Financing in Indonesia for F&B and Retail
Denny S Hanubrata
November 7, 2013
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or
distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.
Overview of Indonesia
Key Indicators
GDP 2012: US$878 bn – 16th
largest economy in the world
Country Overview
Seven macro trends
Favorable demographics
 Favorable Demographics (young and growing
population) will likely drive further increases in
GDP per capita
Urbanization
 Urbanization will drive the bulk of the economic
growth of Indonesia.
Foreign exchange reserves:
US$95,675.33 million (Sep 2013)
Population: 247mio (2013)
Real GDP growth:
 6.3% (average of 2009-12)
 6.3% (average of 2013-23)
GDP per capita:
 US$3,599 (2012)
 US$8,380 (2023)
Inflation:
 4.6% (average of 2009-12)
 5.0% (average of 2013-23)
Foreign Direct Investment
remains strong particularly
in manufacturing
 Manufacturers are now consistently seeing parts of
their value-chain being transferred to Indonesia
due to low cost advantage and near to the market
Rural revolution
 Government support as investment increase to
narrow infrastructure gaps between rural and urban
Rise of consumers,
growing affluence and
burgeoning middle class
 Indonesia’s middle class is expected to grow to 3545% of the total population by 2030
Low credit penetration
 Growth in Indonesia’s banking industry - demand
has not been artificially pulled forward, hence the
marginal return on credit growth is still quite high
Exports 2012: US$210.7 bn
Imports 2012: US$212.8 bn
Emerging digital and
technology driven nation
 Emerging digital and technology driven nation
Source: McKinsey, Business Monitor, Bank Indonesia, Kompas, Country meterinfo and other research report
1
DBS Indonesia
-Indonesia
Indonesia’s macro
Indonesia: The Asian Growth Story
Today:
16th largest economy in the world
2020:
Economy larger than Singapore, Thailand and Malaysia combined
2030:
7th largest economy in the world
Some blips in the near term but long term growth story still intact
Upside, with
*infrastructure
developments
+0.5% to 1%
5.8 – 6
Continued growth trajectory
(current state)
10 years average
GDP growth of 5.7%
Presidential
Election Year
GDP per capita
(current US$)
1,076
1,871
Doubled in 5 years
Possibility that the
full impact of
government’s latest
measures be visible
only after
presidential election
3,557
Sources: DBS Group Research, McKinsey, IMF, World Bank
* Realization of Indonesia MP3EI Economic Masterplan 2011 – 2025
3
Indonesia’s macro
Some blips in the near term; allows for economy to adjust
Slower GDP growth and volatility in the Rupiah, a result of weaker global economy
Indonesia economy: Domestic Consumption Driven Model (59% of GDP)
Slower Growth in Exports
AFC ’97
14,950
GFC ’08
12,400
With the impending tapering of Fed’s
stimulus, volatility expected over next
couple of months.
Aug’13
10,741
Weakening since late 2011
Rupiah under some pressure, exacerbated by portfolio outflows
GFC ’08
USD 52bn
4.7 mths
Jun’13
USD 98bn
5.8 mths
AFC ’97
USD 18bn
3.5 mths
Foreign reserves have fallen from a high of USD 124bn
(Aug’11) to below the USD 100bn mark lately (Jun’13)
Sources: ASEAN Briefing, DBS Group Research, CEIC, World Bank
4
Indonesia’s macro
Indonesia: The Asian Growth Story
Indonesia’s long term growth potential remains strong
Indonesia’s Huge Potential
 Large domestic
Challenges
Megatrends Powering Indonesia’s Growth
into the Future
•1
Rise of consumers – growing
affluence and burgeoning middle
class
•2
Growing investments signaling
investor confidence
•3
Broad-based growth across
Indonesia
•4
Emerging digital and technology
driven nation
•5
Infrastructure development will
provide upside
•6
Growth in Indonesia’s banking
industry
 Weak infrastructure
market
 Young population;
growing
working age segment
 Lower labor costs
 Abundant and
 Political uncertainty
 Corruption, excessive
bureaucracy
 Shortage of local
talent
untapped resources
 Sound economic
fundamentals
5
Business in Indonesia
Doing Business in Indonesia
Looking at the several demographic facts at Indonesia
65+ yrs
5%
Others
19%
0-14 yrs
30%
30 - 64 yrs
36%
Hindu
2%
Budhist Other
1%
1%
Christian
8%
Bali
2%
Sumatera
21%
15-29 yrs
29%
• Indonesia’s population is
young – half the population is
below the age of 25 and 30%
under the age of 14. Only 5%
are aged 65 years and over.
Java
59%
• Java population accounts for
the lion’s share of Indonesia’s
population, so too it accounts
for the bulk of economic
activity.
Muslim
88%
• HALAL FOODS - Almost 90% of
the Indonesian population is of
Muslim faith but there are
significant numbers of
believers in other faiths.
Indonesians of Islamic faith
generally adhere to accepted
Islamic dietary restrictions.
Source: Central Bureau Statistics
6
F & B Industry in Indonesia
Halal Certification
• The Indonesian authorities do not require halal certification for all foodstuffs.
• However, given 88% of the population is Muslim, “Halal” remains a very significant aspect and is
strongly recommended.
• In addition the Indonesian Islamic Council (MUI) prefers all food products to be halal accredited.
3 Steps of LPPOM MUI Halal Certificaton:
1.
2.
Pre-Audit
 Fill in 3 application forms: halal
certification, the declaration on
ingredients, and company’s affirmation
forms
 Attach information with specification, halal
certificate and document on Halal
Assurance System
 LP POM MUI sending official letter of
schedule audit
 Auditing process to the factory
Process Audit
 Auditing Process Covers :
a. Management of Halal Assurance
System.
b. All documents regarding to the raw
material
c. Whole process of production
d. Sampling if necessary
The Field Auditing :
a. Production location (every location,
branches and toll manufacturing).
b. Factory location in the country
origin .
c. Factory location for base form of
raw material.
3. Post Audit
 Company prepare Halal Assurance System.
 Company regular report system to LP POM
MUI every 6 months and every changes raw
material, supplier, factory process, etc.
 Unscheduled inspection by LP POM MUI to the
company factory.
7
Business in Indonesia
Doing Business in Indonesia
Roadmap for those setting up business in Indonesia
Preparation
Establish an Indonesian Legal Entity
to conduct capital investment
activities.
1•
2
3
Setting Up
Preparing facilities, infrastructures and
licensing / non-licensing arrangements
for capital investment
Registration to BKPM
Must establish an Indonesian legal
entity within 6 months, or will be
declared null and void.
1•
Deed Establishment by Notary
If it is a foreign capital investment,
the legal entity shall be in the form
of a Limited Liability Company
(LLC).
2
Ratification of Legal Entity
Obtain ratification from the Minister
of Law & Human Rights of the
Republic of Indonesia.
Regional License
The company is required to have a
regional license issued by the regional
government.
Operational Permit
Company may directly arrange for
Operations Permit to the Ministry or
technical service office relevant to its
field of business.
Ready for Operation
Company is ready to conduct
production activities (industry) or
to conduct operational activities
(services).
Business Permit
To submit an application to the
institution operating One Stop
Service.
Next step (required application):
● For a trading company →
General Importer Identification
Number (API-U).
● For non-trading companies →
import duty exemption for
goods and materials.
Source: BKPM
8
Foods & Beverages - Retail
Indonesia Top 15 Industries
Food & Beverage potential remains strong for the next 20 years
2023
2012
In S$ million
Personal and household
services
470
Textile manufacturing
3,274
Estate crops (e.g. CPO,
coffee, tea)
484
Telecommunication
3,328
Textile manufacturing
498
Transportation (land, water, air)
3,456
Restaurants
3,457
Oil and gas manufacturing
3,496
Oil and gas manufacturing
Telecommunication
Transportation (land, water, air)
General Government
Fertilizers, chemical and
rubber products
544
634
Estate crops (e.g. CPO, coffee,
tea)
666
Fertilizers, chemical and rubber
products
698
General Government
732
Food crops (e.g. rice, corn)
Property
Non-oil and gas mining (e.g.
coal, metal)
930
Non-oil and gas mining (e.g.
coal, metal)
Oil and gas mining
1,094
Oil and gas mining
Automotive and Machinery
Manufacturing
1,155
Automotive and Machinery
Manufacturing
Infrastructure
1,384
Food, beverages and tobacco
manufacturing
1,565
Infrastructure
Growth rate assumption (Source:BMI & BI)

Transportation, Oil & Gas manufacturing & mining (9%)

Textile manufacturing, Property, Non oil & gas mining (10%)

Automotive and machinery manufacturing (12%)

Infrastructure (13%)
Property
865
1,606
Food, beverages and tobacco
manufacturing
Food crops (e.g. rice, corn)

Restaurant (14%)




Estate crops ( (16%)
General government (17%)
F&B and Tobacco manufacturing (18%)
Food crops (23%)
4,489
5,219
5,685
7,310
8,019
8,708
11,020
11,724
15,021
16,866
9
Foods & Beverages - Retail
F & B Industry in Indonesia
Investment and Competition
The food industry is included in the investment realization in the Top 5 Domestic Investments (DCI) and
Foreign Direct Investments (FDI) in Indonesia.
Foreign Direct Investment Realization Based on
Capital Investment Activity, 2011
Domestic Direct Investment Realization Based
on Capital Investment Activity, 2011
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
100%
36%
Total: IDR 76 Tn
10.40%
12%
9.20%
9%
11%
12.30%
1
27.00%
0.9
4.00%
Total: IDR 19.5 Tn
0.8
6.30%
5.60%
0.7
9.10%
0.6
9.60%
18.50%
0.5
100%
0.4 19.80%
0.3
0.2
0.1
0
• Investment realization in the food industry ranks fifth in FDI in 2011, while it ranked the third for
domestic investment.
• In terms of the number of businesses, large medium-scale enterprises in this industry is very
small (<1%). However, they control the turnover by 85%.
• Food and beverage manufacturers in Indonesia have faced non-tariff barriers for export, such as
food safety and labeling requirements.
• In addition to competition with domestic products, business competition in the food and beverage
industry with imported products in 2012 is estimated to be tighter.
Source: Central Bureau Statistic, The Investment Coordinating Board
Foods & Beverages - Retail
F & B Industry in Indonesia
A sharp growth in Food and Beverage industry over the past few years.
Why Indonesia for F&B?
• The large and growing number of Indonesia
population
• The fairly strong domestic economy and
people’s purchasing power
• The increasing middle-class segment in the
country, which increases demand for imported
food.
• Indonesia is expected to become one of the
world's largest food suppliers.
• The nature of products related to basic needs.
• Increasing urbanization, growing health
consciousness, and changing life styles.
• Government support: Government has planned
to allocate more investments in the food industry
in its Master Plan for Acceleration and
Expansion for Economic Development (MP3EI).
Source: Central Bureau of Statistics, Ministry of Industry
Contribution of the food & beverage and tobacco
industry to the non-oil and gas manufacturing industry
Share of Food & Beverage and
Tobacco Industry Output to Total
Non-Oil Manufacturing Industry
Output
33.20%33.60%
Food & Beverage and Tobacco
Industry Output Growth
11.22%
10.40%
9.19% 8.94%
8.15%
7.21%
30.40%
29.80%
28.60%28.50%
5.05%
2.75%
2.34% 2.78%
2005 2006 2007 2008 2009 2010
• Contribution of the food & beverage and tobacco
industry output to the total non-oil and gas
manufacturing industry output for several years
shows an increasing trend to 33.6% in 2010.
• On the other hand, the industry output growth is
somewhat unstable.
• Indonesia experienced the second highest
growth in the food & beverage and tobacco
industry output in 2011, reaching 9.2%.
Foods & Beverages - Retail
F & B Industry in Indonesia
F&B Retail is still prospective
• Mass Grocery Retail sales are forecast to increase by a compound annual average rate
of 13.7% over the five years to 2017.
• Modern retail outlets such as supermarkets and convenience stores are springing up
quickly across Indonesia's urban cities.
• The convenience sub-sector attracts strong attention from retailers as well, given that
there would be much less interference in the sector from regulators.
• Traditional retail in the form of small, independent grocery stores and open-air markets
continues to play a strong role in the country.
80
2,500,000
60
2,000,000
1,500,000
40
1,000,000
500,000
20
0
0
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Total mass grocery retail sector (IDRbn)
Supermarkets & Hypermarkets
Convenience stores (IDRbn)
Total mass grocery retail sector growth, IDR, (y-o-y)
• Supermarkets is expected to continue enjoy the strongest growth.
• The convenience store will benefit from the increasingly demanding nature of Indonesia's
urban residents and from its ability to expand in crowded towns and cities where
saturation restricts the expansion of larger formats.
Source: Indonesia’s Modern Retail Sector: Interaction With Changing Food Consumption and Trade Patterns / EIB-97 Economic
Research Service/USDA
12
Foods & Beverages - Retail
F & B Industry in Indonesia
Modern Retail Markets
Indonesia market share concentration across modern retail outlet would be as follows:
Hypermart
Supermarket
0.50%
Superindo
8.30%
6.60%
19.40%
54.30%
25.80%
2.70%
Carrefour
1.90% 1%
Hypermart
1%
Giant
Foodmart
Giant
Macan Yaohan
Supermarket
Grand Lucky
Carrefour Express
79%
Hero
Others
Convenience Store
0.80%
2%
4.70%
• Since 1999, the minimart/convenience store
presence has grown rapidly.
Alfamart
18.200%
Indomaret
40.30%
Alfa Midi
Circle K
Yomart
34%
Others
• This segment is highly concentrated, dominated by
the domestically owned firms, such as Alfamart
and Indomaret.
• In the last 10 years, hypermarket and convenience
stores, rather than super-markets, have driven the
modern food-retail industry’s growth in Indonesia.
Source: USDA, Economic Research Service calculations using Euromonitor data
13
Financing Products for F&B Retail
Foods & Beverages - Financing
Trade Products - Manage your trade transactions efficiently and improve your cash flow
Import Services
• Letter of Credit or SKBDN - Provide assurance to your suppliers when the complying
documents are presented
• Import Financing - Finance the purchase of your goods and take ownership earlier
• Inward Bill Collection (DA/DP) - Facilitate your trade activities with our documentary
collection service
• Shipping Guarantee - Take delivery of your cargo quickly to avoid costly demurrage
charges
Export Services
• Letter of Credit Negotiation/Discounting - Convert receivables to cash immediately
• Transferable Letter of Credit - Purchase goods quickly and easily by transferring your
export Letter of Credit
• Outward Bill Collection (DA/DP) - Collect your payments easily and efficiently
• Pre-Export Financing - Improve your working capital with pre-shipment financing
• Export Factoring - Minimise your export risks with credit protection
Related Services
• Accounts Payable Financing - Increase your turnaround time with this customised
invoice financing solution
• Accounts Receivable Financing - Improve your cash flow by monetising your
receivables with DBS Accounts Receivable Financing (ARF).
• Banker’s Guarantee/Standby Letter of Credit- Provide payment assurance to your
beneficiaries
14
Financing Products for F&B Retail
Foods & Beverages - Financing
Business Loan - Fund the growth of your business with a wide range of financing solutions
tailored to your needs
Working Capital
• Supply-Chain Financing - Free up valuable cash trapped in the supply chain with DBS
Supply-Chain Financing (SCF). This innovative working capital solution benefits all
parties involved by leveraging our relationship with a corporate anchor to inject liquidity
into the supply chain.
• Overdraft - Enjoy greater flexibility with immediate access to funding
• Revolving Credit Facility - Enjoy steady access to funding and free up cash that can
be invested back into the business to help you grow.
• Inventory Financing - Increase liquidity, build your stock and grow your business with
Inventory Financing under a Collateral Management Agreement (CMA).
Term Loan
• Term Loan - Grow your business with minimal disruption to your cash flow. Grasp the
opportunity to expand your business with a DBS Term Loan. Enhance your cash flow
and improve your day-to-day business operations with attractive interest rates.
15
Financing Products for F&B Retail
Foods & Beverages - Financing
Treasury Products - Manage your risk and grow your business with our range of treasury
solutions
Foreign Exchange
• FX Value Today - Convert your currencies immediately
• Spot FX - Convert your currencies for future delivery
• FX Forward - Protect your foreign currency receivables and payables from
exchange rate volatility with a DBS FX Forward contract.
• FX Option - Hedge against exchange rate volatility with a DBS FX Option,
which can be customised to suit your needs.
Interest Rates
• Interest Rate Swap - Protect your business against interest rate volatility
through DBS’ Interest Rate Swap. We can help you manage the interest
expense you pay on your loans.
• Cross-Currency Swap - Hedge against both currency and interest rate
exposures with DBS Cross-Currency Swap. This is an agreement between
two parties to swap future interest payments.
16
DBSI contact number
• Denny S Hanubrata, office email : dennysh@dbs.com
• Mobile phone +628129933278
• Samuel Yuliady, office email : samuelyuliady@dbs.com
• Mobile phone +6285959939290/+6281212730780
• William Prasetia Jaya, office email: williamprasetia@dbs.com
• Mobile phone +6287781958642/+6281806267328
PT. Bank DBS Indonesia
DBS Bank Tower, 37th Floor
Ciputra World 1
Jalan Prof. Dr. Satrio Kav 3-5
Jakarta 12940
www.dbs.com/id
17
APPENDIX
18
Some of our Customers at F&B Retail
Foods & Beverages - Retail
Strong commitment has been provided by DBSI to our customers
Garuda Food
GarudaFood is a food and beverage company subordinated to Tudung Group. In
addition to GarudaFood, Tudung Group also subordinates agribusiness companies
operating iniCrude Palm Oil field and peanuts.
In a national level, GarudaFood is positively perceived as one of the admired food
and beverage companies. Survey made by Frontier and BusinessWeek Indonesia
Magazine indicated that GarudaFood was in the third position of Indonesian Most
Admired Company ( IMAC) .
To accelerate the achievement of its vision, in 2011 GarudaFood Group with nonalcohol divion of Suntory Beverage & Food, a company from Japan established a
subsidiary PT Garuda Suntory Beverage, focused on the development of the
beverage
Mitra Alam Segar – Wings Group
WINGS Group is one of the largest and most established consumer goods
manufacturer in Indonesia focusing in laundry, household, personal care, and Food
& Beverage products. Ale – Ale & Teh RIO currently is the leading brand in its
category.
PT. Alam Segar is one of the companies incorporated in the Wings group that
operates in the Food & Beverage products.
General Food Ind – Petra Food
Headquartered in Singapore and listed on the mainboard of the SGX-ST since
November 2004, Petra Foods Limited (“Petra Foods”) markets and distributes its
own brand of chocolate confectionery products in its core markets of Indonesia,
Philippines, Singapore and Malaysia. In addition, their chocolate confectionery
products are sold in over 10 other countries including Thailand, Brunei, India, South
Korea and Vietnam.
The Group has an established portfolio of chocolate confectionery brand names in
Indonesia including "SilverQueen" and "Ceres" which were introduced in the 1950's
and "Delfi" in the 1980's.
Aneka Coffee Industri
PT. Aneka Coffee Industry (ACI) was established in 1995 as a joint venture
company by PT. Prasidha Aneka Niaga Tbk, a subsidiary of Prasidha Group Indonesia's largest coffee processor and exporter, Itochu Corporation - Japan's
number one trading house, and UCC Ueshima Coffee Co., Ltd. - a strong player in
retail coffee business.
ACI, located in Sidoarjo-East Java, Indonesia, is one of the biggest instant and
roasted ground coffee manufacturers in South East Asia. ACI exports to various
industrial buyers throughout the world instant coffee products. Special and distinct
blends of instant coffee according to customers' specific requirements are often
made to help customers create differentiated products.
ACI also provides private labeling and toll manufacturing services. To establish an
identity for itself in the coffee industry, ACI sells "Prima" branded instant coffee
products and "Alami" branded ground coffee products in selected international and
domestic markets.
Amanfood Industri (Ligo Group)
PT. Aman Food Industri, a company that concentrates on beverage products, was
established in 2008. The factory is located in Wanaherang, Bogor and currently, AFI
has 4 different flavored beverages- Orango, Blackcurrant, Strawberry and Guava,
labeled under the brand NICE LHO! and one tea product under the brand TEH
SEMESTA.
Through continuous innovation and outstanding human resources, AFI has grown
tremendously, coming up with new product ranges as well as increasing production
capacity. In addition, products manufactured by AFI are in line with the regulations of
Health Department of the Republic of Indonesia. To maintain the quality of products,
AFI also implements the GMP method (Good Manufacturing Practice).
AFI commits to deliver excellent products at a reasonable price to our customers. AFI
has marketing & distribution channel that encompass whole level from distributor to
retail and covering area of Jakarta, Bogor, Depok, Tangerang and Bekasi.
19
DBSI Corporate Profile
DBS Corporate Profile
Well-Positioned at the Crossroads of Asia
We are a leading financial services group in Asia






Largest commercial banking group in Singapore and Southeast Asia
Established in 1968 as Singapore’s development bank
Market capitalisation: SGD 32.4 bn (equivalent to USD 25.3 bn)1
Total assets: SGD 340.8 bn (equivalent to USD 262.2 bn)2
Net profit: SGD 2.65 bn (FY2010) vs. SGD 3.03 bn (FY 2011)
Credit ratings of Aa1/AA-/AA- (Moody’s/S&P/Fitch) , one of the highest in Asia
More than 18,000 staff
representing over 30 nationalities
Present in 50 cities in 15 markets
Over 200 branches & 2,000 SSBs*
1as
at 30 May 2012
at 31 December 2011
*SSBs comprise ATMs, AXS Stations, cash deposit machines (CAM) & coin deposit machines
2as
20
DBSI Corporate Profile
DBS Corporate Profile
Awards and Accolades 2012 – 2013
• Best Treasury and Working Capital Bank for
MNC/Large corporate
• Best Cash Management Solution: Payments
Integration and Workflow Management for GM
Autoworld Indonesia
• Best Trade Finance Solution
• Best Structured Trade Deal
• Best Transaction Bank
• Best Cash Management Solution
• Best Risk Management Solution
• Best Wealth Manager, Indonesia
• Best Overall Domestic Cash Management
Services for Small Business
• Best Foreign Cash Management Bank in
Indonesia
• Best Foreign Cash Management Bank
Across All Categories for Small Business
• Best Foreign Cash Management Bank in
Indonesia for Small Corporate
• Banking Efficiency Awards
• Best Foreign Bank in Indonesia
• Best Arranger of Institutional
Loans for Indonesian
Borrowers
• Best Bank in the
Conventional Bank with
Asset above 25-100
Trillion Category
• Best Foreign Exchange
Bank
• Bank with Very Good Rating
on 2012 Financial
Performance
• Platinum Awards for Best
Supervisor
21