“INDONESIA” - Gujarat Technological University PDF 2012/728 - Indonesia.pdfINDONESIAN HISTORY The foremost people in Indonesia arrived some 40,000 life ago when sea destroy was

A

GLOBAL / COUNTRY STUDY AND REPORT

ON

“INDONESIA”

Submitted to

L.J.INSTITUTE OF ENGINEERING AND TECHNOLOGY

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF

THE AWARD FOR THE DEGREE OF MASTER OF

BUSINESS ADMINISTRATION

In

Gujarat Technological University

Under the guidance of

Prof. Abhijeet Singh

Submitted by

L.J.I.E.T (Section-D)

Batch: 2010-12

MBA SEMESTER III-IV

L.J.INSTITUTE OF ENGINEERING AND TECHNOLOGY

MBA PROGRAMME

Affiliated to Gujarat Technological University

Ahmedabad

May, 2012

DECLARATION

We, students of L.J.I.E.T (Section-D), hereby declare that the report for Global/

Country Study Report on INDONESIA is a result of our own work and our

indebtedness to other work publications, references, if any, have been duly

acknowledged.

Place: Ahmedabad

Date: 2nd May, 2012. (L.J.I.E.T)

INSTITUTE CERTIFICATE

Certified that this Global /Country Study and Report on Indonesia is the bonafide

work of students of L.J.Institute of Engineering & Technology, who carried out the

research under my supervision. I also certify further, that to the best of my

knowledge the work reported herein does not form part of any other project report or

dissertation on the basis of which a degree or award was conferred on an earlier

occasion on this or any other candidate.

(Prof. Abhijeet Singh, Assistant professor)

PREFACE

This global country study at MBA programme develops a feeling about the

difficulties and challenges in the business world. Only theoretical knowledge is

not important, but practical knowledge along with that is also important as it

adds meaning to education.

Through this report we came to know the various aspects of the country,

economic and social factors surrounding INDONESIA. We came to know about

the environment prevailing in the country for trade and commerce carried out in

the country.

In this report we have studied the supply chains of the retailers and wholesalers.

Media contribution and reach to the people of the country.

This report even includes study of different industries from the view point of

trade between India and Indonesia. The export-import policies related to these

different industries is also studied here. Different industries such as cement

industry, textile industry, tourism industry, fishery industry, etc. have been

studied.

Thus this report is a compilation of all the different aspects of Indonesia related

to trade and commerce of the country.

ACKNOWLEDGEMENT

The successful completion of this report would not have been possible without

co-operation and support of our professor, friends, institute and the university.

We forward gratitude to respected director of our institute for giving us an

opportunity to work out this report.

We are also thankful to our project guide Prof. Abhijeet Singh, with whose help

the study was made possible and who provided the full guidance, co-operation

and valuable suggestion about this report.

The valuable ideas, recommendation and response are simply adorable. We

have been provided all possible guidance and helpful suggestion for

accomplishment of this project.

We are thankful to our college friends and all those who have helped us directly

or indirectly in the preparation of this report.

TABLE OF CONTENTS

Ch. No. Particulars Page No.

GCR PART - I

1.1 Demographic Profile of Indonesia 1

1.2 Economic Overview of Indonesia 10

1.3 Overview of Different Economic Sectors 12

1.4 Overview of Business & Trade at InternationalLevel

14

1.5 Overview of Industry’s Trade & Commerce 18

1.6 Inter-relation of India & Indonesia 22

.

GCR PART – II

.

2.1 Cement industry 25

2.2 Textile industry 35

2.3 Dairy industry 45

2.4 Minerals industry 56

2.5 Retail industry 65

2.6 Pharmaceutical industry 78

2.7 Telecommunication industry 88

2.8 Tourism industry 100

2.9 Steel industry 111

2.10 Fishery industry 120

2.11 Conclusion 129

GCR PART I

OVERVIEW OF INDONESIA

Chapter – 1.1

DEMOGRAPHIC PROFILE OFINDONESIA

1

INDONESIAN HISTORY

The foremost people in Indonesia arrived some 40,000 life ago when sea destroy

was inferior and it was connected to Aggregation by a orbit structure. By about 2,500

BC, they learned to grow crops such as taro, bananas, painter and dramatist. The

untimely farmers also prefabricated clayware but all their tools were prefab of jurist.

However by 700 BC the Indonesians had learned to work colour and trammels.

Furthermore at that indication wet lyricist cultivation was introd From near 400 BC

Indonesians traded with other nations such as China and India.

State strategic sea-lane function supported inter-island and foreign merchandise. For

model, transaction course with both Amerind kingdoms and China were foreign

several centuries BCE. Transaction has since essentially wrought Asian chronicle.

Geography of Indonesia

Indonesia is an archipelagic island country in Southeast Asia, lying between the

Indian Ocean and the Pacific Ocean. It is in a strategic location astride or along

major sea lanes from Indian Ocean to Pacific Ocean.

Regions

Indonesia is an archipelagic country extending 5,120 kilometres (3,181 mi) from east

to west and 1,760 kilometres (1,094 mi) from north to south. It encompasses an

estimated 17,508 islands, only 6,000 of which are inhabited. It comprises five main

islands: Sumatra, Java, Borneo (known as "Kalimantan" in Indonesia), Sulawesi, and

New Guinea; two major archipelagos (Nusa Tengaara and the Maluku Islands); and

sixty smaller archipelagos.

Geology

Sea depths in the Sunda and Sahul shelves average 200 metres (656 ft) or less.

Between these two shelves lie Sulawesi, Nusa Tenggara, and the Maluku Islands (or

the Moluccas), which form a second island group where the surrounding seas in

some places reach 4,500 mtrs(14,764 ft) in depth.

2

Climate

The country experiences two seasons—a wet season and a dry season—with no

extremes of summer or winter. For most of Indonesia, the wet season falls between

October and April with the dry season between May and September.

Environmental issues

For centuries, the geographical resources of the State archipelago bonk been

victimised in shipway that hap into concordant friendly and past patterns. One

ethnical route consists of the formerly Indianized, rice-growing peasants in the

valleys and plains of Island, Drink, and Bali; added ethnic interlocking is unperturbed

of the mostly Islamic coastal advertizing sector; a gear, much narrow facet consists

of the alpestrine set business communities which exist by way of subsistence

swidden business. To whatsoever degree, these patterns can be linked to the

geographical resources themselves, with ample shoreline, mostly soothe seas, and

stabilize winds pro the use of sailing vessels, and fertilized

AREA AND BOUNDARIES

Area:total land area: 1,919,440 km2 (land: 1,826,440 km2, inland water: 93,000 km2)

territorial area: 5,193,250 km2

total area (including exclusive economic zone): around 7.9 million km2

Land boundaries:

total: 2,830 km

border countries: Malaysia 1,782 km, Papua New Guinea 820 km, East Timor

228 km

Other nearby countries: India NW of Aceh, Australia, Singapore, Philippines, Brunei.

Coastline: 54,716 km

3

Maritime claims: measured from claimed archipelagic baselines

exclusive economic zone: 200 nmi (230.2 mi 370.4 km)

territorial sea: 12 nmi (13.8 mi; 22.2 km)

Elevation extremes:lowest point: Indian Ocean 0 m(sea surface level), Wetar Basin in east of Banda Sea

at -7,440 m (northwest of Tanimbar Islands & southeast of Ceram Island),

where subduction zone is: highest point: Puncak Jaya (also known as Carstenz

Pyramid) 4,884 m

RESOURCES AND LAND USE

Natural resources: petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile

soils, coal, gold, silver

Land use:arable land: 9.9%

permanent crops: 7.2%

other: 82.9% (1998 est.)

Irrigated land: 48,150 km2 (1998 est.)

4

SOCIAL INSTITUTION

Different Family Lives in IndonesiaIndonesia comprise more than 300 ethnics assemble. Asiatic are fountainhead alert

of the patronage of kin itemize, which is celebrated as "Marga" or "Fam" and such

make feature get a special identity of ancestry.

The varied ethnicities of Batak people from Northwest Sumatra are noted for

their demanding practice to preserving their origin gens.

The matrilineal clan obloquy of the Minangkabau grouping are passed

felled from mothers to their children. Minangkabau is the maximal lineal guild

in the man.

The Bugis grouping from Southernmost Sulawesi person surnames

specified as Mappanyukki, Mallarangeng and Matalatta.

The different ethnicities of the Dayak fill from the provinces in State tally

names such as Dau and Narang.

Family is very important in Country and it is very common for large families that

include grandparents, aunts, uncles and cousins to all whippy together in one

expanse. Careful societies in Sumatra and eastern Country carry out affinal

alignment, in which marriages are laid between persons in special lineal clans or

lineages who are concomitant as nearest or away cross-cousins. Women and men

apportion in more aspects of settlement husbandry, Men predominate in toil and

fishing, which may assert them off for dwarfish industries, and markets, as

intimately as in upscale businesses, but nearly ever in less lottery than men.

Literacy Charge 2011 manlike: 94% somebody: 86.8%

Political system of indonesia

Government Type: Independent republic.

Independence: August 17, 1945 proclaimed.

5

Constitution: 1945.Embodies five principles of the state philosophy, called

Pancasila, namely monotheism, humanitarianism, national unity, representative

democracy by consensus, and social justice.

Branches:

Executive: President (head of government and chief of state) elected by direct

popular votes.

Legislative: The People's Consultative Assembly (MPR), which includes member

House of Representatives (DPR) and the 132-member Council of Regional the 560-

Representatives (DPD), both elected to 5-year terms.

Judicial: Supreme Court is the final court of appeal. Constitutional Court has power of

judicial review.

The Political Party: The main political parties of Indonesia are the Democratic Party

(PD ) the Functional Groups Party (Golkar), Indonesian Democratic Party-Struggle

(PDIP), and Prosperous Justice Party (PKS).

Regional Government: There are 30 provinces and 354 regencies in Indonesia. A

governor heads a province, while the regency or municipal level of government is

headed by a regent or mayor

Principal Government Officials

President: Susilo Bambang Yudhoyono, Vice President: Boediono Minister of Foreign

Affairs: Marty Natalegawa, Ambassador of India to Ambassador of India to republic of

Indonesia: Biren Nanda.

Legal aspect of indonesia

The Indonesian legal system is based on Roman-Dutch law, modified by

custom and Islamic law. Sources of law are Islamic law, statutory legislation.

judiciary System: General courts include District Courts of First Instance, High

Courts of Appeal, and the Supreme Court (Mahkamah Agung).

6

Social organization of Indonesia

Social organizations have a potentially important role to endeavour in

enhancing the action of government institutions in Land and in the process of

beatific organization writer generally. The family is considered the centre of the

social structure. When one member of the stock suffers a business setback, the rest

of the family will contribute what they can to help out.

Social Classes

Classes and Castes: Financial inequality, still, cuts across ethnical and ethnic

The common representation is of a region bisulcate into "elites" and

grassroots," with the grassroots including most villagers and low-income

earners in municipality and the elites being civilised, higher-income persons,

"java millionaires," and remaining entrepreneurs. Equivalent upper and move

assemblage in gild according to their income, wealth and mixer position in elite.

The major ethnic groups in Indonesia

Ethnic groups: Javanese 45%, Sudanese 14%, Madurese 7.5%, Malay 7.5%,

Chinese 3% and other ethnic group 23% of population. In each group have many

social castes as under:

Sumatra, Kalimantan, Sulawesi, the Lesser Sundas, the Moluccas and IrianJaya.

Foreign Ethnicities: Chinese, Arabs, Indian, Indos, and Japanese.

Religion: All Indonesians must show as mass of one of five constituted

religions: Islam(87%), Protestantism(6%), Christianity(3%), Faith(3%), and

Buddhism(1%). Atheism, associated with the banned ideology movement, is not

allowed. Churchgoing communities are forbidden to essay converts from each others

memberships.

7

RELIGION AND AESTHETICS

RELIGION & OTHER BELIEF SYSTEM

Orthodox Doctrines & structure

The primary principle of Country's ideology states that Pancasila: "belief in the one

and only God". A assort of distinguishable religions are practiced in the country, and

their clustered impact on the land's governmental, thrifty and ethnical existence is

meaningful. However, the governing only recognizes six fireman religions namely:

Religion, Protestantism, Catholicity, Hinduism, Faith, Confucianism.

Inter-religious relationships

Though the Indonesian government recognizes a ascertain of incompatible religions,

inter-religious conflicts someone occurred. In the New Magnitude era, previous

presidency Solon planned the Anti-Chinese law which prohibits anything connate to

Sinitic culture, including names and religions.

AESTHETICS

Meaning:

Aesthetics is a branch of philosophy dealing with the nature of beauty, art, and taste,

and with the creation and appreciation of beauty.

1. Visual Arts: Paintings

Sculpture

2. Music3. Drama4. Ballet and other performing arts5. Folk and relevant symbols

8

In the history of folk dance, Indonesian folk dances offer a particularly colorful

and emotional brand of folk dance. Many people don't realize it, but Bali is in

Indonesia, and Indonesia shares a border with Papua New Guinea.

Balinese Folk Dances- Wali and Balli Javanese Folk Dance

Folk dance from Java, another island of Indonesia, has gained media attention

around the world for being 'too graphic' sexually. The Javanese Jaipong dance is

rooted in Javanese, and therefore Indonesian, cultural and dance history

LIVING CONDITIONS

Many Islamic protestantism groups much as the FPI and the FBR are openly violent

towards LGBT grouping by attacking the interior or pass of those they consider are a

threat to the values of Monotheism. Land does someone a honour as existence a

relatively mild and tolerant Ruler nation, which does tally several cure to LGBT

grouping.

Diet and nutrition

Bahasa preparation varies by realm and is supported on Asiatic, Continent, Region

Orient, and Asian precedents. Rice is the primary commodity matter and is served

with pull dishes of meat and vegetables. Spices (notably chili), coco milk, fish and

fearful are harmonic ingredients.

Shelter

About 48% of Indonesians live in rural villages where they charged by husbandry

lyricist, whiskey and other crops as healed as fishing, aquaculture and upbringing

ducks and chickens. Hamlet houses are usually naif one or two chance bamboo and

wooden buildings. For those who springy in Indonesia's fast-growing cities, lodging

styles diverge widely, from new suburban lodging developments and current high-

rise apartments.

9

Clothing

In general, the people wear clothes that are similar to western style. They wear

traditional dress on special occasions in their country itself.

HealthChief health and vivification expectancy get restored for most Indonesians during the

last few decades. Experience outlook is 73 for women and 68 for men.

Improvements in nutrition and availability of unspotted liquid eff contributed to this.

State has successfully mature a method of community upbeat centres in towns and

villages allowing rattling distributed make to quill welfare repair.

LANGUAGE

Official Language

The Indonesian name for the language is Bahasa State (literally "the module of

Land"). This word can sometimes solace be saved in printed or voiced Humanities.

In addition, the communication is sometimes referred to as "Bahasa" by Humanities

speakers. The module is oral throughout Land.

Dialects

There are 583 languages and dialects unwritten in the archipelago. They ordinarily

belong to variant ethnic groups of the accumulation. Few of the distinctly distinct

anesthetic languages are: Acehnese, Batak, Indonesian, Indonesian, Sasak, Tetum

of Timor, Dayak, Minahasa, Toraja, Buginese, Halmahera, Ambonese, Ceramese,

and several Irianese languages.

Chapter – 1.2

ECONOMIC OVERVIEW OFINDONESIA

10

INTRODUCTION OF ECONOMY

Indonesia has a mixed economy in which both the private sector and government

play significant roles. The country is the largest economy in Southeast Asia and a

member of the G-20 major economies. The Gross domestic product (GDP) is almost

Rp.1 trillion ($117.6 million) and the debt ratio to the GDP is 26 percent. The industry

sector is the economy's largest and accounts for 46.4% of GDP (2010), this is

followed by services (37.1%) and agriculture (16.5%).

According to World Trade Organization data, Indonesia was the 27th biggest

exporting country in the world in 2010. Indonesia's main export markets (2010) are

Japan (17.28%), Singapore (11.29%), the United States (10.81%), and China

(7.62%). The major suppliers of imports to Indonesia are Singapore (24.96%), China

(12.52%), and Japan (8.92%).

Population:

The population of Indonesia according to the 2010 national census is 237.6 million,

with population growth still high at 1.9 pct. 58% of the universe lives on Drink, the

humankind's most inhabited island. The collection is anticipated to get to around 254

cardinal by 2020 and 288 meg by 2050.

There are around 300 distinct native ethnicities in Land, and 742 antithetical

languages and dialects. Succeeding are the contrasting Ethnical Groups as per the

pct of Aggregation in Indonesia - Indonesian 40.6%, Bahasa 15%, Madurese 3.3%,

Minangkabau 2.7%, Betawi 2.4%, Bugis 2.4%, Banten 2%, Banjar 1.7%, another or

unspecified 29.9% (2010 count)

The official national language, Indonesian, a change of Malay, is universally taught in

schools, and consequently is spoken by nearly every State. Time sacred immunity is

stipulated in the Country constitution, the governing officially recognizes exclusive six

religions: Islamism, Protestantism, Catholicity, Hinduism, Faith, and Confucianism.

Land is the mankind's most inhabited Muslim-majority land, with 86.1% of

11

Indonesians being Muslim according to the 2000 census. 44% of total population

lives in urban areas in State and the valuate of urbanization are at 1.7% reference

measure of alteration

Total population:Year 2006 2007 2008 2009 2010 2011

Population 245452700 234694000 237512400 240271500 242968300 245613000

1. Population growth rates:Year 2006 2007 2008 2009 2010 2011Rate 1.41 1.21 1.18 1.14 1.10 1.07

2. Birth rates:Year 2006 2007 2008 2009 2010 2011Rate 20.34 19.65 19.24 18.84 18.45 18.10

3. Age structure:0-14 years 27.3%(Male 34165213/Female 32978841)

15-64 years 66.5%(Male 82104636/Female 81263055)65 years and above 6.1%(Male 6654695/ Female 8446603)

4. Migration rates: The rates during the years are -1.15 (2011), -1.23 (2010), -1.24(2009).

ECONOMIC STATISTICS AND ACTIVITY:

1. Total Gross National Product:Year 2006 2007 2008 2009 2010

GDP(Billion $) 389.12 421.9 505.4 539.5 706.56

2. Rate Of Growth Rate:Year 2006 2007 2008 2009 2010Rate 6.01% 5.85% 5.35% 5.43% 5.85%

3. Personal Per Capita Income:Year 2006 2007 2008 2009 2010

GDP(Billion $) 912 949 989 1038 1087

Chapter – 1.3

OVERVIEW OF DIFFERENTECONOMIC SECTORS

12

MINERALS AND RESOURCES

Indonesia’s Natural resources contributed 11.2% of GDP in 2010. Indonesian Oil and gas sector is estimated to have contributed $23.3 billion to

government revenues. Indonesia holds 3rd rank in world liquefied natural gas exports production in 2010. Indonesia is the world's largest tin market.

Energy Subsidy:

Fuel and electricity subsidy, is still needed due to the relatively low purchasing powerof the people and to accelerate economic development

Surface Transportation

Indonesia's transport system has been shaped over time by the economicresource base of an archipelago with thousands of islands, and thedistribution of its more than 200 million people highly concentrated on a singleisland which is Java.

Road transport is predominant, with a total system length of 437,759 km in2008.

The railway system has four unconnected networks in Java and Sumatraprimarily dedicated to transport bulk commodities and long-distancepassenger traffic

Sea transport is extremely important for economic integration and fordomestic and foreign trade.

Boats in common use include large container ships, a variety of ferries,passenger ships, sailing ships, and smaller motorized vessels.

On some islands, major rivers provide a key transportation link in the absenceof good roads.

Road transport was valued at 81,449,500 million rupiahs in 2006 thusregistering over 106% growth since 2003.

Sea transport was valued at 16,120,700 million rupiahs in 2006 thusregistering over 34% growth since 2003.

River, lake and ferry transport was valued at 4,510,700 million rupiahs in 2006thus registering over 53% growth since 2003.

Air transport was valued at 14,685,200 million rupiahs in 2006 thus registeringover 96% growth since 2003.

13

Communication Systems

Print media: Kompas and Koran Tempo are circulated around Indonesia.

Telephone: Telephones main lines in use: 9.99 million (2004).

Telephones - mobile cellular: At end of 2010, the mobile cellularpenetration rate standing at around 67 %.

Radio: Radio broadcast stations: AM 678, FM 43, shortwave 82 (1998).radios: 31.5 million (1997).

Television: Television broadcast stations: 11 national TV, 60 local TV.

Televisions: 13.75 million (1997).

Internet: Internet Service Providers (ISPs): 24 (1999). By June 2011, all sub-districts in Indonesia will be connected with internet.

Working Conditions

The Indonesian labor force is estimated at about 95 million, two-thirds ofwhich is between the ages of 15 and 34, and two-fifths of which is made up ofwomen.

While workers were allowed to join a single union established by thegovernment under the Suharto regime, new regulations put forth in 1998 haveallowed the formation of more than 2 dozen new labor unions.

Indonesia has also traditionally sent large numbers of workers overseas, bothlegally and illegally.

Compensation and benefits in Indonesia

Basic salary is given on a monthly basis, and an annual incentive is legallyrequired. Some companies resort to deferred compensation while othersinclude various allowances.

The retirement process, along with its specifications, is governed by thePension Law and the legal entity of Dana Pension is created in the absence ofa trust law.

Chapter – 1.4OVERVIEW OF BUSINESS AND

TRADE

AT

INTERNATIONAL LEVEL

14

FOREIGN INVESTMENTS

Due to liberalization in the economy i.e. economic reforms the foreign investments

opportunities has improved tremendously. Indonesia’s foreign direct investment,

FDI, has not yet recovered from post crisis falls. However, its foreign investment

regime is more open than before the crisis, generating potential opportunities in an

environment of ongoing reform. The outlook for foreign investment in Indonesia

also is assisted by the sale of state held assets and enterprises, more competit ive

export-oriented and import substitution sectors due to the weaker rupiah and a

more open economy. Opportunities are diverse. Foreign investors can purchase

assets from IBRA’s sizeable bank equity holdings, operate retail outlets, distribute

goods produced locally and apply to import and distribute other products. They also

can enter joint ventures to supply educational, medical and infrastructure services

including telecommunications.

International Trade

Major Exports Exports Partners Major Imports Imports Partners

Oil and gas Japan 20.7%, US

10.2%, Singapore

9.2%, China 8.5%,

South Korea 6.6%,

Malaysia 4.5%,

India 4.3%

Machinery and

equipment

Singapore 13.2%,

China 11.5%,

Japan 8.8%,

Malaysia 8.6%,

US 6.4%,

Thailand 5.8%,

Australia 4%

Electrical

appliances

Chemicals

Plywood Fuels

Textiles Foodstuffs

Rubber

Exchange Rates

For many years, Indonesia has had an exceedingly complex exchange system,

with a large number of buying and selling rates, a wide spread between rates, and

various mixtures of free market elements with fixed rates. Another aspects of

complexity of the Indonesian exchange rate structure has been the frequent

changes-at least one in each year since 1955-and the practice giving different

names to basically the same exchange rate structure.

15

Trade Restrictions

A trade restriction is an artificial restriction on the trade of goods between two

countries. It is the result of protectionism.

Indonesia’s Trade Regulation Agreements:Indonesia is part of many different Trade Agreements with countries around the

world. The largest of these is the General Agreement on Tariffs and Trades (GATT),

which Indonesia joined during the Uruguay round negotiations from 1986-1993.

Indonesia has also joined in different regional agreements such as Asia-Pacific

Economic Cooperation (APEC) and ASEAN Free Trade Area (AFTA). APEC and

AFTA both allow for member economies to grow and strength due to the decreasing

and elimination of tariffs and non-tariff barriers to trade. These international

agreements that Indonesia has entered into have allowed for many different

countries to have easier trade with Indonesia on all matter of goods. There are

however still groups of goods that are taxed by Indonesia upon entering the country

as well as the 2.5% tax on all goods entering the country.

An embargo is the partial or complete prohibition of commerce and trade with a

particular country, in order to isolate it. Embargoes are considered strong diplomatic

measures imposed in an effort, by the imposing country, to elicit a given national-

interest result from the country on which it is imposed.

Import Taxes in IndonesiaImports into Indonesia are broken down into 4 classifications (A, B, C, and D) based

on the need for the goods. These different classes of goods receive different duties

based on the Harmonized System Code (HS), which Indonesia adheres to.

Class A (0-10% duty) Organic foods, medicines and clothing

Class B (10-40% Duty) most raw materials and spare parts of industry

Class C (50-70% Duty) locally manufactured and produced goods, which have,

Import protection

Class D (up to 200% Duty) Items above and beyond that which is needed for

everyday life.

16

DEVELOPMENT IN SCIENCE & TECHNOLOGY ININDONESIA

Current technology available:

Indicators of Indonesia’s technological development.

Classifying industries at different levels of technological intensity may be

misleading when low-technology products can use relatively sophisticated

technological processes.

Accordingly, firms in high-technology industries may be simple assembling

plants.

Percentage of GNP invested in research and development:

For 2010, the Indonesian government has allocated Rs. 1.9 trillion for R&D,

which is less than one percent of the total state expenditure.

The most recent five-year plan to promote S&T activities is the NMDP for

2004-2009 is following:

To sharpen R&D and engineering priorities in S&T to be oriented towards the

demand of the private sector and the need of society, following a clear

roadmap.

To enhance S&T capacity and capability by strengthening S&T institutions,

resources and networks at the central and regional level.

To create a suitable innovation climate with an effective incentive scheme to

foster industrial restructuring.

To implant and foster S&T culture in order to enhance Indonesia’s civil

development.

The national investment on R&D activities attained a level of Rs. 18000.16

crores in 2002-03. The same is estimated to be Rs. 19726.99 crores in 2003-

04 and Rs. 21639.58 crores in 2004-05.

Sector-wise percentage of national R&D expenditure during 2002-03 was

from Central Government 62.0%, State Government 8.5%, Higher Education

4.2%, Public Sector Industries 5.0% and Private Sector Industries 20.3%.

17

Industry spent 0.47% of their sales turnover on R&D in 2002-03.

There were 11,304 women directly engaged in R&D activities.

Technological skills of the labour force and general population:

Labour conditions in Indonesia over the last year have shown some

improvement, as indicated by the increasing employment and falling

unemployment.

In 2010, the labour force numbered 116 million people, an increase of 2.26

million from 2009, while the number of employed people was 107.41 million,

an increase of 2.92 million from 2009.

The rate of open unemployment in Indonesia in 2010 was 7.41percent; lower

than the 2009 figure of 8.14 percent.

Human rights

Indonesia has played an active role in the protection of human rights through

its membership of the UN Human Rights Council from 2006 to 2010.

In 2005, Indonesia passed law No.11/2005 regarding the ratification of

international covenants on economic, social & cultural rights.

General population

According to the 2010 Population Census, Indonesia’s population is

237,556,363, of which 119.5 million are male and 118 million female.

A report by the United Nations Development Program (UNDP) in 2010 shows

that the life expectancy of Indonesians has increased dramatically, rising from

54 to 71 years in the period between 1980 and 2010.

Chapter – 1.5

OVERVIEW OF INDUSTRIESTRADE AND

COMMERCE

18

CHANNELS OF DISTRIBUTION OF INDONESIA

Retailers

The Indonesian retail sector began its rapid expansion in 1999, when a Presidential

Decree allowed Carrefour, a French retailer, to increase its outlet numbers in

Jakarta. Indonesian retail sector grew and consumers benefited from stronger

competition between retailers. Modern retail businesses such as hypermarkets,

supermarkets, and mini-markets are replacing more traditional retail outlets,

including wet markets and independent small grocers.

Numbers of retailers and outlets

Role of chain stores, departmental stores, and speciality stores

There are five players in the hypermarket group and three of them dominate the

market. In 2008, Carrefour had 48.7 percent of hypermarket sales, followed by Hyper

mart with 22.1 percent and Giant with 17.8 percent. In addition, there are six

supermarkets in the supermarket group that have 76 percent of supermarket sales.

Indonesian mini-markets are essentially upgraded traditional road side stalls that

carry essential staple goods, some frozen items, and fresh fruits. Low prices

compared to the major retailers are one of their selling points.

Wholesale middlemen

The modern wholesaler sector is expanding rapidly. Wholesaler sector will

increasingly import produce and other products directly from foreign exporters, or will

be supplied directly by local manufacturers and fresh produce suppliers or growers.

19

Distribution channel of Indonesian market

Warehousing

This segment is the most likely to purchase imported products and stores it. Imports

can account for anywhere between 5 and 30 percent of the food items sold,

increasing to 60 percent for specialty retailers catering to higher end consumers. In

the near future, smaller quantities of imported products are expected to be featured,

but with a greater variety of brands and items.

Penetration of rural and urban market

In Indonesia rural sector and urban sector have low difference in terms of

penetration where rural market consist of 44.1 percent of the total market coverage

and urban sector consist of around 52 of the total sector, if we see from the point

view retailer and wholesaler, the retailers are in a dominant position

20

MEDIA

Availability of various media in Indonesia

Media freedom in Indonesia increased considerably after the end of President

Suharto's rule, during which the now-defunct Ministry of Information monitored and

controlled domestic media and restricted foreign media. The number of printed

publications had increased significantly since 1998. There are hundreds of new

magazines, newspapers, and tabloids. By 2002, newspaper reach had climbed to

over 40 percent of the adult population of the country.

The media of Indonesia consist of several different types of communicationsmedia:

Television

Radio

Cinema

Newspapers

Magazines and

Internet-based Web sites

Some of the leading news paper of Indonesia are Jakarta Globe - Indonesia's

newest newspaper The Jakarta Post - English, Kompas - mass-circulation daily -

Indonesian, Media Indonesia - mass-circulation daily – Indonesian

Radio Republic Indonesia (RRI) - public, operates six national networks, regional

and local stations, external service Voice of Indonesia. Several Indonesian radio

stations are available as free streaming audio service on Internet.

Television network comprises of Satellite, Cable, Terrestrial and mobile network.

Indonesia’s Media industry is believed to grow moderately. Nielsen Media Research

Indonesia reported that in 2009 Advertising Expenditure (ADEX) reached IDR48.6

trillion, reflecting a 16.5% growth from IDR41.7 trillion in 2008. The three largest sub-

sectors in media industry are television, newspaper, and magazine (including tabloid

and others).

21

There are various ad agencies which help which provide regional and international

development aid or assistance, divided between national (mainly OECD countries)

and international organizations. Some of the large agencies namely are Indonesia

Advertising, Lumba2Studio, and The Alternative Media Group.

As far as the coverage of the various media is concerned, radio holds the maximum

share.

The reach of newspaper, television and radio is shown below:

Newspaper and periodicals circulations daily:Newspaper and periodicals circulations daily – 4782000 copies

Television:Number of television – 13750000

Source – Tenlab May 2002

Television receivers – 13750000

Radio:Number of radio – 315000000

Source – UNESCO Institute of Technology

Radio Receivers – 31500000

Chapter – 1.6

INTER-RELATION OF INDIA &INDONESIA

22

INTER RELATIONS OF INDIA-INDONESIA

India and Indonesia are close geographical neighbors who share a maritime

boundary. We have shared close cultural and commercial contacts over the last two

millennia. During our respective struggles for independence, the national leaderships

of the two countries collaborated closely in supporting the cause of Asian and African

independence. India took a big step in that direction with its ‘Look East Policy’.

India and Indonesia: Emerging Economies in Asia

The economies of both India and Indonesia have undergone massive reforms in the

past two decades. Among other things, this has facilitated trade, investment

liberalization, fiscal and monetary policy reforms, and infrastructural up gradation.

Trade and Investment Potential

Dr. Manmohan Singh, prime minister of India and Dr. H. Susilo Bambang

Yudhoyono, president of Indonesia, inked a bilateral strategic partnership agreement

in November 2005. As part of the agreement, the two sides agreed to increase

bilateral trade up to $10 billion by 2010.

Cooperation in the Energy Sector

Anil Dhirubhai Ambani Group’s Reliance Power also acquired three coal mines in

Indonesia and plans to invest over Rs. 3,000 crore in that country. In June 2010, it

announced that it plans to buy two Indonesian coal companies through its unit. In the

past two years, almost all power giants - NTPC, Essar Power, Adani Power, JSW

Energy, Indiabulls Power and Lanco Infratech - have been exploring options to own

coal mines in Indonesia, to fuel some of their proposed projects.

23

Investment and Manufacturing Sector

The India-Indonesia JWG notes that while the two countries are destinations of FDI

inflows, they have also emerged as sources of outward investment in different

sectors. Specific areas of mutual interest which both countries can exploit in close

collaboration include energy agriculture and fisheries, forestry, transportation, SEZs,

etc.

Services Sector

With reference to the trade in services, the JSG identifies several sectors for

enhanced cooperation between India and Indonesia. These include IT,

telecommunications, financial, audio-visual, education, health, tourism and travel,

professional services, and transportation.

Co-operation in Disaster Management

Both India and Indonesia having long coastlines are prone to natural disasters like

cyclonic storms and tsunamis. In the past, India has provided material and personnel

assistance to Indonesia during tsunamis and earthquakes.

Trade and Investment relations

Indonesia is our third largest trading partner in the ASEAN bloc. Bilateral trade

registered in 2010-11 stood at USD 14.8 billion. Major Indian companies operating in

Indonesia include the Aditya Birla Group which has a viscose fiber plant and

downstream units; Essar, which has a cold-rolled steel mill near Jakarta; and Jindal

Stainless Steel in Surabaya. There are two Indian motorcycle manufacturers - Bajaj

and TVS - in Indonesia. The State Bank of India and the Bank of India have

branches in a number of Indonesian cities. Tata’s own 30% of the two largest coal

mines in Indonesia.

24

Co- operation in the field of Science and Technology

An MOU on Cooperation in Science and Technology and a Plan of Cooperation on

Science and Technology were signed during the State Visit of President Yudhoyono

in January 2011. The Indian Space Research Organization (ISRO) and the National

Institute of Aeronautics and Space of Indonesia (LAPAN) have signed an MOU on

Cooperation in the field of Space Application, Capacity Building, Remote Sensing

and Space Technologies. ISRO has launched Indonesian satellites. LAPAN has

provided logistical and technical support to ISRO for the setting up its Telemetric,

Tracking Command.

GCR PART II

INDUSTRY ANALYSIS

Chapter – 2.1CEMENT INDUSTRY

25

INTRODUCTION OF CEMENT INDUSTRY

Cement is the glue that holds the existent unitedly, and is thus grave for converging

guild's needs of protection and canonical infrastructure specified as bridges, roads,

element communicating facilities, schools and hospitals. Being one of the

fundamental elements for environment up forceful and anicteric fund, Cement plays

a decisive enactment in economic development of any region.

The manufacturing deliver of filler consists of mixing, drying and attrition of

limestone, clay and silica into a composite body. The motley is then hot and burnt in

a pre-heater and kiln to be cooled in an air-cooling method to create fragment, which

is the semi-finished word. This fragment is cooled by air and later earth with gypsum

to contour filler.

Cement is a cyclical industry in which endless periods of growth are interspersed by

shorter periods of descend. This also way that as an overview the wares of markets

in healthy at any one participate tell transcends those in react. This is an grave

transform out for the long-term somebody of the filler facet.

The key growth drivers for cement phthisis are collection growing (maximising status

for housing, commercial building and infrastructure) and system growth (dynamical

up the use of filler per capita). Rapid status and the untouched money possess

guidance to an increment in rendition and utilization crossways Bharat, attracting

plain the worldwide players.

Filler is a spheric manufacture made up of decentralized markets. When a

abstraction is both grim and gaudy, job costs meliorate key cipher in determining its

vantage, so cement plants requirement to be close to customers. Nasal immersion of

filler production may be referable to overlooking city costs and lengthened gestation

periods in object job.

26

GLOBAL CEMENT SCENARIO

According to the leading manufacturer of cement equipment in the concern, FL

Suffragist, earth filler demand is set to grade on intermediate between 3.6% and

4.8% per year in the forthcoming eld. At the like cover, the Portland Filler Connection

(the US cement sector's trade body) is expecting man cement utilization to moderate

author than 6% yearly in the next two life, achievement 4.9 1000000000000 function

tons by 2012 (judgment Oct 2010). Spell a lot of this growth is set to uprise from

uphill maturation markets in Midway and Southeastern Assemblage and Collection,

enlargement in grown-up markets also looks hefty.

WORLD CEMENT PRODUCTION

Regionally, Asia contributes around 70% to group production and includes in 9 of the

20 leading producing countries. Sandwich Assemblage had about 8% of tally sign;

the Mid Easternmost (including Land) and Solon Ground, nearly 6% each Africa,

Halfway Ground and Region U.s.a. (united), and the Commonwealth of Autarkic

States, active 4% apiece and Asian Europe, about 2%.

One States is the largest trader of cement in the humankind, with come job of US$

1,396 million during 2008, followed by Frg, Belgium and Netherlands with enumerate

transaction of US$ 945 cardinal, US$ 744 cardinal and US$ 562 meg, respectively.

Despite being the agreement largest maker of cement in the group, India is not

amongst the stellar traders of cement.

27

INDONESIAN CEMENT INDUSTRY

In Indonesia, nine cement companies control 15 cement plants with a number

installed production ability of 46.1 million metric tons (MMT). PT Semen Gresik, PT

Semen Padang, and PT Semen Tonasa are division of the Humor Gresik Forgather,

which is 51% owned the Authorities and holds the maximal marketplace apportion of

45.3%. PT Indocement Tunggal Prakarsa, a assistant of Heidelberg of Germany, is

the second-largest player with a market assets of 29.6%, and PT Holcim State, a

underling of Holcim of Schweiz, is the base largest with a market portion of 15.2%.

The top triplet companies have a 90% distribute of the industry. PT Semen Gresik,

PT Indocement Tunggal Prakarsa, and, to a lesser extent, PT Holcim Country apiece

manipulate individual mountainous plants crosswise the state. Nevertheless, 73% of

their capacity is in Drinkable, which accounts for over two thirds of their income. The

another quaternion companies (PT Seed Andalas Land [SAI], PT Humour Bosowa,

PT Ejaculate Baturaja, and PT Seed Kupang) each run a only set or a few small

plants in Sumatra or in different islands.

ROLE OF CEMENT INDUSTRY IN INDONESIA

The Cement Industry is growing at a good pace of around 9 % on an average of past

3 years annually compared to Its GDP of 6.6%.

Also the domestic consumption of cement in Indonesia is increasing at a high speed.

Indonesia’s cement per capita consumption is 172kg, while that of India is 143kg.

28

BUSINESS ACTIVITIES OF CEMENT INDUSTRY IN INDONESIA

There are seven main players with a combined design clinker capacity of 40.7 million

tons per year and cement 44.9 million tons. Cement output in 2009 was 39.6 million

tones. Housing and infrastructure sectors constitute a major part of the total demand

for cement in India.

Design Capacity: 54.4 m ton

Domestic Growth: 17.7%

Domestic Utilization: 89%

Total Utilization: 91%

Supply:

Domestic: 48.0 m ton

Export: 1.2 m ton

Import: 1.8 m ton

Key Drivers of Domestic Cement Demand: National Economic Growth

Favorable Interest Rate Environment

Infrastructure Expansion

Per Capita Consumption increase from Current Low Levels

29

INDIAN CEMENT INDUSTRY

The Cement industry in India dates back to 1914, with the setting up of its first unit in

Porbunder. It is considered as one of the core infrastructure industries. India holds

No. 2 position in the world in terms of Cement Production globally. It is just behind

China with a total industry capacity of over 200 million tonnes. It is considered to be

a core sector accounting for approximately 1.3% of GDP and employing over 0.14

million people.

During recent times, the Domestic Cement Demand Growth is increased at a good

pace, which has helped to the economic growth of the country. The cement demand

growth rate over the past five years was at 8.37 %, which was higher than the rate of

growth of supply at 4.84%. Demand for cement in the country is expected to rise on

the back of robust economic growth.

The Indian cement industry is extremely energy intensive and is the third largest user

of coal in the country. It is modern and uses latest technology, which is among the

best in the world. Also, the industry has tremendous potential for development as

limestone of excellent quality is found almost throughout the country. In other words,

it is experiencing a boom on account of overall growth of the Indian economy.

Some of the various types of cement produced in India are:

Clinker Cement

Ordinary Portland cement (OPC)

Portland Blast Furnace Slag Cement (PSC)

Portland Pozzolana Cement (PPC)

White Cement

Oil Well Cement

Sulphate Resistance Cement

Rapid Hardening Cement

30

INDIAN CEMENT INDUSTRY STATISTICS

Large Cement Plants

Companies (Members) (Nos.) 42

Cement Plants (Nos.) 139

Installed Capacity (Mn. tn.) 234.30

Cement Production (Mn. tn.) 2009-10 168.29

Plants with Capacity of Million tonnes and above (Nos.) 97

Manpower Employed (Nos.) Approx 1,20,000

Turnover in 2010 (Mn. US$) around 18,000

Cement Map of Gujarat

All India Ranking – 5

(As on 31st March, 2011)

(Cement Production in Million Tonnes)

Year Capacity CementProduction

CementConsumption

CementExport

2010-2011 18.72 12.19 13.08 2.53

2009-10 16.82 11.49 11.54 3.23

2008-09 19.62 15.21 12.09 5.06

2007-08 19.07 15.40 11.68 5.11

2006-07 17.47 15.22 10.08 7.83

31

CEMENT PLANT INSTALLED CAPACITY GROWTH IN INDIA

The cement plant installed capacity of Indian Cement Industry is growing at almost

8-10% every year. In 2010, cement capacity went up to 235.9 Mt.

EXPORTS OF CEMENT FROM INDIA

Exports of cement (total) decreased to 3.42 million tonnes in 2009-10 from 4.82

million tonnes in 2008-09. Portland grey cement had a share of 82% and cement

clinker 12% in the total cement exports. Portland white cement and other cements

together had a 6% share. Exports of cement in 2009-10 were mainly to Malaysia

(30%), UAE (21%), Iraq (20%) and Yemen Republic (12%).

IMPORTS OF CEMENT FROM ABROAD

Cement imports in 2008-10 increased to 6.2 lakh tonnes from 2.12 lakh tonnes

in 2008-09. Grey cement had a share of 61% in the total cement imports in

2007-08 followed by cement clinker (28%), other cements 10% and white

cement (<1%). Main suppliers in 2007-08 were Pakistan (61%), Bangladesh

(9%), UK (8%), China and Japan (6% each).

INDIA’S CEMENT TRADE

Cement has traditionally not been among India’s major traded products. During

2010, India was the 44th largest cement-trading nation in the world.

Trade in cement is also underway with the neighboring countries and countries in

Africa and West Asia. L&T (now a part of Grasim), Gujarat Ambuja Cements Ltd and

Jaiprakash Industries are the top exporters. The western region, due to its proximity

to the coasts, accounts for 92.4 per cent of total exports, of which Gujarat holds a

share of 76 per cent.

32

GOVT REGULATIONS IMPACTING ON INDONESIAN CEMENTINDUSTRY

Manufacture and Exchange, Ministry of Communications and the Asiatic Cement

Remembering (ASI) has observed the quota supported on factories activity,

production volume, and the premise of the cement market in the location. The

purport of this organization of system and quota was to swan filler give and stem in

every domain at a relatively lasting price.

Furthermore, in visit to have the unchangingness of filler terms in the land, the

regime has ingrained Pegged Pricing Scheme with Peak Retail Soprano HET)

method, the soprano is monitored at all nowadays to insure that the soprano of

cement on the mart is within just capability.

The authorities originally set the toll of Rp.1.650/bag on 17 Feb 1974. And by

Ministry of Line Decree No. 31 9/KP/IV/1979 afterwards the HET scheme is varied

into Localised Cost Criterional (Harga Patokan Setempat-HPS) system. The topical

filler prices in the servant markets are upto Rs 4100 per bag (equal to Rs.41/Kg) in

2010, or some 35% higher than the 2008 state.

QUALITY STANDARDS

The Government has set standards for the quality of cement products as given in SNI

15-2049-2004, which is the standard for Portland cement of the I, II, II,IV, and V

types. Standards for other types of cement have also been set by the government.

33

GOVERMENT POLICY TOWARDS CEMENT INDUSTRY ININDIA

Government Policies in India have affected the growth of cement units at various

stages. First and Foremost, there was total control on cement industry for a long

period of time, and then partial decontrol and thereafter the total decontrol has

contributed much to the gradual opening of the market for cement producers.

Following were the stages of the growth of Cement industry in India brief:

a. Price and Distribution Controls (1940-1981)b. Partial Decontrol (1982-1988)c. Total Decontrol (1989)

In India, the Department of Industrial Policy and Promotion (DIPP), under theMinistry of Commerce and Industry, is the nodal agency for the development of

cement industries, that is, it is involved in monitoring their performance at regular

intervals and suggesting suitable policy incentives, as per the requirement.

Some of the rules and orders, administered by DIPP, relating to the cement industry

are:-

Cement Control Order, 1967

Cement Cess Rule, 1993

Cement (Quality Control) Order,1995

Cement (Quality Control) Order, 2003

GOVERNMENT CONTROLS

The control of cement prices can be controlled through the prices of coal, power

tariffs, railway, freight, royalty and cess on limestone. Interestingly, all of these prices

are controlled by government.

34

ADVANTAGE TO INDIA FOR EXPORTS

India is the second largest country in the world after china in terms of cement production, with

an installed capacity of about 236 million tonnes (MT) in 2009–2010.

Between 2005–2006 and 2009-2010, sales and realization of cement has been estimated to

have grown at a CAGR of 10.6 per cent and 18.4 per cent, respectively.

The industry has witnessed continuous modernization and adoption of new technologies.

Almost 93 per cent of the total capacity is based on eco friendly dry process technology.

The sector is expected to add an additional capacity of 92.3 MT by 2013. As a result, the

industry will have a total installed capacity of above 350 MT by March 2013. The cement

industry employed 140,000 people in 2009.

POTENTIAL FOR EXPORT

India is the second-largest producer and consumer of cement in the world, hence there is a

significant potential to use & capitalize its per capita consumption of cement in the country,

which is very low in comparison to Indonesia.

The per capita consumption of cement in India is 143 kg, as compared with Indonesia of 172

kg. Thus, there is a good opportunity for India to Export Cement to Indonesia.

Chapter – 2.2

TEXTILE INDUSTRY

35

INTRODUCTION TO INDONESIAN TEXTILE INDUSTRY

• The textile industry in Indonesia, has already a long standing tradition and is

among the pioneering sector in industrial manufacturing.

• In Indonesia the weaving industry can be divided into two broad sectors, the

modern power-driven machine sector and the traditional hand-loom sector.

• The rapid growth in textile and food production during the 1970s was driven

by the import-substitution policy pursued by the government as a strategy to

provide adequate food and clothing for the people.

• The garment industry too began to emerge rapidly in the late 1970s in

response to rapidly rising demand in the domestic market and growth

opportunities in the export markets.

• Indonesia’s textile industry is vertically integrated and involved in almost every

sector of the textile supply chain from the production of man-made fibres,

particularly polyester, nylon and rayon; man-made and cotton yarn spinning;

and weaving and knitting; to dyeing, printing and finishing; and apparel

manufacturing.

• As the largest employer in Indonesia’s industrial and manufacturing sector,

the textile industry in 2005 employed 1.8 million workers in directly related

large- and small-scale operations and 3.7 million in indirectly related

operations. Textile industry workers altogether comprised 1.9 percent of total

employment in the republic.

* Central Bureau of Statistics ** Sept 1996

1995 1996 1997 1998 1999 2000

Population (million.) 195.4 198.5 201.9 204.9 208.2 211.5

Total Consumption (‘000

ton)1500 1,593 1,694 1800 1,913 2,034

Domestic (‘000 ton) 787 832 880 932 986 1.044

Consumption/head (kg) 4.0 4.2 4.4 4.5 4.7 4.9

Export Volume(‘000 ton) 713 761 814 868 927 990

36

Year 2008 2009

Product Value Volume Value Volume

Manmade

Fibres445 271 382 286

Yarns 1,719 680 1,601 723

Fabrics 1,610 307 1,316 255

Garments 6,016 415 5,659 390

Other Textile

Products353 95 303 104

Total 10,143 1,768 9,261 1,758

Table 2.2 Value of Textile and Textile Product Export in 2008 – 2009 ($1,000)

Year 2008 2009

Product Value Volume Value Volume

Manmade

Fibers1,637 917 1,181 749

Yarns 448 135 335 110

Fabrics 2,559 392 2,215 335

Garments 233 40 214 38

Other Textile

Products226 72 227 61

Total 5,103 1,556 4,172 1,293

Table 2.3 Value of Textile and Textile Product Import in 2008-2009 (In $1,000)

37

GENERAL CHARACTERISTICS OF TEXTILE INDUSTRY ININDONESIA

• The geographical distribution of the Indonesian textile industry is highly

concentrated on the island of Java, and in particular in West Java.

Interestingly is the process of batik printing, a traditional way of printing cotton

fabrics.

• The technology in the weaving sector is very mixed, from simple locally-made

handlooms used by village people even in remote areas to modern

computerised looms and air jet looms. In general, the Indonesian textile

industry is labour-intensive, and woman workers dominate the scene.

ROLE OF TEXTILE INDUSTRY IN INDONESIA

• The textile and apparel manufacturing industry of Indonesia ranks 14th in the

world in 2008, the value added by textiles and clothing manufacturing dropped

to 1.2%. Industry was hard hit by the global recession of the late 2000s.

• Textile industry is also the largest contributor to the foreign exchange

earnings of Indonesia.

• In 2009, the textile industry contributed 12.72 percent in foreign exchange

earnings on exports of industrial products, excluding oil and gas, and 9.58

percent to total non-oil exports, although 85 percent of cotton, as the raw

materials, is imported.

• That amount increased sharply from only US$ 559 million in 1985 . Besides

having a large contribution in the GDP and foreign exchange, the industry

also employs many workers, both who work directly or indirectly.

38

Structure of the Indonesian Textile Industries

The works weaving facet emerged in 1920.

The weaving manufacture was promoted by the government as a

businessperson of a fundamental commodity over the period 1950-65.

After 1965, turn in the weaving aspect through introducing powerfulness

looms instead of the pointer looms.

The ability tower sector began to declination apace and hand looms were

replaced with epic embedded textile mills.

The fiber industry is much more recent in origin.

Hand spinning of localized and imported fibers has protracted existed as an

occasional unit reflection in Country, but a lesser mill aspect did not produce

until the 1930.

The moving production enlarged symmetrical many rapidly than weaving

because of field revolution.

The industry seasoned a lag in the growing rate of actual creation during

1980-85. indicating a 12.3 % growth per annum, though it had realized 13 %

annually in 1976-80.

Business activity of Indonesian cotton industry

A) Production :

• Indonesia produces only 0.5 % of their total domestic demand of cotton.

• Indonesia’s cotton production was decline to 25000 bales from 30000 bales in

2009-10.

B) Consumption :

• The Indonesian textile and textile products industry employs about 1.3 million

workers which equals to 10.6 % of the total work force in 2009.

• Textile product exports contributed 7.4 % to total Indonesian national exports.

39

TEXTILE INDUSTRIES IN INDIA

Present position of textile business in India

• Industrial output 14%

• Export 30%

• Employment

Current Scenario

• Domestic market of textile in India is expected to increase up to US$

60 billion by 2012 from the current US$ 34.6 billion

• Textile market US, UAE, UK, Germany, France, Italy, Russia, Canada,

Bangladesh and Japan

Textiles and Garments Exports from India

• Textile and garment exports by India may reach $31 billion to $32 billion in

2011-12

• India shipped out textile products and garments worth $26.8 billion in the

2010-11

Trends of Textile Business

• Introduction of Bt-cotton seed in India, the cotton production in the country

doubled to

• 340 lakh bales in 2011-12 from 164 lakh bales in 2004-05

• New investment of Rs.500 billion in the textile industry in the last five years

• India's cotton production increased by 57% over the last five years

40

Cotton Production in India and Gujarat

• India is the second largest producer of textiles and garments after China

• Since its introduction in 2002, Bt cotton has been a major success story in

Indian agriculture

• Bt cotton area is expected to again reach 90 percent of total area in MY

2011/12

• India’s marketing year 2011/12 (August/July) cotton production is forecast to

increase to a records 27.3 million bales

• India’s cotton consumption in MY 2010/11 is estimated at 21.5 million bales,

more than 10 percent above the previous year

FOREIGN TRADE REGULATIONS: INDONESIA

GROUP-A

• Includes rice, flour, iron and steel products, chemicals, organic and

pharmaceutical products, cotton, medicine, fertilizers and insecticides,

agricultural and industrial machinery and some raw materials

GROUP-B

• Includes materials and spare parts for industry

GROUP-C

• Is made up of locally produced goods that require import protection

GROUP-D

• Is made of luxury products, some consumer goods and some goods produced

locally.

• Importers must have API, temporary API, and limited API. Importers must

have an import license delivered by the Ministry of Industry and trade.

41

IMPORT LICENSES FOR DOING BUSINESS IN INDONESIA

• For businesses to import goods into Indonesian custom areas, itrequires an import identification number known as API. There are twotypes of API:

• A General Import License or API-U may be used to import finished products

or to trade goods with a third party. Licenses are issued by the Head of the

Provincial Trade Service Office of where the company is based and take

around 2 months to obtain. The API-U is valid for 5 years and then subject to

renewal.

• A Producer Import License or API-P that may be used to import raw

materials, unfinished products and goods for the production process for the

company’s use only. Licenses are issued by BKPM. (Please see Useful

Documents - Application for Producer Importer ID Number)

• Licenses are limited to a particular industry area and do not permit importation

of goods not related to the sector of business.

42

EXPORT TRADE REGULATION IN INDIA

A) Registration with Reserve Bank of India

- To obtain IEC number

- But now this job is being done by DGFT.

B) Registration with Export Promotion Council

- Non-profit organisation

- Government of India and act as a platform for interaction between the exporting

community and the government.

- So its important for an exporter to obtain a registration cum membership certificate

(RCMC)

C ) Registration with Commodity Boards

- Designated by the Ministry of Commerce, Government of India

D) Registration with Income Tax Authorities

- to get the benefit of tax exemption

43

EXPORT LICENSE ISSUING IN INDIA

A) Issued by the appropriate licensing agency

• Export license depends on the nature of goods to be transported as well as

the destination port.

• What are you exporting?

• Where are you exporting?

• Who will receive your item?

• What will your items will be used

B ) Canalisation

• can be imported only by designated agencies.

• E.g.. an item like gold, in bulk .

C ) Exports Free unless regulated

• Any goods, not included in the ITC (HS) Classifications of Export and

Import items may be exported without a license

44

Present Trade Barriers

Since Apr, India's use of varied restrictions on shrub exports has greatly more

to the volatility and uncertainty in the grouping cotton industry.

By introducing an unnatural gap between world and internal prices, India's

undetermined commodity programme conveys benefits to their textile

manufacture at the disbursement of textile industries in remaining countries.

When an commerce land institutes mete restrictions, the potential upshot is

for mankind prices to be pushed higher time interior prices are pressured

inferior.

India declared that the goods ban would be lifted on Oct 1 and mortal prices

immediately echoic the due removal of the export ban.

India's price again moves to a considerable allowance qualifying to the "A"

Forefinger as the goods entering process is halted and harvest approaches.

Business Opportunities In Future

• Based on these historical observations, the scenario assumes that India’s

exports increase by an amount necessary to reduce ending stocks to 28% of

mill use.

• Under the scenario, ‘09/10 exports are estimated to increase to 7.76 million

bales and ending stocks would be 5.46 million bales. The resulting exports

would be 1.21 million bales above ‘09/10 actual exports.

• While continuing to push for a complete ban on exports, growth in India’s

textile industry is bolstered by the presence of a number of government

subsidies.

• With Increasing Population and passing time Indonesian textile market is

going to expand for all the other various reason. Export of garments and other

textile products from Indonesia has grown over time n will grow more through

we have to find the best opportunities for business.

Chapter – 2.3

DAIRY INDUSTRY

45

INTRODUCTION TO INDONESIAN FOOD PROCESSING INDUSTRY& ITS ROLE IN INDONESIAN ECONOMY

Overview

Food processing industry in Indonesia is serving a population of 240 million people

with food and ingredients. The output of this sector grew by 176.3% from 2000 to

2009 putting the industry as a whole at a value of 194$ billion at the end of 2010

according to the Indonesia food and beverage business association. The domestic

consumption and spending on food and beverage has been steadily increasing at a

rate of 14.1% a year from 2006-2010. The total sales of processed food during 2010

reached at 63.4$ billion and at that time it was projected to increase by 13% in the

year 2011 with a value of 76.59$ billion according to the Indonesia food and

beverage business association.

Package Processed Food Retail Sales in 2010 (IDR billion)

Source: Union of Dairy Cooperatives

2.4

11.81.7

11.5

2.2

7.1

2.4 6.94.2

45


Overview












16.7

2.5

16.5

1.912.2

Bakery Products

Meal Replacement Products, Pasta, ReadyMeals & SoupsDairy Products

Chilled Processed Food

Noodles

Spreads

Confectionery

Preserved Food

Baby Food

Ice Cream

Sweet & Savory Snacks

Frezon Processed Food

Oils & Fats

Sauces, Dressings & Condiments

45


Overview












Meal Replacement Products, Pasta, ReadyMeals & Soups

Sauces, Dressings & Condiments

46

Present Scenario

In 2010, Indonesia’s fresh marketed milk production was about 1.4 million liters per

day (approx.) amounting to most 0.47 million ton per year. This total meets exclusive

25-30% of the farm needs, the remnant are imported. Imports are mainly obtained

from Oceania (Country, New Zealand), EU and USA.

According to the Ministry of Cultivation, over the last five years milk production has

hyperbolic steadily from 535,962 tonnes in 2005 to 927,838 tonnes in 2010. This

represents an cypher yearbook increment in milk production of 14.6 pct. In 2010, the

maximal farm creation province of Easternmost Beverage, accounted for 57

proportion of the tally domestic river production, followed by Westward Java with 29

pct share and Nuclear Java with 11 proportionality.

Market Share of Milk Processors in Indonesia

Milk processors Volume

(million ltr/year)

Market

ShareNestlé Indonesia 162 35.8

Frisian Flag Industries/Foremost 123 27.1Indomilk/Indolacto 68 15.0Ultra Jaya 30 6.6Sartihusada 12 2.7Others 58 12.8Total 453 100

Source: Indonesia Dairy Corporation

Indonesian Economy

In Indonesia there is a mixed economy where both the private sectors and

government sectors plays an important role in the economy. In Southeast Asia,

Indonesia has a largest economy and it is also a member of G-20 major economies.

In 2010, the gross domestic product (GDP) of Indonesia was $706.73 billion and

estimated nominal per capita GDP was $3015 and per capita GDP PPP was $4394.

47

Contribution of all Industries in Indonesian GDP

Source: Indonesian Statistics (BPS)

According to the Indonesian Food and Beverage Business Association the total

output of this sector is grown by 176.3% over the period of 2000 to 2009. This

industry has a total value of $194 billion at the end of 2010. The total sales during

2010 were reached $63.4bn and were projected to reach by 13% to $76.59bn in

2011 according to GAPMMI. The processed food industry has its contribution to

exports has been increasing from $3.7bn in 2009 and $5.7bn in 2010.

Food Processing Industry Structure

48

COMPARATIVE POSITION OF FOOD PROCESSING INDUSTRYWITH INDIA

Indian Food Processing Industry

The food processing sector is highly fragmented industry, it widely comprises of the

following segments: Fruits and vegetables, milk and milk products, beer and

alcoholic beverages, meat and poultry, marine products, grain processing, packaged

or convenience food and packaged drinks. A huge number of entrepreneurs in this

industry are small in terms of their production and operations, and are largely

concentrated in the unorganized segment.

Share of Food Processing Industry & Its Segments

Source: D&B Research

Present Position and Trend of Business with India

India’s demand for dairy products and consumption of liquid milk are increasing

along with the production of dairy products. This trend is forecast for the year 2011.

The Indian consumption of nonfat dry milk is forecast to surpass Indian production

during 2011 and reflect the small growing deficit in dairy production and the need for

increased supplies. The consumption of butter is exceeding the domestic production

in 2010 and it will be the same in 2011 and 2012.

49

In India, the organized dairy sector having 40 to 50 percent of Indian dairy farmer

work and it is also estimated that about 65% of milk in India is consumed in fluid and

other forms on the farm or by the unorganized sector which contains local milk

vendors, retailers, wholesalers, and producers. The organized and unorganized both

sectors distributing the total milk of which 46% in fluid form and the rest is in the form

of other milk products like butter, yogurt, milk powder etc.

Import-Export of Dairy Products

In 2010 Indonesia imported 302,158 tonnes of dairy products (worth US$925

million); this was an increase from 2009 of 12 percent in volume. The main

products imported in 2010 were SMP, WMP and whey. Imports of prepackaged

powdered milk products represent about 22 percent of the volume and 29 percent of

the value of total powdered milk consumption. There are at least 40 brands of

prepackaged imported powdered milk sold through various retail outlets in Indonesia.

India has started exporting surplus dairy commodities, such as skim milk powder,

whole milk powder, butter and ghee. The agricultural and processed food products

export development authority regulated the export and import of dairy products till

early 1990’s in the country.

Exports of Dairy Products from India

Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Quantity, MT 21439.81 8918.38 42160.06 59745.73 37391.11 -

Value, Rs Cr 153.59 87.11 358.69 552.28 395.15 557.61

Source: DGCIS/APEDA

50

POLICIES AND NORMS OF INDONESIA FOR DAIRY INDUSTRY FORIMPORT

Import Tariffs

Despite the very high bound tariff rates on dairy products, applied rates on most

products are five percent. The exceptions include some processed products, such as

yogurt, and some concentrated milk and cream, which are subject to a higher

applied tariff of 10 percent. Dairy imports face a number of regulations in Indonesia.

Finished milk products can only be imported by companies appointed by Indonesia’s

government. In the Import Duty Tariff Book published by the Finance Ministry, import

duties on milk products is 5% and value added tax (VAT) is 10%.

Product Registration

There are three types of registration numbers:

1. Training Certificate (Certificate Penyuluhan) – for a small company with

limited investment where monitoring is done by Regional Health Service by

providing guidance or training.

2. MD Number – for local food and beverage manufacturer with high investment

which is capable to comply with government regulation.

3. ML Number – for imported processed food and beverage products.

Labeling

Every packaged food products which are distributed in Indonesia must be labeled

in Indonesian language, Arabic numbers and Latin letters.

The special wording regarding content is necessary for labels of certain foods like

milk products, baby food, alcoholic beverages and halal foods.

The expiry date of product is necessary to shown on the packaging.

Food ingredients must be display on the label.

The name and address of manufacturer or the details of importers must be

shown.

Net weight and net volume of product must be shown on the label.

51

POLICIES AND NORMS OF INDIA FOR DAIRY INDUSTRY FOREXPORT

Dairy Production Policy

Dairy production in India is characterized by a low input-low outturn group, whereby

smallholder producers typically own no solon than quintuplet cows or bovid and use

locally procurable feedstuffs. While yields are below multinational averages,

production costs are amongst the worst in the group. Amerindian farm policy is

currently convergent in accretionary river production through a come of incentives

schemes.

In gathering 2010, the polity along with the National Dairy Use Enter, has worn up a

Person Farm Contrive, with a proposed outlay of around 378 Cardinal dollar to

nearly ambiguous the state's river creation by period 2020. This contrive instrument

focus on accelerando milk productivity of the Amerindic dairy concourse finished

individual way, including the use of imported biology as considerably as selective

acculturation of topical cows.

The National Dairy Development Board (NDDB)

The National Dairy Development Board (NDDB) was set up by the Government of

India, by an Act of the Parliament, as a statutory body and an institution of national

importance in the year 1987. NDDB promotes plans and organizes programmes for

the development of dairy and other agriculture based and allied industries along

cooperative lines. It also provides assistance for the implementation of such

programmes.

The Export Inspection Council and the National Productivity Council have been

notified by the Government of India as Quality Auditors to conduct periodic

inspections (once a year) of the units registered under MMPO to ascertain that the

specified sanitary, hygienic conditions and food safety measures are complied with.

52

Dairy Venture Capital Fund

The second intervention by the Government of India was at the financial level.

Recognizing farmers’ need for financial assistance for the up-gradation of traditional

technology to handle operations on a commercial scale using modern equipment

and for the up-gradation of the quality of milk, the dairy capital Venture Fund was the

initiated in the 10 Plan. Financial assistance is provided to small scale milk

producers for the establishment of small dairy farms; Purchase of milking machines /

milk-o-tester / bulk coolers etc.

ADVANTAGES AND CHALLENGES FOR INDIA

Advantages Challenges

Market size - Indonesia has a

population of around 240 million

people

Import regulations are often complex

and non-transparent and permits can

be difficult to obtain, thus requiring a

close business relationship with a

local agent

The industry is constantly creating

new products based on consumer

preference trends. These new

products often require ingredients

unavailable domestically

Quantities of ingredients for new

product and market trials are usually

not enough to fulfill the minimums

required by Indian suppliers

Indian products are considered to be

of high quality

Competitive products are often less

expensive, and are used equivalently

to Indian products

Applied duties on most food and

agricultural products are currently 5

percent, with a 10 percent applied

duty on certain processed foods

Weak purchasing power of the

majority of the population. Muslims

accounting for 88% of the population

require halal-certified products

53

EXPORT POTENTIAL

India is presently having enough potential to become the leading player in milk and

milk products export. India is having good location advantage, which is located

amidst major milk deficit countries in Asia and Africa countries. Major importers of

milk and milk products are Bangladesh, China, Hongkong, Singapore, Thailand,

Malaysia, Japan, Oman, Gulf countries, UAE and other countries located near India.

Low Cost of Production

Milk production is very scale insensitive and labour intensive. Because of low labour

cost, cost of production of milk is very low in comparison to other countries.

Quality

To increase quality and maintain good standards of the production, significant

investment has to be made in milk procurement, equipments, chilling abd

refrigeration facilities. Training should also be given to the workers so the wastage

becomes less and products becomes of good standard. These also results into good

quality which can pass international standards.

Productivity

To have an exportable products surplus in the long term and also to maintain low

cost competitiveness, it is imperative to improve productivity of the indian cattle.

There is a vast market for the export of traditional milk products such as ghee,

paneer, shrikhand and other ethnic sweets to the large number of Indians scattered

all over the world.

54

BUSINESS OPPORTUNITY FOR DAIRY PRODUCTS

Commentary OpportunityMarket Settings &

Trends

Cheese-Based Products A good market with sound

growth prospects and

many Indonesian

companies are seeking

engagement with

Australia.

A limited number of

Australian suppliers can

readily find good local

associates. There are

companies interested in

JV operations to produce

cheese from Australian

curd and also import

cheese in bulk and pack

for the local market.

Liquid Yoghurt Drinks Demand is sound at the

high end of market.

Challenge is to produce for

the medium/low market

sector.

Opportunities may lie in

developing a strong brand,

in association with an

existing Indonesian dairy

producer.

Establishing integrated

Dairy Operations

Improving for the

commercial investments

and an integrated model

appears most partners.

Several are already are

working with Australian

principals to produce block

cheese.

Flavoured Milk Limited market,

undertaken by some

potential may exist for

existing dairy companies.

The business climate is PT

Greenfield has

demonstrated that

investment in this sector is

viable, with strong local

licensing brands.

Ice cream & Dairy Ice

Confectionery

Currently limited to the

upper income range of the

market with limited growth

Potential to develop the

niche products in A1

income group market.

55

potential – until there is

broader based income

growth.

Possibilities also to test

low cost ice-cream and

ices for a wider consumer

base, as these have

proved popular elsewhere

in Asia, in urban centers.

Chapter – 2.4MINERALS INDUSTRY

56

INTRODUCTION OF THE MINERAL INDUSTRY

Minerals are natural compounds produced through geological processes. Iron,

calcium, potassium, and sodium are some of vital minerals. Humans need small

amounts of about 14 minerals to sustain usual body function and good health.

Minerals are neither animal nor vegetable; they are inorganic.

Types of Minerals

Macro Minerals

Micro / Trace Minerals

Mineral role in the economy of IndonesiaIndia’s Gross Domestic Product (GDP) growth was 6.1% in 2010. The state's

developed outturn accounted for 24.8% of its totality GDP based on purchasing

cognition conservation of $1.03 trillion. The progressive sphere grew by 4.5% in

2010. The ontogeny of minerals and oil and gas continuing to modification a alpha

part in the land's efficient growth. The valuate of petrified goods production

accounted for 11.2% of the GDP, and the chemical business and the defence and

quarrying industries grew by 4.7% and 3.5%, respectively, during the year. The

cement and trammel and brace industries showed minor increases in growth,

whereas the oil and gas manufacture enrolled pessimistic growth. The Governance

encouraged promotion in new oil and gas exploration to cease the status in

production.

Business Activities of Mineral IndustryIndonesia continues to be a important player in the global mining industry with major

levels of production of coal, copper, gold, tin and nickel. In particular, Indonesia

remains among the world’s prime exporters of thermal coal. Global mining

companies constantly rank Indonesia highly in terms of coal and mineral prospects,

however assessments of its mining policies and investment climate have not been so

positive. As such, in recent years there have been partial levels of investment,

particularly in green fields projects, other than in the coal sector.

57

COMPARATIVE POSITION OF MINERAL INDUSTRY WITH INDIA &GUJARAT

Indonesian economic position of mineral industry

Mining companies are in many cases the exclusive central employer in whatsoever

of these faraway areas. In past period, the mining business has contributed roughly

4-5% to the number Country GDP, though the business represents a overmuch

larger acquire of the regional economies of galore provinces, including Papua,

Bangka- Belitung, Westward Nusa Tenggara and East Kalimantan. The Governance

hopes to gain the donation of the production manufacture to federal GDP over the

upcoming age finished a focal sail on greatest scale stock projects and on an

improved regulatory climate.

Indonesia's in general mining production levels were somewhat lower during 2010,

with the exclusion of coal & metal. People the upturn in the worldwide frugality in

latterly 2009 and aboriginal 2010 and a universal increase in prices over this

punctuation, the rank of promotion pertain in the Land mining aspect is

strengthening,

Indian economic position of mineral industry

Indian minerals industry is one of the fast growing industries. India has a vast base

of metals and minerals includes all the atomic minerals, The Indian mining industry

at present employs over 1.1 million people.

58

PRESENT POSITION AND TREND OF BUSINESS (IMPORT /EXPORT) WITH INDIA DURING LAST 3 TO 5 YEARS

Coal in particular has seen much interest from the ever increasing demand from China

and India.

Bilateral trade was down by 12% during Jan-Sept 2009 as compared to the same period

in 2008. Trade statistics gathered from the Central Bureau of Statistics, Indonesia (BPS)

Trends in the Indonesian mining industry 2006 was another stunning year for the mining

industry, both in Indonesia and globally-and with the commodity prices at their current

highs, 2007 and 2008 will see even better financial outcome.

Indonesia import from India

Mineral Fuels, Mineral Oils and Products of their Distillation;

Bituminous Substances; Mineral Waxes

Organic Chemicals

Iron And Steel

Indonesia export to India

Mineral Fuels, Mineral Oils and Products of their Distillation; Bituminous Substances;

Mineral Waxes.

Ores, Slag and Ash.

Organic Chemicals

Miscellaneous Chemical Products.

59

POLICIES AND NORMS OF INDONESIA FOR MINERAL INDUSTRY FORIMPORT / EXPORT INCLUDING LICENSING / PERMISSION, TAXATION ETC

Basic principles in the new mining Law Indonesia

▫ License will be issued through tender mechanism based on parity &

transparency

▫ Licensing system will be simplified and grouped into two:

i. Exploration license (general survey, exploration)

ii. operation license ( construction, mining, processing, transportation &

marketing)

▫ The existing of license authority and agreement will be honored vs. 2-5

years transitional period

Indonesia’s long standing Contract of Work (“CoW”) framework for foreign investment,

and licensing scheme for Indonesian investors, have been replaced under the Mining

Law.

▫ it is the provisions of the Law that the Government has had a difficult

task in complementary the interests of foreign investors & Indonesian

nationals.

▫ The Mining Law so removes most of the distinctions between

Indonesian and foreign investors in the mining sector, and is consistent

with the current Negative List on Foreign Investment which allows 100

percent foreign investment in the mining sector

60

Policies and Norms of India for Import or export including licensing /permission, taxation etc

With mining licenses now more liberally available to foreign investors and the

increased foreign demand for coal, 2011 and beyond should see further increases in

coal production.

I. Private Participation in the mining sector

The national mineral policy was revised in 1994 & as a result private investment (

both domestic & foreign) has been legal for the exploration & exploitation of 13

minerals:

Diamond Chrome ore

Nickel Zinc

Platinum Sulfur

Iron ore Molybdenum

Copper Gold

Manganese Tungsten ore

Lead

II. Investment Policy

In 1999, the foreign investment policy has been additionally liberalized to promote

(FDI) foreign direct investment in mining sector.

On 24th april,2000 the coal mines (nationalization) bill, 2000 was introduced in the

parliament of amending the coal mines act, 1973 and permitting private investment in

coal & lignite mines subject to definite conditions.

III. Investment Incentives

Mining in particular backward districts is entitled for a complete tax holiday for a

period of 5 years from commencement of production and a 30 percent tax holiday for

5 years thereafter.

Environment protection equipment, pollution control equipment, energy saving

equipment and certain other equipment entitled for 100 percent depreciation.

61

One tenth of the expenditure on prospecting or extracting or production of certain

minerals throughout five years ending with the first year of commercial production is

allowed as a deduction from the total income.

Export profits from specific minerals and ores are entitled for certain concessions

under the Income Tax Act.

Minerals in their finished form excepted from excise duty.

Low customs duty on capital equipment used for minerals, on nickel, tin, pig iron,

unwrought aluminum.

Capital goods imported for mining under EPCG scheme qualify for concessional

customs duty subject to certain export obligation.

IV. Foreign Direct Investment in Minerals Sector

100 % allowable export & import of minerals in India.

Custom duty on imported copper has been reduced in phase from 35% to 5%in

2002-03.

Present Trade barriers for import / Export of Minerals

o Low innovation capabilities

o Infrastructure Problem

o Government restrictions on trade

o Government policy

o High rate of illegal mining

o Mining companies and equipment suppliers are under the constant threat of

being taken over by foreign companies.

o A heavy tax burden discourages.

o Politicians undervalue the industry's contributions to the economy.

o Stricter environment rules restricting mining activities

62

POTENTIAL FOR IMPORT / EXPORT IN INDIA / GUJARAT MARKET

Trade

Exports of ores and minerals from India have grown-up from US $ 917 million

in 1999-2000 to US $ 7028 million in 2006-07.

ANALYSIS OF WORLD IMPORT OF SELECT MINERALS AND INDIA’S EXPORT

POTENTIAL

I. Iron Ore and Concentrates

o With regard to India also, iron ores and concentrates is the largest

exported mineral with the export value being US $ 3.9 billion in 2006-

07.

II. Copper Ores and Concentrates

o In the year 2006-07, India’s export of copper ores and concentrates

amounted to US $ 2.37 million only.

III. Chromium Ores and Concentrates

o In the year 2006-07, over 88% of India’s total exports of chromium ores

and concentrates were directed to China. Japan (8%), UAE (2%) and

Indonesia are other major destinations for India’s chromium ore

exports.

Business Opportunities in futureo In a world that is already facing shortages of some of the vital minerals

and metals like petroleum and coal, the demand for such products is only

bound to increase with time.

o Meeting those demands will be a challenge for the mining and minerals

industry worldwide.

o There is already a shortage of skilled workforce throughout the world.

o So to conclude, it can be said that mining and minerals sector has a

brilliant future, be it in terms of employment or technology.

63

o India has an predicted 85 billion tones of mineral reserves remaining to be

exploited.

o Besides coal, oil and gas reserves, the mineral inventory in India includes

13,000 deposits/ prospects of 61 non-fuel minerals.

o Estimated 82 billion tones of reserves of various metals yet to be tapped

o While India has 7.5% of the world's total bauxite deposits, aluminum

production capacity is only 3% of world capacity, indicating the scope and

NEED FOR NEW CAPACITIES

SWOT Analysis

• India produces 89 minerals out of which 4 are fuel minerals, 11 metallic, 52

non-metallic and 22 minor minerals.

• India is the world's biggest producer of mica blocks and mica splitting.

• India ranks 3rd in production of coal & lignite and barytes, 4th in iron ore, 6th in

bauxite and manganese ore, 10 in aluminum and 11 th in crude steel in the

World.

Strengths

• The government offers a wide range of concessions to investors in India,

engaged in mining activity.

• World's largest producer of mica; third largest producer of coal and lignite &

barytes; ranks among the top producers of iron ore, bauxite, manganese ore

and aluminum.

• Labours easily available

• Low labour and conversion costs

• Large amount of high quality reserves

64

Weakness

• Coal mining in India is related with poor employee productivity

• Poor infrastructure facilities

• Mining technology is outdated

• Low innovation capabilities

• Labor force is highly un-skilled and inexperienced

• Lack of R&D programs and training and development

• There are long lead times on production decisions.

• High rate of illegal mining.

Chapter – 2.5

RETAIL INDUSTRY

65

INTRODUCTION OF RETAILING INDUSTRY

The latter half of the 20th

Century, in both Europe and North America, has seen the

emergence of the supermarket as the dominant grocery retail form. The reasons why

supermarkets have come to dominate food retailing are not hard to find. The search

for convenience in food shopping and consumption, coupled to car ownership, led to

the birth of the supermarket. As incomes rose and shoppers sought both

convenience and new tastes and stimulation, supermarkets were able to expand the

products offered.

Retailing sector in Indonesia

Similar to China and India, which have huge populations with growing consumption,

typified by the surge of middle-income consumers, Indonesia’s retail market can be

equally attractive. Foreign brands and retailers are attracted to the Indonesian

market for its huge appetite for imported goods, with strong growth prospects

underlined by hefty retail sales and rapid modernization of the retail sector.

Indonesia is Southeast Asia’s largest economy and while Indonesia’s annual growth

slowed down to 4.5% in 2009, it expanded to 6.1% in 2010. Some economists predict

that Indonesia’s economic growth may reach 8% in 2011-12. During the difficult global

conditions of 2009, Indonesia’s economy was among the top worldwide performers.

Stock market valuation was up 87% in 2009 and 46% in 2010 and from 2000 until 2010,

Indonesia’s average annual GDP growth was 5.17% with a stable currency and

improved sovereign credit status.

The consumer market continues to lead growth in the world’s fourth-largest country with

237.5 million citizens, 50% of whom are under the age of 30.

GDP per person exceeds its ASEAN neighbors such the Philippines and Vietnam.

Indonesia is a thriving democracy with significant regional autonomy. It is located on the

world’s major trade routes and has extensive natural resources.

It is a top-ten market for U.S. agricultural products and within the top 30 overall for U.S.

exports.

Indonesia ratified the Cape Town Treaty, which gives U.S. aircraft exporters access to

financing through international protection and registration of financial interests. In 2009

Indonesia implemented the ASEAN-China free trade agreement.

66

The number of households in Indonesia with US$5,000 to US$15,000 in annual

disposable income is expected to expand from 36% of the population to more than 58%

by 2020.

More than 60 million low-income Indonesian workers are projected to join the middle

class in the coming decade which signals increased spending on consumer goods.

Indian Retail Sector on the Fast – Track

India’s GDP growth of 9.4 per cent in 2006-07 is the highest posted for over 18

years, reflecting the booming economy of the country. Growing in tandem with the

economy is the Indian retail sector. The sector is on a high growth trajectory and is

expected to grow by more than 27 per cent over the next 5 to 6 years. Retail is one

of India’s largest industries, contributing to about 10 per cent of the GDP and

providing employment to 8 per cent of the nation’s workforce. Indian retail business

promises to be one of the core sectors of the Indian economy, with organised retail

sector estimated to grow by 400 per cent of its current size by 2007-08. over the next

12 months. The economics of Indian consumerism is buoyant, with India ranking as

the fourth largest economy in terms of Purchasing Power Parity (PPP), next only to

United States, Japan and China. India is expected to outpace Japan by the year

2010 to become world’s third largest economy. With 54 per cent of the Indians aged

below 25, the young Indian consumer is buying big to look good and feel good.

67

The Indian retail revolutionRetailing in India is evolving rapidly, with consumer spending growing by

unprecedented rates and with increasing number of global players investing in this

sector. Organised retail in India is undergoing a metamorphosis and is expected to

scale up to meet global standards over the next five years.Greater exposure to

western products and lifestyles has helped drive consumerism. The sector also

benefited considerably by the rising popularity of satellite television since the early

1990s, which provided a highly effective mass marketing route, reaching out to the

large Indian consumer base.

PRESENT POSITION AND TREND OF IMPORT / EXPORT

Footwear Industry

With the global economies recovering from the slowdown, India's footwear exports

are expected to more than double to USD 3.37 billion (about Rs 14, 828 crore) in the

next two years over 2008-09 period.

The Indian footwear industry, the second-largest in the world after China, is growing

at a rate of about 10 per cent annually, President of Indian Footwear Components

Manufacturers Association B D Bhaiya told reporters here. "Apart from growth in the

domestic sector, we have also set a target of USD 3.37 billion in exports of footwear

alone by 2013-14," Bhaiya said. In 2008-09, a footwear export from India was USD

1.53 billion.

Gems and Jewellery Industry

The gems and jewellery industry in India comprises of sourcing, processing,

manufacturing and selling of precious metals, diamonds, pearls, precious and semi-

precious gemstones, and artificial jewellery. India is one of the fastest growing

jewellery markets in the world and is the largest consumer of gold in the world.

running family owned business India is also emerging as the largest trading centre

for gold. The demand for gold jewellery in India has been traditionally linked to social

and religious significance, as gold is valued as an important savings and investment

vehicle in India, and is the second most preferred investment after bank deposits.

68

Indian textiles and Clothing Industry

The textiles and garments industry is one of the largest and most prominent sectors

of Indian economy, in terms of output, foreign exchange earnings and employment

generation. Indian textile industry is multi-fiber based, using cotton, jute, wool, silk

and mane made and synthetic fibers. In the spinning segment, India has an installed

capacity of around 40 million spindles (23% of world), 0.5 million rotors (6% of

world). In the weaving segment, India is equipped with 1.80 million shuttle looms

(45% of world), 0.02 million shuttle less looms (3% of world) and 3.90 million

handlooms (85% of world).

Textiles and Garments Exports from India

The share of textiles and garments exports in India’s total exports in the year 2003-

04 stood at about 20 percent, amounting to US $ 12.5 billion. The quota countries,

USA, EU and Canada accounted for nearly 70 percent of India’s garments exports

and 44 percent of India’s textile exports. Amongst non-quota countries, UAE is the

largest market for Indian textiles and garments; UAE accounted for 7 percent of

India’s total textile exports and 10 percent of India’s garments exports.

POLICY AND REGULATORY ENVIRONMENT IN INDONESIA

a) Foreign direct investment

Foreign Direct Investment (FDI) started to make significant progress in Indonesia in

the 1970s.After change in regulatory policies relating to foreign direct investment by

Indonesian government, Over the period the value of foreign direct investment

reached USD30 billion per year. This subsequently increased to around USD100

billion per year during the 1980s, and by the year 2000 FDI had reached USD1,167

billion (World Development Report 2003).

69

Property/real estate regulationsThe government has enacted a number of policies and regulations with a view to

regulating and controlling modern retailers and modern market formats and

protecting small retailers and small traders. But so far the implementation and

supervision of these regulations has not been strong enough

Reference for managing market storeThe SK Menperindag (Industry and Trade Ministry Decree) issued on October 13,

1997 acts as a reference for managing markets and stores • Modern markets are

allowed to be developed in every provincial capital.

• Their location must comply with either the Local Landscape Plans (“Rencana Tata

Ruang Wilayah Kota/” RTRWK or “Rencana Detail Tata Ruang Wilayah Kota/”

RDTRWK).

OTHER REGULATIONSb) VAT

The government has revised its value added tax policy,adopting a level of 10% on

retail products for allmodern retailers. The new policy is stated in Kepmenkeu No.

253/2003 about Pajak Perdagangan Ritel (tax on retail trade), which was issued on

May 31, 2003 and implemented on June 1, 2003. This 10% applies to the sale via

modern retail formats of all agricultural products, as well as breeding and fishing.

The policy is not effective for retail traders operating in the traditional market. Some

modern retailers are complaining about the implementation of value added tax for

the abovestated products because it will have a direct impact on end customers,

increase price by 10% or more. The government’s decision is aimed at protecting

traditional traders and increasing tax revenues. However, the move also places a

bigger burden on modern retail operations and could lead consumers to suffer.

c) The liberalization of retail trading

The SK Meninvest/No. 29/SK/1998 and Keppres No. 99/1998 policies have

effectively opened up the retail market by allowing foreign companies to invest in the

wholesale trading and retail sector. These policies make it easier for foreign

investors to penetrate the Indonesian retail market, by putting them on an even

footing with local retailers.

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Policy and Regulatory Environment in INDIA

The Government is progressively undertaking reforms and liberalising the retail

sector; thereby attracting significant foreign investments. The regulatory and

supervisory policies are being reshaped and reoriented to meet the new challenges

and opportunities in this sector.

To facilitate easier flow of Foreign Direct Investments (“FDI”) inflow, instead of

having to seek Foreign Investment Promotion Board (“FIPB”) approval, FDI up to

100 per cent is allowed under the automatic route for cash and carry wholesale

trading and export trading.

FDI up to 51 per cent is allowed, with prior Government approval for retail trade in

‘Single Brand’ products with the objective of attracting investment, technology and

global best practices and catering to the demand for such branded goods in India.

The most common channels for entry of foreign retailers are the strategic licence

agreements, franchising, distribution, manufacturing, joint ventures and cash and

carry wholesale trading.

Trade barriers

a. Tariffs Barriers

In accordance with the WTO Agreement on Agriculture, Indonesia agreed to

eliminate non-tariff barriers on agricultural products, and replace them with tariffs. In

the agricultural sector, 1,341 tariff lines have bindings at or above 40 percent,

including the most sensitive and heavily protected sectors.

b. Non-Tariff Barriers

In April 2008, the Indonesian government announced that the National Logistics

Agency (BULOG) would have exclusive authority to import rice for purposes of food

security and price management.

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Domestic producers continue to receive government protection from imports

through a quota and licensing scheme. This effectively limits imports to remote

markets and has the effect of keeping rice prices artificially high for domestic

producers, others are as belowc. Other Barriersd. Import Requirements and Documentatione. Temporary Entryf. Labeling and Marking Requirementsg. Prohibited and Restricted Imports

POTENTIAL FOR IMPORT / EXPORT

The following incentives attracts the importers / exporter to make trade with the

Indonesia(a) Regional Incentives

The basic tax incentive is a tax holiday for three years in Bali and Java, and for five

years everywhere else.In addition, a tax holiday for another year is granted in each

of the following cases:

Where at least 2,000 people are employed;

Where cooperatives own at least 20 per cent of the project;

Where the value of the project, excluding land and buildings, is at least US$ 200

million; and

Where the construction phase of the project is limited to five years. If the time taken

is less, the time saved is added to the total tax holiday period.]

(b) Sectoral incentivesThe Government recently introduced a new tax holiday regime. Tax holidays will be

granted in respect of approved projects in certain industry sectors including textiles,

selected chemicals and pharmaceuticals, iron and steel, and crude oil refining.

Tax holidays are granted for:

Projects approved by the investment coordinating board, BKPM (i.e. by the State

Minister of Investment/Chairman of the BKPM); and

Projects approved by the Minister of Finance based on recommendations of the

committee charged with the responsibility of reviewing applications for tax holidays.It is

expected that the process for dealing with applications for tax holidays under the new

regime will be more transparent than under the previous regime.

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(c) Export incentives and free trade zonesBonded zones and industrial estates have been set up to encourage the processing

of exports. Goods may be brought into bonded zones free of import duty for export

elsewhere. Goods brought into an industrial estate are also subject to favourable

regimes with respect to value-added tax and sales tax on luxury goods. Bonded

zones exist on Batam Island and surrounding islands and in Jakarta. Industrial

estates have been established on Batam Island and Bintan Island.

Incentives for import export in India

(a) Regional IncentivesAn industrial undertaking set up in a specified underdeveloped state or union territory

or in a specified industrially underdeveloped district, and which commenced

manufacturing or production before 31 March 1995, is eligible for a 30 per cent tax

exemption on its profits for the 10 years beginning with the year in which

manufacturing or production takes place.

(b) Sect oral incentivesAn industrial undertaking set up in any part of India for the generation of power, or its

generation and distribution, before 31 March 2003, is eligible for 100 per cent tax

exemption on its profits for the first five years and for 30 per cent for the next five

years. All the profits of an undertaking that begins commercial oil production in any

part of India after 1 October 1998 are exempt from tax for the first seven years

(c) Export incentives and free trade zonesA complete tax holiday is provided to companies that are set up in FTZs for the first

10 years of operation. These FTZs are Kandla Free Trade Zone (KAFTZ), Gujarat;

Santa Cruz Electronics Export Processing Zone (SEEPZ), Mumbai; Madras Export

Processing Zone (MEPZ), Tamil Nadu; Cochin Export Processing Zone (CEPZ),

Kerala; Noida Export Processing Zone (NEPZ), Uttar Pradesh; and Falta Export

Processing Zone (FEPZ), West Bengal. Approved, newly established 100 per cent

export-oriented industrial undertakings and units in electronic hardware and software

technology parks are entitled to a similar tax holiday.

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A domestic company or a resident non-corporate assessee engaged in the hotel or

travel agency business can enjoy an exemption of 50 per cent on the profits derived

from services provided to foreign tourists, plus any portion of the remaining profits

that are transferred to a reserve account from the profit and loss account. Profit must

be received in convertible foreign exchange.

(d) Other incentivesA foreign institutional investor investing in shares and securities in India would be

liable to tax at 10 per cent on its long-term capital gains and 30 per cent on short-

term capital gains. The minimum period of holding in the case of equity shares would

be more than one year to be considered long term, and three years in the case of

other securities.

Dividends, interest or long-term capital gains of an infrastructure capital fund or

infrastructure capital company that earns from investments made on or after 1 June

1998 in any enterprise engaged in the business of developing, maintaining and

operating any infrastructure facility, and which has been approved by the central

Government, is exempt from tax.

(f) Statutory tax rateThe national corporate tax rate is 35 per cent and the tax rate for foreign companies

is 48 per cent. The 1999/2000 budget announced a surcharge of 10 per cent, making

the effective rate 38.5 per cent. Dividends declared, distributed or paid after 1 June

1997 are not subject to withholding tax.

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BUSINESS OPPORTUNITIES IN FUTURE

The GOI opened the retail industry to foreign investment in 1998 following a letter of

intent which the GOI signed with the International Monetary Fund (IMF) to revive

Indonesia’s ailing economy. Soon after the 1998 liberalization, many big foreign

retailers began to invest in Indonesia. Foreign retailers have been particularly active

in the hypermarket and department store sectors.

The continuous growth of the retail industry has been driven mostly by strong

domestic consumption, serving as a primary factor that supports Indonesia’s

economy. In 2010, total sales of Indonesia’s retail industry were expected to reach

$9.68 billion, generated by more than 8,000 non-traditional retail outlets throughout

the country.

No Regulatory issues related to opening a retail outlets

Continuously increases domestic consumption.

Only 35-38% of total retail sales covered by modern retails.

High potentiality for opening retail outlets in small towns.

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SWOT ANALYSIS

INDIA INDONESIA

STRENGTHS

Quality of work

Initiatives taken by the

Government (setting up Hi-Tech

Parks and implementation of e-

governance projects)

Many global players have set-up

operations in India like Microsoft,

Oracle, Adobe, etc.

Following Quality Standards such

as ISO 9000, SEI CMM etc.

English-speaking professionals

Cost competitiveness

Quality telecommunications

infrastructure

Indian time zone (24 x 7 services

to the global customers). Time

difference between India and

America is approximately 12

hours, which is beneficial for

outsourcing of work.

STRENGTHS

supporting government policy

towards retailing sector

Many global players have set-up

operations in like Carrefour, Sogo,

Giant (under Dairy Farm), Lotte

Mart and Best Denki,

Lower taxation

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Weaknesses

Absence of practical knowledge

Dearth of suitable candidates

Less Research and

Development

Contribution of IT sector to

India's GDP is still rather small.

Employee salaries in IT,

retailing sector are increasing

tremendously. Low wages

benefit will soon come to an

end.

Weaknesses

Absence of strict regulatory policy

Dominance of foreign retailers in

Indonesian market

Absence of infrastructure

Less research and development

Dearth of suitable candidates

Opportunities

High quality IT education market

Huge potential for retailing sector

(8-9%) Market was covered by

organised retailers

Increase number of working age

people

India 's well developed soft

infrastructure

Upcoming International Players in

the market

Better for retailing sector (8-9%)

Market was covered

Opportunities

Huge potential for retailing sector

(35-40%) Market was covered by

organised retailers

Huge population 7th largest

populated contry

Growing market

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Threats

Lack of data security systems

Countries like China with

qualified workforce making

efforts to overcome the English

language barrier

IT development concentrated in

few cities only

Threats

Instability of political situation in

the country

Lack of data security systems

Less IT developments

Chapter – 2.6PHARMACEUTICAL INDUSTRY

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INTRODUCTION OF PHARMACEUTICAL INDUSTRY

Indonesia has a fairly small but fast-growing pharmaceutical market, with an

estimated value of USD 6.05 billion in 2010. The pharmaceutical market is projected

to grow at a compound annual growth rate of 11.3%, reaching a value of USD 11.08

billion by 2015. It is expected that the market will further grow as current drug

consumption per capital is relatively lower than neighboring countries at USD 17.8 in

2010, hence there likely will be more increases in health spending in the future. Due

to a large population size and relatively strong production base, Indonesia has the

potential to be a lucrative pharmaceutical market. The country has huge generic drug

market.

Vaccination and medication has been very much important in Indonesia from last 50

years. It is estimated that people in Indonesia spend 30 percent of total health on

pharmaceuticals and vaccines. These shows that people of Indonesia are not

spending much on medicines. It is important that the government development plan

includes a focus on pharmaceuticals.

The GoI goal of reducing the growing burden of non-communicable diseases (NCDs)

makes pharmaceuticals even more important. Most of the medicines required for

these conditions are now off-patent, and potentially available as cheap generics.

Growth and Structure of Pharmaceutical Industry of Indonesia

Indonesia’s pharmaceuticals market received a score of 53, which is considerably

above the average for the 16 markets in the Asia Pacific region. Indonesia is a lower

middle income country, where a significant proportion of the population does not

have access to adequate healthcare and, as a result, pharmaceuticals remain

prohibitively expensive for many. Nevertheless, the demand for drugs will rise over

the forecast period, due to an increased need for modern medicines, population

growth and healthcare service improvements, as well as developing economic

conditions.

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Foreign direct investment has continued growing due to Indonesia’s economic

development. During the first month of 2007, the pharmaceutical industry received

foreign direct investment worth US$6.9 billion. The increase in healthcare demand

and rapid population growth will provide opportunities for the Indonesian drug

market.

The market size of pharmaceutical products in Indonesia is estimated to be around

IDR 37.5 trillion (US$ 3.9 billion, 2010), with an impressive average annual growth in

the last five years of 10%.

Indonesian Pharmaceutical Market 2005 – 2010

Year 2005 2006 2007 2008 2009 2010

Total

Market

(IDR bn)

23,589 23,047 25,708 29,981 33,969 37,531

Growth

(%)

13.6 - 2.3 11.5 16.6 13.3 10.5

The market consists of 170 local companies including 3 state owned companies and

32 foreign companies. The foreign companies have a 40% market share. Out of the

estimated 32 multinational pharmaceuticals companies operating in

Indonesia, there are an estimated 20 European companies with an active presence.

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The top 3 pharmaceutical multinational corporation in Indonesia Bayer

Novartis

Pfizer

The top 6 domestic pharmaceutical companies in Indonesia Kalbe Farma

Sanbe

Dexa Medica

Soho

Pharos

Kimia Farma and Indofarma

The state own companies

PT Kalbe Farma Tbk,

PT Merck Tbk,

PT Kimia Farma Tbk.

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COMPARATIVE POSITION OF PHARMA INDUSTRY OF INDONESIAAND INDIA

Comparison of Indonesian & Indian pharma industry on basis of various factors.

Factor Indonesia India

Labour The low cost and

availability of labour is

still the main

attraction for investors in

Indonesia. However,

unskilled

labour dominates. Only

6.2% of the population

has a

college or university

degree.

In India, about 300,000

postgraduates and 1,500

PhD students qualify

annually in biosciences

and

engineering and around

150,000 MSc students

graduate

in chemistry alone. The

number of fresh scientists

and

engineers available every

year is 700,000

according to

a Confederation of Indian

Industries (CII) study

IPR Weak IPR regulations. IPR protection altered

significantly in 2005 when

India

became TRIPS-compliant

and formally recognised

product patents with

retrospective application

to 1995.

Tax R&D expenses tax

deductible. Tax rate up to

a maximum of 30%.

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Present Position and Trend of Business The India – Indonesia Trade and Investment Relations: High Expectations for the Future

High expectations of a vibrant trade and investment relationship between India and

Indonesia stem from the fact that both the economies are high-growth-large-

economies in their respective sub-regions. While both the economies are labour

abundant with a growing industrial base, there are certain complementarities in

various sectors. Such complementarity should be the basis of an exceptionally

vibrant trading relationship, and modeling predictions based on economic factors put

the potential for India – Indonesia trade at around US$ 18 billion in 2020 (compared

to the 2007 level of US$ 7 billion). This figure now looks extremely conservative as

bilateral trade already crossed the US$ 10 billion mark for 2009 and both the

countries have set the target of US$ 20 billion by 2015

The pharmaceutical industry in India has been identified as one of the most

important knowledge-based industries. The industry grew rapidly in every sector i.e.

large-scale sector, medium-scale sector and the small-scale sector besides the

public sector during the 1980s and the mid-1990s. The number of manufacturing

units registered in this sector has since grown to over 22,000. The industry has

recorded a growth of about 15 per cent annually during the last decade.

The industry has also shown significant growth in export of drugs to developed and

developing countries. The quality of drugs produced and exported has been of world-

class standards. The following table shows the export potential of the

industry. The imports have also been shown for the purposes of comparison.

Year Exports

Rupees in millions

Imports

Rupees in millions

1992-3 14,901 11,374

1998-99 61,520 30,473

1999-00 72,302 15,020

2000-01 87,299 20,325

2001-002 104,759 25,812

Source: Report of the Working Group on Drugs and Pharmaceuticals for the 9th

Five-year plan (1997-1990-2001-2002)

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IndonesiaThe pharmaceutical industry in Indonesia comprises the pharmaceutical industry and

traditional medicine industry. The Indonesian Health Profile 2000 indicates how the

different sectors of this industry have grown during 1991- 1998. The data is given in

the following table:

Type of

industry

1991 1994 1997 1998

Pharmaceutical

industry

256 224 224 198

Traditional

medicine

Industry

4 23 76 79

In 2002 the number of pharmaceutical manufacturers remained the same i.e. 198.

These manufacturers consist of:

Government – owned companies 4

MNC 32

Domestic companies 162

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Policy and Norms of Indonesia

Import licenses

Import into Indonesia maybe conducted only by companies having import license

procured from the Ministry of Industry and Trade. To import pharmaceutical

products, a company must have import license from the Ministry of Industry and

Trade and be registered as a pharmaceutical wholesaler with a permit from the

Ministry of Health.

Import documentation requirements

The government requires the following for most imports: pro-forma invoice;

commercial invoice; certificate of origin; bill of lading; insurance certificate; special

certificates. According to the Indonesian Customs Law that came into effect in April

1997, importers are now required to notify the Customs Office in the first stage by

submitting the import documents on a standard form computer diskette.

Free trade zones and warehouses

The government encourages foreign investors who export to locate in bonded or

export processing zones (EPZ). There are a number of EPZs in Indonesia, the most

well-known being Batam Island, located 20 km. south of Singapore. Indonesia also

has several bonded zones or areas that are designated as entree ports for export

destined production (EPTE). Companies are encouraged to locate in bonded zones

or industrial estates whenever possible. Producers located within the bonded areas

are allowed to sell up to 15% of their product into the local market. Foreign and

domestic investors wishing to establish projects in a bonded area must apply to the

National Investment Coordinating.

Membership in Free Trade Agreements

As a member of the Association of Southeast Asian Nations (ASEAN), Indonesia

is party to the ASEAN Free Trade Agreement (AFTA). Through AFTA, ASEAN

members are phasing in a Common Effective Preferential Tariff (CEPT) scheme,

which will be completed for most traded goods in 2003.

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FDI investment

Upto to 75% for foreign investments in Indonesia.

Trade barrier- Weak IPR regulations which leads to decrease in confidence of MNC’s.

- Raw Materials

Lack of pharmaceutical raw material. It imports 90% of raw materials.

Potential for import and export

GenericsIndonesia has major generic market probably have the share to make up 75% of

the total pharmaceutical market in Indonesia. Though there is huge manufacturing

capacity is available but due to lack of proper IPR regulation and Rand D it makes

the industry less competitive. For generics Indonesia cannot yet compete with India

or China.

India and China have suffient raw materials for manufacturing available on the local

market. As producers have to import the raw materials the high import duty makes it

the finished product costly. The competitiveness of Indonesian generics

pharmaceuticals manufacturing is also limited by the weak infrastructure in the

country and expensive financing, making products more expensive. The prices paid

for most branded generic drugs in hospitals and pharmacies are high–often over six

times higher than international reference prices or four to five times higher than the

lowest price generic substitute available in Indonesia. There are very wide

differentials between the prices of branded generics and originator brands compared

with international reference prices.

Herbal medicineHerbal medicine is one area where Indonesia could create a competitive advantage

coupled with a well developed industry in Indonesia and availability of resources.

The Ministry of Health ensures jamu is safe and backed by research, also to ensure

efficacy. The resources which can be used for herbal purpose is different types of

ginger, nutmeg, cardamom, cumin and cloves, certain chilies, and fruits like papaya

86

and banana. The availability of raw materials to make traditional herbal medicine is

relatively abundant in Indonesia. The results of studies conducted by the Indonesian

Institute of Science showed that 30,000 of the 40,000 available species of world

medicinal plants are found in Indonesia.

Business Opportunity in Indonesia

The business opportuunies in Indonesia can be better understand if we directly

compare its Strength, weakness, opportunity, threats.

SWOT for India:

Strength

A sufficient number of medical and

pharmacy graduates strengthening of the

IPI

Patent Act and Drug Price Control act

low labor costs

Weakness

Drug discovery and drug development

are risky, complex requires huge

investments

Opportunities

Merging with a domestic or

international company giving

competitive edge over cost and

capacity.

Threats

The IPI would be compelled to

compete with multinationals in 2005,

and it remains to be seen how many

companies actually will survive the

competition

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SWOT for Indonesia:

Strength

Significant market growth potential, with

a fast-growing population.

Sizeable and strong generic drug market,

largely owing to the low-income

population.

Labour

Weakness

Lack of formal price

Low purchasing power of large section of

the population.

Reliance on imports for raw materials.

Poor intellectual property (IP) protection

leading to reduced foreign investment

(FDI).

Opportunities

Proposed privatization

Demand for low-cost drugs

Government encouragement of exports

Threat

Escalating raw material cost and taxation

of imports resulting in pharmaceutical

products becoming prohibitively

expensive

Widespread corruption

Chapter – 2.7

TELECOMMUNICATION

INDUSTRY

88

INTRODUCTION OF TELECOMMUNICATION INDUSTRY ININDONESIA

There has been recorded a tremendous growth for telecommunication industry in

Indonesia in last 5-7 years. The major reason for this is the evolution in technology.

Mobile Phones and the various applications of internet are growing rapidly. There

has been seen a rapid increase for mobile usages among teenagers. The social

networking sites are also one of the major factor. Now-a-days, Smart Phones have

captured a huge attention of all categories of people.

Market analysis

Network & information services In telecom

Voice & data of mobile

IP services

Top key trends seen in 2012

Annual sizing & telecommunication services forecast

Market trend & technology emerging

Competitive profile of broadband services provider

Preference of SMEs & communication usage

Adoption plan by vertical market & communication usage

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Indonesia telecommunication services revenue

Competitive analysis

This service reviews strategies, market positioning, and future direction of several

providers in the Indonesia telecommunications market, including: PT. Atlasat, PT.

Bakrie Telekomunikasi, PT. BizNet, PT. CBN Indonesia, PT. Citra Sari Makmur, PT.

Excelcomindo, PT. Fast Media, PT. Gaharu, PT. Hutchison Telecommunication

Indonesia, PT. Indonet, PT. Indosat, PT. Lintasarta, PT. Mobile-8, PT. Natrindo

Telepon Seluler, PT. Radnet Nusantara, PT. Sampoerna Telecommunication

Indonesia, PT. Sistelindo, PT. Smart Telecommunication, PT. Telkomsel, and PT.

Telkom Indonesia.

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Mobile Phone Manufacturing Company in Indonesia

Spice i2i :

Mochhenry :

Cv.Desty Electronics

Quest.net :

Iner inti teknologi :

VITELL mobile Indonesia :

Procedure for Incorporation certificate in Indonesia

Step : 1

Prepared the required document with application & completed accorading

investment plan

Step: 2

Getting the initial licenses ( SPCC BKPM ) valid for 3 year.

Step : 3

integration of SPCC BKPM

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Establish Articles of Association with a Public prosecutor detailing proof of capital

investment, and send it to the Ministry of Justice for approval and issuance of State

Gazette.

Company address register with local council.

IRD registration (NPWP + PKP )

Register with the Department of Industry & Trade ( TDP )

Step : 4

Key emigrant positions (work permits) and Fixed Operating License (30 years)

Step : 5

organize and send the 6-month report (LKPM) to the regional BKPM office as well as

UUG (HO) nuisance act to the regional office of BKPM.

Step : 6

Ownership of property

Step : 7

Provincial Approval for fixed licenses ( BAP )

Step : 8

Fixed License (IUT) for 30 years is issued

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Overview of Indonesia mobile market

World 4th largest population country

Mobile manufacturing company : 5 company

Mobile supplier : 350

Usage of mobile : more than 90 million people

Most usage by: middle class people

INTRODUCATION OF COMPANY :

CEPAT KONEKSI ( RAPID CONNECTION )

Company profile

name Cepat koneksi ( rapid connection )

Employees 500 – 550

Profile Manufacturing , supplier

Product Mobile phone

Cepat Koneksi is a mobile establish of new manufacturing company entering into the

Indonesia market. We were accomplished all the procedure of the incorporation of

the company according to companies act of Indonesia. We are a private limited

company & have a six partner in the company. We manufacturing smart phone in

Indonesian market. We are also a supplier of the smart phone & export a smart

phone in other countries.

Cepat Koneksi has all the necessary resources including highly qualified,

experienced and competent human resources at all levels and a full-function and

elaborate infrastructure and communication facilities including Marketing & Purchase

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office and the Manufacturing Plant including Testing facilities to fulfil its customer’s

needs and expectations.

The product manufactured by cepet koneksi are mobile smart phones , hand set ,

batteries , mobile cover ,etc. We are manufacturing according to demand of the

market . we are using a best technology by manufacturing a mobile & its products

GOAL & OBJECTIVE :

To manufacture high quality mobile product.

To assist people in feeling that they are very near to what matters to them

most

By provide internet in phone with improved internet technology

To provide best services to the customer

Higher the sale & increasing the profit.

To capturing the entire market of Indonesia for manufacturing the mobile phone. We

are a new players in the market so in the first phase we have to manufacturing a for

Smartphone in Indonesia.

MISSION & VISION :

Mission :

Focus on customer enchantment

Seek technology and trade leadership.

Build company image.

Quality people.

increase work culture & environment.

Better and effective communication with all market players.

Optimize resource management.

Sustained sales and profitability.

Obtaining higher sale in smart phone.

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Vision:

Make intex a globally respect name.

Improve the quality of life of people.

Achieve the status of a global mobile mechanized company which is most

fashionable for its product performance by its customers and being

recognized by society as a responsible corporate citizen.

Analysis Of The Company

SWOT analysis :

Cepat Koneksi is mainly associated with its smart phone business. So, SWOT

analysis helps to determine its strengths, weaknesses, opportunities and threats for

its concerned industry and market.

Strengths Weaknesses

Opportunities

S4 – O6: To survive in the

competitive environment, high

quality mobiles are produced

O2, 3, 4 – S9: Focus on design

new mobile technologies and

develop new applications

depending on prefect design

engineers.

S8 – O8: Keeping manufacture

spare capacity to provide the

demand of the spare parts.

W2 – O7: To cover large

orders from buyers,

manufacturing process is

compatible with latest

technology.

W1 – O4: Regular

upgradation of software

programs for mobiles to

support new technology.

W6 – O1: Expand the

company operations to

provide flexibility due to

environment effects.

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Threats

S2 – T6: Keeping the good

buyers through our good global

prestige of product development

and creativity.

S6 – T5: Negative Image can be

overcome due to its well known

prestige for over the globe.

S5 – T3: Depending on our good

marketing staff we can reduce

seasonal market demand risk.

W3 – T6: Losing of buyers

can be prevented by

several steps like

recruiting quality staffs

and giving training to

them.

W6–T2: To prevent

Operations regarding

manufacturing from

continuous

environmental effects,

flexible strategies are

adopted.

Indonesia regulations and policies on export- import relatedelectronic equipments:

According to Trade Ministry of Indonesia, there are general provisions for exporting

the goods from the country.

Policy of Goods for export (No. 575/MPP/KEP/VIII/2002):

Exporter might a company or individual, but should registered as an exporter

Electronic goods are free for export

Procedure: Notify the Custom prior to exporting of goods

Company should possess the license for exporting

Exporting the certain (prohibited) goods are not allowed

Policy of Goods for Import (No. 229/MPP/KEP/7/1997):

Provision on Import:

a. Only can be conducted by a company poses Importer Identification Number

(API);

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b. Imported goods must new ones;

c. Exemption for particular goods and procedures apply (determined by ministry of

trade)

d. Electronics and its components might be conducted by Specialized Importer

e. Specified used EEE are prohibited to be imported which can create environment

problem.

POTENTIAL FOR IMPORT/EXPORT IN INDIA:

Although there are many mobile handset manufacturers available in India, Indian

mobile handset market is still growing tremendously. Everyday new technology

comes in this sector. The prices for mobile handsets available are comparatively

quite high for smart phones. Manufactured exports are believed to be one of the

engines of Indonesian economic growth. It is true that Indonesia`s manufactured

exports grew rapidly and its share in GDP increased year by year.

Import / Export from Indonesia:

There a lot of craze has been seen among youngsters for smart phones which

include latest trends available in Cell phone segment.

Export Mobiles from Indonesia to India:

Indian Mobile Phone market has a great potential. As, Cepat Koneksi is the

specialist for smart phones having latest technology from Indonesia with a low price

and high quality standards. Indian Mobile phone ( Cell Phone) Market grows rapidly.

Everyday there are so many mobile users are increasing. Cepat Koneksi is

exporting its smart phones from Indonesia to India after studying Indian Cellular

Phone Market & mobile Industry. Cepat Koneksi also exports and imports mobile

accessories.

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98

Comparison between the India & Indonesia mobile company India :

Open competitive model

Separation between policy & regulatory function

TRAI seen to be independent & efficient

Fully privatized one incumbent ( VSNL )

Adopted Unified Access Regime-forward-looking, tech neutral solution to

convergence

Indonesia:

limited entry, duopoly model (HHI mobile 5082)

BRTI surrounded within ministry, understaffed, under-funded

Partially privatized both historical incumbent though Govt. controlled

Messy licensing framework that constrains infrastructure rollout & unsuited

for converged landscape.

Proposition:

In 1999, when India and Indonesia embark on substantive reform of the

telecom sector, India’s telecom development was lower than Indonesia’s and

hence it has been playing catch-up ever since.

India’s lower average per capita income compare to Indonesia dictate the

slower pace in the uptake of telecom services.

Lower prices in Indonesia have made telecom services more affordable and

have stimulated demand and hence growth of the telecom sector compared to

India.

Greater per capita investment in the Indonesian telecom sector compared to

India has driven network rollout and dissemination in Indonesia.

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Business strategies & opportunity in future

Business Strategies of Cepat Koneksi for India:

Lowest price of Smart phones

Only focusing in smart phone segment

Strategic tie ups with Indian Telecom Operator for promoting its Smart phones

Engaging various agencies for promotions and Advertisements

Business Opportunities in Future:

After the establishment of the brand “Cepat Koneksi” in Indian Mareket, company will

look to enter in to other mobile segments and tablet business. Company is expecting

huge business from India in next 3-5 years. Company is also thinking for strategic

partnership with Indian IT companies for its mobile application development in future.

Chapter – 2.8

TOURISM INDUSTRY

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INTRODUCTION OF TOURISM INDUSTRY

About Tourism

Tourism is the activities of persons which includes: travelling to and staying in

places outside their usual environment

-for not more than one consecutive year

-for the leisure or business purposes

Tourism is a competitive & dynamic industry:

- Which requires ability to adapt to customers' changing needs and desires

constantly

- as the main focus of tourism businesses is: customer’s satisfaction, safety

& enjoyment

Travel & Tourism is forecast to contribute some $6.5 trillion to the global

economy.

International inbound tourism generates sizable foreign currency earnings,

domestic and foreign investment, male and female employment and tax

revenues.

General Considerations

Tourism activities can be categorized as the following headings:

Coastal Tourism,

Natural and Historic heritage,

Marine tourism – Cruise tourism

Tourism in Winter,

Business travel, Family trips.

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A comprehensive tourism policy is required to enable an improvement in the

country’s economic opportunities, which benefit communities and enterprises, and to

contribute to personal, social and economic growth for men and women.

Tourism and vulnerability

To a large degree, tourism depends on the preservation of the environment and of

cultural, social, and historical heritage. Therefore, the effects of disasters can be

aggravated if the aspects like- absence of environmental management, natural

resources land-use regulations, lack of adequate construction standards related

human settlements- are not strictly addressed.

The best tourism destinations in the region are frequented by tropical storms and

hurricanes, as well as floods and earthquakes. Although vulnerability varies from one

country to another, the fragile nature of the land and marine ecosystems in the

region is obvious, as is the lack of suitable environmental management, disaster-

aware land-use planning and building standards.

Main Sectors in the Industry

1. Accommodation

2.Food & beverage services

3. Entertainment & recreation services

4. Transportation

5. Travel services

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PESTEL analysis for Tourism Industry

Political:

Government toppling and political instability, Taxation policies, attacks by terrorists

result in tight security reasons and immigration laws become strict.

Economical:

Exchange rates, Globalization, Oil prices, UNWTO’s 2020 vision, Recession

Socio cultural:

Life Style, Brand Consciousness, Changing attitudes towards safety and

environment

Technological:

Customers relying on internet and online sales are increasing; Substitutes such as

television and games are threats to tourism

Environmental:

Air flight rationing is proposed by UK government as a method to reduce

pollution, increased emission of CO2 is a major threat of climatic conditions, Health

Problems is a major concern for tourism industry and tourists, Natural Disasters are

also a major concern for tourism industry.

Legal:

Governments recommend a wide range of regulations on Aviation Safety and

Regulations (Department of Travel, 2009), Trade Laws plays a crucial part in current

world businesses.

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Role of Tourism in the Economy of Indonesia

Tourism in Indonesia

o The major components of Indonesian tourism are nature & Culture.o The ancient Prambanan and Borobudur temples, Toraja, Yogyakarta,

Minangkabau, and of course Bali, are some of the popular cultural destinations for

tourism.

o The beaches in Bali, diving sites in Bunaken, Mount Rinjani in Lombok and various

national parks in Sumatra are just few examples of popular scenic destinations.

Tourism & Economy of Indonesia

o The establishment of a Ministry of Tourism, Post and Telecommunication in

1988, by the President with a view to promote the tourism industry.

o The program -“Visit Indonesia Year 1990” was set then.

o Concept of Eco-Tourism is developed there to preserve environmental

assets.

o In 2005, tourism accounted for 7% of job opportunities and 5% of Indonesian

GDP.

o In January 2010, the coordinating Minister for the Economy Hatta Rajasa was

reported as announcing that he expected “the tourism sector to contribute

4.8% of the gross domestic product” in the year 2010.

o In 2010, based on World Economic Forum survey, Indonesia got Tourism

Competitiveness Index at number 74 (up from number 81) from 139

countries.

o Development of environmental friendly tourism for the purpose that eco-

tourism should make requirements of nature and environmental protection the

basis for touristic activities. Thus, it ensures its ecological sustainability.

o On average, there’ve been 5 million foreign tourists each year, since 2000,

who spend an average of US$100 per day. With an average visit duration of

9–12 days, Indonesia gains US$4.6 billion of foreign exchange income

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annually. Because of which Indonesia's tourism becomes third most important

non-oil–gas source of foreign revenue, after timber and textile products.

Statistics

It is noticed that visitors around 59% are traveling to Indonesia for holiday, while 38% for

business purposes.

Structure, Functions & Business Activities of Tourism Industry

Structure of tourism industry

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Functions

Major Functions of Tourism Department

Formulation and implementation of development policy

National level tourism development planning for long term

Coordination in implementation of development

Formulating and implementing laws and regulations for tourism

Service standards & facility’s establishment and administration

Environmental principles adoption in tourism development and operation

Collecting statistical data, its compilation and report making

Conduct a research studies

Planning of human resource development for tourism and its implementation

Training standards establishment for coordination with the concerned

authorities.

Leasing land for tourism purpose, registration of all tourism operators and

facilities

COMPARATIVE POSITION OF TOURISM INDUSTRY IN INDIA

Tourism in India

Tourism in India is the largest service industry, with a contribution of 6.23% to

the national GDP and 8.78% of the total employment in India.

New forms of tourism such as rural, cruise, medical and eco-tourism.

It is expected to increase foreign revenue to US$375.5 billion by 2018 at a

9.4% annual growth rate.

According to World Travel and Tourism Council, India will be a tourism hot-

spot from 2009–2018, having the highest 10-year growth potential.

The Ministry of Tourism also maintains the Incredible India campaign. The tourism Industry of India is based on certain core nationalistic ideals and

standards which are: Swaagat (Welcome), Sahyog (cooperation), Soochna(Information), Sanrachanaa (Infrastructure), Suvidhaa (Facility), Safaai(cleanliness) and Surakshaa (Security).

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Indian Tourism & Economy

FDI of Indian Hotel & Tourism Industry which contributes to the Indian

Economy inflows are US$2.1 billion from April 2000 to March 2010, according

to the Department of Industrial Policy & Promotion.(DIPP)

Indian Export earnings from international visitors and tourism goods are

expected to generate US$51.4 billion (nominal terms) by 2019.

The sector which accounted for 6.4% of total employment in 2009 is

estimated to rise to 7.2% of total employment by 2019.

Tourism in Gujarat

Gujarat Tourism refers to the Tourism in Gujarat, the seventh largest state

in India, located in the western part of India with a coastline of 1600 km (longest

in India).

It is one of the most popular state in the country for tourists with annual footfall of

19.81 million tourists in 2010-11.

Amitabh Bachchan is currently the brand ambassador of Gujarat Tourism.

‘Khushboo Gujarat Ki' campaign by megastar Amitabh Bachchan has grown

tourism in Gujarat by 14 per cent, twice that of national growth rate.

Ahmedabad is considered to be an ideal hub to cover all the destinations in

Gujarat.

PRESENT POSITION & TREND OF BUSINESS WITH INDIA DURINGLAST 3 TO 5 YEARS

Present trade affairs between India and Indonesia

India and Indonesia both the country signed 18 business MOUs in infrastructure,

manufacture, mining worth $15.1 billion.

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Indonesia’s bilateral trade tripled in the last five years from $4 billion in 2005 and it is

to reach $12 billion in 2010. The next target is to double this, in the next 5 years, to $

25 billion.

India's investment in Indonesia has grown from USD 11.6 million in 2007 to USD 44

million in 2010 and invited Indian industry to invest in his country as it offers

conducive industrial environment with handsome return on overseas as well as

domestic investments..

Indian companies are entering the Indonesian markets to build long term sustainable

relationships with its people, leveraging local resources and local talents. Similarly,

Indonesian companies too are displaying keen interest in India’s burgeoning markets

and investment opportunities in sectors such as infrastructure and power. Both India

and Indonesia are poised to reap demographic dividend, and jointly address

developmental challenges, through synergies in social infrastructure.

POLICIES & NORMS OF INDONESIA FOR TOURISM

Visa regulation

On February 1, 2004, Indonesia introduced not popular and tighter tourist visa

regulations.

Tourists visas were formerly free and valid for 60 days, visitors from different

countries now required one of two visas of arrival(VOA) : a US$15 visa valid for

10 days or a US$25 visa valid for 30 days.

On July 14, 2004, the Indonesian tourism ministry granted permission for different

countries to be included on the VOA list for tourism.

January 2010 the regulations changed and the only type of visa on arrival(VOA)

available was for 30 days for a free of US$25.00.

This new version of VOA may be extended later at a local Immigration office for a

further once only period of up to 30 days for a fee of Rs.250,000.

The previous 7 day visa on arrival was no longer available from January 2010.

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Import regulation by Indonesian customs

Free Import

Tobacco products (no limitations for diplomats): 50 cigars or 200 cigarettes or 100

grams of tobacco;

1 litter of liquor can import;

A reasonable quantity of perfume can import;

Personal goods up to a value of USD 250.- per passenger or USD valid

Export regulation by Indonesian customs

Free export

1000 gr. of tobacco or 50 cigars or 200 cigarettes for persons of 21 years and older

Less than 2 litters of alcoholic beverages in opened bottles and personal goods up to a

value of IDR 1,000,000

POLICIES & NORMS OF INDIA FOR IMPORT-EXPORT TOINDONESIA

Import and regulation by Indian customs

Free import

• 200 cigarettes or 50 cigars or 250 grams of other tobacco products, Up to 2 litters

of Wines or alcoholic beverages, 59 ml of perfume, 250 ml toiletries, Authorized

personal goods

•An unlimited amount of foreign currency can be imported into the country. Sums

equalling US10000in local currency must be declared upon entry.

Prohibited

•Illegal drugs Firearms and ammunition – unless permission has been obtained,

Knives and deadly weapons, Pets and other live animals – unless permission has

been obtained, Birds and bird products –eggs and feathers, Pigs and pig meat

products, Endangered plants, Plants and plant products – unless permission has

been obtained Radio transmitters, Culturally important or valuable antiques,

Counterfeit money and goods, Pornographic material

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Trade between India and Indonesia

In the modern era, trade relations were formalized under a Trade Agreement signed

by India & Indonesia in June, 1978, committing both countries to take all appropriate

measures to facilitate, strengthen and diversify bilateral trade for increase the

meaning of trade agreement.

Investments/Joint Ventures/Projects by many Indian companies.

Bilateral trade removed barriers from the trade between India-Indonesia.

FUTURE BUSINESS OPPORTUNITIES IN TOURISM

Findings

The areas where tour operators can integrate sustainability practices are the key

operating areas which are:

Internal management, by considering sustainability principles in the human

resources management, office supplies and production of printed materials;

Product development and management, by planning tours & holiday selection

Package components considering minimization of environmental, economic and

social impacts of tourism

Contracting with suppliers, by sustainability integration principles into the

selection.

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SWOT Analysis for Tourism in Indonesia

Strength: Tourist attractions

Community benefits

Government support

Information and Promotion

infrastructure/facilities

Tourism activities

Weakness: Lack of good governance/

management

Insufficient budget for tourism

management

Tourism dependency –land &

resources

Leakage from tourism.

Opportunities: International support

freedom & expansion

Emerging of new markets

Threats: Natural disasters

Terrorism

Economic downfall

Health issues.

Business Opportunities with tourism in Indonesia

Indonesian tourism sector is highly supported to be developed by the govt. of Indonesia.

And so to enter in Indonesian tourism industry would not face much barriers.

By their own initiative, regional & local budget airlines appear to be doing more to

develop travel & tourism than any other business or organization, including the cash-

strapped ministry of tourism.

All holiday makers regardless of the distance they travel, make a contribution to the local

economy with a diverse range of customers.

With tourism growing rapidly in Asia, Indonesia is lagging way behind its neighbors.

While Vietnam receives more & more tourists every year, Indonesia hampered by its

Bali-centric philosophy, languishes.

Chapter – 2.9STEEL INDUSTRY

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STEEL INDUSTRY

Objective of global country report study

We as a group has done Global country Report on Indonesia. We have selected

steel industry. Our basic aim was to find opportunities to export steel products to

Indonesia. We have done research on import rules of steel in Indonesia. We have

also studied present position of steel industry in India and Indonesia.

Hence, on the basis of the study, our main aim is to find the business relationship

between INDIA and INDONESIA considering the product of steel. Other objectives

are to find out :

Present condition of steel industry in India,

Role of major competitive steel producer company,

Condition & growth of steel industry in Indonesia and possibility of export various

steel product to Indonesia,

Policies & norms of import in Indonesia,

Present condition in Indonesia, government support in import export of steel,

Tariff barriers on import steel in Indonesia,

Future growth of export of steel in Indonesia.

COMPARATIVE POSITION OF STEEL INDUSTRY IN INDIA

Steel has been the key material with which the world has reached to a developed

position. All the engineering machines, mechanical tools and most importantly

building and construction structures like bars, rods, channels, wires, angles etc are

made of steel for its feature being hard and adaptable.

After independence, successive governments placed great emphasis on the

development of an Indian steel industry. . In Financial Year 1991, the six major

plants, of which five were in the public sector, produced 10 million tons.

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The rest of India steel production, 4.7 million tons, came from 180 small plants,

almost all of which were in the private sector. India's Steel production more than

doubled during the 1980s but still did not meet the demand in the mid-1990s, the

government was seeking private-sector investment in new steel plants. Production

was projected to increase substantially as the result of plans to set up a 1 million ton

steel plant and three pig-iron plants totalling 600,000 tons capacity in West Bengal,

with Chinese technical assistance and financial investment.

SWOT analysis of the industryThe strengths, weaknesses, opportunities and threats for the Indian steel industry

have been tabulated below. The national steel policy lays down the broad roadmap

to deal with all of them.

Strengths1. Availability of iron ore and coal

2. Low labour wage rates

3. Abundance of quality manpower

4. Mature production base

Weaknesses1. Unscientific mining

2. Low productivity

3. Coking coal import dependence

4. Low R&D investments

5. High cost of debt

6. Inadequate infrastructure

Opportunities1. Unexplored rural market

2. Growing domestic demand

3. Exports

4. Consolidation

Threats1. China becoming net exporter

2. Protectionism in the West

3. Dumping by competitors

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PRESENT POSITION AND TREND OF BUSINESS

Demand of steel in IndiaOne study says that India's steel consumption will continue to grow by 17 per cent

annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion.

The scope for raising the total consumption of steel in the country is huge, as the per

capita steel consumption is only 35 kgs compared to 150 kg in the world and 250 kg

in China. With this surge in demand level, steel producers have been reporting

encouraging results. We expect strong demand growth in India over the next five

years, driven by a boom in construction (43%-plus of steel demand in India). Soaring

demand by sectors like infrastructure, real estate and automobiles, at home and

abroad, has put India's steel industry on the world steel map.

Steel supply by IndiaOver the past ten years India’s crude steel output rose nearly 8 %per year to 63.3

million tons , while global crude steel output increased by 5 % (Although India is the

world’s fifth largest steel producer, its 3%-plus share of global steel output is still very

low; it is roughly the same as Ukraine’s share of world steel production. China, the

world’s biggest steelmaker, produces nearly ten times as much as India. We forecast

a significant increase in output by the Indian steel industry over the medium term.

Steel pricesFollowing de-regulation of prices for integrated steel plants in 1991-92, the domestic

prices of steel have become market-determined. Market prices remain in step with

international prices, though generally lower. During industry downturns, prices fall

and during upturns, they rise. While rationalization of the customs and excise duty

structure is aimed primarily at reducing fiscal and revenue deficits, it has an indirect

influence on consumer prices. At present, there are around three thousand units

manufacturing steel and steel products, which are marketed by over 100,000 traders

for ultimate consumers. This dispersal of the distribution chain has been the principal

reason why no price regulation of the steel trade has ever been in force. Government

has recently set up a Competition Commission to look into complaints of

monopolistic pricing.

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Steel futureThe cyclical nature of the steel industry deters fresh investments due to risks of

recession. The mismatch between demand and supply also leads to price volatility

witnessed during recent times. Stagnation in steel prices for long periods followed by

sudden. At present there are large inter plant variations in labour productivity from 70

tonnes per man-year to 600 tonnes per man-year. The average productivity by 2020

has been assumed to 340 tonnes per man-year taking a mix of old and new plants.

Source: Office of Economic Advisor, Ministry of Commerce & Industry spurt also

affects the consumers and the infrastructure industry. Therefore, the efforts of

various stakeholders to develop risk-hedging instruments like futures and derivatives

would be supported.

Technologies, Research and DevelopmentIndia’s expenditure on Research and Development has been negligible not only in

absolute terms but also as a percentage of GNP at 0.86 percent. This can be

compared to the developed world with an average ratio of 2.5 percent.9 In the case

of steel industry, the ratio of expenditure on R&D as a percentage of turnover is only

0.26 percent.

Environment concernWith a view to making various operations in steel industry environment friendly,

environmental audit and life cycle assessment of existing steel plants (including

sponge iron units) would be encouraged so that the relevant processes reduce

emissions and effluents, minimize and better manage solid waste generation, and

improve resource conservation such as energy and water. There are some fine

examples of high-level environmental performance in the steel sector already.

However, the steel sector would join the efforts of other industries to improve

environmental performance even more.

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Secondary and small scale sectorThe secondary sector primarily consists of non-integrated and comparatively small

steel producers. However there are large variations amongst various units in terms

of scale of operations, product-mix and technology. The secondary sector plays an

important role in providing employment, meeting local demand of steel in rural and

semi-urban areas, and meeting the country’s demand of some special products

required in small volumes.

Trade policyExports: The Government will support all efforts to make available export credit,

provide trade information, and cut transaction costs in general. In view of the slow

progress of multi-lateral negotiations, Government would focus on regional trade

agreements to broaden the export base.

Imports: Import duty rates have been brought down progressively in the post-

deregulation period. The Indian steel industry has been able to successfully

withstand the competitive pressures of overseas producers.

POLICIES AND NORMS OF IMPORTING STEEL TO INDONESIA

The "Provisions on Iron and Steel Importation" (Decree of the Minister of Trade No

08/M-DAG/PER/2/2009), announced on 18 February 2009, introduces new

procedures for the import of iron and steel as follows:

I. Registration of importers with Indonesia’s Ministry of Trade

II. Pre-shipment import technical verification

III. Submission of quarterly reports on the realization of imports

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General Import Clearance Information in Indonesia

Clearance process:

Working with Customs officials throughout the world, FedEx has developed

innovative technology to eliminate many steps of the paperwork-handling process

and expedite the movement of international shipments. This process is known as

the FedEx Express clear Electronic Customs clearance system.

Document Requirements :

Various documents are required to import in Indonesia ie. Commercial Invoice,

Certificate of Origin, Bill of Lading /Air Waybill, Packing List, Import Licenses,

Document various duties and fees paid.

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POLICY OF INDIA TO EXPORT STEEL TO ANY COUNTRYExports of Iron & Steel Iron & Steel are freely exportable.

Advance Licensing Scheme allows duty free import of raw materials for exports. Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports.

Registration as Export Firm:Various documents like the Reserve Bank Code Number, Registration, the Exporter

Importer Code Number, Industrial License are required to get a firm registered as

export firm.

Export Document:Documents requires in India for export

Export Order, Order Acceptance, Production Programme, Letter of Credit, Proforma

Invoice, Packing List, Commercial Invoice, Certificate of Origin, Shipping Bill/Bill of

Entry, Certificate of Origin, Shipping Bill/Bill of Entry, ARE-1 Form, Exchange

Declaration Form (GR/SDF Form), Bills of Exchange, Inspection Certificate, Bill of

Lading, Airway Bill, Insurance Certificate, Consular Invoice.

Export Documents Can Be Classified Under Four Categories1. Commercial documents:

2. Regulatory Documents:

3. Export Assistance Documents:

Documentation Required by Importing Countries

Role of export documentationExports are very valuable for every country, hence export documents plays a vital

role in International Business as it facilitates the smooth flow of goods and

payments. Export documentation is, however, complex as the number of documents

to be filled in is large. Moreover, documents requirement differs from country to

country. Incorrect documents may lead to non delivery of goods to the importer. One

has to pay the storage charges till the documents get corrected.

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PRESENT TARIFF BARRIERS TO IMPORT STEEL PRODUCTS ININDONESIA

Indonesia’s tariff policies are based on the Indonesian Customs Law promulgated in

1973. The current import tariff rates were formulated by the Ministry of Finance in

1988. Since then, the Department of Finance has released every year a policy

package for industrial and economic deregulation in the form of a ministerial decree,

which includes the readjustment of import tariff rates.

Non-Tariff Barriers MeasuresNon-tariff barriers can take various forms. Broadly these can be categorized as

under:

Import Policy Barriers

Standards, Testing, Labeling and Certification requirements

Anti-dumping & Countervailing Measures

Export Subsidies and Domestic Support

Government procurement

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FUTURE OF STEEL INDUSTRY

India’s consumption of Stainless Steel is increasing gradually but the per capita

consumption is still as low as 700 grams as compared to 14/15 kgs in the western

world.

According to the reports Indian consumption is likely to cross four million tonnes in

the next ten years.

ISSDA’s efforts to help increase the consumption of stainless steel in the country are

already showing some positive results. The future of the Indian Stainless Steel

industry is bright and favourable government policies will help its further growth. In

the coastal areas, the prospect of using Stainless Steel is getting momentum and its

use in this area is expected to pick up in future.

Expected growthThe International Iron and Steel Institute (IISI) has forecasted that the steel demand

will go of from 1.12 billion ton to 1.19 billion ton in 2010.And this will further increase

in a higher rate up to 2012.In India the growth will be more prominent because of the

growth in Real estate, Aviation, Manufacturing, Automobile sector; other sectors like

infrastructure development, housing and urbanization and capacity building in steel

making industry.

Chapter – 2.10FISHERY INDUSTRY

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INTRODUCTION OF FISHERY INDUSTRY

The fishing business includes any industry or process obsessed with action,

culturing, processing, protective, storing, transporting, marketing or mercantilism

seek or fish products.

It is settled by the FAO as including nonprofessional, subsistence and commercial

fishing, and the harvesting, processing, and marketing sectors. The commercial

activity is aimed at the transferral of search and new seafood products for imperfect

ingestion or as input factors in separate industrial processes.

Directly or indirectly, the livelihood of over 500 million people in nonindustrial

countries depends on fisheries and aquaculture.

There are three principal industry sectors:

The commercial sector: Comprises enterprises and individuals related with wild-

catch or aquaculture resources and the various transformations of those resources

into products for understanding. It is also referred to as the "seafood business",

though non-food items specified as pearls are included among its products.

The traditional sector: Comprises enterprises and individuals associated with

fisheries resources from which primal grouping create products in gift with their

traditions.

The recreational sector: Comprises enterprises and individuals associated for the

design of recreation, sportswoman or sustenance with fisheries resources from

which products are derivable that are not for agreement.

The commercial sector of the fishing industry comprises the following chain:

1. Commercial fishing and fish farming which produce the fish

2. Fish processing which produce the fish products

3. Marketing of the fish products

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FISHERY IN INDONESIA

Main ResourcesMarine fisheries resources are categorized into (1) large pelagics; (2) small pelagics;

(3) demersal and coral reef fishes; and (4) shrimp, seafood, remaining crustaceans,

etc. Most of the leatherneck resources in the southwestern line of Bahasa waters

make been employed intensively, while most resources in the oriental strain works

someone room for exercise.

Management applied to main fisheriesBiologically, management of the fisheries resources is through fish quotas based on

the unconditioned allowable adult (TAC), discovered on the component of up to 80%

of the estimated voltage make, videlicet 6.4 cardinal t/yr, and operated crossways

niner man seize workplace areas

FUNCTIONS OF FISHERY INDUSTRY

The basic work of fishery industry is to give fill by exploiting the natural oceanic

resources for extremum unsound point net benefits to mankind. As indication goes

by, ingestion people prettify flush many copernican because there is no tranquility in

the domain of famish.

The fishing industry is at the crossroads with regards to the transformation from

chaotic toil business to adopting a occupation approximate to the gathering which

includes a ontogenesis field.

Other crucial end is the ladened reasonable use of acknowledged and yet unmapped

but existing fishery resources.

Fishery direction moldiness be a spheric travail if fish stocks are to rest commercially

viable for the beginning to move.

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ACTIVITIES OF FISHERY INDUSTRY

The fishery industry is participating in many activities covering all aspects of the job

spectrum: purchase inputs, applying for loans, paying for labor, thinking for the next

and making profits.

These subsist throughout a fisheries method: in felony, processing and marketing.

Also, as in any manufacture, artisanal or developed fisheries bang characteristics

which moldiness be identified in status to finer see the workplace business coverall.

A concern is a throw which has antithetical objectives. In prescript, the objectives

can be mullioned between those which staleness be fulfilled to still sodding self-

sustainability, and those which are essential, but not important to much an end.

An important objective, from an economic viewpoint, is to be economically self-

sustained, i.e., to pay place the resources invested and make a clear within a

rational indication. Attainment of this impersonal is a necessary state because

without it the project will not be viable, and will break when the initial city finishes, or

when the subsidies cease.

Most of the recitation is devoted to the analysis of this objective. Nonetheless, it is

not unrecoverable that in the happening of the fishery industry there are remaining

needful conditions for self-sustainability.

The most manifest is the poorness for a coherent management of fishery and

environmental resources. The relation between the whole economics of a fishery and

the direction of the resources linked to it.

Fish as food, the ultimate objective of the fishery industry, should also be safe and of

the quality required by consumers and public regulations. This is also a necessary

condition, interacting with the economics of a company

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POLICIES & NORMS OF INDONESIA FOR FISHERY INDUSTRY

Mission

The broad mission statement of Indonesia’s government in relation to fisheries policy

is to: Contribute to Indonesia’s economic and social well being through the

development of policies that achieve an internationally competitive fishery sector

focused on sustainable growth.

Main Fishery Policy Objectives

Developing potential new and emerging markets through targeted marketing

strategies; Encouraging the development of efficient and competitive transportation

networks; Fostering regional fishery development; Enhancing industry standards and

skill levels; Improving the industry’s information base; Encouraging the conservation

and preservation of Indonesia’s unique natural and cultural heritage; Encouraging

diversification of the industry’s product base; and Reinforcing Indonesia’s image as

a safe and friendly destination.

Strategies to achieve these initiatives have been implemented and significantly

progressed since the introduction of the Plan. The government takes a whole-of-

government approach to meeting these objectives. It recognizes the importance of

integrating fishery policy into other public policy areas to optimize the benefits of

fishery to the country.

The strategic activities concern:

Implementing structural change to more effectively support Indonesia’s

international and

domestic market.

Facilitating better alignment of fishery product to market needs, particularly in

regional Indonesia;

Supporting measures to improve quality of fisheries product;

Improving fisheries information, research and forecasts to more effectively

serve the needs of industry and government;

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Encouraging and support environmentally and culturally sustainable fishery

business practices;

Promoting more effective partnerships between the fishery sector and

government bodies

charged with land/heritage management;

Ensuring training delivers skills appropriate for the fishery workforce and

businesses, and

promotes improved productivity;

Facilitating innovation and technological development in the fishery sector.

Legal Framework

A range of legislative instruments and regulations have been implemented by the

Federal and State and Territory governments in relation to the Indonesian fishery

sector. Some of the key legislative measures include:

Most company agents are licensed under State/Territory Acts and have to meet

certain requirements which include contributing to the Fishing Compensation Fund

(FCF). The FCF is a tool for protecting consumers, particularly against the financial

failures of licensed fishing agents;

Federal Trade Practices Act, which is designed to ensure market competition and

consumer protection; and States and Territory Fair Trading Acts, which are designed

to protect consumers and address business practices;

The Environment Protection and Biodiversity Conservation Act 1999 controls the

activities that can be undertaken on water World Heritage Areas, Wetlands that

could impact on endangered species. Planned changes to this legislation will also

control actions on any site placed on the Indonesian National Heritage List; and

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MINISTRY OF AGRICULTURE, GOVT. OF INDIA

Fisheries aspect occupies a really beta space in the socio-economic use of the

country. It has been constituted as a reigning income and occupation generator as it

stimulates growing of a limit of help industries, and is a author of gaudy and

nutritious nutrient too state a foreign reverse jobholder. Most importantly, it is the

seed of livelihood for a immense division of economically backward accumulation of

the country. The important challenges covering fisheries development in the land

includes content, concur improvement, gathering and post-harvest transaction,

landing and berthing facilities for fishing vessels and welfare of fishermen.

Thrust areas:

Fishery is a State subject and as such the primary responsibility for development rests with

the State Governments. The major thrust in fisheries development has been focused on

optimizing production and productivity, augmenting export of fishery products, generating

employment and improving welfare of fishermen and their socio-economic status.

Highlights:

There has been probative growth in search creation in the region in the recent years.

India is now the tierce largest producer of seek and indorsement maximal maker of

reinvigorated installation seek in the man.

Fish production during the twelvemonth 2008-09 was 76.2 lakh tonnes comprising

29.8 lakh tonnes of leatherneck fish and 46.4 lakh tonnes of inland fish.

Fish seed creation during 2007-08 was 24143.57 million fry.

A system of 429 Fish Farmers' Processing Agencies (FFDA's) has been set up cover

all the potency districts in all the States and Combination Territories for propagating

freshwater aquaculture.

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With a view to provide technical , financial and education activity to shrimp farmers in

the small fleck sphere, 39 Brackishwater Fish Farmers Utilization Agencies (BFDA's)

bang been set up in all the coastal States and the UT of Andaman & Nicobar Islands.

Due to commencement of reinforced field of fish occupation and the efforts of FFDAs

,the federal calculate productivity of ponds and tanks crusted under the software has

reached 2600 kg/ha per annum

Under the Centrally Sponsored Schemes (CSS) for motorization of traditional crafts a total of about

42,950 approx. have been motorized so far.

Agriculture and forestry, logging and fishing comprised 16.6% of the GDP which

engaged 60% of the accumulation. The country had the third largest sportfishing

business in the domain

Indian FisheriesGlobal position 3rd in Fisheries 2nd in Aquaculture

Contribution of Fisheries to GDP (%) 1.07

Contribution to Agril. GDP (%) 5.30

Per capita fish availability (Kg.) 9.0

Annual Export earnings (Rs. In Crore) 7,200

Employment in sector (million) 14.0

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BUSINESS OPPORTUNITIES IN FUTURE

Marine Work The difference of search and new serviceman underwater organisms

provides opportunities for a beamy arrange of sportfishing activities. It is, however,

crucial to control those activities so as to desist battle among small-, medium- and

large-scale fisheries.

Moreover, encourage utilization in cost of amount in wares of fishing vessels to

perfect the utilization of leatherneck resources has to be directed to the orient

vocalizer of Land (KTI) and EEZ, where search resources utilization is relatively little

(24% utilized in KTI and 47% in the EEZ in 1998).

In this respect, encourage usage is primarily directed to the vocalist of: (1) western

Sumatra and southern Java, Bali and Nusa Tenggara for tuna and skipjack using

longlines and gillnets; (2) Makassar Strait and Sulawesi Sea for small pelagics, squid

and tuna and skipjack using purse seines, gillnets and longlines; (3) Maluku Sea,

Halmahera and Pacific Ocean for tuna, skipjack and demersal species using

longlines, pole-and-line and bottom trawls. Also, further development will be

encouraged in EEZ waters apart from the Malacca Strait and the Arafura Sea.

Prospects for Mariculture The coastline of Country is estimated at around 81 000 km

and has high potential for process of mariculture activities. Nevertheless, in

mariculture, apiece species requires circumstantial environmental conditions.

Therefore each region has to amend its mariculture for a specific species or artifact,

videlicet (1) Groupers and Hulk sit in Statesman Island, Riau, Southmost Island,

Nusa Tenggara and Lampung; (2) Execution cockles in Northwest Island, Riau and

Lampung; (3) seaweed in Riau, Lampung, Orient Kalimantan, Nusa Tenggara and

South and South-east Sulawesi; and (4) Sea cucumber in Riau, Lampung, Nusa

Tenggara, middlemost and South-east Sulawesi.

Prospect for Brackish-water Society There are varied latent species for brackish-

water content, including high-value species much as crustaceans and some search.

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As for mariculati=ure, divergent regions possess differing potentials: (1) seafood and

River fish: in all Provinces; (2) Colossus sit and groupers in Aceh, Northeasterly and

Region Island, Riau, Jambi, Westernmost, Eastside and nuclear Drinkable,

Lampung, South Sulawesi and Bali; and (3) Streaked Spinefoot in Riau, centric and

Eastward Drinkable and Southland Sulawesi.

Prospects for the Processing Industry Modern processing units generally process

product for export. Commodities include shrimp, tuna and skipjack, fish fillets, tuna

loin and tuna steak. There are several processing operations that have good

potential, including (1) freezing, cold storage and ice production; (2) product

processing with value added, to meet the increasing market demand for fishery

products that are ready to cook (convenience products), such as IQF products,

shrimps, breaded fish, surimi and fish balls.

Other Fishery Creation Processing The demands of foreign markets travel to evolve.

Indonesia erstwhile exported in the form of frozen fish, but it is now progressively

providing products such as fresh fish, fillets, smoked fish, shrimp crackers, fish oil

and even live fish.

Chapter – 2.11

Conclusion

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CEMENT INDUSTRY

Although, India ranks second in the world in terms of cement production, but still

cement has not been amongst India’s major traded products. During the year 2010,

India was the 44th largest cement-trading nation in the world. The Cement Industry

recorded an exponential growth after the introduction of partial decontrol in 1982 and

the total decontrol in 1989.

The capacity which was 29 Million tons in 1982, climbed to 236 Million tons at the

end of FY10. While it took 8 decades to reach the 1st 100 Million tons capacity, the

2nd 100 Million tons was added in just 10 years.

The Indian cement Production Capacity is increasing at almost 8-10% every year compared

to that of Indonesia’s growth of 6%. In 2010, cement capacity grew up to 235.9 Mt.

Indonesia’s cement per capita consumption is 172kg, while that of India is 143kg. Thus,

there is good scope of India to export Cement to Indonesia & thus increase the exports.

Cement Industry, which was branded as the highest polluter of environment, now meets the

pollution standards, and is no longer a polluter today. It contributes to environmental

cleanliness by consuming hazardous wastes like Fly Ash (around 30 Million tons) from

Thermal Power Plants and the entire 8 Million ton of Slag produced by Steel manufacturing

units.

As a part of Corporate Social Responsibility (CSR), the Cement Industry employs

around 1 lakh people and takes care of the social needs not only of the employees

but also adopts several villages around the factories providing free drinking water,

electricity, medical and educational facilities.

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TEXTILE INDUSTRY

• When an exporting country institutes border restrictions, the expected impact is

for world prices to be pushed higher while internal prices are pressured lower.

• India announced that the export ban would be lifted on October 1 and relative

prices immediately reflected the anticipated removal of the export ban.

• For the 2011/12 marketing year, India’s exports are again assumed to reach a

level that result in a stocks-to-mill use ratio of 28%.

• Market in Indonesian textile industry is full of opportunity and India with its

Production Capacity has the ability to meet it.

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DAIRY INDUSTRY

The diets of Indonesian households are changing like in many Southeast Asian

countries. A major change is the increased consumption of animal proteins in the

form of poultry and milk products. The objective of the study was to identify import

potentials for the Indonesian dairy sector and opportunities for India to contribute to

this. The report presented an overview of the macro situation of the dairy sector,

major government policies in relation to the sector, an analysis of the dairy supply

chain, its limitations and possible solutions and options for cooperation with India.

The local milk production in Indonesia is mainly concentrated in the higher altitude

areas of the island of Java. There is an interest of the government and the private

sector (dairy industry) to stimulate local milk production. Local milk production could

also be increased by expansion of dairy farming on West Sumatra and Sulawesi

and/or in other parts of Indonesia.

Indonesian government policy is directed to increase self-sufficiency in milk products

from the current 30% to 50% by 2015. Government policy directed at the primary

producers aims at improvement of production levels per cow (milk production per

cow per day to increase from the present 8-10 kg to 15 kg per cow per day),

improvement of raw milk quality and a minimum farm gate milk price to be at least

80% of the world market price.

The matter of fact being the vast difference between the demand and supply which

could not be fulfilled in a short duration of time requiring organizational level changes

in Indonesia. India can tap this opportunity by filling the gap between the existing

demand and supply position of Indonesia. With Indonesia and India being located

close to each other on the globe the cost of transportation could be not much of

concern. With healthy Exim policy the boost to trade can lead India to becoming

major dairy product exporter to Indonesia.

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MINERAL INDUSTRY

In this sector Indonesia possesses rich resources, the development of which

needs to be optimized so they can completely contribute to national economic

development.

Indonesia is still rich with mineral reserves and holds a promising geological

potential.

Development on the Indonesia mining business condition must be done directly

by all stakeholders.

Mining activities must be conducted based on the standard of Good Corporate

Governance and Good Mining Practice which is founded on triple bottom line

approach socialization of a positive Indonesian mining industry image.

India’s exports have mainly been confined to only few minerals, with iron-ore

occupying a major share.

India has to diversify its export basket with mineral products that have a longer

life index or with a larger reserve base.

An appropriate incentive structure may also need to be developed in order to

attract private sector / foreign investment in exploration related activities in the

country.

The occurrence of a range of mineral resources gives Indonesia a distinct

competitive benefit in terms of geo-resource assets. Thus, they should be

managed and developed properly, so that sustainable national economic

development can be achieved for the sake of the people’s prosperity.

Based on the known mineral resources, it is clear that Indonesia is an attractive

country for developing such resources.

Three major environmental issues need to be critically managed, namely

1. Post mine land use.

2. Regional and community developments and

3. Poverty alleviation.

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RETAILING INDUSTRY

Similar to China and India, which have huge populations with growing consumption,

typified by the surge of middle-income consumers, Indonesia’s retail market can be

equally attractive. Foreign brands and retailers are attracted to the Indonesian

market for its huge appetite for imported goods, with strong growth prospects

underlined by hefty retail sales and rapid modernization of the retail sector.

Increasing foreign participation is a major force changing the entire retail landscape

of Indonesia

In the past five years, a lot of up-scale shopping malls, such as Pacific Place

(Jakarta), Senayan City (Jakarta) and Grand City (Surabaya) have been opened.

Most of the up-scale shopping malls tend to have huge retail space and modern,

stylish interior design. Senayan City. Shopping centers, Departmental stores and

convenient stores in Indonesia are now getting bigger and bigger, gradually turning

into a convenient one-stop shopping location for consumers.

Foreign Direct Investment (FDI) started to make significant progress in Indonesia in

the 1970s. Over the period the value of foreign direct investment reached USD30

billion per year. This subsequently increased to around USD100 billion per year

during the 1980s, and by the year 2000 FDI had reached USD1,167 billion.

If we see from the point of view of Indian retailer it is not advisable decision for them

to create business in Indonesia because there is huge potential in the Indian retailing

sector, only 8-10% of market share covered by organised retailing sector in India.

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PHARMACEUTICAL INDUSTRY

Due high population making Indonesia 4th populous country and less reach to

medication, pharmaceutical industry has huge growth potential.

In Indonesia there is a huge market for generic drugs but the branded generic drugs

costs higher than unbranded generic drugs. These opens an entry for well

established Indian pharmaceuticals companies to sell the branded generic drugs at

comparatively low cost.

Indonesia possesses certain herbal resources which makes it suitable for production

of herbal medicines. This area is another possible entry for Indian companies to

establish their unit in Indonesia which allows FDI investment up to 75%.

135

TELECOMMUNICATION INDUSTRY

After studying the mobile phone Industry of both Indian and Indonesian Companies,

it is expected that Indonesian based “Cepat Koneksi- Rapid Connection” will do the

great business for its smart phones in India. Manufactured exports are believed to be

one of the engines of Indonesian economic growth. It is true that Indonesia`s

manufactured exports grew rapidly and its share in GDP increased year by year. The

company will export only smart phones in its first phase. The policies for export-

import for both the countries will help to grow “Cepat Koneksi” in Indian Market.

After succeeding in its first phase it will expand its operations for Indian market in

future.

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TOURISM INDUSTRY

Tourism Industry is the fastest growing sector which consists plenty of business

opportunities all over the world. In India it is the largest service Industry which

contributes significantly in GDP and Employment.

Tourism is not only good for Employment, Revenue generation and all over

Economic development but it is also good in so many other incalculable ways i.e.:

The exchange of views,

The mingling

The sharing of culture

The goodness that natural beauty can bring

The development of communal pride and purpose.

No industry promotes - human values, the philosophy to live and let live and the

celebration of life - more than Tourism.

Developing country like Indonesia is a good market for India for developing business

relationship. Business in tourism sector would be so beneficial to both India and

Indonesia as it would consider mutual interest of both countries in terms of National

income, GDP, Employment, Infrastructure- ultimately the whole economy.

137

STEEL INDUSTRY

On the basis of an extensive study of various dimensions of the economies of the

two countries, including an assessment of potential economic complementarities, it is

concludes that the proposed India-Indonesia CECA is feasible and is mutually

beneficial in expanding bilateral economic linkages. The study recognises that both

India and Indonesia have highly dynamic and modern economies and both have

undertaken wide-ranging economic reforms conducive for bilateral economic

cooperation.

138

FISHERY INDUSTRY

The point of this report has been to illustrate how the different commissions’

reports have argued for and/or against a fishery zone in Indonesia, especially in

relation to the issue of non recommendation of suggestions based on trade

between Indonesia and India. The task has been to find out what made these

report conclude so differently, and what they have based these conclusions on.

The arguments in the reports concerning a fishery zone in Indonesia are based

upon the relation between these two countries and their individual trade rights.

Theory can be used in order to explain the difficulties of giving rights based on

Fishery. These theories are usually framed as opposites, while in this case they

are used in order to explain different aspects of the same issue. The industry has

been used as a foundation for requesting the establishment of a fishery zone in

Indonesia.

Based on the above analysis the board is self sustainable and financially viable on

a long term basis.