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10/19/2011 1
ASIA PACIFIC WEEK
BERLIN , 8 SEPTEMBER 2011
ADHI LUKMAN
Chairman of GAPMMI
(INDONESIAN FOOD & BEVERAGES ASSOCIATION)
Food Trends
Changing Consumer Preferences and Markets
Indonesia and ASEAN
10/19/2011 2
INDONESIA
INDONESIA , the Archipelago Country and The World
The Indonesian
Economy and F&B Industry
Development
FACTS:� 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
INDONESIA 2011
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
� 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
Leading ASEAN
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$) 1,938 2,270 2,590 3,005 3,520 3,906
Population (mill) 225.6 228.5 231.4 237.6 243.7 249.0
Open unemployment rate (%) 9.8 8.6 7.9 7.6 7.0 6.7***
Inflation rate (%, year end) 6.6 11.2 2.8 7.0 4.61*** 5.3***
BI rate (%, year end) 8.00 9.25 6.50 6.50 6.75** 6.50
Fiscal balance (% of GDP) -1.3 -0.1 -1.6 -1.0 -1.2 -1.5
Public debt (% of GDP) 35.2 33.0 29.5 28.3 26.4 25.0
Currrency (Rp/US$, 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 96.2
123.2**
* 130.0
S&P's Rating BB- BB- BB- BB BB+ BBB-
**Semester 1 – 2011
***July 2011 (President speech 16 August 2011, RAPBN 2012) . Source: Bappenas, BPS
Key Strengths
Steady GDP growth
5.56.3 6.1
4.5
6.1 6.55.7 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
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
Break USD 4000
Break USD 3000
Source: BPS
10/19/201110/19/2011 99
Inflation is kept low
Source: BPS, Kemenperin
-2.0 4.0 6.0 8.0
10.0 12.0 14.0 16.0 18.0
2005 2006 2007 2008 2009 2010
%
Year
Food Material
Processed Food
General
January – July 2011 inflation rate at 4.61 %
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
F&B industry is dominated by Small and Home Industry (SME’s), however they only contributed less than 15%
Can SME’s survive in the competition in the global market?
OUTPUT F&B (BPS, estimated by GAPMMI):
Year RP (Trillions)
2007 402
2008 526,6
2009 586
2010 605
2011* 684
*Target, estimated growth 5 – 13 %
F&B industry output is estimated at about USD 80 billion
Source : BPS dan Kementerian Perindustrian
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
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
2011 F&B industrial growth estimated at 9.34%The sector that always kept positive growth within last 5 years
8.8 8.4 9.6 9.8 11.7 8.211.8 12.4
7.11.5
12.7 10.9 13.9 10.9 11.9 10.8 11.9 13.3
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
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)
Modern packaged food has grown double digit in 2011
Retail Audit: Indonesia Total Grocery | Food Department
Source: Nielsen Indonesia
-0.4
12.8
4.3
4.4
21.3
3.8
5.3
-0.4
2.0
6.3
16.5
5.76.8
7.0
2.0
45.9
13.6
6.4
11.3
6.3
Volume Growth %
Value Growth %
Retail Audit: Indonesia Grocery | Top 10 | Volume & Value Growth % | Jan-Jun 2011 vs. YA
Instant Noodles
Powder Milk
Coffee
Biscuit
Detergent
Cooking Oil
Sweetened Condensed Milk
Shampoo
Toilet Soap
Skincare
Source: Nielsen Indonesia
F&B categories have been growing steady
11.0
-0.4
5.5
22.9
1.6
1.5
0.5
-6.9
1.9
17.1
5.5
13.5
-1.1
8.6
0.4
2.1
6.6
27.0
14.7
12.2
Volume Growth %
Value Growth %
Tea-RTD
Liquid Milk
Snack
Toothpaste
Baby Diapers
Stock Soup
Insecticides
Energy Drink
Non Powder Detergent
Cologne
Retail Audit: Indonesia Grocery | Top 20 | Volume & Value Growth % | Jan-Jun 2011 vs. YA
Source: Nielsen Indonesia
Convenient and Healthy categories grow faster
Source : BPS, 2011
Contribution by Sector in Manufacturing Industry 2005 – 2010 (%)
F&B and Tobacco
F&B manufacturing sector has increased contribution
Investment Realization By Sector Year 2010 In Indonesia
17
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$. 1.0 billion).
(US$ 1 = IDR 8.900,-)
(US$. billion)
Transportations, Storage &Telecommunications
Mining
Electricity, Gas & Water Supply
Real Estate, Industrial Estate &Office Building
Food Industry
(US$. billion)
Food Crops and Plantation
Food Industry
Transportations, Storage &Telecommunications
Electricity, Gas & Water Supply
Other Services
Source : BKPM
Food industry is ranked 2nd in domestic investment realization and
5th in FDI realization
10/19/2011 18
PMDN/DDI Realization by Sector Q-1 2011
Source : BKPM
Domestic food industry has realized 1.7T IDR investment in Q1 2011
10/19/2011 19
Transport, Storage
& Communication
Others
Food Crops &
Plantation
Food
Industry
Paper & Printing
Industry
PMDN/DDI Realization by Sector Q-2 2011
Metal, Machinery &
Electronic Industry
Higher investment in Q2 2011 - 2.9T IDR
Source : BKPM
10/19/2011 20
PMA/FDI Realization by Sector Q -1 2011
Source : BKPM
FDI reached USD 0.3B in Q1 2011
Source : BKPM
Others
US$ 1.3 B Mining
US$ 1.5 B
Trade &
repairs
US$ 0.4 B
Transport,
Storage &
Communication
US$ 0.5 B
Metal, Machinery &
Electronic Industry
US$ 0.5 B
Chemical &
Pharmaceutical
Industry
US$ 0.6 B
Food Industry
US$ 0.27 B
(5.5%)
FDI add USD 0.27B in Q2 2011
Others
US$ 2.2 B
Japan
US$ 0.4 B
USA
US$ 0.6 B
Netherland
$ 0.6 B
Singapore
US$ 0.8 B
South Korea
US$ 0.2 B
Source : BKPM
Singapore, Netherland and USA are top 3 foreign direct investor
Country Q 1 Q 2
P I P I
Source : BKPM
EU FDI Realization in Indonesia increased from 604 bil IDR in Q1 to 833 bil IDR in Q2 2011
P= # of Projects
I = in Billions Rupiah
24
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 2008-2010
1. China 1 1 1
2. India 2 3 2
3. Brazil 3 4 5
4. USA 4 2 3
5. Russia 5 5 4
6. Mexico 6 12 11
7. Inggris 7 6 12
8. Vietnam 8 11 6
10. Germany 10 7 7
11. Thailand 11 n/a n/a
12. Poland 12 13 13
13. Australia 13 8 n/a
14. France 14 14 15
15. Malaysia 15 n/a n/a
16. Japan 16 n/a n/a
17. Canada 17 10 10
18. Chile 18 n/a n/a
19. South Afrika 19 n/a n/a
20. Spain 20 n/a n/a
9. Indonesia 9 9 8
Indonesia was ranked 9th as major
destination for FDI. This result was based
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:Channel Development,
Consumer Preferences, Food Safety, Regulation & Trade
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
82.9 82.1 81.5 80.7 80.4 80.8 79.8 76.2 74.5
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
Trade Channel Contribution | Total 56 Categories – including cigarette
17.1%
25.5%
However in term of sales value, modern contribute to about 25% of the market
*55 Cats (Jaguar) + Cigarette (Legacy)
Source: Nielsen Indonesia
YTD 2011 modern channel is still driver of the growth
of total market
8.2
15.6
11.1TotalIndonesia
ModernTrade
TraditionalStores
Trade Channel Value (Rp) Growth | Total 55 Categories | YTD 2011 vs. YA
Source: Nielsen Indonesia
2929
••INFORMATION ERA INFORMATION ERA
(CONNECTED & TECHNOLOGY)(CONNECTED & TECHNOLOGY)
••EDUCATIONEDUCATION
••SOCIAL STATUS & LIFE STYLESOCIAL STATUS & LIFE STYLE
““New ConsumerismNew Consumerism””
••HEALTH CONCIOUSHEALTH CONCIOUS
••RELIGIOUSRELIGIOUS
••DISTRIBUTIONDISTRIBUTION
••CONVENIENCECONVENIENCE
Point of Point of
view/food view/food
valuevalue
Challenges ahead for food industry is that market &
consumer is changed
10/19/2011 30
��Digital technology change all aspect of life styleDigital technology change all aspect of life style
��Every 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)
••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 . But, boosting sales & knowledge . But,
sometimes also spread misleading information (black campaignsometimes also spread misleading information (black campaign) quickly that will ) quickly that will
impact to sales impact to sales
TREND INFORMATION ERA With digital/communication technology development will make the world to be
more connected
10/19/2011 31
EDUCATION, SOCIAL STATUS & LIFE STYLE, HEALTH CONSCIOUS & RELIGIEDUCATION, SOCIAL STATUS & LIFE STYLE, HEALTH CONSCIOUS & RELIGIOUS:OUS:
��More educated, wellMore educated, well--knowledge knowledge �������� higher desirehigher desire
��Higher social status & lifestyleHigher social status & lifestyle
�������� higher demand of high end product higher demand of high end product
�������� ““new consumerismnew consumerism””
��More health conscious More health conscious �������� promotion claim:promotion claim:
•• 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 awareness of religiosity Higher awareness of religiosity �������� Hallal, etcHallal, etc
��Awareness of Food SafetyAwareness of Food Safety
��Then, food business is regulated more strict in all over the worThen, food business is regulated more strict in all over the world. More developed ld. More developed
the country, more strict the regulationthe country, more strict the regulation
Education changed lifestyle
10/19/2011 32
Nutrition
Facts
Hallal
Waste
concerned
Educated Consumers are more aware of Packaging label
3333
•Food Safety•Quality Standard
•Healthy & Functional Food
•Back to Nature
•Food Additives concern
•Label
•Hallal/ Khouzier
•Convenience
Local & Global
Trade
consideration
Even though
•Delicious
•High Nutrition
If Not SafeNo Value
Challenges on Food Quality and Safety
garbage
3434
•• 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
••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 Critical Point
Management
Food Safety
SAFE VS COST
Food Availability
Food Acceptability
Food Safety
People’s Welfare
Food Accessibility
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
3636
Concerning about Quality & Food Safety Integrated System
(Traceability)
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
HACCP
Production facility
Farming Post Harvest’shandling
Processing Distribution Market Consumer
GFP
GHP
GMP GDP GRP GCP
Harvest Post Harvest
Mutual Recognition Arrangement (MRA)
FORM FARM
FROM STABLE
TO FORK
TO TABLE
Pre Harvest
3737
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)
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)
Protection for Consumers
*NADFC = National Agency of Drug and Food Control
10/19/201110/19/2011 3939
Basic Training & Implementation of Food Safety
GMP
HACCP
Quality System
Certified Quality Management (ISO 9000, 22000, SQF)
Encouraging Food Industry to reach Food Safety System
(by NADFC)
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
10/19/201110/19/2011 GAPMMI presentationGAPMMI presentation 4141
Key International Standards:
�Codex Standards (CAC)
�GRAS, ADI, etc
�ISO Standards (9000, 9001,14000, 22000,26000) FSSC 22000 ,
PAS 220, etc
�HACCP, GMP,, etc.
BUILDING THE FUTURE” FOR TRACEABILITYKey Legal Requirements:
�EU Food Law
�FDA Regulations
�JAPAN FOOD SANITATION LAW
�AUSTRALIA BIOSECURITY ACT
�Etc
Key Commercial Standards:
�Global Food Safety Initiative (CIES)
�EUREPGAP
�SQF (FMI)
�BRC
�NGO
International standards
to address consumers'
desire
10/19/201110/19/2011 4242
REGULATION IN IMPORTING COUNTRY
Each Country update the regulation to protect Consumers?
1. White Paper on Food Safety From EU, 2000
2. Bioterrorism Act from US, 2003
3. Japan Food Sanitation Law, Traceability, Positive list regulation, 2006
4. The Biosecurity and Agriculture Management Act 2007 (BAM Act)
5. Food Laws in Hong Kong, 2007 and Mandatory Nutrition Fact on Label 2010
Mandatory
43
• NTBs (Non Tariff Barriers)
• REACH (Registration, Evaluation, Authorization and Restriction of Chemicals)
• DMF (Dimethyl fumarate)
• SPS (Sanitary and Phytosanitary)
• MRA (Mutual Recognition Agreement)
• RED (Renewable Energy Directive)
While, some NTBs /Non Tariff Measure continues to occur in the midst of the spirit of FTA
10/19/2011 44
DISTRIBUTION, CONVENIENCE :DISTRIBUTION, CONVENIENCE :
��Consumers demand more quick services, comfortable & convenienceConsumers demand more quick services, comfortable & convenience storestore��������
Growth of modern market is higher than traditionalGrowth of modern market is higher than traditional
��Young family , small family, & working people Young family , small family, & working people �������� changing habits of consumptionchanging habits of consumption
��Changing style & size of packagingChanging style & size of packaging
Lifestyle could change the demand for product, services and distribution system, etc.
10/19/2011 45
Modern Trade/Mini MarketTraditional Market
FMCG is shifting to modern distribution
10/19/2011 46
Traditional Market
Old Style
Traditional Market
New Style
Modern Market
However for fresh food, the wet market is still a preferred
channel by consumer
•The art of purchase with
bargain
•Interaction Seller - Buyer
More hygienic, convenience Fixed Price
10/19/2011 47
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
10/19/2011 48
Traditional Modern / Global
Modern premise may influence but not necessary eliminate
traditional
Lifestyle
for
modern
Young
generation
10/19/2011 49
A New Trend, new demand���� more convenient &services for
Consumers
24 hours Mini Market is combined
with Café shop (upstairs)24 hours Gasoline Station with Mini
Market
24 hours with
Wi-Fi services
Indonesian Middle Class has grown 50 million since 2003 to
become 131 million people in 2010
"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 2011
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
“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
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
expanding to Latin America
Main Regional FTA
Source : CIA Factbook (2007)
NAFTAPopulation: 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
ASEANPopulation: 575.5 millionGDP: US$ 3.431 billion
FTA Canada – Chile 1997FTA : Chile – Mexico 1999FTA : USA – Chile 2004FTA : USA – Singapore 2004FTA : USA – Australia 2005FTA : Mexico – Japan 2005FTA : Chile – Brunei – NZ –Singapore 2006
MERCOSURArgentina, Brazil,
Paraguay, Uruguay
FTAA(by 2005)
under negotiation
NAFTAU.S.A.,
Canada,Mexico
SAPTABangladesh, Bhutan,
India, Maldives,Nepal, Pakistan, Sri
Lanka
China - ASEAN FTA
ASEAN-Japan Comprehensive
Economic Partnership (AJCEP)
Japan-Korea FTA(under negotiation)
Japan-Mexico EPA(signed agreement)
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
EU-MEXICOFTA
EU27 countries
ACP-EUCountries in Africa and the Caribbean
(approx. 70 countries)Japan-
MexicoEPA
(signed agreement)
Japan-Korea-China FTA (under negotiation)
Australia-New Zealand-ASEAN FTA
Korea - ASEAN FTA
Source : CIA Factbook (2007)
5454
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
3. Indonesia – Australia
President RI and President of
Australia, Nov 2nd 2010
4. Indonesia – EU
President RI and President of EU
Commission, Dec 2009
1. Trade in Goods (TIG)
2. Rules of Origin (ROO)
3. Trade Remedies
4. Trade in Services (TIS)
5. Intellectual Property Rights (IPR)
6. Government Procurement
7. Technical Cooperation / Capacity
Building
8. Other Issues
9. Legal Text
Single market
and
production
base
Highly
competitive
region
Region of
equitable
economic
development
Integration
into the
global
economy
AEC 2015
It could be a Potential Market?
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)
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
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)
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
10/19/2011 57
Continent Density
(inhab./km2)Population (2011)
Most populous
countryMost populous city
Asia 86.7 4,140,336,501
People's Republic of
China
(1,341,403,687)
Tokyo (37,730,064)
Africa 32.7 994,527,534Nigeria
(152,217,341)Cairo (19,439,541)
Europe 70 738,523,843Russia
(142,905,200)
Moscow
(14,837,510)
North America 22.9 528,720,588
United States of
America
(308,745,538)
Mexico City
(21,163,226)
South America 21.4 385,742,554 Brazil (190,732,694)São Paulo
(19,672,582)
Oceania 4.25 36,102,071Australia
(22,612,355)Sydney (4,575,532)
Antarctica 03,687
(nonpermanent)
Antarctica (3,687,
nonpermanent)No cities
World population by continent (2011)Will the number of population could change the world economy?
10/19/2011 58
Rank CountryGDP
(millions of USD)
— World 62,909,274
— European Union 16,282,230
— United States 14,657,800
— People's Republic of China 5,878,257
— Japan 5,458,872
— South Korea 1,007,084
— ASEAN 1,843,846
1 Indonesia 706,735
2 Thailand 318,850
3 Malaysia 237,959
4 Singapore 222,699
5 Philippines 188,719
6 Vietnam 103,574
7 Burma 35,646
8 Brunei 11,963
9 Cambodia 11,360
10 Laos 6,341
List of ASEAN countries GDP (nominal),
International Monetary Fund 2010 estimates.
Contribution of
ASEAN Plus:
29.60 % of the World GDP
ASEAN Economic Minister Meeting
ASEAN Senior Economic Official Meeting (SEOM)
ASEAN Consultative Committee on Standards and Quality (ACCSQ)
WG 1
Working
Group on
Standards
and Mutual
Recognition
Arrangemen
ts (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
Pharmaceutic
al 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
To prepare towards AEC 2015, ASEAN formed ACCSQ Structure to
evaluate all aspect trade,
and PFPWG for food & foodstuff has been formed
10/19/2011 59
• Exchange of information on standards, regulations, procedures and mandatory requirements in Member Countries related to prepared foodstuff;
• Review and analyze the comparative study of regulatory regimes among Member Countries;
• Identify areas for possible harmonization and MRAs;• Develop, implement and monitor the sector MRAs; and• Identify the technical infrastructure needs and build-up mutual confidence in
testing and conformity assessment
10/19/2011 60
PFPWG – Scope of activities
Aspect to be Identified:
• Food Safety
• Labeling
• Registration
• Hallal
• Specific Requirements
The 8th ACCSQ PFPWG Meeting (Palembang, Indonesia, 21-22 August
2008)
Task Force on harmonization
of food safety standards for Prepared
Foodstuff was formed
The 8The 8thth ACCSQ ACCSQ PFPWG Meeting PFPWG Meeting
(Palembang, Indonesia, (Palembang, Indonesia, 2121--22 August 22 August
20082008))
Task Force oTask Force onn harmoniharmonizzation ation
of food safety standards of food safety standards for Prepared for Prepared
Foodstuff Foodstuff was formedwas formed
Future ASEAN Single Market Future ASEAN Single Market supportedsupported
The Trade intra ASEAN The Trade intra ASEAN facilitatedfacilitated
ASEAN Food Safety Standards ASEAN Food Safety Standards HarmonizationHarmonization
TBT eliminationTBT elimination
MRA developmentMRA development
ACCSQ Prepared Foodstuff
Product Working Group (Latest
13th in Cambodia , July 2011
10/19/2011 61
ACCSQ – PFPWG work to eliminate TBT and develop MRA among
ASEAN Countries
10/19/2011 62
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
•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
1st & 2nd Commodity Priority have been decided to implement ASEAN Standards
10/19/2011 63
Activity
Value : US$
2010 Jan-May'10 Jan-May'11
Export 539,611,476 198,099,734 321,193,638
Import 242,462,615 98,353,018 82,018,192
Source: BPS, calculated by Ministry of Trade
F&B TRADE BETWEEN INDONESIA - EU
Trade value is still very small compared to its potential
Still plenty of ROOM to improve Trade
and exploit the Potential
10/19/2011 64
No. COUNTRY
Export Import
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
F&B TRADE AMONG INDONESIA - ASEAN
While, trade value among ASEAN Countries is higher than Indonesia – EU. Though
number of population of Indonesia - the EU is much bigger than Indonesia - ASEAN
Conclusion Actions for Indonesia - EU
10/19/2011 66
Consumer’s Preferences & Market Changes
10/19/2011 67
WHAT TO DO INDONESIA - EU
10/19/2011 68
WHAT TO DO INDONESIA - EU
NEED CLOSER COOPERATION
INDONESIA – ASEAN - EU
696910/19/201110/19/2011
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