, handling,etclow processing, handling,etc

Food Safety Critical Point

Management

SAFE VS COST

3939

••Bad packagingBad packagingchoose wrong pack choose wrong pack

bad packaging process,etcbad packaging process,etc

•• Bad storage/ distribution/ retailBad storage/ distribution/ retailbad temperature controlbad temperature control

bad humidity controlbad humidity controlbad handling,etc.bad handling,etc.Food Safety

SAFE VS COST

Food Safety

People’s Welfare

Food Safety is important with higher Socio Economic Status

Developed Countries have talked about Food Safety , while some other Underdeveloped

Countries still talking about Food Availability

Transformation of the social status will encourage the

business potential

Indonesia status?ASEAN status?

Food Availability

Food Acceptability

Food Accessibility

business potential

Indonesian Middle Class has grown 50 million since 2003 to become 131 million people in 2010

ClassExpenditure 2003 2010

(US$ per day) (%) population (%) population

Low < $ 1,25 21.9 14.0 $ 1,25 – $ 2 40.3 29.3

Middle

$ 2 - $ 4 32.1

37.6

36.5

54.5$ 4 - $ 6 3.9 11.7 $ 6 - $ 10 1.3 5.0

$ 10 - $ 20 0.3 1.3 High > $ 20 0.1 0.2

"The Rise of Asia's 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.

By 2025, Indonesia will be among six major emerging economies to account for more than half of 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 help drive growth in lower income countries through more commercial and financial transactions. With a growing middle class in developing countries, consumption trends are likely to strengthen, and eventually become a source of sustained global growth

Source: Susenas, BPS, World Bank report 2011High > $ 20 0.1 0.2

DISTRIBUTION, CONVENIENCE :DISTRIBUTION, CONVENIENCE :Consumers demand more quick services, comfortable & convenience storeConsumers demand more quick services, comfortable & convenience store

Growth of modern market is higher than traditionalGrowth of modern market is higher than traditionalYoung family , small family, & working people Young family , small family, & working people changing habits of changing habits of

consumptionconsumptionChanging Changing style & size of packagingstyle & size of packaging

Lifestyle changes demand a change in product, services and distribution system, etc.

9/17/2011 42

Indonesia market is dominated by traditional stores and both are growing in numbers

Shop type Universe 2010

Hypermarket 154Supermarket 1,076Minimarket 16,922Impulse 108,567Provision stores 2,297,592

Pasar Food Prep 12,936

Pasar RTC 6,134Semi Retailer 55,120


82.9 82.1 81.5 80.7 80.4 80.8 79.8 76.2 74.5

Trade Channel Contribution | Total 56 Categories – including cigarette

However in term of sales value, modern contribute to about 25% of the market

17.1 17.9 18.5 19.3 19.5 19.3 20.2 23.8 25.5

2002 2003 2004 2005 2006 2007 2008 2009* 2010*Traditional Stores Modern Stores

17.1%

25.5%

*55 Cats (Jaguar) + Cigarette (Legacy)


YTD 2011 modern channel is still driver of the growth of total market

11.1Total

Indonesia

Trade Channel Value (Rp) Growth | Total 55 Categories | YTD 2011 vs. YA

8.2

15.6ModernTrade

TraditionalStores


Modern Trade/Mini MarketTraditional Market

FMCG is shifting to modern distribution

9/17/2011 46

Traditional MarketOld Style

Traditional MarketNew Style

Modern Market

However for fresh food, the wet market is still a preferred channel by consumer

9/17/2011 47

•The art of purchase with bargain•Interaction Seller - Buyer More hygienic, convenience Fixed Price

Some of Modern Super Market/ Hypermarket in Indonesia

Foreign investor enter to Indonesian

market because of potential

market. Indonesia is #4

largest

9/17/2011 48

largest population in

the world.

Soon, Metro Germany will

enter to Indonesia

market

Traditional Modern / Global

Modern premise may influence but not necessary eliminate traditional

Lifestylefor

modern Young

generation

9/17/2011 49

generation

24 hours Mini Market is combined 24 hours Gasoline Station with Mini

A New Trend, new demandmore convenient &services for Consumers

9/17/2011 50

24 hours Mini Market is combined with Café shop (upstairs)

24 hours Gasoline Station with Mini Market

24 hours with Wi-Fi services

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

5151

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)

1. Liability to obtain Distribution Licenses from BPOM/NADFC* (before selling to market) :A. No MD : For Domestic ProductB. No PIRT : For Domestic Product (SME’s)C. No ML : For Import Product

2. Mandatory use Label in Bahasa Indonesia3. 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)

Protection for Consumers

*NADFC = National Agency of Drug and Food Control

1. 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 by

2. 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)

Import Monitoring

Towards Global Market & AEC 2015

EVOLUTION OF TRADE IN THE WORLD

Global 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

Global 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

expanding to Eastern Europe

Main Regional FTANAFTAPopulation: 445 millionGDP: US$15.857 trillion

EUPopulation: 491 millionGDP: US$ 14.38 trillion

CHINA Population: 1.330 billion GDP PPP: US$ 6.991 trillion

JAPANPopulation: 127 million GDP PPP: US$ 4.29 trillion

FTA Canada – Chile 1997FTA : Chile – Mexico 1999FTA : USA – Chile 2004FTA : USA – Singapore 2004FTA : USA – Australia 2005FTA : Mexico – Japan 2005FTA : Chile – Brunei – NZ –Singapore 2006

NAFTAU.S.A.,

Canada,Mexico ASEAN-Japan

Comprehensive

Japan-Korea FTA(under negotiation)

Japan-Mexico EPA(signed agreement)

EU-MEXICOFTA

EU27 countries

ACP-EUCountries in Africa

Japan-Korea-China FTA (under negotiation)

expanding to Latin America

Source : CIA Factbook (2007)

ASEANPopulation: 575.5 millionGDP: US$ 3.431 billion

MERCOSURArgentina, Brazil,

Paraguay, Uruguay

FTAA(by 2005)

under negotiation SAPTABangladesh, Bhutan,

India, Maldives,Nepal, Pakistan, Sri

Lanka

China - ASEAN FTA

Comprehensive Economic Partnership

(AJCEP)

Japan’s Bilaterals:• Japan-Singapore EPA • Japan-Philippines EPA• Japan-Thailand EPA• Japan-Malaysia EPA• Japan-Indonesia EPA

AFTAIndonesia, Malaysia,

Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, Cambodia

India - ASEAN FTAII – CECA

Countries in Africa and the Caribbean

(approx. 70 countries)Japan-

Mexico EPA(signed agreement)

Australia-New Zealand-ASEAN FTA

Korea - ASEAN FTA

Source : CIA Factbook (2007)

Bilateral Negotiation and Preparation (in progress)

1. Indonesia - EFTA

President RI and President

Switzerland, July 8th 2008

2. Indonesia – India

President RI – President of India,

Jan 2011

1. Trade in Goods (TIG)

2. Rules of Origin (ROO)

3. Trade Remedies

4. Trade in Services (TIS)

5. Intellectual Property Rights (IPR)

5656

3. Indonesia – Australia

President RI and President of

Australia, Nov 2nd 2010

4. Indonesia – EU

President RI and President of EU

Commission, Dec 2009

6. Government Procurement

7. Technical Cooperation / Capacity

Building

8. Other Issues

9. Legal Text

AEC 2015

Single market and

production base

Highly competitive

region

Region of equitable economic

development

Integration into the global

economy

POPULATION 0F ASEAN PLUSinto 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 Source

4 Indonesia 237,556,363 May 2010 3.42% 2010 Indonesian Census

12 Philippines 94,013,200 Mid-2010 1.35% National Statistics Office medium projection

13 Vietnam 87,375,000 2011 1.26% Official estimate

19 Thailand 67,041,000 July 1, 2010 0.97% Key Statistics of Thailand, 2009,

(Population projections). National Statistics Office of Thailand

26 Myanmar 47,963,000 2010 0.73% UN estimate for 2010

44 Malaysia 27,565,821 2010 0.4% The 2010 Population and Housing Census (Census 2010)

1 Chinan2 1,339,724,852 November 1, 2010 19.3% 2010 China Census

2 India 1,210,193,422 March 1, 2011 17.44% Provisional 2011 Indian Census result

10 Japan 127,950,000 June 1, 2011 1.84% Official Japan Statistics Bureau

25 South Korea 48,988,833 2011 0.71% Statistics Korea

51 Australian5 22,688,987 August 26, 2011 0.33% Australian Official Population Clock

123 New Zealand 4,414,700 August 26, 2011 0.064% Official New Zealand Population clock

44 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 Census

104 Laos 6,230,200 2010 0.09% Official estimate

116 Singapore 5,076,700 June 30, 2010 0.073% Statistics Singapore

173 Brunei 399,000 2010 0.006% UN estimate for 2010

Rank Country GDP (millions of USD)

— World 62,909,274

— People's Republic of China 5,878,257

— Japan 5,458,872— South Korea 1,007,084— ASEAN 1,843,8461 Indonesia 706,7352 Thailand 318,850

List of ASEAN countries GDP (nominal), International Monetary Fund 2010 estimates.

Contribution of ASEAN Plus:

29.60 % of the World GDP

9/17/2011 59

2 Thailand 318,8503 Malaysia 237,9594 Singapore 222,6995 Philippines 188,7196 Vietnam 103,5747 Burma 35,6468 Brunei 11,9639 Cambodia 11,36010 Laos 6,341

Huge Potential

NEGARA Total Jan - Des 2010 % Total Jan - Juni

2010 % Total Jan - Juni 2011 %

Perubahan total Jan -Mei 2011 vs Jan - Juni

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%

Import of Packaged Food Product through Special Port Zone.

Unfortunately, data showed that import value is increased significantly

9/17/2011 60

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

No. COUNTRYExport Import

2010 Jan-May 2011 2010 Jan-May 2011Value (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

Trade value is still very small compared to its potential

All F&B Trade between INDONESIA - ASEAN

9/17/2011 61

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.

PROCESSED FOODS ITEMS IMPORTED BY INDONESIA FROM ASEAN 2006-2011 (as of 23 Aug 2011)

Malaysia products dominate the products imported in IndonesiaFood Category PHIL MAL SIN THAI VIET TOTAL ASEAN*

1. Dairy products and analogues 34 187 47 44 2 314

2. Fats, oils and Fat emulsions - 39 68 4 - 111

3. Edible ices - 22 - 1 - 23

4. Fruits and vegetables 6 172 112 259 1 550

5. Confectionery 37 788 44 152 17 1,038

6. Cereals and cereal products 43 1,362 157 232 16 1,810

7. Bakery wares - 1 3 - 1 5

62Source: BPOM, 2011

7. Bakery wares - 1 3 - 1 5

8. Meat and meat products - 90 19 - 8 117

9. Fish and fish products 1 186 33 76 2 298

10. Eggs and egg products - - - - - -

11. Sweeteners, including honey 11 9 3 2 - 25

12. Salts, spices, soups, sauces, salads, protein products 4 260 202 120 14 600

13. Foodstuffs intended for particular nutritional uses 15 35 5 17 - 72

14. Beverages, excluding dairy products 21 687 287 89 6 1,090

15. Ready-to-eat savouries 7 458 79 190 7 741

16. Composite foods 3 8 27 - 2 40

TOTAL FOOD ITEMS IMPORTED 182 4,304 1,086 1,186 76 6,834

PROCESSED FOODS ITEMS IMPORTED BY INDONESIA From 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

63

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

(%) 32.92 67.08 100.00

Trade

Value US$

2006 2007 2008 2009 2010JAN-MAR

10JAN-MAR

11

Export5,100,866 9,201,490 8,318,669 10,183,313 20,961,439 3,473,220 3,476,354

Export – Import F&B Product between Indonesia - China

Comparing with ASEAN. The trade value Indonesia -China is smaller than it’s potential

9/17/2011 64

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 9,963,402

Source: BPS (calculated by Data Centre Ministry of Trade)

During his visit to Indonesia last April, Excellency PM Wen Jiabao talked about trade relations between Indonesia - China in the context of ACFTA: “Strengthen Good-Neighbourly Relations and Deepen Mutually Beneficial Cooperation”. “Entering the new century, our two countries have enjoyed frequent high-level exchanges, deepening political mutual trust and fast growing business cooperation. The establishment of the strategic partnership in 2005 brought 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”

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 in 2006 & 2007. On the other hand, ASEAN has maintained trade surplus with theUSA,EU25,Australia,NewZealand,India,Canada and Pakistan since 1998.

65Source: ASEAN Secretariat (2010)

Intra and Extra Trade ASEANAbout 25% trade is Intra-ASEAN. Means , ASEAN is still more trade dependence with Extra-ASEAN. Hope to bigger trade Intra-ASEAN after AEC

66

Source : http://www.aseansec.org/22073.htm,

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

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

WG 1

Working Group on Standards

and Mutual Recognition

Arrangements (MRAS)

WG 2

Working

Group Accreditatio

n and Conformity Assessment

WG 3

Working

Group on Legal

Metrology

JSC EE MRA

Joint Sectoral Committee for

ASEAN Sectoral MRA for Electrical

and Electronic Equipment

ACC

ASEAN Cosmetic

Committee

PPWG

Pharmaceutical Product Working

Group

PFPWG

Prepared Foodstuff

Product Working

Group

APWG

Automotive

Product Working

Group

TMHSPWG

Traditional Medicines and Health

Supplements

Product Working

Group

WBPWG

Wood-Based

Product Working

Group

RBPWG

Rubber-Based

Product Working

Group

MDPWG

Medical Devices

Product Working

Group

9/17/2011 67

Aspect to be Identified: • Food Safety• Labeling• Registration• Hallal• Specific Requirements

HARMONIZATION & STANDARD IN ASEAN TOWARDS AEC 2015

1st Commodity Priorities 2nd Commodity Priorities

•HS 1704; GSFA 05.2, 05.2.1, 05.2.2, 5.2.3, 05.4

•HS 1904; GSFA 06.3, 06.7•HS 2007; GSFA 04.1.2.5

•HS 1702 ; GSFA 11.2•HS 1704; GSFA 05.3•HS 1805; GSFA 05.1.1•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

1st & 2nd Commodity Priority have been decided to implement ASEAN Standards

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•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

Conclusion Indonesia in AEC 2015

Actions to improve

IndonesiaMarket

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

dominated by SME’s, but value by Big – Medium enterprises•Market is dominated by Traditional market but Modern trade is growing faster•Middle class has grown fast

Business Potential

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Consumers

•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)

AEC 2015

• 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 in

WHAT TO DO INDONESIA in ASEAN

9/17/2011 71

AEC 2015PRODUCT, as a basis production to be more competitive in 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 Market

Cooperationamong

• Need to build MRA to reduce Trade Barriers• Eliminating NON-TARIFF MEASURE as much

as possible , without ignoring FOOD SAFETY Standard

• Economic Partnership to minimize constraint of social status differences/gap, especially SME’s in the Country

WHAT TO DO INDONESIA in ASEAN

9/17/2011 72

amongCountries

especially SME’s in the Country• CAPACITY BUILDING for SME’s Industry to

understand about global market, standard, and market integration

NEED A CLOSER COOPERATION INDONESIA – ASEAN towards

AEC 2015

73739/17/20119/17/2011

ASEAN Food Industry indonesia

Education

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