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Getting a Slice of Indonesia’s Food and Pharma Sectors




With Indonesia’s pharmaceutical and food and beverage (F&B) manufacturing industries growing rapidly, Jakarta’s AllPack Indonesia trade event last October offered valuable insights into these increasingly competitive sectors.

According to figures from Indonesia Investments, a Dutch-owned investment advisory service, the country’s manufacturing industry was worth about US$156 billion in 2015, representing 18.1 per cent of its GDP. Of this, F&B was the largest sector, accounting for 30.8 per cent of the total revenue from all non-oil and gas manufacturing industries. A further 9.58 per cent came from the chemicals, pharmaceuticals and traditional medicine sectors. Opportunities emerging in the country’s manufacturing sector have attracted a considerable number of overseas businesses.

Manufacturing Expansion

SMC: now manufacturing in Indonesia

SMC: now manufacturing in Indonesia

One recent arrival is SMC Pneumatics Indonesia, a local subsidiary of the Tokyo-headquartered SMC Corporation. Its Indonesian operation opened in April 2014 and operates from purpose-built premises in the EJIP Industrial Park in the Cikarang Selatan region of Java.

“Indonesia’s manufacturing industry is expanding at a rapid pace and after more than 30 years of distributing our machines in the country, we saw an opportunity to open our own plant,” said PS Leow, SMC’s Country Manager.

“Locally, there is growing demand for pneumatic machinery and for quality after-sales support. We are committed to investing in our new plant and fully expect our local customer base to continue to expand.”

Another pneumatic-machinery manufacturer – France’s NEU Group – is also looking to expand into Indonesia. It has already earmarked a prospective site and hopes to be operational in two years. At present, the company uses a local distributor for its range of pneumatics material handling and transfer system machines.

“There is a huge market for our products in Indonesia,” said Deden Zainudin, a Senior Engineer with NEU Indonesia, the incumbent distribution company. “There have been occasions when we have had to turn down orders because we can’t keep up with demand. As a result of this exhibition alone, we expect to have a full year’s worth of orders from pharmaceutical companies and food-processing firms. Indonesia really is a huge market.”

Promising Pharma

According to several exhibitors at the event, the pharma sector is particularly promising and continues to grow rapidly from an already significant base. Figures from GlobalData, a London-headquartered market-research group, show that Indonesia’s pharmaceutical market more than doubled in value between 2008 and 2015 – growing to US$7 billion from US$3 billion.

Driven by a series of government economic and healthcare initiatives, the market is expected to be worth US$12.6 billion by 2020. Several factors are set to sustain this growth, most notably the prevalence of infectious diseases, widespread use of generic pharmaceuticals, increasing affordability of healthcare products, and the sheer size of the country’s over-the-counter medicine market.

“People in Indonesia are now more concerned about their health and, as the country’s population is huge, I think the country’s pharmaceutical sector will only continue to grow,” said Mary He, Sales Manager for Truking Technology, a Hunan-based manufacturer of pharmaceutical injection machines.

A veteran of the Indonesian pharmaceutical sector, Truking Technology sells sterilisation and vial washing machinery, and provides quality-control systems for the pharmaceutical sector. Ms He said that many companies in the sector are increasingly keen on adopting integrated solutions. “More of our customers now look for one-stop manufacturing solutions, covering everything from concept and design to construction and operation. They also prefer sourcing everything from one supplier.”

With Indonesia increasingly opening to overseas investors, the country’s machinery and equipment manufacturers face increasing competition. “As competition within Indonesia is now intense, we focus on quality as a way to maintain our market share,” said Arya Aditama, Sales Executive for Esco Utama, a local subsidiary of Singapore’s Esco Technologies. “Inevitably, given the size of the local population, many overseas businesses – particularly China-based companies – are looking to set up here.”

Operating in Indonesia since 2012, Esco Utama specialises in providing controlled environment equipment and laboratory and clean-room systems, such as biological safety cabinets, laminar flow and laboratory fume hoods, laboratory ovens, incubators and thermal cyclers.

Huge Growth Opportunity

AllPack Indonesia: a barometer of success for the country's pharma and food-processing industries

AllPack Indonesia: a barometer of success for the country’s pharma and food-processing industries

“The manufacturing industry here is so big that there is a genuinely huge opportunity for us to expand and grow our customer base,” said Noboru Ide, Murata Machinery’s General Manager for ASEAN and India. “With this in mind, we already have a sales and distribution office in Indonesia.”

The company specialises in textile machinery, turning machines, sheet-metal machinery and communication equipment – including a number of multi-functional digital products. It also provides factory automation and logistics systems, including automated material handling systems for clean rooms.

For Suji Asuka, Marketing Adviser for Nakakin Indonesia – a subsidiary of Osaka-based Nakakin, a specialist in manufacturing pumps for the food industry – Indonesia solves a problem the company faces due to its slow domestic market. “Japan’s population is static, which is not a good situation. As a result, it is impossible for food manufacturers to expand in Japan.

“This is why we now focus on Indonesia and Thailand, countries where the populations are big and growing. From our point of view, as long as the local population continues to grow and people continue to eat and drink, the F&B market in Indonesia will never be less than vibrant.”

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