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

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. F I Asia in Indonesia 2010
9/17/2011 2

3. The Indonesian Strategic Planning,
Economy and F&B Industry
Development

4. INDONESIA 2011
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%,
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. 3. STRATEGIC GEOGRAPHIC LOCATION…
Leading ASEAN
 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.
ASEAN
Source: Supply Chain Leaders

6. THE NEW VISION OF INDONESIA
Government 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. The Action Plan strategy
ACTION PLAN
(up to 2014)
LOGICAL
FRAMEWORK
OF THE
MASTERPLAN

8. F&B is one of the main economic activities in MP3EI framework
F&B
22 Main
Economic
Activities
9/17/2011 8

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. 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 (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
123.2**
Reserves (US$ billions) 56.9 52.1 66.1 96.2 * 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

11. Steady GDP growth
5.5
6.3 6.1 6.1 6.5 5.7 6.2 5.8
6.5 6.5 6.5
4.5
06 07 08 '09 '10 est Q1 Q2 Q3 Q4 Q1 Q2
'11 '10 '10 '10 '10 '11 '11
Source: BPS, Bank of Indonesia

12. Passing GDP per capita USD 3000
Break
USD 4000
Break
USD 3000
Break
USD 2000
Break
USD 1000
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
Source: BPS

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
Year
9/17/2011 13
Source: BPS, Kemenperin

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. 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. 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 6,49
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
Source : BPS dan Kementerian Perindustrian

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 8,085
7,099 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 13.3
8.8 8.4 9.6
1.5
Jan- 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. F&B categories have been growing steady
Retail 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. Convenient and Healthy categories grow faster
Retail 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. F&B manufacturing sector has increased contribution
Contribution by Sector in Manufacturing Industry 2005 – 2010 (%)
F&B and Tobacco
Source : BPS, 2011

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. 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/ 16.6
Communication Plantation
Non Metal Mineral 2.3/ 16.7 Food Industry 2.9/15.2
Industry
Food Industry 1.7/ 12 Paper & Printing Industry 2.7/ 14.1
Electricity, Gas, and 1.6/ 11.6 Metal, Machinery & 1.9/ 10.3
Water Electronic Industry
Food Crops and 1.4/ 9.9 Transport, Storage & 1.7 / 9
Plantation Communication
Others 4.3/ 30.9 Others 6.6/ 34.9
9/17/2011 Source : BKPM 22

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/ 31.5
Electricity, Gas, and 0.6/ 13.8 Chemical & 0.6/ 13.0
Water Pharmaceutical industry
Transport, Storage & 0.6/ 13.5 Metal, Machinery & 0.5/ 11.4
Communication Electronic Industry
Food Crops and 0.4/ 9.6 Transport, Storage & 0.5/ 9.6
Plantation Communication
Food Industry 0.3/ 6.8 Trade & Repairs 0.4/ 7.9
Others 1.4/ 33.1 Others 1.3/ 26.6
(Food Industry) (0.27/ 5.5)
9/17/2011 23
Source : BKPM

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. 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 for
2. India 2 3 2 the location of FDI” conducted by the United
3. Brazil 3 4 5 Nations Conference on Trade and
4. USA 4 2 3 Development (UNCTAD)
5. Russia 5 5 4
6. Mexico 6 12 11
7. Inggris 7 6 12 Indonesia was ranked 9th as major
8. Vietnam 8 11 6 destination for FDI. This result was based
9. Indonesia 9 9 8 on UNCTAD survey whose respondents are
10. Germany 10 7 7 executives of Transnational Corporations
11. Thailand 11 n/a n/a (TNC) from developed and/or developing
12. Poland 12 13 13 countries. UNCTAD consists of 193
13. Australia 13 8 n/a member economies or countries.
14. France 14 14 15
15. Malaysia 15 n/a n/a
16. Japan 16 n/a n/a
17. Canada 17 10 10 Source: World Investment Prospects Survey 2010 – 2012, UNCTAD
18. Chile 18 n/a n/a
19. South Afrika 19 n/a n/a
25
20. Spain 20 n/a n/a

26. Key Challenges:
Natural resources potential, Changes in
Consumers habit & Market , Food Safety,
Regulation & Trade Channel
Development

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 2009
9/17/2011 27

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 3
Corn 16,5 17,8 8
Soybean 1,0 0,908*** 11
White Crystal Sugar 3,3 2,7 3
Refined Sugar 1,5 2,4 n.a
CPO 23,6 19,8 1
Tea 0,154 0,150 7
Coffee 0,754 0,680 4
Cocoa 0,855 0.661 2
Black Pepper n.a 0.022** 2
Nutmeg n.a 0.0075** 1
Chili n.a 1,3** 4
Fruit & vegetable n.a 9,096 15
Milk n.a 1,238 65
Chicken meat n.a 1,527*** 7
Hen Egg n.a 1,059*** 8
Cow meat n.a 408 19
Fish & 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. 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. 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
2009/2010.
Challenges for
Indonesia to improve
competitiveness
© 2011 World Economic Forum

31. The Global
Competitiveness
Index 2010-2011 rankings
Within Developing Asia &
ASEAN
Indonesia in rank # 5
within ASEAN
© 2011 World Economic Forum
9/17/2011 31

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. TREND INFORMATION ERA
With 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. Education changed lifestyle
EDUCATION, 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. “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. Educated Consumers are more aware of Packaging label
Nutrition
Facts
Waste
concerned
Hallal
9/17/2011 36

37. Challenges on Food Quality and Safety
Even 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. Concerning about Quality & Food Safety Integrated System
(Traceability)
FROM FARM TO FORK
FROM STABLE TO TABLE
HACCP
Production
facility
Farming Post Processing Consumer
Distribution Market
Harvest’s
handling
GFP GMP GDP GRP GCP
GHP
Pre 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. 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,etc
SAFE 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. 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
People’s Welfare
Transformation of the
social status will Indonesia status?
encourage the Food Safety ASEAN status?
business potential
Food Acceptability
Food Accessibility
Food Availability

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 2011
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
"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.

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. 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. 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 20.2
17.1%
2002 2003 2004 2005 2006 2007 2008 2009* 2010*
Traditional Stores Modern Stores
*55 Cats (Jaguar) + Cigarette (Legacy)
Source: Nielsen Indonesia

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
Trade
Traditional
8.2
Stores
Source: Nielsen Indonesia

46. FMCG is shifting to modern distribution
Traditional Market Modern Trade/Mini Market
9/17/2011 46

47. However for fresh food, the wet market is still a preferred
channel by consumer
Traditional 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. 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
market
9/17/2011 48

49. Modern premise may influence but not necessary eliminate
traditional
Traditional Modern / Global
Lifestyle
for
modern
Young
generation
9/17/2011 49

50. A New Trend, new demand more convenient &services for
Consumers
24 hours Mini Market is combined 24 hours Gasoline Station with Mini
with Café shop (upstairs) Market
24 hours with
Wi-Fi services
9/17/2011 50

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. 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 Monitoring
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)
*NADFC = National Agency of Drug and Food Control

53. Towards Global Market & AEC 2015

54. 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

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 FTA
Source : CIA Factbook
(2007)

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 Remedies
2. Indonesia – India
4. Trade in Services (TIS)
President RI – President of India,
Jan 2011 5. Intellectual Property Rights (IPR)
3. Indonesia – Australia 6. Government Procurement
President RI and President of 7. Technical Cooperation / Capacity
Australia, Nov 2nd 2010 Building
4. Indonesia – EU 8. Other Issues
President RI and President of EU
Commission, Dec 2009
9. Legal Text
56

57. AEC 2015
Single market Highly Region of Integration
and competitive equitable into the global
production region economic economy
base development

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 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
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

59. List of ASEAN countries GDP (nominal),
International Monetary Fund 2010 estimates.
GDP
Rank Country
(millions of USD)
— World 62,909,274
Contribution of — People's Republic of China 5,878,257
ASEAN Plus: — Japan 5,458,872
29.60 % 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. 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. All F&B Trade between INDONESIA - ASEAN
Trade value is still very small compared to its potential
Export Import
No. 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. 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 2 314
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
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
62
Source: BPOM, 2011

63. 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
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. Export – Import F&B Product between Indonesia - China
Comparing with ASEAN. The trade value Indonesia -China is smaller than it’s
potential
Value US$
Trade
JAN-MAR JAN-MAR
2006 2007 2008 2009 2010
10 11
Export
5,100,866 9,201,490 8,318,669 10,183,313 20,961,439 3,473,220 3,476,354
Import
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”
9/17/2011 64

65. ASEAN Balance of trade with selected trading partner countries
ASEAN 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.
65
Source: ASEAN Secretariat (2010)

66. Intra and Extra Trade ASEAN
About 25% trade is Intra-ASEAN. Means , ASEAN is still more trade
dependence with Extra-ASEAN. Hope to bigger trade Intra-ASEAN after
AEC
Source : http://www.aseansec.org/22073.htm,
66

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
Group
Aspect 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. HARMONIZATION & STANDARD IN ASEAN TOWARDS AEC 2015
1st & 2nd Commodity Priority have been decided to implement ASEAN Standards
1st 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. Conclusion
Indonesia in AEC 2015
Actions to improve

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)
Consumers
9/17/2011 70

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 in
AEC 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 Market
9/17/2011 71

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
Standard
Cooperation • 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

73. 9/17/2011 73