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Strengthening Business Integrity in Food Sectors through Licensing: Several Dilemmas
By: Dewi Meisari Haryanti
Project Leader of http://ukmindonesia.org – LPEM FEB UI
Scope of Business Classification in Food Sectors
• Food industry or Food processing (including forage or provender) – KBLI 10
• Food and beverages services (restaurants, food truck, café, etc) – KBLI 56
• Food trading (food commodities wholesale trader, warung, shop or market that sells food products) – KBLI 46 and 47
• Supporting industry (such as packaging industry– KBLI 17; or machinery industry-KBLI 28)
Business Actors within Food Sectors
• Terkait sektor Industri, pada 2010 terdapat total 23,345 perusahaan Industri Besar Sedang (IBS), yang menghasilkan nilai tambah sekitar Rp 890.1 trilyun; sementara total nilai tambah seluruh sektor industri pada tahun yang sama adalah sekitar Rp 1600 trilyun. Sementara untuk industry makanan saja adalah sekitar Rp 465.4 trilyun (termasuk industry minuman dan pengolahan tembakau)
• Artinya industri besar dan sedang berkontribusi sekitar 55.6% dari total nilai tambah sektor industri; sehingga 44.4% dihasilkan oleh Industri Mikro dan Kecil (IMK), yang berjumlah 2,732,724 unit.
Micro and Small
(BPS, 2010)
Medium and Large
(BPS, 2010)
Food industry or
Food processing 929,910 5248
Food and beverages
services n/a n/a
Food Trading n/a n/a
Supporting Industry
(KBLI 17 and 28) 8,808 787
Business
Classification
Number of Business Actors
Business Actors in Food Industry
Type of Business Actor
Number of Unit Productivity (IDR million)
Annual Average productivity/unit (IDR million)
Contribution to whole industry sector
Micro and Small Industry
2,732,724 707,985,000 259.45 44.4%
Medium and Large Industry
23,345 891,088,000 38,123.79 55.6%
Micro and Small Industry in Food Industry*
929,910 238,463,000 256.44 14.9%
Medium and Large Industry in Food Industry*
5,248 226,904,000 43,236.28 14.2%
*) Including beverages industry and tobacco processing Source: BPS, for the year of 2010 (market price); for Micro and Small Industry unit is from BPS (2010) in Tambunan (2012), data is processed by author
The structure of actors in Food Industry
• Micro and Small food Industry has unit share of about 99.4% of total business unit in the whole Food Industry, with 14.9% contribution to total productivity of the whole Industry/manufacturing sector.
• Medium and large food industry has unit share of only about 0.6% of total business unit in Food Industry, with about 14.2% contribution to total productivity of the whole industry sector.
• Micro and small food industry absorb large number of manpower, but low productivity. If we assume average manpower is 5 person per business unit, than it involves about 4.65 million manpower.
• Medium and large food industry absorb about 1.04 million manpower
• The average business productivity of Medium and Large (ML) Food Industry is about 168 times higher than Micro and Small (MS) Food Industry
Product Integrity: MS-Food Industry vs ML-Food Industry
• Most of Micro and Small Food Industry do not have formal license nor legal entity; while Medium and Large Industry have.
• However, its product is cheaper, thus provide affordable food for a lot of Indonesian.
• In 2014, our average monthly Income is about IDR 3.36 million per month; about the same of Minimum wage in DKI Jakarta
• In general, the products of MS-Food Industry have lower integrity than the ML-Food Industry; thus, have higher risk to harm Indonesian people due to its non-reliable processing method, particularly regarding hygiene and sanitation norms.
Product Integrity: MS-Food Industry vs ML-Food Industry
The dilemma:
1. If the product formalization have consequences on the higher price, would it be better for the general people?
2. Is it possible to formalize and increase integrity of food products without consequence on price? Do we have to choose or we can have both?
Lets first we take a closer look on formalization process that any business in Food Industry have to secure in the context of Indonesia.
What we heard from SMEs…
1. “We want to go formal, but the procedure is very complicated, unclear, and uncertain”
2. “We want to obey the regulation, but don’t know what the regulation, or type of licenses we should have, and we don’t know the step-by-step about how to comply with the regulation. We need assistance.”
3. “Only those who have strong network and capacity to pay a good legal consultant can comply with the regulation”
4. “If the government want us to improve our integrity, why don’t government improve their integrity first?
Let’s collaborate
Government cannot solve every problem
We all should take part to improve the situation
Our small contribution is this webportal, where we can be:
- Government channel to disseminates regulation and licensing information
- SMEs channel to express their aspiration and report of licensing experience, for us to analyse, and send recommendation for the government
We need your feedbacks to improve our service!
TERIMA KASIH
