Value Chain Analysis of Marine Fish Aquaculture in Indonesia

2014

Prepared for:

Prepared by:

June 2014

Value Chain Analysis of

Marine Fish Aquaculture in Indonesia Business Opportunities for Norwegian Companies

INDONESIA AQUACULTURE 1

Table of Contents

1. Research methodology and objectives ......................................................................... 11

2. Summary and analytical outcomes ................................................................................ 12

3. General overview of Indonesian fisheries and aquaculture ......................................... 15

3.1. Current condition of Indonesian fishery sector .......................................................... 15

3.2. Structure of fisheries activities in Indonesia ................................................................ 18

3.3. Indonesian aquaculture .............................................................................................. 19

3.3.1 General overview of Indonesian aquaculture industry ................................................. 19

3.3.2 Aquaculture methodes ................................................................................................... 22

3.3.3 Fish species for marine aquaculture in Indonesia .......................................................... 24

3.3.4 Benefits,values and challenges for each aquaculture fish species .............................. 32

3.3.5 New species being developed ....................................................................................... 33

3.3.6 Domestic and export markets for each species ............................................................ 36

3.4 “Minapolitan” system as an unique approach to aquaculture................................. 39

3.5 The marine climate ....................................................................................................... 40

3.5.1 Pollution ............................................................................................................................ 43

3.6 Workforce availability ................................................................................................... 44

4. Aquaculture hotspot mapping ........................................................................................ 45

4.1 Province of Aceh ........................................................................................................... 47

4.2 Province of Riau Archipelago....................................................................................... 50

4.3 Province of Lampung .................................................................................................... 52

4.4 Province of East Java (Java Timur) .............................................................................. 55

4.5 Province of Bali .............................................................................................................. 58

4.6 Province of West Nusa Tenggara (Nusa Tenggara Barat) .......................................... 60

4.7 Province of South Sulawesi (Sulawesi Selatan) ........................................................... 63

4.8 Province of Maluku........................................................................................................ 65

4.9 Province of West Papua (Papua Barat) ....................................................................... 69

5. Value chain analysis ........................................................................................................ 72

5.1. Value chain commodity schemes.............................................................................. 72

5.1.1 Processed commodities .................................................................................................. 73

5.1.2 Live commodities ............................................................................................................. 74


5.2 Value chain business segments ................................................................................... 75

5.2.1 Hatcheries......................................................................................................................... 75

5.2.2 Nursery/aquafarming....................................................................................................... 79

5.2.3 Vaccines .......................................................................................................................... 83

5.2.4 Fish feed ............................................................................................................................ 85

5.2.5 Processing ......................................................................................................................... 88

5.2.6 Logistics ............................................................................................................................. 91

5.2.7 Equipment ........................................................................................................................ 92

6. Regulatory, policy and investment environment .......................................................... 95

6.1 Top-level aquaculture investors and other stakeholders ........................................... 95

6.2 Laws, regulatory framework and standards ................................................................ 96

6.2.1 Property and water rights ................................................................................................ 96

6.2.2 Infrastructure development............................................................................................. 97

6.2.3 Legal context .................................................................................................................. 97

6.2.4 Research, technology development and extension ..................................................... 98

6.2.5 Promotion ......................................................................................................................... 98

6.2.6 Other policy frameworks ................................................................................................. 99

6.2.7 Taxation system for Indonesian aquaculture ............................................................... 100

6.3 Ownership structure for aquafarming and processing.............................................. 101

6.3.1 Investor facilities and incentives .................................................................................... 101

6.4 Foreign investment framework .................................................................................... 102

6.5 National and regional aquaculture initiatives ........................................................... 105

6.5.1 Overarching objectives ................................................................................................. 105

6.5.2 Prominent challenges .................................................................................................... 107

6.5.3 International cooperation ............................................................................................. 107

6.5.4 Permit processes ............................................................................................................ 110

7. Analysis and recommendations ..................................................................................... 111

7.1 Porter’s Five Forces analysis on each business segment .......................................... 111

7.1.1 Hatcheries....................................................................................................................... 111

7.1.2 Nursery/aquafarming..................................................................................................... 113

7.1.3 Fish feed .......................................................................................................................... 114

7.1.4 Vaccines ........................................................................................................................ 115

7.1.5 Processing ....................................................................................................................... 116


7.1.6 Logistics (cargo services) ............................................................................................... 117

7.2 Market attractiveness for aquaculture species ......................................................... 118

7.3 Segments’ drivers and inhibitors .................................................................................. 119

7.4 Species comparison and attractiveness .................................................................... 121

7.5 Segments’s key success factors and key selling points ........................................... 123

7.6 Segments’ challenges and opportunities ................................................................... 125

7.7 Primary CSR issues ........................................................................................................ 128

7.8 Funding for market entry initiatives ............................................................................. 130

7.9 Recommendations ....................................................................................................... 132

Appendices .......................................................................................................................... 139

List of Indonesian maricultureknowledge institutions ........................................................... 140

List of integrated aquaculture players in Indonesia ............................................................ 142

List of equipment companies in Indonesia ........................................................................... 144

List of vaccines players in Indonesia ...................................................................................... 145

List of fish feed players in Indonesia ....................................................................................... 147

List of processing companies in Indonesia ............................................................................ 149


List of Tables Table 1 – Exploitation level status of fish resources in each of Indonesian FMA, 2012........................ 17

Table 2 – Average consumption of fish in 2010 – 2011.............................................................................. 19

Table 3 – Number of aquaculture establishments (in units) ..................................................................... 20

Table 4 – Fish species in Indonesian marine aquafarming ....................................................................... 25

Table 5 – Benefits, values & challenges for each aquaculture fish species ......................................... 32

Table 6 – Groupers (export figure and country of destination, 2012) .................................................... 36

Table 7 – Snapper (export figure and country of destination, 2012) ..................................................... 37

Table 8 – Barramundi (export figure and country of destination, 2012) ................................................ 38

Table 9 – Pompano (export figure and country of destination, 2012) ................................................... 39

Table 10 – Wind speed and tide information of Indonesian water ........................................................ 42

Table 11 – Indonesia competent workforce in 2013 ................................................................................. 44

Table 12 – Output breakdown per aquaculture spots in Indonesia ...................................................... 46

Table 13 – Unique strengths and weaknesses, Aceh ................................................................................ 47

Table 14 – Environmental conditions and supporting aspects, Aceh.................................................... 47

Table 15 – Comparative assessment of regency potential, Aceh ......................................................... 49

Table 16 – Marine fish aquaculture lifecycle, Aceh .................................................................................. 49

Table 17 – Unique strengths and weaknesses, Riau Archipelago .......................................................... 50

Table 18 – Environmental conditions and supporting aspects, Riau Archipelago .............................. 50

Table 19 – Comparative assessment of regency potential, Riau Archipelago ................................... 51

Table 20 – Marine fish aquaculture lifecycle, Riau Archipelago ............................................................ 52

Table 21 – Unique strengths and weaknesses, Lampung ......................................................................... 52

Table 22 – Environmental conditions and supporting aspects, Lampung ............................................ 52

Table 23 – Comparative assessment of regency potential, Lampung ................................................. 54

Table 24 – Marine fish aquaculture lifecycle, Lampung ........................................................................... 54

Table 25 – Unique strengths and weaknesses, East Java ......................................................................... 55

Table 26 – Environmental conditions and supporting aspects, East Java ............................................ 55

Table 27 – Comparative assessment of regency potential, East Java ................................................. 57

Table 28 – Marine fish aquaculture lifecycle, East Java ........................................................................... 57

Table 29 – Unique strengths and weaknesses, Bali .................................................................................... 58

Table 30 – Environmental conditions and supporting aspects, Bali ....................................................... 58

Table 31 – Comparative assessment of regency potential, Bali ............................................................. 59

Table 32 – Marine fish aquaculture lifecycle, Bali ...................................................................................... 60

Table 33 – Unique strengths and weaknesses, West Nusa Tenggara .................................................... 60

Table 34 – Environmental conditions and supporting aspects, West Nusa Tenggara ........................ 61


Table 35 – Comparative assessment of regency potential, West Nusa Tenggara ............................. 62

Table 36 – Marine fish aquaculture lifecycle, West Nusa Tenggara ...................................................... 62

Table 37 – Unique strengths and weaknesses, South Sulawesi ................................................................ 63

Table 38 – Environmental conditions and supporting aspects, South Sulawesi ................................... 63

Table 39 – Comparative assessment of regency potential, South Sulawesi ........................................ 64

Table 40 – Marine fish aquaculture lifecycle, South Sulawesi.................................................................. 65

Table 41 – Unique strengths and weaknesses, Maluku ............................................................................. 65

Table 42 – Environmental conditions and supporting aspects, Maluku ................................................ 66

Table 43 – Comparative assessment of regency potential, Maluku ...................................................... 68

Table 44 – Marine fish aquaculture lifecycle, Maluku ............................................................................... 68

Table 45 – Unique strengths and weaknesses, West Papua .................................................................... 69

Table 46 – Environmental conditions and supporting aspects, West Papua ....................................... 69

Table 47 – Comparative assessment of regency potential, West Papua ............................................. 71

Table 48 – Marine fish aquaculture lifecycle, West Papua ...................................................................... 71

Table 49 – Cost level breakdown for hatchery company (medium scale).......................................... 76

Table 50 – Commodities' dynamics for hatchery company (medium scale) ...................................... 77

Table 51 – Cost level breakdown for nursery/aquafarming business segment ................................... 80

Table 52 – Commodities' dynamics for nursery/aquafarming business segment ............................... 80

Table 53 – Cost level breakdown for vaccines business segment ......................................................... 83

Table 54 – Cost expenditure for Indonesian aquafarmer ........................................................................ 84

Table 55 – Cost level breakdown for feed production business ............................................................. 86

Table 56 – Cost level breakdown for processing business ....................................................................... 89

Table 57 – Equipment classification and function ..................................................................................... 92

Table 58 – Types of Technical Implementation Units (UPT) ....................................................................... 96

Table 59 – Fields related to the business framework ................................................................................. 97

Table 60 – List of other international cooperation projects.................................................................... 108

Table 61 – Segments' drivers and inhibitors ............................................................................................... 119

Table 62 – Species’ drivers and inhibitors .................................................................................................. 121

Table 63 – Segments’ key success factors & key selling points ............................................................. 123

Table 64 – Challenges and opportunities for Indonesian aquaculture ............................................... 125

Table 65 – Primary and relevant CSR issues ............................................................................................... 128

Table 66 – Relevant funding for market entry initiatives ......................................................................... 130


List of Figures Figure 1 – Map of Fisheries Management Areas in Indonesia ................................................................. 15

Figure 2 – Production volume of fisheries in Indonesia, 2012 (tons) ........................................................ 16

Figure 3 – Activities and sub-activities of fishery sector in Indonesia ..................................................... 18

Figure 4 – Indonesian aquaculture commodities breakdown, 2012 (tons) .......................................... 20

Figure 5 – Historical and projection production volume of aquaculture, 2008 -2018 (tons) ............. 21

Figure 6 – Historical and projection production value of aquaculture, 2008 -2018 (IDR trillion) ....... 22

Figure 7 – Aquaculture production of Groupers in Indonesia, 2009-2012 (tons) ................................. 27

Figure 8 – Aquaculture production of Snapper in Indonesia, 2009-2012 (tons) ................................... 29

Figure 9 – Aquaculture production of Barramundi in Indonesia, 2009-2012 (tons) ............................. 30

Figure 10 – Aquaculture production of Pompano in Indonesia, 2009-2012 (tons) .............................. 31

Figure 11 – Marine map for Indonesian currents ........................................................................................ 40

Figure 12 – Indonesian tides and wind speed information ...................................................................... 40

Figure 13 – Depiction of warm current flow in Indonesia ......................................................................... 41

Figure 14 – Indonesian salinity map .............................................................................................................. 41

Figure 15 – Aquaculture hotspot area selection process ......................................................................... 45

Figure 16 – Brackish-water Aquaculture Development Centre (BADC), Aceh ................................... 48

Figure 17 – Mariculture Development Centre (MDC), Batam ................................................................. 51

Figure 18 – Main Centre for Mariculture Development (MCMD), Lampung ........................................ 53

Figure 19 – Brackish-water Aquaculture Development Centre (BADC), Situbondo ........................... 56

Figure 20 – Research Institute of Mariculture (RIM), Bali ........................................................................... 59

Figure 21 – Mariculture Development Centre (MDC), West Nusa Tenggara ....................................... 61

Figure 22 – Brackish-water Aquaculture Development Centre (BADC), Takalar ................................ 64

Figure 23 – Mariculture Development Centre (MDC), Ambon ............................................................... 67

Figure 24 – Hatchery unit of Ministry of Marine Affairs and Fisheries, West Papua .............................. 70

Figure 25 – Value chain scheme in Indonesian aquaculture industry (processed commodities..... 73

Figure 26 – Value chain scheme in Indonesian aquaculture industry (live commodities) ................ 74

Figure 27 – The hatchery business segment value chain in Indonesian aquaculture sector ............ 75

Figure 28 – Fish juveniles in styrofoam ........................................................................................................... 77

Figure 29 – The nursery/aquafarming business value chain in Indonesian aquaculture sector ....... 79

Figure 30 – Enlargement of aquafarming segment................................................................................... 80

Figure 31 – Deployed cages technologies on Indonesian aquaculture............................................... 81

Figure 32 – The vaccine business segment value chain in Indonesian aquaculture sector ............. 83

Figure 33 – The fish feed business segment value chain in Indonesian aquaculture sector ............ 85

Figure 34 – The processing business segment value chain in Indonesian aquaculture sector ......... 88


Figure 35 – Mode of logistic in Indonesian aquaculture sector .............................................................. 91

Figure 36 – Permit license mechanism in Indonesia ................................................................................ 102

Figure 37 – Porter's Five Forces Analysis ...................................................................................................... 111

Figure 38 – The GE matrix on market attractiveness on each species ................................................ 118



Abbreviations

AMDAL Environmental Repercussion Analysis

BADC Brackish-water Aquaculture Development Centre

BFT Biofloc Technology

BKPM Indonesia Investment Coordinating Board

BMKG Board of Meteorology, Climatology and Geophysical

BPOM Indonesian Drug & Food Agency

CAGR Compound Annual Growth Rate

CC Catch Certification

CCRF Code of Conduct for Responsible Fisheries

CDS Catch Document Scheme

CTI Coral Triangle Initiative

CV Limited Liability Partnership

DGP Good Distribution Practices

DNI Negative Investment List

FCR Feed Conversion Ratio

GAP Good Aquaculture Practices

GHDP Good Handling Practices

GLP Good Laboratory Practice

GMP Good Manufacturing Practices

GT Gross Tonnage

HACCP Hazard Analysis Critical Control Point

IUT Permanent Business Permit

Juklak Implementation Guidelines

KBLI Indonesian Standard Industrial Classification

KHV Koi Herpes Virus


KTP Indonesian Identity Card

MCMD Main Centre for Mariculture Development

MDC Mariculture Development Centre

MMAF Ministry of Marine Affairs and Fisheries

MP3EI Master Plan programme for Acceleration and Expansion of Indonesia

Economic Development

MSME Micro, Small, Medium Enterprise

NACA Network of Aquaculture Centres in Asia Pacific

NPWP Tax Registration Code Number

Pedum General Guidelines

PMA Foreign Investment Company

Proksimas Indonesian government programme concerned with increasing

aquaculture production for in-country consumption

Prolinda Indonesian government programme concerned with rehabilitation of

aquaculture and resources

Propekan Indonesia government programme that concerned with increasing

aquaculture production for export market

PT Limited Liability Company

RIM Research Institute for Mariculture

RPIPM Investment Recommendation for Fish Culture

SIKPI Fish Ship Transporter Permit

SSOP Standard Sanitation Operating Procedure

TAC Total Allowable Catches

TPT Technical Support Officer

UPI Fishery Processing Unit

UPP Development Service Unit

USAID United States Agency for International Development

UUD Constitution of Indonesia

WCPFC Western and Central Pacific Fisheries Committee


1. Research methodology and objectives

Objective Methodology Outcome

Phase 1: Geographic

Overview: Identify

promising regions

Establish a macro

understanding of the

industry and identify

hotspots and species

for Phase 2 player

interviews

Primary and secondary

research: Fish

aquaculture data from

government/

associations

Expert interviews: On

marine fish species and

characteristics

Provides a clear

overview of the

most promising

investment

regions/species

(hotspots)

Phase 2: Value

Chain Analysis

Identify value chain

margins and

investment

possibilities in the

most promising

geographical areas

(green) ; identify

challenges and

describe

opportunities for

Norwegian

companies

Primary research: Expert

and player interviews for

detailed descriptions of

value chain activities and

value for each species

Results in mapping

of highest potential

investment regions,

players, and

corresponding

value chain

specifics.

Phase 3: Summary &

recommendations

Share Spire’s

expertise on market

assessment and

go-to strategy

Senior research

consultants in collective

brainstorming with project

research consultants

Indicates best

investment

opportunities for

aquafarming in

Indonesia.

Description of

foreign player entry

process.

1.1 Breakdown

a. Interviews (primary):

Expert interviews: Associations, government institutions, academic experts

Major players in Sumatra, Java, Bali, Sulawesi, Maluku, Papua

b. Secondary research:

Industry journals, government publications, and news articles on fish aquaculture

Proprietary business databanks for extensive listing of top-tier and lower level

players in fish aquaculture

Research methodology and objectives


2. Summary and analytical outcomes

This report concludes an end-to-end value chain analysis in marine fish aquaculture in

Indonesia as of 2014 across all relevant industry segments -- from broodstock to logistics.

The aim is to understand and identify business Indonesian opportunities and constraints

as they relate to Norwegian companies.

Spire’s assessment evaluates the needs and capacity essential to respond to production

requirements; thereby meeting market demands and competing globally with more

technically advanced peers. Actors from all segments of the industry have been

considered for their perspectives on existing comparative challenges, key success

factors, key selling points, cost levels, and technologies applied.

The reporting approach includes identification of successful firms and dynamic key

actors within the value chain that serve as models to catalyze holistic improvement

within the industry. The value of this exhaustive assessment lies in the resulting illustrations

of the vertical and horizontal links among the value chain participants, centered on

farmers. It methodically takes into account all stage players in the industry: Breeders,

collectors, processors, buyers, the government and other supporters and influencers in

the sector. The report highlights the situation in Indonesia in which breeders and farmers

generally operate as a single entity whereas this is usually not the case with industry

peers overseas. Additionally, the nursery/aquafarming segment incorporates complex

elements within the value chain; for example, fingerlings – whether cultivated or wild --

as well as fish feed, emanate from both domestic and imported sources.

Indonesia is well-known as the largest archipelago on earth, consisting of more than

17,000 islands and boasting a coastline of over 81,000 kilometers. Yet Indonesia’s

seafood industry is still in its infancy compared to its Asian neighbors. Indonesia is

currently the ninth largest fish producer in the world. Given the country’s extensive

coastline, abundant marine resources, and a tropical climate that lends itself to

aquaculture production all year round, the country has tremendous potential to be a

leading global seafood player. Already well-connected in distribution markets,

Indonesian aquaculture products are exported to more than 200 countries with main

markets in Japan, Hong Kong, Taiwan and the United States. Nonetheless, local players

yearn for greater access to European markets in particular.

In-depth interview research was conducted only in carefully selected “hot spots”

because of the vast geography and varying levels of industry maturity. First, all provinces

with proven, multiply attractive features were flagged for inspection. Then a closer

analysis was made to identify individual regencies in those provinces with the most

promise. In each case the criteria hinged on competitive advantages and a

comparative assessment of current opportunities.

Summary and analytical outcomes


Hot spot parameters included: Current production output; environmental conditions

such as ocean current, wave frequency and salinity; pollution factors; general

infrastructure; and proximity to the government mariculture research centres, which play

a key role in aquaculture in Indonesia. Norwegian companies better equipped with fresh

knowledge through this report are encouraged to make further assessments in those

locales.

In addition to geographic considerations, individual fish species were analyzed to assess

comparative potential for development in the Indonesian aquaculture industry. Five

species emerged as being of particular interest for nurturing: Tiger Grouper, Humpback

Grouper, Barramundi, Pompano and Snapper. The main criteria in determining their

potential included: Market demand, survival rate, profit margin and comprehensiveness

of existing aquaculture technique. These species are especially recommended to

Norwegian companies for further assessment.

Spire’s recommended strategies for entering the market are divided into two broad

categories:

Locations and species recommendations – Indonesia has been struggling to

capture an advantage in several expanding high-value niche markets. With

inputs from leaders in the industry, Indonesia’s competitive position could

materialize rapidly to the benefit of all participants. Certain species and certain

geographic hot spots offer better entry and growth opportunities. For newcomers,

knowing where to go and what commodities to pursue are keys to gaining the

advantage.

Understanding the regulatory playing field, foreign investment guidelines, and

nuances of Indonesian business culture are essential to managing risk upon

entering the market. A few of the implications discussed in the body of the report

are:

Investment methods are likely to be most productive in the form of a

vertically integrated company; and

Identifying a partner is highly advisable as it offers faster cultural integration

and efficiency in reaching larger numbers of micro, small and medium

enterprises.

With foreign investors in mind, the analysis and recommendations section of this

report (Section 7) sums up where to go, which species to cultivate, and what

types of business models to use.



Segment-specific recommendations – In these recommendations, focus is given

to each segment in the value chain:

Hatchery – Numerous species have been evaluated for productivity, while

also addressing appropriate mode of market entry to reduce risks

Nursery/aquafarming – Primary consideration is geographic region and

sub-region, with due consideration for access to quality seed

Feed – Product versatility and diversity in fish feed are key in order to

achieve effective grow-out

Vaccines – Indonesia is not yet able to supply its own vaccines at

affordable prices while educating users on necessity of employing them

Processing – Key differentiation points include ability to seal exclusive

contracts and resourcefulness in expanding market outlets

Taken as a whole, these recommendations help Norwegian players single out

unique forces and trends that affect the respective aquaculture business

segments in Indonesia. Some of these dynamics may signal near-term opportunity

and success for those who invest while others are essentially warning signs of

dangerous currents.

This is surely clear to report users: Local players, environmental factors, and

geographic considerations must all be taken into account prior to establishing

business activities.



3. General overview of Indonesian fisheries and aquaculture

3.1 Current condition of Indonesian fishery sector

Indonesia is often referred to as the world’s largest archipelago. This South-East Asian

nation is well-positioned to become a global fisheries leader, particularly as regards

expansion of aquaculture. Indonesia’s marine territory counted for 62% of the total area,

extending 5,100 km along the equator between the Pacific and Indian Oceans. The

water bodies are further broken down into marine zone and inland waters.

Indonesia currently derives substantial benefit from the fishery sector. Per annum fishery

production growth reached 7% in 2011 (Indonesian Investment Coordinating Board /

BKPM), making the country the largest producer of fishery products in Southeast Asia. In

2013, fisheries contributed around 15% to the agricultural gross domestic product (GDP),

second-ranked under field crops (the biggest contributor) and making rapid gains. Such

statistics indicate that the aquaculture and fisheries sector plays a very important role in

the Indonesian economy.

Figure 1 - Map of Fisheries Management Areas in Indonesia

The fisheries of this country extend for some 5.8 million km2 (about three-quarters of the

entire national territory). They cover archipelagic waters, territorial seas, and exclusive

economic zones (EEZ). Indonesia’s inland open-water areas are estimated at 54,000 km2,

consisting of wetlands (71.6%), riverine areas (22.1%) and lakes and reservoirs (3.9%).

General overview of Indonesian fisheries and aquaculture

Current condition of Indonesian fishery sector


Figure 1 shows the official scheme used to divide the country into 11 Fishery

Management Areas (FMA’s) (locally designated as WPP). The FMA’s are defined as

follows:

1. FMA 571 : Strait of Malaka, Strait of Hindia (West of Sumatra)

2. FMA 572 : Indian Ocean (West of Sumatra) – Sunda Strait

3. FMA 573 : Indian Ocean (South of Java) – South of Nusa Tenggara – Sawu Sea –

West of Timor Sea

4. FMA 711 : Karimata Strait – Natuna Island – South China Sea

5. FMA 712 : Java Sea

6. FMA 713 : Makassar Strait – Bone Bay – Flores Sea – Bali Sea

7. FMA 714 : Tolo Bay – Banda Sea

8. FMA 715 : Tomini Bay – Maluku Sea – Halmahera Sea – Ceram Sea – Berau Bay

9. FMA 716 : Sulawesi Sea – North of Halmahera

10. FMA 717 : Cendrawasih Bay – Pacific Ocean

11. FMA 718 : Aru Sea - Arafura Sea – East of Timor Sea

Indonesia ranked third, after China and Peru, as the country with the highest production

of captured fisheries in the world.

Figure 2 – Production volume of fisheries in Indonesia, 2012 (tons)

As recently as 2005, the wild-caught sector dominated fishery production in Indonesia

with marine products accounting for the lion’s share, or 64.17% of the total. As the total

output increased, the share of wild caught decreased to 37.61% of the total in 2012. The




driving force behind this change was the rapid emergence of Indonesian aquaculture.

The average annual increase of aquaculture production from 2009-2012 was 30.9%,

while capture fisheries grew at only 3.83% for the period.

The most common type of fish caught (more than 100,000 tons per year in 2012)

included Skipjack Tuna, Red Snapper, Scads, Indian Mackerels, Indian Oil Sardinella,

Fringescale Sardinella, Narrow Barred, Anchovies, and Eastern Little Tunas.

In a 2011 Fisheries ministry regulation, the sustainable potential of fish resources in

Indonesia was put at 6.671 million tons/year, with shares of 1.15 million tons of large

pelagic fish, 3.65 million tons of small pelagic fish, 1.45 million tons of demersal fish,

145,000 tons of reef fish, 98,300 tons of paneid shrimp, 145,300 thousand tons of reef fish

consumption, 4800 tons of lobster and 2830 tons of squid (KEP. 45/MEN/2011).

Table 1 presents data on exploitation status for various species of marine fish in each of

the FMA’s. In 2012, however, total production of marine capture fisheries was 5.82 million

tons, or over 13% in excess of the total allowable catch (TAC) limit of around 5.12 million

tons. While, with production numbers of marine fisheries for each major species

increasing by an average of at least 2.39% each year, there has surely been even more

encroachment on the sustainable limit.

Table 1 - Exploitation level status of fish resources in each of Indonesian FMA, 2012

O = Over-Exploited | F = Fully-Exploited | M-F = Moderate to Fully-Exploited | M = Moderate

(*)= Illegal Fishing effects | (1) = Java Sea > 40 m | (2) = Particularly for Fishing | (3) Particularly for Fishing | (4) Concrete

Fish Pot | (5) Overextend Fishing in NTT | (6) Bali Strait




Pelagic fish play an important role in Indonesian fisheries. Accounting for around 70% of

total fish stock, large pelagic fish are keys to FMA 572 and FMA 573 while small pelagic

fish are important to FMA 717. Yet irregular or disproportionate resource utilization

throughout the Fishery Management Areas (FMA’s) is reported. Over-exploitation of

pelagics -- in Indonesia and globally – is well known. Southern Bluefin Tuna. Skipjack Tuna

and Yellow Fin Tuna are common examples of overfishing to the point of collapse.

Demersals like Red Snapper -- in the Arafura and Timor Seas in Indonesia’s far east for

example -- are likewise fished beyond sustainable limits. Demersals as a whole are

reportedly fully exploited and “likely to move to overfished status … in the South China

Sea, Java Sea, Makassar Strait, Flores Sea and Indian ocean” (Sustainable Fisheries

Partnership, June 2014). However, in other areas, such as Sulawesi, Maluku, and the

border shared with Australia, the fish have been only moderately exploited.

Policies specifying type of fishing permitted in each area are needed in order to ensure

sustainability as well as in accordance with the FAO Code of Conduct for Responsible

Fisheries (CCRF). However, as a practical matter Indonesian authorities struggle to

control small-scale illegal fishing, let alone organized pirates and fishing mafia.

3.2 Structure of fisheries activities in Indonesia

Fisheries activities are among primary economic activities that need to be developed in

order to provide national food security. This is an industry that can drive employment

and poverty reduction. The fishing industry in 2009 employed 2,641,967 fishermen and

913,788 people in other roles, with 603,856 companies and households devoted to fishing

activities.

Three basic activities, which are related to each other, comprise fishery production in

Indonesia: Fishing provides input (wild fish) for fish farming, while the fish processing

industry (further broken down into sub-activities), depending on the fishing and fish

farming inputs.

Figure 3 - Activities and sub-activities of fishery sector in Indonesia


Structure of fisheries activities in Indonesia

http://www.sustainablefish.org/fisheries-improvement/snapper-grouper/indonesian-snapper/fip-details


Per capital fish consumption in 2011 was 31.64 kg, up 4.81% from 2010. While this is an

acceptable figures overall, it suggests that the “Enjoy Fish” campaign has yet to yield

significant results.

Table 2 - Average consumption of fish in 2010 – 2011

Detail Year

Growth (%) 2010 2011

Fish Consumption

(kg/capita/year) 30.48 31.64 4.81

Source: Ministry of Marine Affairs and Fisheries in Indonesia, 2012

3.3 Indonesian aquaculture

3.3.1 General overview of Indonesian aquaculture industry

Indonesia has many aquaculture plus factors. The relatively stable water temperature

typical of tropical areas enables aquaculture to be carried out throughout the year. The

role of aquaculture is very strategic since it becomes a basis for maintaining the

availability of animal protein and also prolongs the sustainability of capture fisheries.

With 4.5 million tons of production in 2009, the country was already the world’s third

largest aquaculture producer in the world, after China and India, and possesses

potential to increase 35.3% per annum in 2014, with production targets of 15 million tons

by the end of the year]. Despite a slight decline of growth (from 23% to 17%) in 2013, the

total production of aquaculture in the country is projected to continue to grow at a

compound annual growth rate (CAGR) of 21.85% [through] 2018. Indonesian’s currency

devaluation could be the reason for the dip in 2014.

Aquaculture in Indonesia is practiced in fresh, brackish and marine water using a variety

of species, production facilities and methods. Production of seaweed, including the

Eucheuma spp. and Gracilaria spp. species is particularly significant. Penaeid shrimp

and milkfish (Chanos chanos) also play a big role. Marine culture has only truly

blossomed over the last ten years and is dominated by the grouper species such as

Humpback Grouper (Cromileptes altivelis) and Brown-Marbled Grouper (Epinephelus

fuscogutattus).


Indonesian aquaculture


Based on data for 2012, seaweed accounted for about 67% of the total aquaculture

production, followed by fish (26%), shells (0.20%), crustaceans, including various types of

shrimp (0.15%) and other species (2%).

Figure 4 – Indonesian aquaculture commodities breakdown, 2012 (tons)


Table 3 organizes data about aquaculture growth since 2008, including information

about various methods or nurturing environments.

The rise of aquaculture production is led by the increasing number of aquaculture

establishments, demonstrated in Table 3 below. It is comprised of pond culture by 78%,

with 80% being freshwater ponds and 20% brackish-water ponds. Although brackish-

water pond aquaculture is a much older tradition in Indonesia, having been practiced

for more than 400 years, freshwater ponds became common to many backyards during

the Dutch occupation in the middle of 19th century.

Table 3 – Number of aquaculture establishments (in units)

Year

Method

2008 2009 2010 2011 2012

Average

Growth

(no. of

units)

Pond* 977,206 992,237 1,055,311 1,102,565 1,164,561 4%

Paddy Field* 207,490 183,819 208,394 212,434 221,224 2%

Net Pen Culture* 56,472 57,556 65,911 66,375 67,874 5%

Floating Cage* 21,847 27,034 26,705 31,232 30,441 9%


*Method of farming would be explained on pages 21 and 22

Owing to the fact that brackish-water pond culture is practiced more commercially in

Indonesia, land utilization for it is higher compared to freshwater culture. As time goes




by, land utilization rate for brackish-water will grow stagnant and freshwater utilization

rate is likely to surpass the former while also increasing its commercial production

volume.

Figure 5 below shows production volume statistics. Net pen culture is projected to remain

the dominant aquaculture system in place, followed closely by floating cages. In 2012,

the total production from this type of operation was 4.4 million tons.

Figure 5 - Historical and projection production volume on aquaculture

in Indonesia, 2008-2018 (tons)

Source: Ministry of Marine Affairs and Fisheries (MMAF), 2012 and Spire’s analysis

Figure 6 shows historical and projected production values for the various types of

aquaculture production, with net pen culture again the biggest contributor to total

production value

The value of aquaculture in Indonesia production rose from IDR 57.63 trillion in the year

2010 to IDR 75.88 trillion in 2013, with a yearly increase of 18.35%. The highest average

annual growth rate in term of production was 42% in 2010 with the biggest contributor in

value by net pen culture. Subsequently, a minor plunge in 2011 is attributed to the

Indonesian economic downturn. It is projected that in the next 5 years, the value of

aquafarming in Indonesia will reach IDR 197.09 trillion with an average annual growth

rate of 21%.

ProjectiProjection




Figure 6 - Historical and projection production value of aquaculture

in Indonesia, 2008-2018a (IDR Trillion) Source: Ministry of Marine Affairs and Fisheries (MMAF), 2012 and Spire’s analysis

3.3.2 Aquaculture methods

Figures 2 in Section 3.1 showed how activities within the three main aquaculture domains

– freshwater, brackish-water and marine -- are also categorized by different farm types

or systems, such as ponds, paddy fields, net pens, or floating cages. Those methods are

described in detail as follows:

a. Ponds

Pond compartments are usually rectangular but may also be triangular, raceway-

shaped, or oval. They can range from less than a hectare to several hectares each

and can be operated by the owner (aquafarmers) in a backyard or on an industrial

scale. The pond system is enclosed by a perimeter dike and the individual pond

compartments are separated from each other by partition dikes. The perimeter dike

is wider and higher than the partition dikes for protection. Side slopes of the dikes

range from 1:1 to 1:3, they can be made out of soil or concrete.

Pond culture in freshwater began with the stocking of common carp in backyard

ponds in West Java in the mid-1800s, spreading to other parts of Java, Sumatra and

Projecti

on Projection




Sulawesi islands after 1900. In the late 1970s, the introduction of new farming

technologies contributed to the availability of hatchery-produced seed and in turn

helped boost freshwater aquaculture production.

Catfish is the predominant species, with production comprising 30.2% of the total

freshwater aquaculture output. The culture of ornamental freshwater fish has also

been expanding, triggered by huge export demand and strong government

support. Since the outbreak of the koi herpes virus (KHV), that affects carp, many

common carp hatchery, nursery and grow-out farmers and operators have been

shifting to the production of ornamental fish species for the export market.

While the aggregate production value from freshwater ponds is roughly 10% more

than for the brackish-water type, total pond area devoted to brackish-water ponds is

much greater (approximately 80% versus 20% in favor of brackish-water operations).

In fact, brackish-water aquaculture predates the introduction of freshwater methods,

by the Dutch during the colonial era, and has been practiced in Java on a

subsistence basis for more than 400 years.

Area devoted to brackish-water pond areas increased significantly in the 1980s with

the successful development of the eyestalk ablation technique and the rapid growth

of shrimp hatcheries. The private sector was also able to expand brackish-water

pond areas in the provinces of South Sumatra and Lampung to improve large-scale

pond culture using the nucleus estate system, or contract farming scheme. In terms

of value, shrimp are the prime commodity, contributing 80% to total brackish-water

value.

Since brackish-water ponds are currently an in-demand commercial type of

aquaculture, a premium applies to land used for this purpose. However, due to a

reverse trend (in favor of freshwater culture), demand and land utilization prices for

freshwater ponds are expected to increase going forward.

b. Paddy Field

The paddy field system involves establishing a temporary (30 days) nursery of seed

stock using rice paddies. The stock which is later raised to maturity in nets or cages.

Fish species depend on farmer requirements and include Common Carp, Tawes,

Sepat Siam and Tilapia.

Methods are differentiated as being penyelang (before paddy planting); tumpang

sari (simultaneous with paddy planting); or palawija (in between growing seasons).

c. Net Pen Culture

Net pen culture is a generally a freshwater commercial effort and main livelihood for

those involved in it. Cages measuring around 4 x 2 x 1 m (Java) or else 4 x 2 x 2 m




(Sumatra and Kalimantan) are placed in rivers or canals. The cages are constructed

using bamboo or iron bars as support beams from which a net is bound, forming a

floating cage.

d. Floating Cage

A relatively small portion of Indonesian marine coastal areas has been developed for

marine fish culture using floating net-cages. These developments occur more

commonly in bays where there is natural protection from strong currents and waves.

Floating net cage culture may also be developed in freshwater lakes and reservoirs.

The floating net-cage size is usually 8 x 8 m and divided in to four blocks. Frames can

be made from wood, bamboo, coconut trunks, or galvanized iron and this frame is

held afloat with empty drums or buoys.

3.3.3 Fish species for marine aquaculture in Indonesia

Table 4 organizes basic information about the 12 main fish species farmed in marine

environments in Indonesia.

To achieve the required depth of analysis at each link in the value chain, this report will

hereafter focus exclusively on the following five-species subset:

Tiger Grouper

Humpback Grouper

Snapper

Pompano

Barramundi

This subset was judged to be sufficiently representative to allow valid conclusions to be

drawn about the whole. In making such determination factors such as market demand,

survival rate, profit margin, and sophistication of existing aquaculture techniques were

taken duly into account.




Table 4 - Fish species in Indonesian marine aquafarming

No. PICTURE OF SPECIES NAMES

Genus English Indonesian

1.

Mycteroperca

Tigris

Tiger

Grouper

Kerapu

Macan

2.

Cromileptes

Altivelis

Humpback

Grouper

Kerapu

Bebek

3.

Epinephelus

fuscoguttatus

Brown-

marbled

Grouper

Kerapu

Cantang

4.

Plectropomus

leopardus

Coral Trout

Grouper

Kerapu

Sunu

5.

Epinephelus

polyphekadion

Camouflage

Grouper

Kerapu

Batik

6.

Epinephelus

lanceolatus

Giant

Grouper

Kerapu

Kertang




7.

Lates

calcarifer

Barramundi/

Asian Sea

Bass

Kakap

Putih

8.

Lutjanus

malabaricus Snapper

Kakap

Merah

9.

Trachinotus Pompano Bawal

Bintang

10.

Gnathanodon

speciosus

Golden

Trevally Kuwe

11.

Siganus Rabbitfish Baronang

12.

Rachycentron

canadum Cobia

Salmon

Hitam

Sources: Secondary Research




3.3.3.1 Grouper

Grouper is a highly valuable sea culture commodity in demand on international markets.

Grouper species in Indonesia include the Humpback Grouper (Cromileptes altivelis),

Tiger Grouper (Ephinephelus fuscogutattus) and Kertang Grouper (Ephinephelus

lanceouslatus). The production target for grouper in 2014 is 20,000 tons, with a projected

seed requirement of 50 million. This species has recorded modest aquaculture output in

Indonesia, with 13,338 tons in 2012 and an average yearly growth rate of 13% from 2009-

2012.

Sumatra was the production leader for the latest year covered by the data (2012), with

total output of 5,913 tons. It was followed by Maluku – Papua with 1,324 tons. As

indicated by Figure 7, Indonesia’s aggregate grouper production grew steadily from

2009-12, with total output of 13,338 for 2012, or 13 percent higher than the year before.

Figure 7 – Aquaculture production of Groupers in Indonesia, 2009-2012 (tons) Source: Ministry of Marine Affairs and Fisheries (MMAF), 2012

Grouper culture is generally characterized in Indonesia by the use of wild-caught seed

for hatchery purposes and “trash” fish for feeding. However, hatchery-reared seed is also

an increasingly popular way of coping with sustainability issues. Groupers would

generally be grown out to full size, particularly for small size species. But a general

shortage of land for brackish-water ponds may impact actual practices.

Indonesia is a major producer of Grouper seed stock, with hatcheries in northern Bali

producing 200,000 to a million seeds per month, plus Humpback Grouper seed in smaller

numbers. The hatcheries generally grow fingerlings to around 2-3 centimeters; whereas




the sea-cage farms that grow the fish out to market size prefer fingerlings in the range of

5-10 centimeters.

Grouper nurseries take the form of shore-based tanks (tank culture), or cages in coastal,

brackish-water ponds (pond culture). Generally, juveniles that have been nursed in

ponds are darker in color that those nursed in tanks. However, pond-cultured grouper

juveniles tend to have a better tolerance for unpredictable environmental parameters,

such as salinity. They are the preferred choice for grow-out in sea cages because they

are already adapted to living in cages, to some extent.

Various types of feed are used during the nursery phase, including dry (commercial)

pellets, moist pellets, trash fish, mysid shrimp, or some combination of these. However,

the use of so-called trash fish is not recommended -- unless there is no alternative -- since

it results in transmission of parasites, disease outbreaks, and increases mortality.

General overview of Indonesian fisheries and aquaculture Indonesian aquaculture


3.3.3.2 Snapper

The most common way of designating snapper (Lutjanus spp.) in Indonesia is either

Kakap Merah or Bambangan (red snapper), regardless of the actual species. In reality a

number of Snapper species are present, including the Malabar Blood Snapper (Lutjanus

malabaricus). The Malabar is a species found throughout Southeast Asia and the

western central Pacific but that is often misidentified or confused with Humphead

Snapper or Blood Snapper (Lutjanus sanguineus). Another member prevalent in

Indonesian Snapper fisheries is generally designated Crimson (or Scarlet) Snapper.

Indonesian wild-catch Snapper fisheries cover vast areas of the archipelago from North

Sumatra to West Papua (the Indonesian portion of New Guinea). Nearly 30% of the total

wild catch of Red Snapper in Indonesia comes from waters of the Arafura Sea and Aru

Sea (to the south of West Papua); and the Eastern Timor Sea.

As a euryhaline, the Snapper is adapted for various salinity conditions. It’s also amenable

to variety of feeds. Thus Snapper (especially White Snapper) harbors a lot of promise as

an aquaculture commodity. It grows quickly and with relative ease and has a high

survival rate.

The prevailing constraints appear to be limited availability of seed and dependency on

the wild-catch. The production target for White Snapper in 2014 is 8,500 tons, with seed

requirements of 21 million units.

Figure 8 – Aquaculture production of Snapper in Indonesia, 2009-2012 (tons) Source: Ministry of Marine Affairs and Fisheries (MMAF), 2012

Snappers in Indonesia are caught with small-scale fishing equipment such as handlines,

bottom longlines, bottom gillnets and traps. They are of course also harvested by large

fleets of trawlers. These are operated mainly in eastern Indonesia, both by Indonesian

and foreign joint venture fishing companies.




3.3.3.3 Barramundi

Barramundi (Lates calcarifer) is known locally as Kakap Putih and is frequently spotted in

estuaries, lagoons, and coastal waters. As a diadromous species it moves between rivers

and estuaries. Barramundi is peculiar in that it can change sex from male to female,

spending early maturity as a functional male before becoming female. However, this

occurs only when it is bred in marine water. Barramundi eat other fish and crustaceans.

Under optimum conditions the fish grows to sizes as large as 1,500-3,000g in a single year.

From a commercial standpoint, Barramundi is always in demand, fresh or frozen, and

popular in Australian and Thailand. Total 2012 aquaculture production was 3,609 tons

and industry projections are for that figure to grow at an annual rate of 18%.

Figure 9 – Aquaculture production of Barramundi in Indonesia, 2009-2012 (tons) Source: Ministry of Marine Affairs and Fisheries (MMAF), 2012




3.3.3.4 Pompano

Pompano culture is well-developed in Indonesia with a concentration of operations in

West Java, the country’s most populous province. In 2012, Pompano production was at

121,759 tons, with an annual growth rate of 16%.

There are basically two types of this species, Silver Pompano and Black Pompano.

Currently, demand and consequently production for the Silver Pompano is higher.

Pompano can be cultivated in ponds, floating cages and net pens, while production

may also be integrated with the paddy field method. Pompano may be farmed

pursuant to both monoculture and polyculture schemes. Aquafarming of Pompano is

not complicated, which places significant net profit margins within reach.

Figure 10 – Aquaculture production of Pompano in Indonesia, 2009-2012 (tons) Source: Ministry of Marine Affairs and Fisheries (MMAF), 2012



3.3.4 Benefits, values and challenges for each aquaculture fish species

Table 5 below describes benefits, values and challenges of each of the Indonesian

marine aquaculture species covered. In terms of value, Groupers would have the

highest market price in the industry, ranging between USD 19 and USD 30 per kilo.

Table 5 - Benefits, values & challenges for each aquaculture fish species

Type of Fish

Species Benefits Values Challenges

Tiger

Grouper (Mycteropurca

Tigris)

Humpback

Grouper (Cromileptes

Altivelis)

Robust domestic and

international demand

drives profits

Groupers are

desirable for

restaurant meal and

luxurious hotels in the

worldwide With a weight range

of 500-1000 gram per

fish, a whole live fish is

valued higher than

processed fish

Diversification

benefits as a high-

earning, non-oil

export commodity

Lucrative

commodity: USD 30

per kilo for whole

alive/non-processed

Humpback Grouper

Lucrative

commodity: USD 19

per kilo for whole

alive/non-processed

Tiger Grouper

Grouper has flaky

flesh structure thus

making it

unavailable to

undergo processing

phase.

Location Unknown factors

with regard to

natural disasters,

pollution, predators

and user conflicts;

environmental

parameters are not

well-defined

Broodstock

Without proper

attention to

broodstock sizes,

cannibalism can

impact yield

Seed

Farmers may not be

demanding

enough in ensuring

that suppliers

deliver in

accordance with

the quantity, quality

and delivery terms

required for

operational success

Pests

Farmers /

entrepreneurs may

not understand

how to control

pests and diseases

including thorough

cleaning of cages;



predator

prevention; and

intervention against

specific diseases

Barramundi (Lates Calarifer)

Barramundi are

opportunistic

predators and eat

just about any

organism in the water

High fecundity boosts

yields

One of the most

stress- tolerant fish

species due to

euryhaline nature;

lower mortality rate

Good value: USD 9

per kg in alive form,

USD 5.4/kg in

processed form.

When water

temperatures drop

during rainy season,

Barramundi

become less

active, cutting into

yields

Aggressive

behavior results in

self-injury in

collisions with cage

Will devour other

species if kept in

same cage

Snapper (Lutjanus

Malabarices)

Snapper is a white-

meat fish in demand

for various

international cuisines

Good value: USD 4

per kg for whole

frozen snapper

Impacted by

overfishing (failure

to enforce catch

quotas and

unreported/illegal

fishing)

Pompano (Trachinotus)

Matures quickly,

making it easier to

raise and less risky

Amenable to

herbivorous food

sources (e.g., leaves),

thus reducing

consumption of pellet

food

Resists disease

Good value: USD 5.5

to USD 7 per kg for

whole frozen fish

Timely sourcing of

suitable feed may

require certain level

of grower

sophistication

(possibly

complicated by

framer

illiteracy/lack of

education)

3.3.5 New species being developed

3.3.5.1 Kustang Grouper

Currently Grouper fish farming is being promoted as “best choice” marine aquaculture

export commodity with a high selling price. Meanwhile, the Kustang is an attempt to

ensure the family lives up to its potential by addressing slow growth, a common problem

for many species including the Humpback. Hybridization is an effort to overcome these




problems that can yield seed with enhanced genetic and morphological

characteristics.

Kustang Grouper represents a female Humpback and male Kertang Grouper

hybridization with a growth rate that is better than the Humpback’s.

Since 2011, a key East Java research centre, the Brackish-water Aquaculture

Development (BDAC) Centre in Situbondo regency, has been actively developing these

hybrids. It has succeeded in reaching a stage of seed production marked by mass

quantities and survival rates of 15% to 20%.

Shorter growing period

Like the Cantang Grouper, the Kustang has an astonishing growth rate that can be four

times that of the Humpback. At 15 months, fish are 10 centimeters or more and weigh

around 2kg; whereas a Humpback at that stage would weigh only around 400g-500g.

Appearance

Kustang Grouper fingerlings have morphological forms that represent the two parent-

stock fish: Humpback Grouper and Giant Grouper, with dominant colors, patterns and

batik like a grouper, but the number spots is fewer, while its shape resembles giant

grouper, being longer and thicker.

Resistance to disease

Early indications are that Kustang Grouper is more resistant to VNN than the Humpback

Grouper from seed production through harvest size. In the period of 2011-2012 all newly

discovered cases of Kustang Grouper VNN attacks were on juveniles (2-3 cm). At the

same time there was a wider outbreak of VNN in Humpback Grouper.

Flavor and texture of meat

Overall very similar to Humpback Grouper, yet chewier like the Giant Grouper variety.

3.3.5.2 Yellow Fin Tuna (Thunnus albacores)

Research and development of Yellow Fin Tuna in Indonesia is ongoing due to declining

stock in nature caused by over-intensive capture efforts. With demand robust among

consumers, domestication may represent a breakthrough opportunity for this species,

and a source of foreign exchange earnings.

Fish are being taken alive from zones in the northern Bali Sea for the purpose of

propagating the offspring. However, projects remain in the pilot stage and there has not

yet been any harvested production.




3.3.5.3 Tilapia Zilli

Tilapia Zilli or Redbelly Tilapia are able to live in fresh, brackish and marine waters,

although freshwater production is most common. Nevertheless, the species is able to

adapt to a range of salinity conditions and thus has potential for being farmed in

marine-based floating cage systems.

Some of the advantages of Tilapia Zilli are:

1. Very responsive to artificial feed

2. Rapid growth

3. Ability to survive in high-density conditions

4. Good feed/ filet ratio

5. Resistant to disease and non-optimum water environment

6. Suited to local tastes

If farmed in floating cages the following parameters would be expected to yield the

best results: Salinity from ~33 ppt (with daily salinity fluctuation not to exceed 10 ppt);

temperature from 25-32 (°C); pH of 6.5 to 8.5; dissolved oxygen at 4-8 ppm; a flow

velocity of 10-20 cm/s; 1 – 3 m wave height; and water depth of 10-20m.

3.3.5.4 Napoleon Wrasse

Napoleon Wrasse (Cheilinus undulatus, Ruppell 1835) is registered as a threatened and

endangered species on the IUCN Red List. This species is fully protected and its trade is

regulated via quota system in Indonesia. Even so, in Riau province, in the Anambas

islands and others nearby (such as Temawan and Palmatak), this species is raised by

local people as an export product and a main livelihood. Farmers in Anambas grow

Napoleon in cages. While maturity takes four to five years, the fish fetches prices as high

as USD 100 per kilogram on seafood markets.

Napoleon has Protogynus Hermaphrodite reproductive patterns, i.e., born as a female

but developing male genitals during adulthood. It ranges from 55-75 cm in length with

females ash-gray with red or brown and males greenish or bluish with a grooved pattern

of stripes on head/front. Napoleon fish tend to live solitary, in pairs, or in small groups of

from three to seven individuals.




3.3.6 Domestic and export markets for each species

Diminishing fish wild stock and increasing demand for marine species have slowly shifted

the market equilibrium, creating ample opportunities for a country such as Indonesia,

endowed with a rich mariculture environment. In terms of domestic demand, Indonesian

per capita fish consumption is near 31.64 kg/annum.

3.3.6.1 Grouper market

Grouper – in the top spot on Indonesia’s aquaculture menu -- is sold to Thailand, Hong

Kong, and other parts of China for use in a variety of dishes. Several nursery and

exporting facilities located in the provinces of Nusa Tenggara Barat and Bali aim to serve

unmet international demand for this popular seafood product. Meanwhile, globalization

has permitted the products to be marketed via electronic auction in importing countries

(Aquaculture in Indonesia, June 2014).

Table 6 organizes information about demand for grouper in export destinations around

the world.

Table 6 - Groupers (export figure and country of destination, 2012)

Country Export Quantity (Kg)

Thailand 5,747,727

Hong Kong 2,577,266

Malaysia 1,856,652

Singapore 1,050,496

China 989,537

Vietnam 286,485

Taiwan 150,514

France 72,215

Puerto Rico 27,234

United States 13,406

Others (Japan, Korea, Cambodia and etc.) 13,713

Total 12,785,245

Source: Ministry of Marine Affairs and Fisheries (MMAF), 2012



3.3.6.2 Snapper market

As a rule of thumb, 50% of total world’s snapper comes from Indonesia, with sea

territories in the Arafura Sea that constitute sources of wild-caught snapper (e.g.

Mangrove Red Snapper) very productive but also overfished. Trawling vessels in the

area have doubled in number over recent years to keep up with demand.

To meet Indonesia’s own demand for Snapper, artisanal fishermen act as the primary

medium in marketing the wild stock catch. Fresh fish are typically transported to Jakarta,

Gresik, East Java and Bali to undergo processing. Subsequently, whole-round processed

fish are shipped abroad, primarily to the U.S., Singapore and Malaysia.

Table 7 - Snapper (export figure and country of destination, 2012)


China 778,121

United States 365,851

Malaysia 296,468

Puerto Rico 279,499

France 167,080

Dominican Republic 115,115

Vietnam 75,330

United Kingdom 72,853

Singapore 71,598

Italy 46,605

Others (Taiwan, Mauritius, Reunion and

etc.) 303,584

Total 2,572,104





3.3.6.3 Barramundi market

This species is primarily bred in floating cages in western regions of Indonesia, including

the Sumatra-area provinces of Riau and Lampung. Fish processors in Indonesia are well

equipped to prepare Barramundi commodities, which involve pressure cooking fish until

bones are tender.

Table 8 - Barramundi (export figure and country of destination, 2012)


The United States 3,820

Australia 2,604

Thailand 2,084

Hong Kong 1,910

Brunei Darussalam 1,667

Philippines 1,233

Singapore 955

Taiwan 695

East Timor 469

Spain 391

Others (United Kingdom, France, and the

Netherlands etc.) 1,563

Total 17,363


3.3.6.4 Others Other aqua commodities in abundance in Indonesia include those in the Salmon family,

such as Pompano (discussed above); and Trout.

Most Pompano sales derive from wild-caught fish and the species has long been

considered an attractive one for aquaculture, for its net profit ratio and robust demand.

Additionally, Pompano is often favored for Indonesian dishes, thus local production is

often consumed domestically.




Table 9 - Pompano (export figure and country of destination, 2012)

Country Export Quantity (kg)

China 35,377,884

Thailand 2,002,680

Malaysia 595,607

Japan 112,757

Vietnam 83,258

Singapore 16,070

Taiwan 12,996

Australia 10,900

United States 9,690

Mauritius 5,190

Others (Canada, Hong Kong, and Korea, etc.) 8,590

Total 38,235,622


Based on the table above, less than 40,000 tons of Pompano aquaculture products were

shipped during the year 2012.

3.4 “Minapolitan” system as an unique approach to aquaculture

Originating with the Ministry of Marine Affairs and Fisheries, this term describes a

community where all residents are engaged in aquaculture. (Mina is from the Sanskrit

word for fish and politan is Greek for city). Based on enabling regulations that are only

five years old, at least 50 such communities have been set up in far-flung provinces from

Sumatra to Maluku, with funding coming from the national government. The ministry is

reportedly targeting development of at least 120 more minapolitan projects for 2014.

Specifics vary depending on local needs and resources, but in general, every

participating household obtains a fish pond, at no cost, and is then able to keep all

profits, if any. Generally minapolitan development schemes are linked to broader

development schemes for coastal areas.


“Minapolitan” system as an unique approach to aquaculture


3.5 The marine climate

Aquaculture activities in Indonesia are heavily influenced by environmental parameters

such as marine tides, winds and currents. The map below is a very high-level overview of

water climate in the region.

Figure 11 - Marine map for Indonesian currents Source: BMKG Indonesia (2014)

Figure 12 - Indonesian tides and wind speed information Source: BMKG Indonesia (2014)


The marine climate


Figure 13 - Depiction of warm current flow in Indonesia Source: Indonesian Throughflow, E. van Wijk & S. Wijffels (2008)

The volumetric mass of water passing through the Indonesian islands moves at

approximately 15 sv (Sverdrup) from the Pacific Ocean to the Indian Ocean. However, it

is diverted at different rates through different regions of Indonesia. Ocean currents vary

widely throughout the islands, based primarily on ocean depths and coastline shape.

Warm currents from the western Pacific carry nutrient-rich water driven by circular winds.

Meanwhile, the enormous water mass is roughly equal in salinity across the whole

Indonesian territory. These attributes are suitable for marine organisms to thrive.

Figure 14 - Indonesian salinity map

Source: NASA Aquarius Satellite View (2014)

As Figure 14 illustrates, Indonesian waters have a low average salinity, ranging from 28-33

ppt. Such conditions are driven by high precipitation rates and warm ocean

temperatures. Conditions of salinity, temperature and dissolved oxygen are very much in

line with the general requirements for marine life to flourish.

Lombok Str.

Timor Passage

Ombai Str.


The marine climate


Table 10 - Wind speed and tide information of Indonesian water

No Location Average Wind

Speed (knot)

Average Wave

Height (m)

Max Wave

Height (m)

Wave

frequency

>3m)

1 North Aceh 4-10 0.5 - 1.0 0.5-1.25 0-5%

2 West Aceh to Sumatra

Utara 3-5 0.25 - 1.0 0.75 - 1.25 0-5%

3 West Sumatra 3-5 0.5 - 1.25 0.75 - 1.5 0-5%

4 Bengkulu-Lampung 3-5 0.25 - 1.25 0.5 - 2.0 0-5%

5 Strait of Sunda 3-5 0.25 - 1.25 0.75 - 2.0 0-5%

6 South Banten-West Java 3-5 0.5 - 1.25 0.75 - 2.0 0-5%

7 South of Central Java 3-5 0.5 - 1 0.5 - 1.25 0-5%

8 South of East Java 3-5 0.75 - 1.25 1.0 - 2.0 0-5%

9 Bali-West Nusa Tenggara 4-10 0.5 - 1.5 1.0 - 2.0 0-5%

10 Sawu Sea 4-15 0.75 - 2.0 1.5 - 2.5 0-15%

11 Timor Sea 4-15 0.75 - 2.0 1.5 - 2.5 0-15%

12 Strait of Malacca 3-5 0.25 - 0.5 0.5 - 0.75 0-5%

13 Natuna Sea 5-10 1.25 - 2.0 2.0 - 3.0 1-25%

14 Strait of Karimata 4-10 0.75 - 1.5 1.0 - 2.0 0-5%

15 South of Kalimantan 3-5 0.25 - 0.5 0.5 - 0.75 0-5%

16 Thousand Islands 3-5 0.25 -0.5 0.5 - 1.75 0-5%

17 Java Sea 4-10 0.5 - 1.0 0.75 - 1.25 0-5%

18 Bali Sea 3-5 0.5 - 0.75 0.75 - 1.25 0-5%

19 Flores Sea 5-15 0.75 - 1.25 0.75 - 2.0 0-5%

20 Southern part of Strait of

Makassar 4-10 0.5 - 1.0 0.5 - 1.25 0-5%

21 Southern Sea of Sulawesi 5-10 0.25 - 0.75 0.5 - 1.25 0-5%

22 Maluku Sea 3-10 0.75 - 1.25 0.75 - 2.0 0-5%

23 Buru-Laut Seram Sea 4-10 0.5- 1.25 0.75 - 1.25 0-5%

24 Sulawesi Sea 3-10 0.75 - 1.25 0.75 - 2.0 0-5%

25 Kep. Sangihe Talaud 4-15 0.75 - 2.0 2.0 - 3.0 5-10%

26 Halmahera Sea 3-5 0.5 - 1.5 1.5 - 2.0 0-5%

27 Northern Sea of Papua 3-8 0.5 - 1.25 1.25 - 2.0 0-5%

28 Banda Sea 5-15 0.5 - 1.25 1.5 - 2.0 0-5%

29 Sea of Aru Islands 5-10 0.5 - 1.25 0.75 - 2.0 0-5%

30 Arafuru Sea 5-12 1.25 - 1.5 1.5 - 2.0 5-15%

*Note: Frequency occurrence = 100 %, wave > 3 m happens in a week (7 days)


The marine climate


3.5.1 Pollution

Marine pollution from human activities in Indonesia, such as industry, shipping and

domestic discharges, is daunting in some areas, and only a mild concern in others.

Organisms, reefs, biodiversity as a whole, and human livelihoods are under threat from

the rate at which Indonesia is growing, developing and industrializing. There seems

always to be a new species whose extinction lies just around the corner. With marine-

sourced commodities an important part of the diet, major food safety issues also come

to the fore.

Oil spills continue to loom as a potential source of major marine pollution, since so much

oil and other fossil fuels originate from and transit through the territory. Yet attempts to

address this and other types of environmental degradation in Indonesia have often

been poorly coordinated. The Coral Triangle Initiative and Manado Ocean Declaration,

however, are noteworthy, as efforts on the part of the Indonesian government and its

partners to define and mitigate marine pollution factors and better monitor and

understand the actual capacity of the seas to support people.

Poor spatial planning is another self-inflicted injury as regards Indonesia’s exploitation of

the sea. A foreseeable scenario in where any aquaculture locale simply becomes

overcrowded, for example with hundreds or thousands of cage system operations in

close proximity to one another. All farmers involved would likely suffer since oxygen levels

would drop and the fish would suffocate.

The pollution that poses a risk to marine aquafarmers often reaches the sea via rivers.

Siak River in Riau province and Citarum River in West Java province are inter-linked with

coastal territory. Nevertheless, the dumping of household and industrial waste into these

waterways is essentially allowed, since it may often be done without penalty. In the case

of the Citarum, some estimates suggest that most of the most harmful waste originates

with the nationally important textile industry, which is concentrated in Java.

Alarming sedimentation rates observed in Sumatra, Java and other regions are another

aspect of how environments are becoming less habitable for marine organisms.

Sedimentation may have natural causes or be caused by deforestation, mining or

human activities. Fisheries in Eastern Java have for some years felt the impact of the

Sidoarjo mudflow – believed to be the world’s largest -- that erupted in 2006

simultaneously with natural gas drilling in the area.


The marine climate


3.6 Workforce availability

Based on the statistics below, aquaculture is on an upward trend and has become

increasingly more significant to the Indonesian economy. By the end of 2014 the sector is

projected to directly or indirectly employ 13.8 million people. Below are the numbers of

workers in each industry in Indonesia as of 2013. Besides being of employable age -- 15

years old -- there are no specific requirements or credentials for those working in

aquaculture.

Table 11 - Indonesia competent workforce in 2013

Industry No. of Workers (≥15 years old)

in million people

Agriculture 38.07

Industry 14.88

Construction 6.28

Trading 23.74

Transportation 5.04

Financial institution 2.91

Social services 18.21

Other 1.67

Source: Ministry of Manpower and NACA Aquaculture Assessment

Aquaculture hotspot mapping


Workforce availability


4. Aquaculture hotspot mapping

Figure 15 – Aquaculture hotspot area selection process

Figure 15 illustrates the zoom-in selection process on determining hot spots for in-depth

player interviews and value chain analysis. In the beginning, all 34 provinces of Indonesia

were considered for their aquaculture potential. Subsequently, data collection and

relevant metrics were applied to screen-out less attractive areas based on significant

inputs such as: Current marine fish aquaculture production, presence of industry players,

and basic infrastructure and environmental conditions.

Table 12 lists the nine provinces selected for interview fieldwork and value chain analysis.

The similarities of the nine Prime Potential provinces is characterized most significantly by

the market value of their production of prominent species, their higher-than-average

production output per year, and the species’ survival rates. They are supported by

positive environmental factors such as low pollution conditions, stable ocean currents,

even salinity, and relatively low average wave height. In addition, infrastructure

requirements are well met by availability of electricity, port facilities, workforce, and the

necessary influence of local research centres.

In the aquaculture hotspot mapping, each province is described to understand local

conditions. The strengths and weaknesses from an internal perspective are summarized,

followed by descriptions of environmental and infrastructure conditions. Several pictures

bring life to each section, and then an important regency-to-regency comparison

refines local conditions further. Finally, fish species’ life cycles relevant to the province

are listed.



Table 12 – Output breakdown per aquaculture spots in Indonesia

Excellent

Moderate

Poor

Low

Pollution

Ocean

CurrentSalinity

Ave.

Wave

Height

Electricity Port

Degree of

Influence

of

Research

Centre

Labor

Availability

Brown Marbled

Giant Grouper150,000Rp 850.1 55%

Snapper 55,000Rp 240.80 53%

Snapper 60,000Rp 1,894 51%

Giant Grouper 120,000Rp 3,628 60%

Tiger Grouper 130,000Rp 953 55%

Silver Pompano 50,000Rp 540 60%

Brown Marbled


Giant Grouper 120,000Rp 96 55%

Snapper 60,000Rp 41.14 55%

Barramundi 60,000Rp 40 58%

Humpback

Grouper375,000Rp 143 60%

Brown Marbled


Snapper 50,000Rp 34.6 60%

Tiger Grouper 140,000Rp 302 45%

Humpback

Grouper350,000Rp 413.7 49%

Coral Trout

Grouper150,000Rp 89.8 44%

Kustang Grouper

Snapper 55,000Rp 165.3 64%Humpback

Grouper 325,000Rp 218.5 51%

Brown Marbled

Giant Grouper 115,000Rp 10.8 58%

Camouflage

Grouper 130,000Rp 53 52%

Barramundi 70,000Rp 0.5 62%Cobia 65,000Rp 0.10 49%

Tiger Grouper 120,000Rp 0.15 49%Yellow Fin Tuna

Barramundi 65,000Rp 10 59%

Pompano 45,000Rp 21 60%

Humpback

Grouper300,000Rp 267.2 70%

Red Belly Tilapia

Humpback

Grouper450,000Rp 2.00 48%

Tiger Grouper 410,000Rp 0.80 52%

Coral Trout

Grouper150,000Rp 4.10 67%

Rabbitfish 50,000Rp 0.04 45%

Cobia 75,000Rp 0.043 48%


Golden Travielly 40,000Rp 102 62%

Humpback

Grouper440,000Rp 39 65%

Brown Marbled


Coral Trout

Grouper120,000Rp 18.72 62%

Napoleon


Humpback

Grouper 470,000Rp 50.55 63%

Snapper 180,000Rp 12.9 44%

Infrastructure

Aceh

ProvinceSpecies

Availability

Overall

Survival Rate

Environmental

Camouflage

Grouper108 55%150,000Rp

Value

(IDR/Kg)Volume

(in Tons)

East Java

K. Riau

55,000Rp

Lampung

Barramundi

Upcoming Species

360 60%

Upcoming Species

Bali

South

Sulawesi

West Nusa

Tenggara

Upcoming Species

Maluku

Upcoming Species

West

Papua1,320,498

714,338

967,038

1,813,532

6,150,379

115,678

1,345,876

1,805,881

1,019,934

v



4.1 Province of Aceh

The Brackish-water Aquaculture Development Centre (BADC) of Ujung Batee (the local

research centre) serves as a hub for various activities such as water resource

management and nursery and hatchery production for numerous species, dominated

by milkfish and followed by minor species including Brown Marbled Giant Grouper,

Snapper and Camouflage Grouper. Table 13 compares strengths and weaknesses of

Aceh in terms of environmental conditions for aquaculture business.

Table 13 – Unique strengths and weaknesses, Aceh

Strength Weakness

Remote from industrial area and relatively

secure from polluting factors. Modern

infrastructure supportive to business

environment.

Powerful ocean currents are destructive

to implemented equipment.

Table 14 – Environmental conditions and supporting aspects, Aceh

a) Environmental Conditions

The northern shore of Sumatera island is

characterized by powerful ocean

currents, threatening the successful

deployment of aquaculture equipment in

the area.

Recorded salinity rate ranges from 30-33 -

a desirable value for Indonesian

aquaculture.

b) Identified Hot Spot Regencies

Aceh Timur (East Aceh)

Bireuen

Aceh Utara (North) – Pantai Banda Ache

Aceh Selatan (South Aceh)

c) Strategic Port

As a trading hub, Aceh is supported by

several national and international-scale

ports such as Idi, Kuala Raja, Kreung

Geukeuh and Labuhan Haji. These ports

are equipped with cold storage and other

amenities to facilitate domestic and

international trading.

d) Workforce Availability

Aceh Timur: 155,272 individuals

Bireuen: 172,364 individuals

Aceh Utara: 225,482 individuals

Aceh Selatan: 90,675 individuals


Province of Aceh


Figure 16 – Brackish-water Aquaculture Development Centre (BADC), Aceh

Table 15 summarizes the analysis of highest potential regencies for aquaculture within

the province of Aceh. The regency of Aceh Utara – Pantai Banda Aceh earned highest

ranking for its species variety, production capability, and advanced infrastructure,

especially with regards to proximity to port and workforce availability. In confirmation,

industry experts state that the regency possesses the largest usable coastline compared

to other regencies, thereby supporting expansion of aquaculture business.


Province of Aceh


Table 15 – Comparative assessment of regency potential, Aceh

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Aceh Timur

Bireuen

Aceh Utara –

Pantai Banda

Aceh

Possesses the biggest land area

among the others, allowing

spaces for aquaculture

Dangerous ocean current might

be a destructive factor for the

deployed technology

Aceh Selatan

Rate Rate

Aceh

Rate Rate (Double Counted) RateRateRate

(Double Counted)

Available

Workforce*Total Rate Expert's Insights ChallengesProvince Regency

Species VariantsPlayers Segment

AvailabilityProduction Environmental

There are three species with high cultivation in Aceh. Table 16 summarizes data

gathered from the local research centre, farmers and the Ministry of Marine Affairs and

Fisheries. These average lifecycle measurements are specifically relevant to Aceh and

address the most productive fish species.

Table 16 – Marine fish aquaculture lifecycle, Aceh


Province of Aceh


4.2 Province of Riau Archipelago

The Mariculture Development Centre (MDC) of Batam is responsible for propagation and

dissemination of fish juveniles of Grouper, Barramundi and Snapper in appropriate

aquaculture farming facilities.

Table 17 – Unique strengths and weaknesses, Riau Archipelago

Strength Weakness

Modernized technology is in place to

accommodate aquaculture development.

Strategically located close to Singapore for

input and output logistics.

Scarcity of local fish pellets, stifling the

growth of the organism. Local

aquafarmers are forced to import

expensive feed.

Table 18 – Environmental conditions and supporting aspects, Riau Archipelago


Crowded and intense activities at the shipyard,

discharge of industrial and organic wastes may

pollute the marine biotope in Batam.

Documented salinity rate is from 29-32, favorable

for aquafarming activities.


Kota Batam

Anambas

Bintan

Lingga

are capable of nurturing greatly-diversified fish

species, driving location’s versatility.

c) Strategic Port

Port of Dumai is a national-scale harbor, fully-

equipped with a cold storage facility to support

fishery activities. Motorized wooden long boats are

frequently utilized to transport farmed

commodities.


Kota Batam: 740,147 individual

Anambas Island: 28,595 individuals

Bintan Island: 158,226 individuals

Lingga Island: 68,912 individuals

Batam is the core technical implementation unit in mariculture under the Director General

for Aquaculture at the Ministry of Marine Affairs and Fisheries. The operational area of

MDC Batam includes all of Sumatra and Kalimantan. The administrative centre of the

MDC Batam is in Pulau Setokok, Bulang Sub-District, Batam. Project activities within the site

include the development of seed production for Grouper species (Epinephelus spp and

Cromileptes altivelis), Barramundi (Lates calcarifer), Pompano (Trachinotus blochii),


Province of Riau Archipelago


Mangrove snapper (Lutjanus argentimaculatus), Golden trevally (Gnathanodon

speciosus) and other economically important marine species and seaweed.

Figure 17 – Mariculture Development Centre (MDC), Batam

Batam city ranks highest of the potential regencies for aquaculture business in the

Province of Riau Archipelago. Its species variants are mainly Grouper and Barramundi.

Strong industry players and vertical segment presence supports the overall value chain.

The well-developed infrastructure and strategic location has made the city a trading

hub to reach the international market, adding benefit to aquaculture activities.

Table 19 – Comparative assessment of regency potential, Riau Archipelago

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Kota Batam

Advancement of support ing

infrastructure is highly conducive for

aquaculture activit ies

Skilled- workforce scarcity

Anambas

Bintan

Lingga

Rate Rate

Riau

Archipelago

Rate Rate (Double Counted) RateRateRate

(Double Counted)

Available




There are five species with high cultivation in Riau Archipelago. Table 20 summarizes

data gathered from the local research centre, farmers and the Ministry of Marine Affairs

and Fisheries. These average lifecycle measurements are specifically relevant to Riau

Archipelago and address the most productive fish species.


Province of Riau Archipelago


Table 20 – Marine fish aquaculture lifecycle, Riau Archipelago

4.3 Province of Lampung

The Main Centre for Mariculture Development (MCMD) Lampung is the local research

centre in charge of maintaining a healthy and productive hatchery with fish species

such as Milkfish, Grouper and Cobia.

Table 21 – Unique strengths and weaknesses, Lampung

Strength Weakness

Potential areas for aquafarming are

adjacent to bay, enabling ease of

maintenance.

Supporting infrastructure is improving with

ongoing construction.

Poor road conditions hamper accessibility.

Contaminated coastal area caused by

industrial and organic waste.

Table 22 – Environmental conditions and supporting aspects, Lampung


High-level of sea bound transportation

and tourism activities on the shore line,

creating a hazardous element to

aquaculture

Documented salinity of 30-34 ppt and

water temperature of 28.5-31.4 degrees

Celsius, highly suitable conditions for

aquaculture.


Province of Lampung


b) Identified Hot Spot Regencies Lampung Selatan (South Lampung)

Pesawaran

c) Strategic Port

Bakauheni, the central port for fishery

activities, is about to undergo major

upgrades to accommodate docking

ships.


East Lampung: 696,055 individual

Tulang Bawang: 280,140 individuals

South Lampung: 647,874 individuals

Pesawaran: 285,879 individuals

The Main Centre for Mariculture Development or Balai Besar Pengembangan Budidaya

Laut is the technical execution agency for the Directorate General for Aquaculture,

Ministry of Marine Affairs and Fisheries. In 2001, MCMD Lampung was established by the

Ministry of Marine Affairs and Fisheries to meet the objective of improving hatchery and

grow-out techniques for marine finfish, broodstock and seed resources management

and conservation of the environment. The facility is located in Lampung, south of

Sumatra Island, approximately 17 km from Lampung town centre.

Figure 18 - Main Centre for Mariculture Development (MCMD), Lampung


Province of Lampung


Table 23 summarizes highest potential regencies for aquaculture. Pesawaran is ranked in

the best position with healthy and calm environmental conditions far from

manufacturing industries. MCMD in Lampung provides business support, supplying

juveniles for nursery and aquafarming operations.

Table 23 – Comparative assessment of regency potential, Lampung

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Lampung

Selatan

PesawaranIn proximity with marine research

centre

Support ing infrastructure and

workforce scarcity

Lampung

Rate RateRate Rate (Double Counted) RateRateRate

(Double Counted)

Available




There are five species with high cultivation in Lampung. Table 24 summarizes data


Fisheries. These average lifecycle measurements are specifically relevant to Lampung

and address the most productive fish species.

Table 24 – Marine fish aquaculture lifecycle, Lampung


Province of Lampung


4.4 Province of East Java (Java Timur)

The Brackish-water Aquaculture Development Centre (BADC) in Situbondo, East Java

was incorporated in 1994 and its operational activities revolve around broodstock

production, proper hatchery techniques and nursing of Milkfish and Grouper.

Table 25 – Unique strengths and weaknesses, East Java

Strength Weakness

Well-positioned on Java Island, under close

control from central government and with

greater access to supporting amenities.

Highly populated and industrialized,

widespread pollution with possible

contamination in marine ecosystems.

Table 26 – Environmental conditions and supporting aspects, East Java


Specifically in the western part of East

Java, the close proximity of aquafarming

spots to the industrialized areas are

highly-prone to pollution.

Stable and non-destructive current on

eastern region of East Java presents

conducive environment for aquafarming.

Recorded salinity rate is ranging from 28-

33, supportive for wide array of species.


Lamongan

Banyuwangi

Bangkalan

Situbondo

Sumenep

c) Strategic Port

Tanjung Wangi port is operating as hub

for marine activities, equipped with

warehouses but not cold storage facility.

Expedition ships are coursing in the area

to load commodities to designated

dumping zone.


Lamongan: 906,179 individuals

Banyuwangi: 1,187,058 individuals

Bangkalan: 647,906 individuals

Situbondo: 252,896 individuals

Sumenep: 816,436 individuals

The Brackish-water Aquaculture Development Centre (BADC) Situbondo was

incorporated by the Ministry of Agriculture in 1994. It is a technical implementation unit

of the Directorate General for Aquaculture (MMAF). The centre underwent major

overhaul in 2001 and now has three active divisions:


Province of East Java (Java Timur)


Finfish Division: The main office is at Pecaron Countryside, Klatakan Village, Kendit

District, about 15 kilometers west of Situbondo, East Java. The division facilities are

4.39 ha in area.

Shrimp Division: Situated in Blitok Village, Bungatan District, about 28 kilometers

west of Situbondo, East Java.

Aquaculture Division: Situated in Pulokerto Village, Kraton District, Pasuruan, East

Java (about 100 km from the main office). Facilities are 30 ha in area.

Figure 19 – Brackish-water Aquaculture Development Centre (BADC), Situbondo

Table 27 summarizes highest potential regencies for aquaculture. Situbondo is ranked in

the best position with greatest species variety and industry segment representation.

Among other attributes, BADC Situbondo is actively engaged in developing the

aquaculture industry by nursing the fish species, providing business support to SME

players, and supplying juveniles for nursery and aquafarming operations.




Table 27 – Comparative assessment of regency potential, East Java

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Lamongan

Banyuwangi

Bangkalan

Situbondo

Comprehensive training course

provided by Marine Research Centre

of Situbondo

Market Fluctuation

Sumenep

East Java


(Double Counted)

Available




There are five species with high cultivation in East Java. Table 28 summarizes data


Fisheries. These average lifecycle measurements are specifically relevant to East Java


Table 28 – Marine fish aquaculture lifecycle, East Java




4.5 Province of Bali

The Research Institute of Mariculture (RIM) of Gondol (Singaraja) core business activity is

to research and develop prime juveniles for Snapper and Grouper. The research centre

also provides aquafarm location scouting support for prospective entrepreneurs.

Table 29 – Unique strengths and weaknesses, Bali

Strength Weakness

Strategic location flanked by the two great

oceans, Pacific and Indian, the water is rich

in nutrition beneficial for aquaculture.

Modern equipment, techniques, and

infrastructure endow greater degree of

freedom for local aquafarmers to develop

their own hatchery activities.

Progressive development in the

construction sector may pose pollution

risks for marine ecosystems.

Table 30 – Environmental conditions and supporting aspects, Bali


The northern section of Bali remains relatively

unpolluted compared to the southern area,

supporting potential for aquaculture.

The island’s contour protects against powerful

ocean currents, resulting in a relatively calm

environment for aquaculture on the northern shore.

Excellent salinity grade from 30-34, allowing fish

species to thrive during the grow-out process.

b) Identified Hot Spot

Regencies

Buleleng

Jembrana

Benoa

P. Serangan

c) Strategic Port

Port of Celukan Bawang as large scale port is hosting

inward bound commodities-carrying tankers. Cold

Storage is available on site to preserve the goods

d) Workforce Availability Buleleng: 471,102 individuals

Benoa: 201,836 individuals


Province of Bali


Figure 20 – Research Institute of Mariculture (RIM), Bali

Bali is a strategic point of convergence for aquaculture development throughout

Indonesia. Oceanography and cutting-edge facilities are in place to ensure progressive

and sustainable activities. The research centre in Bali has fully socialized its programme

to local aquafarmers, creating autonomous offshoots and independent hatchery

entities.

Table 31 – Comparative assessment of regency potential, Bali

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Buleleng –

Teluk

Pengametan

Jembrana

Buleleng -

Singaraja

Highly-independent microeconomics

environmentDistance towards marketplace

Benoa

P. Serangan

Bali


(Double Counted)

Available




There are seven species with high cultivation in Bali. Table 32 summarizes data gathered

from the local research centre, farmers and the Ministry of Marine Affairs and Fisheries.

These average lifecycle measurements are specifically relevant to Bali and address the

most productive fish species. The Research Institute of Mariculture of Bali is superior to

other provincial centres in terms of number of species under its care.


Province of Bali


Table 32 – Marine fish aquaculture lifecycle, Bali

4.6 Province of West Nusa Tenggara (Nusa Tenggara Barat)

The Mariculture Development Centre (MDC) in Lombok is under authority of the central

government to test and implement research done on breeding, nursery, and hatchery

of Grouper and Milkfish.

Table 33 – Unique strengths and weaknesses, West Nusa Tenggara

Strength Weakness

West Nusa Tenggara and Bali are

adjacent to one another, sharing

commonalities in their marine features.

However, West Nusa Tengara holds slight

edge over Bali with its relatively pristine

nature.

Local stakeholders are leaning more

towards developing and nurturing sea

commodities such as; seaweed, abalone,

lobster and pearl.


Province of West Nusa Tenggara (Nusa Tenggara Barat)


Table 34 – Environmental conditions and supporting aspects, West Nusa Tenggara


Locations are distant from industrial waste and

pollution, a compatible zone for aquaculture.

Aquafarming areas are centralized close to the

mainland, safe from strong wave current that

might be harmful.

Warm temperature combined with well-matched

salinity from 30-35 create safe haven for

aquaculture.

b) Identified Hot Spot

Regencies

Lombok Barat (West Lombok)

Sumbawa

Lombok Timur – Teluk Ekas (East Lombok)

Lombok Timur – Labuhan Haji (East Lombok)

c) Strategic Port

Port of Lembar provides ease of logistics for

aquaculture activities with storage facility on the

premise.


West Lombok: 145,679 individuals

Jembrana: 296,398 individuals

East Lombok: 767,565 individuals

Figure 21 – Mariculture Development Centre (MDC), West Nusa Tenggara

MDC Lombok is 1 of the 12 technical implementation units of the Directorate General for

Aquaculture, operating under command of the Ministry of Marine Affairs and Fisheries,

Indonesia. MDC Lombok's responsibilities include development of applied research in

the areas of breeding and nursery of marine organisms, fish health management, and

conservation of broodstock/seed resources of marine organisms and the environment.




MDC Lombok is responsible for the development of mariculture activities in Java, Bali,

and West and East Nusa Tenggara.

Table 35 – Comparative assessment of regency potential, West Nusa Tenggara

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Lombok Barat

Sumbawa

Lombok Timur

– Teluk Ekas

Lombok Timur

– Labuhan Haji

Local stakeholders's preference

towards non-fish aquaculture

West Nusa

Tenggara

Untapped aquaculture potential,

evidenced by the existence of

smaller-scale aquafarmers


(Double Counted)

Available




There are three species with high cultivation in West Nusa Tenggara. Table 36 summarizes

data gathered from the local research centre, farmers and the Ministry of Marine Affairs

and Fisheries. These average lifecycle measurements are specifically relevant to West

Nusa Tenggara and address the most productive fish species.

Table 36 – Marine fish aquaculture lifecycle, West Nusa Tenggara




4.7 Province of South Sulawesi (Sulawesi Selatan)

Brackish-water Aquaculture Development Centre (BADC) of Takalar serves as the

primary juveniles’ fish disseminator in South Sulawesi and is accountable for constructing

an aquaculture specimen area to educate local aquafarmers. The regency research

centre of Barru operates directly under the semi-autonomy of the local government. This

research centre is responsible for socializing aquaculture guidelines as released by the

central government.

Table 37 - Unique strengths and weaknesses, South Sulawesi

Strength Weakness

Extensive shoreline and conducive

coastal environment

History of fishing instilled the population

with a desire to work in aquaculture,

although they show some preference

towards wild catch.

Inconsistent supply rate of fish pellets and

juveniles

Inclination towards wild catch activities.

Passiveness of Local research centre: Lack of

novel initiatives to collaborate with local

aquafarmers.

Existence of thermal power plant

Table 38 – Environmental conditions and supporting aspects, South Sulawesi


The presence of Thermal-Power Station adjacent

to the aquaculture spots is posing a detrimental

factor.

Aquafarming areas are surrounded by the small

isles of Spermonde, shielding off the incoming

waves and suppressing the wave strength hitting

the coastline of South Sulawesi.

Salinity ranges from 29-34, a conducive

environment for aquaculture activities.

Warm and nutrient rich water current circulates

the aquatic zone of South Sulawesi.


Jeneponto

Selayar Island

Barru

c) Strategic Port

Port of Paotere is the central hub of fishery

activities equipped with cold storage and fish

health inspection facilities.


Jeneponto: 244,430 individuals

Selayar: 123,283 individuals

Barru: 118,393 individuals

BADC Takalar is one of the 12 technical implementation units of the Directorate General

for Aquaculture, Ministry of Marine Affairs and Fisheries, Indonesia. Operating as centre

for aquaculture development in Eastern Indonesia (Sulawesi, Maluku and Papua), BADC


Province of South Sulawesi (Sulawesi Selatan)


Takalar is mandated to enhance technology for brackish-water aquaculture and the

sustainable management of broodstock, seed and water resources.

Figure 22 – Brackish-water Aquaculture Development Centre (BADC), Takalar

Jeneponto District is located in the western part of South Sulawesi Province. It has a

coastal area that stretches for about 95 km in the southern part, covering an area of

74,979 ha or 749.79 km2. It is bounded by Gowa District on the north, the Flores Sea on

the south, Takalar district on the west and Bantaeng on the east. It is considered the best

potential area in South Sulawesi for aquaculture compared to Selayar Island and

Pangkep due to player segment availability, port capacity and available workforce.

Table 39 – Comparative assessment of regency potential, South Sulawesi

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Jeneponto Remotely-located from industrialized

city of Makassar

Susceptible to weather

condit ion, hampering

accessibility

Selayar Island

Pangkep –

Pelabuhan

Biringkassi,

Kab. Barru

South

Sulawesi


(Double Counted)

Available




There are five species with high cultivation in South Sulawesi. Table 40 summarizes data



Province of South Sulawesi (Sulawesi Selatan)


Fisheries. These average lifecycle measurements are specifically relevant to South

Sulawesi and address the most productive fish species.

Table 40 – Marine fish aquaculture lifecycle, South Sulawesi

4.8 Province of Maluku

Mariculture Development Centre (MDC) of Ambon concentrates its operations on

Grouper roe up until the stage of juvenile nursery. Distribution of juveniles covers Raja

Ampat Regency and other smaller research centres.

Table 41 – Unique strengths and weaknesses, Maluku

Strength Weakness

Isle-esque landscape of Maluku offers

relatively calm and stable water current

suitable for aquaculture.

Focused funding programme for Grouper

development.

Precarious distribution of fish juveniles.

Human Resource scarcity: Lack of

enthusiasm from the locals to work in

aquaculture.

Port availability to accommodate sea

commodities unloading activities.


Province of Maluku


Table 42 – Environmental conditions and supporting aspects, Maluku


Pollution factor in Ambon is low overall, marked

by the discharge of organic waste, cruise ships,

minor industrial development, and residue from

fisheries activities

Maluku is protected by miniscule islands taming

the ocean current from damaging applied

technology

Close vicinity to Pacific Ocean feeds the area

with nutrient-rich water and diverse marine fish

species

Salinity rate of 33-35 suitable for marine biota


Aru Island

Western Part of Southeast Maluku

West Seram – Kairatu Island

West Seram – Marsegu Island

West Seram – Osi Island

Inner Ambon Bay

c) Strategic Port

The port of Ambon has an installed cold storage

facility to accommodate the incoming sea

commodities.

d) Workforce Availability Ambon: 714,338 individuals

MDC Ambon is one of the 12 technical implementation units of the Directorate General

for Aquaculture, Ministry of Marine Affairs and Fisheries, Indonesia. The centre is

responsible for the development of applied research in the areas of breeding and

nursery techniques of marine organisms, conservation of broodstock, seed resources

and the environment. The centre is responsible for the development of mariculture

activities in Sulawesi, North Maluku, Maluku, Irian Jaya and Papua.


Province of Maluku


Figure 23 – Mariculture Development Centre (MDC), Ambon

Maluku is one of the best potential areas for aquaculture; its excellent environmental

conditions fully support business potential. Teluk Ambon in Ambon City is ranked the best

potential regency among many active areas. The research centre, located in Ambon, is

engaged in local aquaculture business, providing juveniles to aquafarmers. The city is

supported with a developed port and high numbers of players in the processing

segment, supporting aquaculture development in the area.


Province of Maluku


Table 43 – Comparative assessment of regency potential, Maluku

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Aru Island

West Southeast

Maluku

West Seram -

Kairatu Island

West Seram -

Marsegu Island

West Seram -

Osi Island

Ambon - Teluk

Dalam Ambon

* Govertment support to the Ambon

city through funding services for

aquaculture and availability of

Research Center to provide seeds

and feeds to the aquafarmers

* Willingness of local people to

learn about aquaculture and its

benefits

Maluku


(Double Counted)

Available




There are five species with high cultivation in Maluku. Table 44 summarizes data


Fisheries. These average lifecycle measurements are specifically relevant to Maluku and

address the most productive fish species.

Table 44 – Marine fish aquaculture lifecycle, Maluku


Province of Maluku


4.9 Province of West Papua (Papua Barat)

The hatchery unit of Ministry of Marine Affairs and Fisheries of Raja Ampat acts as

recipient of juveniles from superior research centres outside the province while

functioning as a distribution hub for local aquafarmers in the region of Papua.

Table 45 – Unique strengths and weaknesses, West Papua

Strength Weakness

Uncontaminated, crystal-clear water with

expansive room for development of

aquaculture.

Ongoing joint ventures involving foreign

institutions across various industry segments

increase potential of Papua.

Human Resource availability: locals prefer

wild catch activities. Low-level education

to support transition to aquaculture.

Sole existence of fisheries port of Waisai is

constraining aquaculture activities to

Raja Ampat, specifically.

Table 46 - Environmental conditions and supporting aspects, West Papua


Water pollution in Raja Ampat is still

considered insignificant as

industrialization has yet to fully develop.

The reported waste discharge emanates

only from inhabitant's consumption

waste.

Wave height and ocean currents may be

an occasional issue for local

aquafarmers.

Recorded salinity rate ranges from 30-33,

compatible with a broad array of

species.


Raja Ampat – Wasai Island

Raja Ampat – Friwen Island

Raja Ampat – Mansiwar Island

Wondoma Bay

Fak Fak

Kaimana

c) Strategic Port

Port of Kaimana is functioning as the

primary channeling hub for fisheries

activities in Papua, equipped with Cold

Storage facility.

d) Workforce Availability Papua: 1, 320,498 individuals


Province of West Papua (Papua Barat)


Figure 24 – Hatchery unit of Ministry of Marine Affairs and Fisheries, West Papua

With respect to the excellent environmental condition in Raja Ampat – Waisai Island, the

location is ranked as the best potential area for aquaculture due to its species variants

and the existence of a hatchery unit, which has been cooperating with private

companies and Ministry of Marine Affairs and Fisheries in developing aquaculture

business. The hatchery unit was established in 2010 and has only been concentrating

efforts on Grouper and Snapper species. The existence of a developed port with suitable

capacity is a significant support for the area.




Table 47 – Comparative assessment of regency potential, West Papua

Infrastructure

(Proximity to Port)

Infrastructure

(Port Capacity)

Raja Ampat -

Waisai Island

* Waisai Island is supported

with Research Center which

is a joint-venture of Marine

and Fisheries Ministry and a

Private company. Seeds and

Feeds provided to

aquafarmers around the

island.

* High-transportat ion cost

(gasoline)

* Willingness of local

people to join the

aquafarming business.

(wild-catch is preferred)

Raja Ampat -

Friwen Island

Raja Ampat -

Mansiwar

Island

Teluk

Wondama

Fak fak

Kaimana

West Papua

Rate RateRateRate (Double

Counted)RateRate

Rate

(Double

Counted)

Available




There are three species with high cultivation in West Papua. Table 48 summarizes data


Fisheries. These average lifecycle measurements are specifically relevant to West Papua


Table 48 – Marine fish aquaculture lifecycle, West Papua




5. Value Chain Analysis

The value chain assessment is a critical step towards understanding opportunities and

constraints within Indonesian aquaculture. As mentioned, the country is currently ranked

third largest fish producer in the world. Indonesia’s climate empowers aquaculture

production all year round and the country has tremendous potential to see its seafood

producing entities become larger, better financed and more sophisticated.

The aquaculture products are exported to around 120 countries as of 2013. The United

States has become the main importer of Indonesia’s aquaculture exports; Indonesia also

exports to China, Japan and the European Union.

5.1 Value chain commodity schemes

This section will outline two value chain scenarios for Indonesian aquaculture:

Processed Commodities; and

Live Commodities

Each scenario has its own distinctive intermediaries to channel the commodities from

one end to another, such as collectors and large middlemen. Generally, operational

vessels used for transporting commodities in Indonesian aquaculture business can be

classified into two:

Self-owned: Typically owned by consigning company (in this context,

processing companies)

Third-party: Independent cargo services providers.

Value chain analysis

Value chain commodity schemes


5.1.1 Processed commodities

Figure 25 illustrates the first value chain scenario as applied to specific aquaculture fish

commodities: Barramundi, Snapper, Pompano, Milkfish, Golden Trevally, Rabbit Fish and

Cobia. The scheme presented includes all the input supply actors up to the end markets,

whether local or export. For processed commodities, and fastest delivery, the primary

the modes of transportation are air and sea.

Figure 25 - Value chain scheme in Indonesian aquaculture Industry

(for processed commodities)




5.1.2 Live commodities

For species like Grouper however, the chain is different because the product is typically

shipped alive. Following harvesting period, the breeder or aquafarmer takes care of

shipping which is via sea or air to markets mainly located in Hong Kong, Taiwan and

Singapore. Commodities are packed in standard-size foam boxes with plane or ship

consignment operated by cargo services providers.

Figure 26 - Value chain scheme in Indonesian aquaculture industry

(for live commodities)

The production of Grouper species is primarily focused on the international market, as

there is a robust emergent demand in Hong Kong as well as Singapore and Taiwan.

Higher income among citizens of China has stimulated greater spending for tertiary and

premium goods. Meanwhile, the centre of the live fish trade is located in Hong Kong

where imports from Indonesia totaled 2.5 million tons in the most recent year shown by

the data. Thirty percent of the total was later re-exported to mainland China. Whereas

demand in China once corresponded to unsustainable fishery practices in Indonesia --

including live catch via poison methods -- this is now much less the case.




5.2 Value chain business segments

5.2.1 Hatcheries

With hatcheries a key link in the value chain, research centres like RIM in Bali, BADC in

Situbondo and MCMD in Lampung, play a crucial aquaculture role in Indonesia. Even

so, local farmers in Bali, and certain government and non-government entities have, on

their own, begun to engage in hatchery activities.

Most of the broodstock for fingerling production is obtained from the wild. Yet the

various research and hatchery programmes have been able to improve broodstock

quality to increase fingerling survival and growth rates, as well as prevent disease and

deformities. Nursery and grow-out technology has also been largely successful. Some of

the innovative hatchery practices for Groupers and other species are unique to

Indonesia. Grouper- and Barramundi seed and fry that are grown in hatcheries are sold

to local breeders and exported to international markets in Vietnam, Singapore and

Malaysia.

Figure 27 – The hatchery business segment value chain in Indonesian aquaculture sector

In terms of feed supply, several farmers noted that, in order to meet dietary requirements

for broodstock and juveniles, fish feed often has to be imported. Feed companies in


Value chain business segments


Indonesia actively follow research results on best combinations of fatty acids, minerals

and vitamins to cover the nutritional needs of specific types of marine fish.

5.2.1.1 Hatcheries/cost level

The two tables below organize information about the cost of production inputs as well as

output value, based on market prices. The data comes from primary research with

hatchery players in Indonesia.

Table 49 refers to what percent of total expenditures would be applied by a medium-

size company to each input depending on fish type. It is benchmarked to an existing

industry study and shows, for example that Humpback Grouper requires greater cost

incurrence compared to other species, since they take longer to reach maturity.

Another point to note is that the Barramundi presents higher market value, largely owing

to its remarkable survival rate. This helps escalate and maintain market demand stability.

Table 49 shows the expenditure break-down for a medium company based on

production output. Separately, it is estimated that gross profit for hatchery business might

reach 60% at the highest.

Table 49 - Cost level breakdown for hatchery company (medium scale)

Cost

expenditure Cost details

Species

Tiger

Grouper

Humpback

Grouper Snapper Pompano Barramundi

Fixed cost

Electricity 8% 8% 4% 4% 4%

Maintenance of Facilities 2% 2% 2% 2% 2%

Labour 25% 21% 21% 22% 21%

Variable

cost

Disinfectant/Vitamin/Drugs/Vaccine 2% 1% 1% 1% 1%

Natural feed (artemia, rotivera, etc.) 26% 29% 30% 30% 30%

Artificial feed 20% 19% 24% 23% 24%

Oxygen 1% 1% 1% 1% 1%

Others

Broodstock* 8% 11% 7% 7% 7%

Net 6% 5% 7% 7% 7%

Plastic bag 2% 2% 2% 2% 2%

Total cost 100% 100% 100% 100% 100%

Species Tiger

Grouper

Humpback


Readiness to market

30-45

days/ 1 -

3cm

28-40

days/1 -

3.1cm

20-40

days/1 -

3.5cm

30

days/2.5-

3 cm

25-45

days/2.5-4

cm




Table 50 - Commodities' dynamics for hatchery company (medium scale)

Product dynamics

Species Tiger Grouper Humpback


Spawn count 223,500 198,530 256,330 185,013 192,500

Survival rate (%) 15% 5% 10% 20% 35%

Output (in fingerling

units) 33,525 9,927 25,633 37,003 67,375

Selling price

(in IDR per tail) 800 1,500 750 500 800

Market value worth

(in IDR) 26,820,000 14,889,750 19,224,750 18,501,300 53,900,000

5.2.1.2 Hatcheries/production technology

The Indonesian aqua-nursery landscape is dominated by household-scale aquafarmers

with limited buying power. Backyard hatchery technology has mass appeal in

Indonesia, following implementation of various types of projects by the Ministry of Marine

Affairs and Fisheries through the research centres that have been mentioned. Aside from

the more important centres in Bali, Lampung, and East Java, investments in hatchery

production are also getting underway in Riau. The first successful techniques were

developed for Humpback Grouper in 1998, followed by Brown-Marbled Grouper in 2001.

Since then the technology has been applied to other marine finfish, including Tiger

Grouper, Coral Trout and Barramundi.

Figure 28 - Fish juveniles in styrofoam

Hatcheries typically address larval nutrition and digestion for high-value marine fin fish.

They also study intensive and semi-intensive hatchery techniques such as live prey

selection, production of SS-train rotifers, use of ultra-small copepod nauplii as first feed

prey, cannibalism and feed development for late larvae and juveniles.




5.2.1.3 Hatcheries/trading

The trading of juveniles has been very limited due to the remoteness of the production

hatchery facilities; therefore, air cargo is the only option. Juveniles are packed in 40 cm x

100 cm bags containing 12 liters of water. They are oxidized regularly and sedated with

tobacco. One bag contains 300 - 700 juveniles.

5.2.1.4 Hatcheries/challenges

Inconsistent distribution of juveniles is a recurring issue that has yet to be resolved. The

mortality rate for locally bred juveniles is frequently higher than for imported ones. Thus,

there is a need for training, capacity building and improved management in the

hatchery business segment so that local actors are able to make hatchery activities as

efficient and productive as possible.




5.2.2 Nursery/aquafarming

The distinction between breeders and aquafarmers is not necessarily recognized in

Indonesia. Inputs into the local nursery/aquafarming segment are not purely domestic in

the value chain (e.g., fish feed and fingerlings emanate from both domestic and

imported streams). Transportation-wise, land transport increases the mortality rate, thus

air and sea deliveries are preferred.

Figure 29 – The nursery/aquafarming business segment value chain in Indonesian aquaculture sector

5.2.2.1 Nursery/aquafarming/cost level

Table 51 breakdowns show the relative aquafarming operational costs over for various

species. Labour is always a big factor, especially for more “troublesome” species. One

player, a medium-size company, estimates their gross profit margin is around 40%.




Table 51 - Cost level breakdown for nursery/aquafarming business segment

Cost


Species

Tiger

Grouper

(10 months

nurturing)

Humpback

Grouper

(15 months

nurturing)

Snapper

(7 months

nurturing)

Pompano

(8 months

nurturing)

Barramundi

(15 months

nurturing)

Operational

cost

Maintenance 5% 6% 5% 5% 7%

Fingerlings

(5,000 tails) 23% 25% 25% 25% 26%

Feed 13% 14% 13% 15% 15%

Labour 42% 45% 40% 42% 40%

Medicine (vitamin,

vaccines, etc.) 7% 5% 9% 8% 8%

Diesel 10% 5% 8% 5% 4%

Total 100% 100% 100% 100% 100%

Table 52 - Commodities' dynamics for nursery/aquafarming business segment

Species Tiger Humpback Snapper Pompano Barramundi

Density (m3) 150 100 100 150 100

Survival rate 70% 50% 70% 75% 70%

Size 3cm 3cm 3cm 4cm 4cm

Fingerling price

(in IDR) 800/cm 1500/cm 750/cm 500/cm 800/cm

Ready for market ~450gr 500 500 500 1500

Nurture duration 10 15 6 7 20

5.2.2.2 Nursery/aqua farming/production technology

Nursery/aquafarming has its own associated technology requirements, illustrated in

Figure 30.

Figure 30 - Enlargement of aquafarming segment




Please note with regard to Figure 30, that platforming technologies come from foreign

suppliers as well as domestic suppliers, such as the brand Aquatec originating from

Bandung. It is highly popular among local aquafarmers.

Platform equipment often comes bundled with polyethylene net cages. The woven-type

confinement nets use a knotless system to minimize damage to ever-circling fish on the

move. Pontoons are easily assembled using a boltless knockdown mechanism and

prevent structural disintegration from forceful wave strikes.

Typically, the suppliers of platforms and cages are able to supply farmers with filtration

and maintenance equipment

Figure 31 - Deployed cages technologies on Indonesian aquaculture

5.2.2.4 Nursery/aquafarming/trading

With many of the other segments clustered around the nursery/aquafarming vertical, this

is correctly viewed as a crucial link in the chain. As noted, transportation of species from

one participant to another is typically by air or sea shipment.

Typical trade routes are:

Live Fish: Grouper is the primary example. Live Groupers are highly-valued in the

market for soft but firm meat texture. For freshness, trading companies employ en-

route circulatory pools to recycle the water in which the commodity is transported.

Primary destination markets for this species are: Malaysia, Hong Kong and China.




Processed fish: Species such as Snappers, Barramundi and Pompano are usually

marketed as fillets, both smoked and fresh.

5.2.2.5 Nursery/aquafarming/challenges

Unreliable supply of healthy juveniles is a major concern. Contamination from industrial

sources and poorly understood diseases (e.g. Red Tide epidemic in Lampung) are some

of the others.




5.2.3 Vaccines

The vaccine business is dominated by foreign-owned companies because domestic

players are not able to consistently meet threshold levels of safety and merchantability.

Regulations can be quite burdensome. For example, in the case of non-betalactam and

non-cephalosporin formulations, manufacturers would have to answer to at least three

regulators: The Indonesian food and drug agency (BPOM), World Health Organization,

and Therapeutic Goods Administration (Australia).

Figure 32 – The vaccine business segment value chain in Indonesian aquaculture sector

5.2.3.1 Vaccines/cost level

Significant economies of scale are available in vaccine manufacturing. The lion’s share

of costs, as shown in table 53 below derives from materials. The breakdown displayed

correlates with approximate gross profits for vaccines players of up to 15%.




Table 53 - Cost level breakdown for vaccine business segment

Cost details Percentage

Packaging (e.g. vials) 22%

Labour 13%

Material 37%

Utility 10%

Logistic 18%

Table 54 represents overall costs of manufacturing vaccines as a percent of all

nursery/aquafarming segment costs. It shows that a 3% level of integration (greater

incurrence) is considered high, whereas a 1.5% level (lesser incurrence) is low.

Table 54 - Cost expenditure for Indonesian aquafarmer

Cost expenditure Integration Level-Low Integration Level-High

Input cost 1.5 % 3 %

5.2.3.2 Vaccines/production technology

Relevant entities often utilize Hot Purified Water Looping System to insure product

purification in the manufacturing process. Moreover, DNA-based technologies have

been partially implemented to embattle Indonesia meager understanding of the

organisms’ immune mechanism. This, however, has been drawing controversy as safety

requirements, ease of application and cost have been restrictive elements in its

commercialization in aquaculture.

Laboratory science is an integral part of the aquaculture system, especially on fish

health and suitable environmental questions. Labs are frontliners for controlling fish

disease and also provide important data for determining how to enhance the quality of

environments and technology. For example, simple skimmer protein design is used to

control water quality at the Ambon research centre to overcome the mass death in the

Angel Piyama (an ornamental).

5.2.3.3 Vaccines/trading

As noted, foreign companies dominate the vaccine trade, although local players also

play a role in distribution. Purchases often take place at the farm site, bringing together

the supplier and farm principals.

5.2.3.4 Vaccines/challenges

With vaccine-manufacturing activities concentrated in Java, prices may be prohibitive

elsewhere for logistics reason. The result is many potential customers rarely engage in

routine use of vaccines. Moreover, many farmers are simply unaware of the benefits.




5.2.4 Fish feed

To complete the value chain analysis in the Indonesian aquaculture sector, fish feed is

one of the most salient factors in terms of the inputs that hatcheries and aqua farmers

require in the business. Feed companies in Indonesia have broad product portfolios

extending to poultry, swine and other animal feeds. Still, aquaculture feed typically

accounts for around 15% to 20% of their total output.

Feed companies require feeder fish, fish and soybean meal, rice bran and coconut oil

as raw materials. These may be acquired from local distributors as well as imported from

Chile, Thailand and other origins.

Figure 33 – The fish feed business segment value chain in Indonesian aquaculture sector

5.2.4.1 Fish feed/cost Level

The structure of monthly cost level in fish feed production in table 55 is based on the

performance of a medium-scale firm. At IDR 4,800 to IDR 8,600 per kg (USD 0.4 –0.7) the

price of feed paid by farmers is considered high, which can be attributed to

dependence on imported raw materials for manufacturing. Around 50,000–60,000 tons

of fish meal products are imported annually in Indonesia thus fish feed produced in the

country is typically comprised of approximately 50% imported meal ingredients. Based

on interviews and calculations, the gross profit margin in the fish feed business would be

around 25% at the highest.




Table 55 - Cost level breakdown for feed production business

Cost expenditure Cost details Percentage

Fixed cost

Depreciation of hammer mill 1.09%

Depreciation of mixer 0.49%

Depreciation of steam 1.37%

Maintenance 0.55%

Promotion & Marketing 4.59%

Building insurance 8.19%

Variable cost

Electricity 5.46%

Corn flour 0.39%

Rice bean 3.28%

Soybean meal 2.18%

Fish meal 1.47%

Coconut oil 2.29%

Lime 2.40%

Premix 2.40%

Anti-fungal 2.51%

Salt 0.98%

Antioxidant 0.04%

Vitamin C 1.31%

Labour (5 person) 54.62%

Packaging 1.09%

Transportation 1.09%

Other costs 2.18%

Total cost 100.00%

5.2.4.2 Fish feed/production technology

Indonesian feed companies typically operate with machines of Swiss, Japanese or

German origin to carry out the following processes:

1. Grinding

2. Mixing

3. Steaming

4. Pelleting

5. Drying

6. Packing

7. Logistics




Disk and hammer mill machines are used for grinding. Both vertical and horizontal mixers

are used for mixing homogenous raw materials

5.2.4.3 Fish feed/trading

Air and sea transport are used in the trade of raw materials to ensure quality and for

faster delivery. Rice bran and meals are shipped in 5 kg bags.

5.2.4.4 Fish feed/challenges

Fish feed players generally lack production capacity, thus crimping supply. In fact, some

aqua farmers say trash fish are more practical for feeding juveniles and brood stock due

to supply issues with manufactured feed. Meanwhile, industrial-scale aquaculture

businesses in Indonesia prefer imported feeds to local ones, since the higher quality

translates into a higher feed conversion ratio (FCR).




5.2.5 Processing

From large companies using advanced technology to small-scale ventures practicing

conventional methods, the processing segment has reached maturity. Here, the caught

and farmed commodities represent the input, while the output may be generally termed

“seafood”. However, the input may originate from outside the country, since local

processing companies do business with and for foreign players.

Figure 34 – The processing business segment value chain in Indonesian aquaculture sector

5.2.5.1 Processing/cost level

Table 56 shows an even split between operational costs and raw materials. (The

breakdown applies to Snapper, Barramundi and Pompano (Groupers are apart, as

discussed above.) Based on data gathered for medium to large enterprises, gross profit

margin may reach 15%.




Table 56 - Cost level breakdown for processing business

Cost


Species

Snapper, Barramundi, and Pompano

Raw

materials &

Labour

Wild caught, Farm raised,

Imported 40 %

Labour 10 %

Operational

cost

Overhead expenses (water,

electricity and steam) 30 %

Logistic 20 %

Total cost 100 %

5.2.5.2 Processing/production technology

The main activities of fish processing companies are washing, cutting, packing and

freezing. These production process steps are supported by quality assurance measures

such as incoming inspection, in-process inspection, checking of products with metal

detector and final inspection. Processing companies must adhere to the Good

Manufacturing Practices (GMP) specified within Indonesia’s SKP fishery processing

certification regime and must be HACCP certified.

5.2.5.3 Processing/trading

The wet cargo handling policies of cargo providers sets out the terms on which live

fisheries commodities are shipped. In general:

Commodities under consignment are confined to 75 cm x 42 cm x 40 cm

styrofoam containers (3 cm thickness) such as those pictured.

Minimum density of 38 kg/m3

Outer layer coverings of styrofoam box must have minimum thickness of 0.10 mm




Inner layer coverings of box must have minimum thickness of 0.06 mm with

threefold wrapping with absorbent strip at the bottom of the box.

Single polyethylene bag is to be dedicated for one organism with threefold

minimum wrapping.

Processed commodities may be offloaded from one vessel and loaded to a different

one as commodities are traded. Trading vessels usually originate from countries such as

Hong Kong, Malaysia and Singapore.

The processing activities described above may take place aboard a carrying vessel.

Alternatively, commodities may be transported to a processing company and

processed there, before being shipped to destination markets in refrigerated containers.

5.2.5.4 Processing/challenges

Processing companies confront the following challenges:

Small operations predominate, although farmers generally lack technical

expertise, training and knowhow

Poor seed quality

Strict regulation for export market

Fluctuating catches




5.2.6 Logistics

Logistics is one of the glues holding Indonesia aquaculture together and is also one of its

biggest challenges as infrastructure is generally under-developed. There are two

principal business models:

Self-owned (owned by consigning company)

Third-parties (independent cargo service providers providing air, sea or land

carriage)

Figure 35 - Mode of logistic in Indonesian aquaculture sector

5.2.6.1 Logistics/cost level

Logistics covers an array of essential activities for trade, including transport,

warehousing, cargo consolidation, border clearance and distribution. The logistics

segment absorbs from 10% - 20% of total cost expenditure in the Indonesian aquaculture

supply chain.

5.2.6.2 Logistics/technology Mechanism

Logistics is generally technology-driven, however the specific innovations depend on the

individual segment of the aquaculture supply chain and the transportation mode

preferred. As an example, reefer- and water circulation tank-equipped vessels are

standard technology for ocean freight.

5.2.6.3 Logistics/challenges

Logistics is vital for the economic performance of any economy. Some problems that

frequently arise in Indonesia are:

Vast area, since Indonesia extends for more than 5,000 km from northwest to

southwest and has more than 6,000 inhabited islands,

With industry very much concentrated in Java, logistics offerings outside this region

are less in evidence and higher in cost, causing higher prices for goods

Poor infrastructure, such as lack of roads, chaotic seaports and overcrowded airports

-- the Achilles heel of the Indonesian economy, according to some.




Quality and competence of logistics services

Timeliness of deliveries

Ability to track and trace consignments

Customs clearance

5.2.7 Equipment

The imperative of utilizing modern aquaculture equipment has yet to be understood for

its full impact across all segments. Not only are the barriers of affordability and

education relevant factors, local equipment choices are hampering outcomes for all

stakeholders. To reach its output potential and become a leading competitor in global

trade, Indonesia’s aquaculture sector is under pressure to advance in both quantity and

quality. Categorically, this relies on tools to improve rearing and harvesting practices

and makes the sale of equipment one of the most obvious business opportunities for

foreign companies.

Table 57 illustrates equipment with widespread use. The brief list only emphasizes the how

limited local choices are at this time.

Table 57- Equipment classification and function

Type Brand Price1 Function

Mesh

Aquatec

USD 75-100/piece

Knotless and HDPE-

based netting system is

used to confine nurtured

species and provide

protection against

foreign invasive

substance

Floating cage unit

Aquatec and BUM

USD 2,998-3,083/unit

Essential unit to clamp

down utilized mesh and

as base platform for

stability

Well-boat

Yanmar and Nissan

USD 63,000-66,000/unit

Mandatory vehicle in

keeping the

commodities alive and

fresh

1 USD 1= IDR 12,000




Aerator

Pioneer and Airmax

USD 1,075/unit

Diffuser of oxygen into

the water for the

purpose of purification

Container

CMA CGM

USD 7,500-8,500/unit

Providing cryogenic

cooling for temperature-

sensitive commodities

Fibre pond

Aquaria

USD 55-650/set

Medium for containing

juveniles during

rearing/nursing phase

Fish tagger

Forestry

USD 49-63/unit

Keeping track of fish

growth and anomaly

from given period of

time

Water pump

Kyodo

USD 50-75/unit Supports farmers in

cleaning the pond

Fish Measuring Board

Trough

USD 20/unit Measures the fish size

Digital scale

Berkley

USD 25/unit Precise measurement of

the fish weight

Value chain analysis Value chain business segments


PH Meter

Hanna

USD 23/unit Measurement to reveals

acidity or alkalinity level

Salinity Meter

Oakton

USD 500/unit To measure the water

salinity

5.2.7.1 Issues and challenges

Importing equipment is still the norm because locally-manufactured equipments are

generally incapable of delivering similar results. At the same time, standardization for

utilized equipments has yet to be fully implemented, creating differences in desired

aquaculture outputs. As results, detrimental outcomes emerge, affecting financial

affordability level of potential users.

On additional notes, end users know-how is still at an immature level, impeding adoption

process for higher resources maximization.




6. Regulatory, policy and investment environment

6.1 Top-level aquaculture investors and other stakeholders

Underdeveloped marine resources are a prominent feature of the investment

landscape in Indonesia as In-place technologies aren’t adequate to ensure that

optimum development of aquaculture activities. Numerous foreign-funded sector

development activities and trainings programmes have been realized in in recent years.

From 2007-2011 they were worth a total of USD 57 million (Indonesia Fisheries Report and

Information).

Prominent example of such initiatives would include the six-day NACA/World Bank

training programme in Surabaya in collaboration with the Ministry of Marine Affairs and

Fisheries. The aim of that initiative was to focus stakeholders on setting goals for

promotion of aquaculture food safety and proper supply chain management. The World

Bank has been an unflagging source of funding and technical support aimed at

enhancing Indonesian aquaculture.

The most recent cooperation initiative is a bilateral agreement between the Indonesian

Ministry of Marine Affairs and Fisheries and the Dutch aquaculture ministry. The

collaboration hopes to develop sustainable fisheries in Indonesia by 1) trimming post-

harvest losses for capture fisheries 2) encouraging broader adoption of good

aquaculture practices and 3) stimulating the business from the marketing and

distribution side.

Aside from G2G partnership programme, various B2B engagements are being

implemented as well in Indonesia. One notable example would be PT Aquafarm

Nusantara’s. One of the most prominent Swiss ventures on the ground, the company

owns a vertically integrated complex that house several parallel efforts from fingerling

grow-out to cultivation.

WorldFish in 2010 launched an initiative to help deter illegal fishing, attract buy-in from

financial entities and spur research into feasible aquaculture investment strategies.

Funding programmes have run with themes such as sustainable livelihoods and

sustainable farms.

Many fish farmers in Indonesia benefit from the Australian government’s financial support

for floating cage projects, and its credit facility programmes. USAID, the development

arm of the U.S. government, backs a major funding stream aimed at promoting

adoption of appropriate aquaculture technology in Indonesia. Various other incubator-

type initiatives have also worked to create closer ties between aquaculture-research

institutions and commercial players.

Regulatory, policy and investment environment

Top-level aquaculture investors and other stakeholders


6.2 Laws, regulatory framework and standards

The Ministry of Marine Affairs and Fisheries serves as the principal governing body for

marine sector planning and management. At the local level (district and sub-district)the

Marine and Fisheries Service of each of the relevant provinces is in-charge. Additional

supervision and support is applied through the establishment of the Technical

Implementation Units (Units Pengembangan Teknologi or “UPT”). These units serve a

function similar to that of the “extension” programmes of the U.S. Department of

Agriculture (USDA), which is to introduce appropriate technology directly to farmers.

Nationwide there are various classes of hatcheries and labs with over 600 individual units,

as shown by Table 58.

Table 58 - Types of Technical Implementation Units (UPT)

No Types of Institution Number of Units Status

1 Central Hatchery 30 Local Government UPT

2 Coastal Hatchery 23 Local Government UPT

3 Local Hatchery 422 Local Government UPT

4 Penaeid Shrimp Hatchery 25 Local Government UPT

5 Freshwater Prawn Hatchery 7 Local Government UPT

6 Fish Health Laboratories 109 Districts and Sub-Districts

Source: Aquaculture in Indonesia, 2013

Since the Ministry of Marine Affairs and Fisheries has responsibilities in agriculture as well

fisheries, aquaculture technology transfer has not been functioning with priority focus.

Funding otherwise earmarked for smaller-scale farmers goes frequently undistributed.

Subsequently, UPTs are frequently being utilized as extensions to communicate and

disseminate novel technologies to municipal development centres throughout the

archipelago.

Indonesian law has various provisions in respect of designation, management and

development of its aquatic territory. Beyond that, it seeks to harmonize local business

practices and standards with those of global bodies. The laws, regulations, policies and

protocols that are of most practical import to foreign investors are discussed below.

6.2.1 Property and water rights

Use of certain bodies of water requires ratification from local municipalities. The majority

of freshwater and brackish areas of Indonesia are privately-owned, while property rights

are absolute and enforced. Meanwhile, shores, lakes and other parts of water are

owned by the public.


Laws, regulatory framework and standards


6.2.2 Infrastructure development

Under the central government’s program for Consecutive Economic Development,

local infrastructure should be overhauled by unifying private and public sectors.

Infrastructure such as roads, electrical supplies, and sea water irrigation will be provided

by the government while water treatment, certain types of expertise, and electrical

equipment and machinery supplies should come from the private sector.

6.2.3 Legal context

For convenience, relevant decrees and regulations are organized in matrix form in table

59.

It may be noted that, in very general terms, Indonesian fishery legislation hews closely to

international regulations and codes like the UN Code of Conduct for Responsible

Fisheries (CCRF) and Catch Documentation Scheme and Catch Certification (CDS and

CC) for large industrial fisheries. Beyond that, Indonesia is in the process of becoming a

member of the Western and Central Pacific Fisheries Committee (WCPFC).

Table 59 - Fields related to the business framework

No. Mandatory Fields Detailed Remarks

1 Creating a conducive business

environment

Gov. Reg. No. 54 of 2003 pertaining to Fisheries

Enterprises, in which the issuance of business

licenses has been assigned to the municipalities

to expedite the overall process of investment.

To bolster the delegation provided above,

government has released Ordinance No. 32 of

2004, declaring that management of coastal

waters up to 12 nautical miles are where local

government carries out spatial planning for

aquaculture development

2

Establishing Rules and Regulations

for the Standardization of

Aquaculture activities and

fisheries products

Ministerial Decree No. KEP. 01/MEN/2002 deals

with monitoring activities related to

aquaculture products for human consumption

to ensure compliance with hygiene and

sanitation standards

3 Regulation on Seed Production

In reinforcing shrimp revitalization programme,

government has issued Ministerial Decree No.

KEP 41/MEN/2001 in hopes of regulating entry,

procurement and distribution of shrimp

broodstock in Indonesia

4 Aquaculture Business Licensing

Ministerial Decree No. KEP.02/MEN/2004,

divided covers:

o Premises establishment

o Commodities transporting vessels:

License good for one year




o For companies in hatchery operations,

the area of the operational site should

not be more than 0.5 ha.

o Aquafarming fish density between 300-

500 per cage; and Environmental

Repercussion Analysis (AMDAL) required

where utilized area exceeds threshold of

[5 ha]

5 Management of Fish and

Environmental Health

Ministerial Decree No. KEP 28/MEN/2002 regards

the establishment of areas affected by fish-

related diseases and covers procurement,

supply, distribution and application of

medicines linked to fish health

Gov. Reg. Number 47/2012 states that it is

mandatory for companies involved in

development and exploitation of natural

resources to establish CSR programmes

6 Capacity of Building Aquaculture

Segment (Fish Farmer)

Ministerial Decree KEP. 40/MEN/2003 regards

promoting capacity enhancement for small-

scale fisheries enterprises

Source: Sustainable Aquaculture Development in Indonesia, 2012

6.2.4 Research, technology development and extension

The Agency for Marine Affairs and Fisheries Research (AMFR) and Directorate General

for Aquaculture are the authoritative bodies in regulating research. The following

aquaculture-linked activities are thus under their purview: Development and

demonstration; extension; education; information services; inspections; market

assistance training; and export assistance. There is evidence that domestication and

genetic development are a priority agenda item of the government. The reason would

be that Indonesian research entities have already had their fair share of difficulty in

dealing with poor turnover rate in breeding sector.

6.2.5 Promotion

The Indonesian government has a vision of driving market expansion in aquaculture

through strategic initiatives. Trade shows are often used as the medium for threading

economic transformation and introduction of vast array of Indonesian aquaculture

commodities. In addition, educational exchange helps reinforce overall human

capacity and capabilities and connect with potential foreign investors with government

as a go-between.




6.2.6 Other policy frameworks

The Indonesian constitution, which stipulates that Indonesia is an archipelagic state and

the state, must use bodies of water and their resources wisely and to benefit the public,

is surely one basis for Indonesian marine sector development.

Meanwhile, the statute that services as the mandate for fisheries development in

Indonesia is Law No. 31/2004. It has over 100 articles regulating all aspects of fisheries,

including objectives for fisheries development and resource management. The

importance of quality fisheries products is emphasized with all actors sharing

responsibility.

All of the following protocols are recognized and implemented to varying degrees by

the government: Hazard Analysis Critical Control Point (HACCP), Good Handling

Practices, Good Distribution Practices, Standard Sanitation Operating Procedure (for

processing companies), Good Manufacturing Practices, and Good Laboratory

Practices. There is also a health certificate procedure which is the responsibility of the

head of quality control laboratories in each province.

Of note, Indonesia also recognizes Good Aquaculture Practices, principles of sustainable

industry that are gaining traction globally. Moreover, the country is now also promoting

organic fish farming with the same ends in mind.

a. Aquaculture spatial planning

Accurate estimation of production capacity for aquafarming areas is crucial and has

been further reinforced by government regulations that put teeth in the 2009 Fisheries

Act (Law No. 45) as regards countering ongoing over-exploitation. The Mandated Plans

and Frameworks degree (No. 30/MEN/2010) have been issued for effective and efficient

spatial planning and zoning for aquaculture activities in sustaining the longevity of

natural resources.

b. Investment blacklist

Relevant points from the most recent amendment of the “Negative Investment List” that

sets out sectors wholly or partially closed to foreign investment (Presidential Decree No.

36 Year 2010) are listed below:

1. Fishery Capture Uses, Fish Capturing Ship of the Size up to 30 GT, in Water Territory

up to Twelve Miles or less (KBLI 03111) Reserved for Micro, Small, Medium

Enterprises and Cooperatives

2. Fishery Processing Business Conducted in an integrated manner by Catching Fish

in Public Water (KBLI 03131 and 03132) Reserved for Micro, Small, Medium

Enterprises and Cooperatives

3. Rearing of Marine Fish (KBLI 03211), Marine Fish Hatchery (KBLI 03212), Rearing of

Brackish-water Fish (KBLI 03213), Brackish-water Fish Hatchery (KBLI 03214), Rearing




of Fresh Water Fish (KBLI 03231), Fresh Water Fish Hatchery (KBLI 03236), Fishery

Processing Business including Salt/ Fish Drying and Other Water Biota Industry (KBLI

10211) and Smoke Fish and Other Water Biota Industry (KBLI 10212), Fishery

Processing (UPI) Business, Fermentation, Reduction/ Chemical Process, Surimi and

Jelly Fish Process (KBLI 10219), Fish product marketing, Distribution including :

Wholesale Fish Products and Export trade of Fish Product (KBLI ), are remark as

partnership

4. Fish Catching Business using catching ship of a size of 100 GT and/or over in ZEEI

catching Territory (KBLI 03111) need special licenses with Terms and Conditions

have been regulated in accordance with the Regulation of Minister of Maritime

and Fishery Number PER 12/MEN/2009 on Fish Catching Business.

5. Usage (Taking) and distribution of decorative coral/atoll from nature for

aquariums) KBLI 03119 and 46206 need recommendation from the Minister of

Maritime and Fishery.

6. Lifting of Valuable Items from a Sunken Ship’s cargo (KBLI 52229) need special

licenses according to Presidential Decree No. 19 of 2007 on National Committee

of Lifting and Using Valuable Items from Sunken Ship’s cargo.

7. Fishery Catching business using a catching ship of 100 GT size and/or bigger in

open sea catching Areas (KBLI 03111), Fishery Catching business using a catching

ship of 30 GT size and/or bigger in water areas beyond 12 miles (KBLI 03111), Sea

Sand Extraction (KBLI 08104) are 100% local capital.

6.2.7 Taxation system for Indonesian aquaculture

Chapter 1, Article 16 of Gov. Reg. No. 19/2006 has additional relevant provisions as

regards “Trawling and Aquaculture Sector”:

1. Private fishery entities classified under small-scale business will be imposed with 1%

tax rate against trawling productivity and against market criterion price of the

given species.

2. Private fishery entities classified under small-scale business will be imposed with

2.5% tax rate against trawling productivity and against market criterion price of

the given species.

3. Companies and Institutions engaging in Aquaculture line of business and utilizing

natural fish fry are bound to be levied by 1% tax rate of the total commodities

sold by the company’s operational site.

4. Companies and Institutions engaging in Aquaculture line of business and

acquiring fish fry from Hatchery are bound to be levied by 0.5% tax rate of the

total commodities sold by the company’s operational site.




6.3 Ownership structure for aquafarming and processing

Percentage of foreign shareholding varies for different types of aquaculture entities;

however a cap of 80% generally applies. The majority of the research and development

centres are publicly-owned by the government. They regulate and filter types of

technologies to be adopted. All proposals for enhancing value or otherwise introducing

novel elements are the purview of the Ministry of Marine Affairs and Fisheries.

Downstream entities may be public or privately owned. Risk-sharing may proceed based

on unwritten rules, provided the parties share common goals. With more sophisticated

partnership arrangements explicit provisions for assigning risk of livestock mortality and

loss incurred in performance are normally present.

Musharaka loans, popular within Islamic banking are frequently adopted as a way to

acceptably apportion the risk of loss as between entrepreneurs/farmers and financing

partners.

6.3.1 Investor facilities and incentives

There are several facilities and incentives that can be granted to investors pursuant to

prevailing laws and regulations:

1. According to Law No. 25/ 2007 regarding Investment, facilities bound to be granted

may be in the form of:

a. Income tax reduction up to certain level of investment made within certain

period;

b. Import duty holiday or reduction for imported capital goods, machinery, or

equipment domestically unavailable for production;

c. Import duty holiday or reduction for raw materials or support materials for

production within certain period and with certain condition;

d. Value added tax holiday or postponement for imported capital goods or

machinery or equipment domestically unavailable for production within

certain period;

e. Accelerated depreciation or amortization; and

f. Property tax reduction, especially for certain business sectors in certain region

or area or zone.

2. According to Minister of Finance Regulation No. 176/ PMK.011/2009, there is an

exemption from import duties on capital goods and raw materials for production for

two years that can be granted to a new company.

3. According to Gov. Reg. No. 52 of 2011 as amended by Gov. Reg. No. 1 of 2007


Ownership structure for aquafarming and processing


concerning income tax facility for investment in certain business fields and/or certain

regions, the income tax facilities that can be given may be in form of:

a. Net income reduction by 30% (thirty percent) of total investments; charged for

six years each at 5% per year;

b. Depreciation and amortization: The imposition of income tax on dividends

paid to foreign tax subject to 10% or a lower rate according to the double

taxation agreements, if any; and

c. Compensation for losses for more than five years with maximum ceiling of no

more than ten years.

6.4 Foreign investment framework

The Indonesian government encourages direct investment in almost every facet of the

Indonesian economy. Foreign investment approvals are the purview of the Investment

Coordinating Board (BPKM) and counterpart agencies at the local level. The overall

dynamic of seeking a permit is described by the figure below.

Figure 36 – Permit license mechanism in Indonesia

Individual requirements for obtaining a business license include the following:

1. Letter of recommendation from the related country or letter which is issued by the

Embassy/Representative Office of the related country in Indonesia if the

applicant is The Government of another country;


Foreign investment framework


2. Copy of valid passport if the applicant is a foreign individual;

3. Copy of Articles of Association of the company in English or its translations in

Bahasa from sworn translator if the applicant is a foreign company;

4. Copy of valid Identity Card (KTP) if the applicant is an Indonesian individual;

5. Copy of Articles of Establishment of the company and any amendment(s) and

approval from the Minister of Law and Human Rights if the applicant is

incorporated under the law of Republic of Indonesia;

6. Copy of Tax Registration Code Number (NPWP) for the applicant, either for

Indonesian individual or company which is incorporated under the law of the

Republic of Indonesia; and

7. This application should be properly and duly signed with sufficient stamp duty by

all applicants (if the company is not yet incorporated) or by the company's Board

of Directors (if the company is already incorporated) attached with Power of

Attorney with sufficient stamp duty from whom signs and/or submits the

application if the applicant is represented by another party (provisions

concerning the Power of Attorney is strictly regulated in this regulation.

Other pertinent aspects of the regulatory framework for investing in aquaculture are

addressed below (as summarized in table 59).

1. Creating a conducive business environment:

a) Gov. Reg. Number 54 of 2003 regarding Fisheries Enterprises, in which the issuing

of business licenses for aquaculture enterprises has already been transferred to

the regional level of government with the goal of expediting the process of

investment in aquaculture at the local level. The central government only issues

business licenses for foreign investment (PMA).

b) In compliance with Indonesian Gov. Reg. No. 54 of 2002, fishery business can only

be conducted by an Indonesian citizen or Indonesian Legal Fisheries entities, or

Overseas Fisheries Company with bilateral pact with Indonesian Government.

c) In keeping with the delegation of the above mentioned authority to issue

licenses, the government has also promulgated Ordinance Number 32 year 2004,

regarding local government wherein management of coastal waters up to 12

nautical miles from land is under the local government. In addition, spatial

planning within their respective administrative territories is also regulated by the

local governments.

2. Establishing rules and regulations for the standardization of aquaculture activities and

fisheries products.

a) In order to make possible the implementation of a responsible and sustainable

aquaculture system, a set of Directives (Pedoman Umum - Pedum) has been

issued covering proper procedures for brackish-water shrimp culture and fish




culture in reservoirs. In addition, Implementation Guidelines (Petunjuk

Pelaksanaan-Juklak) and Technical Guidelines related to environment-friendly

aquaculture have been issued, in particular for Grouper farming, seaweed

farming and freshwater aquaculture.

b) Within the framework of implementation of a fisheries product quality control

system, Ministerial Decree No. KEP.01/MEN/2002 has been issued, which addresses

quality control management systems for regulating the handling of aquaculture

produce throughout processing to ensure finished products which meet the

standards of hygiene and sanitation rules and regulations for human

consumption.

3. Regulation of seed production, in order to promote the availability of seed of the

vaname strain shrimp to fulfill the needs of implementing the revitalization

programme, the Ministerial Decree No. KEP. 41/MEN/2001 has been issued to

regulate the entry, procurement and distribution of broodstock of this prawn variety.

4. Ministerial Decree No. KEP.04/MEN/2003 addresses continuity of fish culture,

specifically export of Milkfish fry, with aim of ensuring that in-country needs are

continuously fulfilled.

5. Management of fish and environmental health is covered by Ministerial Decree No.

KEP.28/MEN/2002 regarding the establishment of areas affected by epidemic

disease and was issued to prevent the spread of Koi epidemic which affects carp

species. In addition, the Ministerial Decree No. KEP. 26/MEN/2002 regulates the

procurement, supply, distribution, use and surveillance of medicines and other

chemicals related to fish health. Official guidelines on storing medicines have also

issued.

6. Capacity building of aquaculture (fish farmer) groups is caught by regulations

related to promoting capacity-building under Ministerial Decree KEP.40/MEN/2003

(on small-scale and large-scale fisheries companies. The official policy guidelines on

the Development Service Units (Unit Pelayanan Pengembangan) Technical Support

Officers (Tenaga Teknis Pendamping) also apply.




6.5 National and regional aquaculture initiatives

6.5.1 Overarching objectives

The vision for the development of aquaculture is to shape Indonesian aquaculture as a

competitive and sustainable mainstay of economic growth. In order to achieve this

development vision, the three-pronged aquaculture development mission to be carried

out is:

To create business opportunities and provide employment;

To produce quality fish/fishery produce efficiently; and

To develop an aquaculture sector that is environmentally responsible.

In line with the vision and mission above, three development goals have been set for the

aquaculture sector, which are:

To increase foreign exchange, income, and create employment and business

opportunities;

To improve the nutritional quality of the nation’s diet through the consumption of

fish; and

To protect, restore and conserve and fisheries resources.

Three main policies will be followed in order to achieve the goals, undertake the mission

and realize the vision for aquaculture development, which are:

Increase aquaculture production for export, with especial focus on increasing

competitive advantages through the development and application of super-

efficient and sustainable technology;

Development of aquaculture production for in-country consumption, with

especial focus on increasing and strengthening the farming of area-specific

(local) commodities and improving community-built ponds; and

Establishing mechanism for controlling the use (exploitation) of aquaculture

resources, with especial focus on increasing the attention paid towards the

conservation of fish and other aquaculture resources.

The implementation of these three policies will be based on Indonesian Fisheries

Management Area (refer to figure 1), which will employ competitive and sustainable

business practices and develop a number of strategic commodities.

The aquaculture development programmes will be carried out through three core

programmes.


National and regional aquaculture initiatives


PROPEKAN is a programme for increasing aquaculture production for export. It is about

the creation of a movement involving all stakeholders working together to develop

aquaculture activities based on partnerships and cooperation between farmers within

each zone. The aim is to increase the productivity and quality of produce through

intensification, expansion (increases in farmed area), rehabilitation and the efficient

application of sustainable technology for increasing the production of aquaculture

commodities destined for export.

The choice of commodities to be developed under PROPEKAN is based on four criteria:

1. High economic (market) value

2. Well-developed (applicative) aquaculture technology

3. High market demand both abroad and in-country

4. Suitable for mass participation in farming and development

The type of commodities to be developed under PROPEKAN include: Seaweed,

Grouper, White Snapper, Abalone, Lobster, Shrimp, Artemia, Milkfish, Tilapia, Catfish and

Carp.

PROKSIMAS is a programme for increasing aquaculture production for in-country

consumption. It is directed towards the development of participatory movements within

aquaculture zones, bringing together a number of interested parties in order to develop

the farming of food fish through intensification, expansion (increased area), and

rehabilitation, and through efficient use of sustainable technology.

The chosen commodities were selected based on ease of cultivation, high growth rates,

affordability and with priority given to fulfilling the need for in-country consumption. The

commodities that the programme targets include Oyster, Milkfish, Goldfish, Tilapia,

Pomfret and Catfish.

PROLINDA is a programme for the protection and rehabilitation of aquaculture

resources. It is focused on activities for the rehabilitation of aquaculture zones, to

achieve optimum environmental conditions for supporting the development of

aquaculture in freshwater, brackish-water and marine environments.

PROLINDA has three core programmes supported by six support programmes which are:

1. The Development of Infrastructure for Aquaculture;

2. The Development of Seed Production Systems;

3. The Development of Production Systems;

4. The Development of Fish and Environmental Health Management Systems;




5. The Development of Aquaculture Business Systems; and

6. The Development of Administrative and Organizational Systems.

6.5.2 Prominent challenges

Constraints include:

Aquaculture is often on a household scale; thus farmers have hard time keeping up

with new regulations, technology, and compliance and enforcement initiatives.

In place regulations aren’t applied uniformly, thus traded commodities have been

observed to contain residue far in excess of permitted levels

6.5.3 International cooperation

Funding Initiatives and bilateral agreements are vital in promulgating and spurring

development in the Indonesian aquaculture sector. Table 60 below organizes certain

key agreements.

A project of Fishery Cooperation between the Norwegian Government and Indonesian

Ministry of Marine Affairs and Fisheries (MMAF) was arranged under an agreement of INS

06/035 for period 2009-2012. The Project was worth NOK 5.2 million. A letter of intent was

signed in 2006 between the two parties and it’s agreed that the Norwegian and

Indonesian governments will pursue opportunities for cooperation on marine and

fisheries management with the aim of promoting sustainable and equitable use and

conservation of the marine resources.

Norway allocated NOK 6 million to facilitate planning and the institutional cooperation.

In 2006 a Norwegian mission representing fisheries research, management and

education visited Indonesia and had meetings with Indonesian institutions, donors and

NGOs. A revisit to Norway was made at the same year. A project proposal was

developed and handed over to the embassy in Jakarta in May 2007.

The development objective of the programme is to build competence in the fields of

fisheries management, including stock assessment and aquaculture aiming at

sustainable development of Indonesian marine resources. The project aims to facilitate

the implementation of specific capacity -building activities in fisheries management and

aquaculture. The important agenda items according to the project documents are:

To implement training course for stock assessment

To complete the survey planning in the Bali Strait

To develop and test and indicative system of catch recording in the area

To validate the predictive fishing model

To implement a workshop with stakeholder

To diagnose the aquaculture stations in terms of technical problems

To develop realistic development for each station

Training of aquaculture specialists (in Norway)




To develop National Fish Health Reference Laboratory and Strategy for disease

prevention

Successful intake of students in Norwegian institutions

To implement educational and training courses

To implement a final summing-up seminar

Table 60 - List of other international cooperation projects

Partnership Programme Background

Indonesia Economic and Trade – Taipei

Economic and Trade

In collaboration with Taiwan to develop

fishery industry between Indonesia and

Taiwan.

United Nations Industrial Development

Organization of Switzerland-Indonesia

To support Indonesia’s capacity to trade in

fisheries by improving business support

services available to the sector.

FAO-Indonesia

Fishery activities such as Technical

Cooperation Programme on development

of preventive aquatic animal health

protection plan and enhancing

emergency response, capacity to shrimp

disease outbreak.

Some of the ongoing projects are Bay of

Bengal Large Marine Ecosystem Project,

strategies for trawl fisheries by catch

management (REBYC-II CTI) and regional

fisheries livelihoods programme for south

and southeast involving participants from

Cambodia, Indonesia, Philippines, Sri

Lanka, Timor L’este and Vietnam

Indonesia-Japan Economic Partnership

Agreement

Comprehensive capacity-building

cooperation project focusing on activities

that will enhance competitiveness of

Indonesia's industrial, agricultural, fishery

and forestry products including joint

initiatives to further promote

competitiveness of Indonesian

manufacturing industry through Initiative

for Manufacturing Industry Development

Centre

Indonesia-Australia Fisheries Cooperation

Facilitates information exchange on

research, management and

technological developments;

complementary management of shared

stocks; training and technical exchanges;

aquaculture development; and trade




promotion and cooperation to deter

illegal fishing

Indonesia-The Netherlands MoU on

Fisheries Sector

The collaboration has set an aim to

develop sustainable fisheries in Indonesia

with three primary aims: Cut back on

losses of post-harvest capture fisheries,

augmenting the aquaculture products

based on best practices and boosting

aqua commodity marketing and

distribution activities.

Regulatory, Policy and Investment Environment

Government and Regional Initiative in Aquaculture




6.5.4 Permit processes

As one of the strategic headliners of the Indonesian government, the aquaculture

business should be faster developed, more focused and better planned, by taking into

account the fishery resources preservation, as well as globalization era and free market.

To cater to interests of prospective investors in the fishery sector, especially aquaculture,

ease in the permitting process, especially the underlying RPIPM permit and as well as

the SIKPI transporter and any other permits required for transporting live commodities is

crucial.

Types of permit arrangements issued by Directorate General for Aquaculture are:

Investment Fish Culture Recommendation (RPIPM). Minister of Marine Affairs and

Fisheries delegates the authority to BKPM as regards permanent business permit (IUT)

for foreign investment but BPKM action is guided by RPIPM recommendation.

Fish Live Import Permit to Indonesia. Requires, inter alia, permit issued by Directorate

General for Aquaculture.

Fish Ship Transporter Permit (SIKPI). Categories established under Directorate General

for Aquaculture are:

Vessel operated by fishery-sector entity (Indonesian or foreign-flagged vessel)

Vessel operated by non-fishery-sector entity (Indonesian or foreign-flagged

vessel)




7. Analysis and recommendations

7.1 Porter’s Five Forces Analysis on each business segment

In this section, Porter’s Five Forces provides a framework for industry analysis and

feasibility. A graphic representation of Porter’s Five Forces is:

Figure 37 - Porter's Five Forces Analysis

7.1.1 Hatchery

Bargaining power of suppliers

The broodstock that supplies the input for the hatchery segment is heavily dependent on

available natural stock. Many research facilities are still compelled to acquire

broodstock from the wild. Nevertheless, as broodstock can be maintained for long

periods, availability is not an immediate issue. For fish feed, companies already

operating or intending to set up operations have a wide range of alternatives, as

domestic feed producers such as Cargill, Japfa Feed and Central Proteina Prima have a

proven capability of producing consistently formulated feed. On the other hand,

vaccine is still largely dominated by foreign firms, especially in the eastern part of

Indonesia. This has resulted in market prices consistently near the price ceiling.

Analysis and recommendations

Porter’s Five Forces Analysis on each business segment


Bargaining power of buyers

As local aquafarmers serve only the domestic market, the industry has not yet reached a

mature stage. Acquiring broodstock from overseas markets is not viable considering the

costs of importing. Thus, local aquafarmers have to concentrate on domestic supply

streams with a limited range of providers, indicating high switching costs

Threat of new entrants

Hatcheries in Indonesia are still in the form of research facilities, although some

companies have expressed interest and have initiated provisional hatchery

programmes. This trend is apparent in Bali, as hatchery-based businesses gradually

supplant local research facilities like RIM.

Additionally, existing ground rules require that before undertaking any such initiative, the

company must submit a proposal to the Ministry of Marine Affairs and Fisheries for

ratification from the Directorate General for Aquaculture. As research facilities are under

the supervision of the Ministry of Marine Affairs and Fisheries, bypassing or taking over

their role would present some difficulty.

Competitiveness within the segment

The competitive landscape in the Indonesian hatchery segment largely remains under

monopoly rule of regional research facilities. All new entrants must go through screening

and supervision procedures. Nevertheless, the growing number of small-scale hatcheries

is projected to disrupt the equilibrium over the next few years.

Threats of substitute products

Because of monopoly control of the hatchery business, private hatcheries can only

produce the species grown in the research facilities.




7.1.2 Nursery/aquafarming


In the nursery/aquafarming segment, backward integration is less likely due to

differences in operations. Hatcheries are mainly controlled by research facilities. In

addition, research facilities have an extended role in providing aquafarming starter

stock examples for aqua farmers, implying that the independence of private operations

remains low. This low product differentiation narrows alternatives for operators.


Forward integration is highly probable as local aqua farmers tend to bypass large

wholesalers and sell directly to restaurants, processing plants, and overseas end-markets.

This means increased product indispensability. However, when capture fisheries are

taken into consideration, the bargaining power of buyers is reduced, as the majority of

fish processing plants remain loyal customers of capture fisheries, effectively giving them

greater bargaining power.

Threats of new entrants

Prospective entrants might benefit from low product differentiation, ease of access to

suppliers, and lack of distinct brands. On the other hand, required capital investment is

high, as investment permits, technology, and equipment are needed. Regulations,

particularly for export activities, appear to be stringent. Companies have to comply with

commodities traceability laws, which require costly investment to accommodate

operations.


Market rivalries are a major issue as competing companies is fighting to supply overseas

markets. Low product differentiation further reinforces competition intensity.


Capture fisheries are a threat to aquafarming. As an illustration, a supermarket might

prefer to source supplies from capture fisheries to minimize dependency on fish life

cycles.




7.1.3 Fish feed


Raw material inputs of fish feed has minor segregation. One differentiating element is

business acumen and technical ability. Otherwise, feed-producing companies have the

freedom of choosing suppliers without high penalties.


Adopted technology within the fish-feed industry would likely affect buyer preferences.

The business entities capable of delivering the most consistent feed have the greatest

opportunity to flourish. In terms of labour, advancing technology has led to more

efficient and economical operation with less input of labour. All in all, the purchasing

power of buyers is moderate.


New market entrants are more likely to reap benefits from low product differentiation

and the relatively minor penalties for buyers who switch. Moreover, there is a significant

requirement for initial capital investment. Compliance with existing regulations is difficult

as well, considering the inconsistent structuring of relevant laws in Indonesia.


There are a few businesses operating in the feed segment in Indonesia. The market

structure resembles an oligopoly with each player operating within its own market share

and zone. Thus market penetrations will likely be met with a fair degree of effective

resistance by existing players.


Widespread use of trash fish is a constant impediment to the growth of the feed

segment. Lack of general awareness and urgency from local aqua farmers have stifled

mass adoption of fish feed as trash fish is considerably cheaper to acquire.




7.1.4 Vaccines


Production sources of fish vaccine are import-reliant, enabling price discrimination from

the supplier side. This has left potential buyers without alternatives and necessitates the

acquisition of raw materials from existing suppliers. To sum up, the bargaining power of

suppliers is high.


The use of vaccine in aquaculture is of paramount importance as it affects the health

and final quality of the commodities. Vaccine is often regarded as a predictive cost and

Indonesian aquaculture stakeholders tend to avoid usage of vaccines—but to no avail.

By inference, the bargaining power of buyers is relatively low.


Acquisition of adequate business acumen and production skills is a real hurdle that new

entrants must somehow overcome. Additionally, the vaccine market of Indonesia has its

own, firmly-established market players. Attempts on market entry from foreign players or

newcomers may stumble since as competition structure has been rigid for some time.


The competition within the market is rigid, intense, and marked by a lack of product

differentiation.


The use of herbal remedies for treatment of fish diseases exist, albeit still in small-scale.

Thus, the threat posed by these products is still considered to be minimal.




7.1.5 Processing


The Indonesian processing segment consists of conventional and advanced scale

where raw materials are farm-raised, imported, and captured. In practice, middlemen

(also called traders) are influential in gathering the fish as they buy fish from the

fisherman or farmers and sell to the processors. On certain occasions, some processing

companies might deploy their own trawling vessels or utilize backward integration with

aqua farmers, bypassing the intermediaries.


The Indonesian seafood industry ranks among the largest in the world. The potential of

the sector for both domestic food security and exports is large. Most of the larger

processors are located in and around production areas such as North Sumatra. The rest

are based around Jakarta and Surabaya. Little processing is done for local markets.

Local processing activities include smoking or salting fish. About 60% of marine fish is

consumed by overseas market.


In general terms, entering this segment requires large operational capital investment

and, subsequently, certification of the production output. National and international

regulations are the main impediment to distributing products domestically or overseas.


With a limited product range, competition within the segments is intense.


Crustaceans and shrimp products do pose a threat to the stability of the fish business.

Fish consumption levels tend to decrease as substitutes catch on.




7.1.6 Logistics (cargo services)


Physical carriers such as articulated trucks and well boats are the primary comparison

points to assess the industry. There are some cases of over-capacity within the industry;

nevertheless, the industry is relatively insignificant to automotive players, as mining and

manufacturing simply count for more. In conclusion, bargaining power of suppliers is fair

here.


Customers within this segment are increasingly applying pressure on logistics providers for

better pricing and modes of services as product differentiation is limited and there are

low penalties for switching. Some of the imminent threats include possible backward

integration from processing companies as cost-effective measures.


Operating within their current business model, achieving economies of scale is tough.

More often than not, providers have to resort to adoption of sophisticated, highly-

customized systems to differentiate themselves from the competition. Difficulty in

achieving economies of scale is a barrier to entry.


Competition revolves around price and services. Potential customers view logistics as

merely a pathway for cost-reduction. This is apparent when companies are operating

with excess capacity, resulting in price cuts. By inference, the competition level is high.


Backward integration is possible as companies are trying to integrate their operations in-

house. However, regardless of the tendency of companies to integrate, few have

managed to pursue integrated management very far up the supply chain. Therefore,

the substitute threat is moderate.




7.2 Market attractiveness for aquaculture species

Based on the GE matrix below, Barramundi and Tiger Grouper are the most attractive

species in the market. Barramundi has the highest survival rate from hatchery to farming

and the shortest period to reach market readiness. Meanwhile, Grouper species are

facing a stumbling block as the Chinese government is imposing trade penalties for an

indefinite period.

Referring to figure 38 below:

Competitive strength criteria are represented by market price, survival rate, readiness

to market, and cost.

Market attractiveness is represented by production growth, profit levels, market

diversity, availability of workers, and facilities.

Figure 38 - The GE matrix on market attractiveness for each species Output figures are as of 2012.


Market attractiveness for aquaculture species


7.3 Segments’ drivers & inhibitors

The table below assesses drivers and inhibitors of each business segment in the value

chain system which will assist investors to better understand development of the industry

in the future.

Table 61 – Segments’ drivers and inhibitors

Segment Drivers Inhibitors

Hatchery

Indonesia is a maritime country

with a massive potential for

aquaculture and capability to

provide broodstock

Indonesian government

support to the fishermen on

aquafarming through

mariculture research institutes

and by providing roe and

juveniles

Limited workforce in the fishery

industry itself

Fishermen still prefer

conventional methods of fish

farming

Wild capture is still preferred by

fishermen.

Lack of proper rearing

techniques expose newly

hatched juvenile to diseases

Nursery/

aquafarming

Diverse methods of

aquaculture indicate excellent

adaptability.


operations can produce a

wide range of fish commodities

with established local and

international markets.

Excellent marine environmental

conditions in the country

provide a high-quality

environment conditions for

aquaculture.

Some marine territories are

located near to heavy

industries that generate

environmental pollution.

Limited availability of skilled

workforce.

Rudimentary infrastructure in

remote areas hampers

transportability of commodities.

Shortfall in proper nourishment

for species used in

aquaculture.

Feed

Higher production of

aquaculture industry from year

to year, both for domestic and

international markets.

Higher fuel prices hits

aquaculture hard because of

the increase in transportation

costs of feed ingredients.

High dependency on imported

raw materials for fish feeds.

Precarious electricity supply


Segments’ drivers and inhibitors


Vaccine

Higher year-to-year production

from aquaculture industry, for

both local and international

markets.

Shifting trends in aquaculture

which require vaccine not only

to treat but to prevent disease.

High dependency on raw

materials for fish vaccines.

Uncertain economic situation

in the country caused high

inflation rate and fluctuation of

the national currency

exchange rate.

Frequent electricity shut-downs

Processing

Development of infrastructure

in Indonesia through the MP3EI

programme

Established international

market for processed fish

commodities

Level of development of fish

processing in eastern and

western Indonesia remains low

Uncertain regulation on

exported fish commodities

Inconsistent supply of electricity


Segments’ drivers and inhibitors


7.4 Species comparison and attractiveness

The comparison and appeal analysis of the five primary fish marine commodities is

explained in Table 62. The weaknesses are mostly influenced by fish feed supplies and

high mortality rates caused by lack of feed and diseases.

Table 62 – Species’ drivers and inhibitors

Species Drivers Inhibitors

Tiger

Grouper

High consumption by domestic

and international markets has

driven high profits.

Ready to market with a nine-

month nurturing period.

Large appetite increases feeding cost.

Humpback

Grouper

High consumption in

international markets,

especially in Southeast Asia.

In demand by restaurants and

luxury hotels worldwide.

With a weight range of 500-

1000g per fish, a whole live fish

is valued higher than processed

fish.

Nurturing period of

approximately two years.

Meat texture is not suitable for

processing.

Low survival rate.

Barramundi

Barramundi are opportunistic

predators and indiscriminate

eaters. This greatly simplifies the

process of sourcing feed intake.

Excellent fecundity rate,

increasing the probability of a

fruitful harvesting season.

As euryhaline organism,

Barramundi can flourish in

water of any level of salinity,

reducing mortality rates.

Frequently attacked by virus,

bacteria and fungi.

Limited supply of seed in term

of quantity and quality.

Snapper

A white-meat fish used

extensively in various

international cuisines.

Has economic value for both

consumption and as an

ornamental fish in domestic

and international markets.

High mortality rate of larvae

due to deficient feed quality.


Species comparison and attractiveness


As euryhaline organism,

snapper can flourish in water of

any level of salinity, reducing

mortality rates.

Pompano

Pompano is readily farmed

because of a rapid growth

period.

Prefers vegetation, reducing

requirements for pellet feed.

High-resistance to disease.

High appetite increases feed

costs.


Species comparison and attractiveness


7.5 Segments’ key success factors and key selling points

The table below indicates the key success factors and selling points for each business

segment in the aquaculture industry.

Table 63 – Segments’ key success factors and key selling points

Segment Key Success Factor Key Selling Point

Hatchery

Collection of wild juveniles for

stock: Hatcheries must be able

to maintain a balance within

the biotope to prevent over-

exploitation.

Hatchery design and

operation: Maintenance of

biodiversity in essential

components, including

quarantine of new fish,

disinfection and dry-out

between fingerlings

production, and routine

monitoring of pathogens and

disease.

Brood stocking activities:

Organisms should be

transported in dark-colored,

lidded containers with

oxygenated water.

Relative monopolization of the

competitive landscape:

Supplier alternatives are few for

small-scale aquafarmers, thus

demand for fish juveniles will

remain stable (research

facilities).

Unique product differentiation:

Existing private hatcheries must

be capable of supplying new

juvenile species to gain a

competitive advantage

(research facilities).

Establishment of reliable and

steady distribution of fish

juveniles (research facilities).

Nursery/

aquafarming

Fish life-cycle optimization:

More frequent harvesting

would provide faster sales

turnover for the aquafarmers.

Sustainability: Environmentally

responsible aquafarming

operations are more likely to

enjoy long-term viability.

Best Business Practices: Proper

nursing and supplementary

intake positively affect the

overall business linkages driving

the entire aquaculture industry.

Product range expansion:

Greater selection of alternatives

provides opportunities to tap

into unmet demand (PT Suri Tani

Pemuka).

Integrated marketing

communication: As the industry

is offering essentially

homogenous products, positive

results are heavily dependent

on properly executed

marketing campaigns

(Indonesian mariculture).


Segments’ key success factors and key selling points


Fish

feed

Pioneer status: Companies with

first-mover advantage are

more likely to dominate market

share.

Location selection: Appropriate

operational sites would yield

superior results.

Feasibility: Sustainable

production guarantees minimal

impact on the environment and

an assured supply for the

foreseeable future (PT Suri Tani

Pemuka)

Vaccine

Standardization: Vaccine is a

mandatory requirement for

sustainable aquaculture;

demand for vaccine will

always be driven automatically

to respective providers.

Innovation: Business entities

capable of delivering cutting-

edge fish-health solutions will

obtain significant market

shares.

Adoption of Safety measures:

Compliance to relevant

systematic preventive

approach from physical

hazards during production

processes (PT Bina San Prima).

Affordability: Vaccines that are

financially accessible to various

levels of relevant stakeholders

are more likely to do well in the

market (PT Bina San Prima).

Processing

Value-added proposition: The

fish processing segment is

characterized by low product

differentiation. By adding value

into current business portfolios,

companies might be able to

gain competitive advantage

(e.g. fish skin flaying services)

Timeliness: Processing facilities

are competing to secure

lucrative supermarket

contracts. Timely delivery is the

key to success within this

segment (PT Bonecom).


Segments’ key success factors and key selling points


7.6 Segments’ challenges and opportunities

Through the years of development of the aquaculture industry in Indonesia the sector

has faced and still faces challenges in each segment which need to be addressed for

the business to be able to grow. However, considering the highly suitable environmental

conditions and the support of the Indonesian government, the sector is has extensive

opportunity to flourish.

Table 64 - Challenges and opportunities for Indonesian aquaculture

Segment Challenges Opportunity

Hatchery

Most small-scale farmers utilize

conventional methods of fish

farming. Advanced

technology is implemented

only by integrated large-scale

companies.

Knowledge of hatchlings is still

limited and depends on

research facilities and, in

some areas such as Bali and

Nusa Tenggara, independent

farmers.

Wild capture is preferred due

to the lack of knowledge of

cultivation.

Knowledge of cultivation is still

limited among small-scale

aquafarmers.

Supply of domestic fingerlings

is still reliant on research

facilities with only a few areas

(Bali and West Nusa

Tenggara) capable to

independently supply their

own requirements.

Limited numbers of species

available for cultivation will

open an opportunity for

businesses to develop other

species. Currently, there are

twelve species available for

cultivation in Indonesia.

Indonesia’s extensive

coastlines provide ideal

conditions for fish farming in

brackish-waters, while lakes

and ponds provide an

abundant resource for

freshwater cultivation.

Saltwater fish farming in

offshore floating cages is an

area that warrants closer

attention. The government has

allocated funds to support

small-scale fish farmers and


Segments’ challenges and opportunities


has enlisted the help of foreign

companies and organizations

to modernize the sector.

Indonesia’s aquaculture

commodities include various

types of fish, shrimp and

seaweed.

Nursery/

aquafarming

Live fish such as Groupers

bear high risks and costs for

transportation.

Technical and non-technical

constraints occur after

implementation. For example,

the grow-out period is too

long for some species such as

Grouper.

Low quality of domestic

fingerlings produced.

Lack of competent farmers:

Most small-scale farmers they

have no traditions of fish

cultivation, which affects the

result.

Dependence on supplies from

research facilities for local

fingerlings. Only farmers in Bali

and Nusa Tenggara are

capable of producing

hatchlings and fingerlings.

Imported materials are

prioritized when the producer

concentrates on production

quality.

Indonesia has a huge

population spread across the

country, and needs qualified

institutions or organizations to

transfer and improve their

knowledge of cultivation.

Fish feed

Lack of technology affects

the feed quality needed for

fish nurturing.

Low usage of artificial feed

due to the awareness of the

production quality.

High distribution costs to the

eastern region increases feed

prices.

Low adoption level of artificial

feed.

Indonesia produces many of

the materials used for fish feed

ingredients.

Fish vaccines

Lack of adequate response to

disease outbreaks.

High dependency on

imported raw material.

Broad opportunities where

vaccine suppliers are still

limited and dominated by

foreign players.




Logistic issues caused by

concentration of

manufacture in Java, inflating

the base price of products

from other regions.

Low level of adoption.

Rural regions such as eastern

Indonesia have a deficiency

of vaccine supplies, while

vaccines suppliers are heavily

concentrated in Java.

Processing

Strict regulation of export

markets.

Inconsistent supply from

cultivation farmers, imported

fish, and fluctuating catches

Largest markets for processing

are exports where marine fish

species are dominant for

processing.

Eastern areas of Indonesia

have a good environment for

fish ecosystem, stabilizing the

supply.




7.7 Primary CSR issues

Environmental issues in Indonesia stem from the country's high population and rapid

industrialization. These issues are often given a lower priority due to high poverty levels

and lack of resources from the government. In accordance to Government Regulation

No 47/2012, it is mandatory for the companies involved in development and exploitation

of natural resources to establish CSR programme which is directly applicable for

hatchery and nursery/aquafarming sectors. Table 65 explains the primary CSR issues

relevant to Indonesian marine aquaculture.

Table 65 - Primary and relevant CSR issues

Objective Description

Environmental and

social concerns

Destruction of mangrove, wetlands, and other sensitive

aquatic habitat by aquaculture projects.

Conversion of agricultural land to ponds.

Water pollution resulting from pond effluents.

Excessive use of drugs, antibiotics, and other chemicals for

aquatic-animal disease control.

Inefficient utilization of fish meal and other natural resources

for fish and shrimp production.

Salinization of land and water by effluents, seepage, and

sediment from brackish-water ponds.

Excessive use of ground water and other freshwater supplies

for filling ponds.

Spread of aquatic animal diseases from aquaculture

organisms to native populations.

Negative effects on biodiversity caused by escape of non-

native species introduced for aquaculture, destruction of

birds and other predators, and entrapment of aquatic

organisms in pumps.

Social issues

Disputes over land rights and forceful acquisitive of land by

large corporations, marginalizing local small-scale

aquafarming initiatives

Illegal aquafarming projects due to local people with no

technical knowledge and little capital starting small-scale

projects without formal permission. Potential for tremendous

damage, comparable to small farming initiatives in tropical

areas

Conflict with other industries for use of land and water as

passage to fishing areas or mangrove areas which are

needed for fuel production. Also, external factors such as


Primary CSR issues


pollution of waters by farms and a decline in fish populations

could spark conflicts.

Aquaculture operations have a higher demand for land in

coastal areas, often generating land-use conflicts. This

situation is worsened by hindered usage rights in

underdeveloped countries.

Water-usage conflicts due to negotiations conducted at the

state government level without the participation of local

governments and citizens who use the waters for recreational

purposes, fishing, or navigation.

Damaging salinization of fresh water by shrimp farmers near

coastlines.

Possible

CSR activities

Donations of fish brood stock to local artisanal fish growers

and reforestation of abandoned aquafarming installations.

Reforestation is crucial to preserving coastal ecosystems from

potential contamination.

Deployment of waste-management vessels to safeguard

environmental quality.

Collaboration with educational institutions for provision of

technical guidelines in aquaculture knowledge

dissemination.

Free medical facilities for improving the overall welfare of the

surrounding communities (in proximity to the company’s

operational sites).

Local infrastructure construction such as schools, religious

structures, and police posts as an expression of long-term

corporate concern for the social environment.


Primary CSR issues


7.8 Funding for market entry initiatives

Indonesia welcomes foreign investment on its own terms. Government policies aim to

ensure that foreigners work with Indonesians to assist in the development of the national

economy and technology. To this end, Indonesia partners with several international

funding institutions. The table below lists institutions that provide funding for market entry.

Table 66 - Relevant funding for market entry initiatives

Organization Background

World Bank

World Bank is a vital source of financial and technical

assistance to developing countries around the world,

providing low-interest loans, interest-free credits, and

grants to developing countries. These support a wide

array of investments in such areas as education, health,

public administration, infrastructure, financial and

private sector development, agriculture, and

environmental and natural resource management

Asian Development Bank

Founded in 1966, ADB has been driven by an inspiration

and dedication to improving people’s lives in Asia and

the Pacific through investment in infrastructure, health-

care services, financial and public administration

systems, or helping nations prepare for the impact of

climate change or better manage their natural

resources. ADB is committed to helping developing

member countries evolve into thriving, modern

economies that are well-integrated with each other

and the world

Islamic Development Bank

Islamic Development Bank is an international financial

institution established in pursuance of the Declaration of

Intent issued by the Conference of Finance Ministers of

Muslim Countries held in Jeddah in Dhul Q'adah 1393H

(December 1973) with the main functions being to

participate in equity capital and grant loans for

productive projects and enterprises besides providing

financial assistance to member countries in other forms

for economic and social development. The Bank is also

required to establish and operate special funds for

specific purposes including a fund for assistance to

Muslim communities in non-member countries, in


Funding for market entry initiatives


addition to setting up trust funds. The Bank is authorized

to accept deposits and to mobilize financial resources

through Sharia-compatible modes. It is also charged

with the responsibility of assisting in the promotion

of foreign trade especially in capital goods, among

member countries

Indonesia Investment

Agency Established in 2007 as a provider of government

investment positioned under the Minister of Finance.

FMO

The Netherlands Development Finance Company

(FMO) supports the private sector in developing

countries and emerging markets in Asia, Africa, Latin

America and the Caribbean and Europe and Central

Asia. FMO provides loans, participation, guarantees and

other investment promotion activities. The goal is to

contribute to the structural and sustainable economic

growth in these countries and, together with the private

sector, obtain healthy returns. These returns make FMO

a valuable risk partner.

Oikocredit

Oikocredit is one of the world’s largest sources of private

funding that provides credit and equity across the

developing world and directly to trade cooperatives

and fair-trade organizations.


Funding for market entry initiatives


7.9 Recommendations

Main Recommendation

Objectives Action Item

Focusing on Eastern part of

Indonesia

Northern Bali (Bali), Jeneponto (Makassar) and

Inner Ambon Bay (Ambon) are recommended as

“hotspot areas” to conduct aquaculture activities

due to their nutrient-rich waters and relatively

pristine environment.

Utilize scout services provided by research facilities

to pinpoint prospective aquaculture spots.

As wild-capture operations still dominate in

recommended areas it is crucial for the

prospective investors to gauge general public

acceptance of aquafarming. This would be useful

when recruiting the workforce.

Tiger Grouper and Barramundi

as prioritized species

Tiger Grouper and Barramundi are the most

attractive species in the aquaculture business in

Indonesia due to their market value, survival rate,

and readiness to market, production growth, and

profit level.

Acclimatization to local conditions, especially

regarding appropriate technologies, is paramount.

For example, farming pens should avoid using

tarpaulin-based materials as it will allow the fish,

especially Barramundi, to escape.

Backward or forward business

integration

The value chain system in the Indonesia

aquaculture industry is not fully independent. The

hatchery segment remains reliant on the Research

Institute for Mariculture for supplies of juveniles.

Based on prevailing conditions, it is recommended

that Norwegian companies avoid converging into

a single segment since profitability would be

problematic.

Business ventures in integrated segments would


Recommendations


have to be consolidated by intensive outreach

and education (seminars, annual publications,

trainings) which, in return, would enhance the

adoption level of relevant stakeholders.

Partnership with local

farmers/companies

For ease of accessibility, identify partners that will

allow the project to efficiently reach large numbers

of micro-, small- and medium-enterprises (MSME) in

the value chain. This can be accomplished

through associations, NGO, governments, banks,

and community groups.

For enhanced market awareness and productivity,

build a collaboration initiative with existing co-ops

and launch a public platform for intelligence

sharing among the relevant stakeholders. This

would enable streamlining of information and

might reduce the risks of a bullwhip effect across

the value chain.

Foster the use of PPP in fisheries and aquaculture

development as a major pathway for investment in

production and sector-related services, such as

hatcheries, feed production, advisory services and

marketing in the form of institutional arrangements.


Recommendations


Recommendation per business segment

Segment Objective Action Item

Hatchery

Target location

Focus on eastern regions of Indonesia such as

Northern Bali (Bali), Lombok Timur (Lombok),

Jeneponto (Makassar) and Inner Ambon Bay

(Ambon) in consideration of supportive factors

such as a pristine environment, skilled farmers

(workforces) and adequate infrastructure.

Species

Humpback Groupers, Tiger Groupers and

Barramundi are the most important fish species

cultured in Indonesia. Humpback Grouper,

Tiger Grouper and Barramundi farming have

proven profitable and contemporary research

is concentrated on these species.

Norwegian companies should invest in

research to acquire more knowledge about

suitable feeds, vaccine and aquaculture

methods for these commodities in order to

devise applicable practices for Indonesian

aquafarmers.

Extensive research into promising species in the

Indonesian mariculture sector, such as Yellow-

fin Tuna and Tilapia Zilli, would be a viable

investment for Norwegian companies wishing

to expand their business.

Market entry

strategy

Enter as a joint venture or consortium

according to the profit-sharing policies of the

relevant companies.

Type of

programme in

improving

hatchery in

Indonesia

Although there is considerable technical

expertise within the mariculture research

system, there is still a substantial unmet need in-

house technical capacity in marine fisheries,

social-economics and fisheries technology to

support optimum development of the sector


Recommendations


Nursery/

aquafarming

Target location

Environment and infrastructure are the primary

criterion for cultivation. The eastern region

remains a promising area for entering this

segment due to its excellent environmental

conditions and developing infrastructure,

although it is not fully up-to-speed.

Norwegian companies could initiate

operations in Inner Ambon Bay, North of Bali or

Jeneponto.

Species

Focus on developing Tiger Grouper and

Barramundi as stand-out species.

More detailed study on the optimal methods of

aquaculture for Tiger Grouper and Barramundi

(e.g. type of equipment).

Extensive research into aquaculture cultivation

method for upcoming species in the

Indonesian mariculture sector such as Yellow-fin

Tuna and Tilapia Zilli.

Market entry

strategy Joint venture or consortium is favored when

risk/reward sharing is the common objective.

Type of

programme in

improving

nursery/

aquafarming in

Indonesia

Norwegian companies could support and

contribute significantly to government

institutions in order to strengthen a long-term

approach to human resources development

and training.

Develop diversified coastal systems for smaller-

scale production, with cooperative support

(training and knowledge transfer).

Technical inputs regarding fish feed and

vaccines are needed to prevent diseases, the

predominant issues affecting the Indonesian

aquaculture industry.


Recommendations


Fish feed

Target location

Focusing on central (Java) and eastern regions

(Makassar).

By approaching local players in the two areas

in order to cover the whole market in the

country. Java will be the trading hub on the

central and western regions, while Makassar

could cover the aquaculture business in the

eastern regions.

Species

Fish feed in Indonesia is used in a uniform

manner regardless of species. Cases of

incompatibilities have occurred on several

occasions, signaling the necessity for

prospective market entrants to come up with

species-specific feed for effective growing-out

(e.g. distinct feed type between Barramundi

and Grouper).

Market entry

strategy

Licensing or joint venture as direct penetration

is not viable with the existing oligopoly market

structure.

Type of

programmes for

improving fish

feeds in

Indonesia

Waste reduction strategies:

Reduction of wastage through better

management and monitoring of feeding.

Approaches including maximizing the bio-

viability of feed components through

research and trialing, as well as better feed-

delivery management using computer-

controlled, centralized feeding systems.

Environmental monitoring:

Intermittent monitoring of the water column

will also provide information on the levels of

feed utilization, wastage, and impact form

aquaculture systems.


Recommendations


Fish vaccines

Target location

Focusing on Central (Java) and eastern regions

(Makassar)

By approaching local players in the two areas

in order to cover the whole market in the

country. Java will be the trading hub on the

central and western regions, while Makassar

could cover the aquaculture business in the

eastern regions.

Species

Put a greater emphasis on battling the

following diseases:

o KHD (KHV), Grouper Iridoviral Disease

(Iridovirus), Streptococciasis (S. iniae and

S.agalactiae), Motile Aeromonas

Septicemia (Aeromonas hydrophila),

Vibriosis (Vibrio sp.), Edwardsiliosis

(Edwardsiela ictaluri) , Mycobacteriosis

(Mycobacterium fortuitum) , Viral

Nervous Necrocis (VNN)/VER), IMN

(Infectious Myonecrosis Virus), WSD

(White Spot Syndrome Virus), TS (Taura

Syndrome Virus) ,IHHN (Infectious

Hypodermal Haematopoietic Necrosis

Virus)

Market entry

strategy

Licensing as entry option to operate against

the competition (Blue Ocean Strategy).

Type of

programme in

improving fish

vaccines in

Indonesia

Provide knowledge transfer to improve

awareness of the necessity of applying

vaccines in aquaculture business. The objective

has to be anticipative rather than focusing on

recovery measures.

Feasible short courses and training should be

carried out in the country, while specialized

courses may be conducted in cooperation

with national institutions.

Analysis and Recommendations

Main Recommendations and Sub-Recommendations


Recommendations


Processing

Target location

Aceh, Bali, Makassar and Papua are the main

targets for fish-processing businesses in

Indonesia due to their high production

capacity and requirements for processing the

commodities

Species

In order to obtain considerable profit in

processing industry, individual companies

should not limit their portfolio to one or two

species.

Market entry

strategy

Joint venture or contract manufacturing to

adapt to the mature industry.

Potential

partnership

players

Find or merge with existing local firms for

partnership. Forging a partnership enables the

processing companies to diversify into

aquaculture commodities which might require

different handling methods. Notable

companies are: PT Lucky Samudera, PT Kelola

Mina Laut and PT Bonecom.

Partnering with local fisherman and collectors

to maintain fish commodities supply.


Recommendations


Appendices

Appendices


1. BBPBAP Jepara (Research Institute of Brackish-water)

Address : Jl. Cik Lanang Bulu Jepara Central Java

Phone : +62 (91) 591125, 591724

Main commodities : Tiger Prawn, Vanname, Mud Crab, Seaweed, Grouper

2. BBAP Ujung Batee (Brackish-water Aquaculture Development Centre)

Address : Jl. Laksamana Malahayati Km 16 Aceh Besar - NAD

Phone : +62 (651) 24686 Main commodities : Tiger Prawn, Shrimp Lamboh, Grouper, Milkfish

3. BADC Situbondo (Brackish-water Aquaculture Development Centre)

Address : Jl. Raya Pecaron Panarukan Situbondo East Java Phone : +62 (338) 673328, 390043, 390255

Main commodities : Grouper, Milkfish, Vaname shrimp, Abalone, Seaweed

4. BBAP Takalar (Brackish-water Aquaculture Development Centre)

Address : Desa Bontoloe, Galesong Selatan Takalar South Sulawesi Phone : +62 (418) 320730, 2326777

Main commodities : Seaweed, Tiger Prawn, Grouper

5. BBPBL Lampung (Main Centre of Mariculture Development)

Address : Desa Hanura Padang Cermin Teluk Betung Lampung Selatan

Phone : +62 (721) 471380, 471379 Main commodities : Grouper, Asian Sea bass, Ornamental Fish

6. BBL Batam (Mariculture Development Centre)

Address : Jembatan 3 Barelang Pulau Setoko Bulang Kota Batam Phone : +62 (778) 7027624, 323764 Main commodities : Pompano, Asian Sea bass, Grouper, Abalone.

7. BBL Lombok (Mariculture Development Centre)

Address : Desa Gili Genting West Nusa Tenggara Phone : +62 (370) 6608290 Main commodities : Abalone, Seaweed.

8. BBL Ambon (Mariculture Development Centre)

Address : Jl. Leo Wattimena Waih Ambon

Phone : +62 (911) 362047

Main commodities : Grouper, Pearl oyster, Seaweed, Lobster, Crab

9. BLUPPB Karawang (Research Institute of Fish Culture Business)

Address : Desa Pusaka Jaya Utara Cilebar Karawang Phone : +62 (267) 7009797

Main commodities : Vaname, eel, milkfish, tilapia, catfish, tiger grouper

List of Indonesian mariculture knowledge institutions

Appendices List of Indonesian mariculture knowledge institutions


10. Loka of Fish Disease Examination & Environment Serang

Address : Jl. Raya Carita Desa Umbul Tanjung Cinangka Serang

Phone : +62 (254) 650431 Main commodities : -

11. BBRP Budidaya Air Laut Gondol (Research Institute of Mariculture)

Address : Jl. Br Gondol Kec Gerogak, Kab. Buleleng, Singaraja, Bali Phone : +62 (362) 92278 Main commodities : Mariculture species

12. Balai Besar Riset Pengolahan Produk, Bioteknologi, Sosial Ekonomi Kelautan dan Perikanan (Marine Products, Biotech, and Social Economics Research Institute)

Address : Jalan KS Tubun Petamburan VI, Slipi, Jakarta Pusat, Indonesia

Phone : +62 (21) 53650157 Main commodities : Research on Aqua Commodities and Processing

13. Balai Riset Perikanan Air Payau (Brackish-water Mariculture Institute)

Address : Jalan Makmur Daeng Sittaka, Maros, South Sulawesi Phone : +62 (411) 371544 Main commodities : Research on Brackish-water Commodities

Appendices List of Indonesian mariculture knowledge institutions


1. PT. Central Proteina Prima.

Address : Wisma GKBI Lt.19 Jl. Jendral Sudirman No.28 Jakarta 10210

Phone : +62 (21) 57851788 Fax : +62 (21) 57851808

Website : www.cpp.co.id Main business : Integrated fish and shrimp producer and processor, feeds and probiotics.

2. PT. Japfa Comfeed Indonesia.

Address : Wisma Millenia Lt.7 Jl. MT Haryono Kav.16 Jakarta 12810

Phone : +62 (21) 28545680

Fax : +62 (21) 8310309 Website : www.japfacomfeed.co.id

Main business : Integrated shrimp producers, feed and vaccines.

3. PT. Aquafarm Nusantara.

Address : Jl. Sei Bingei 36 Desa Naga Kisar, Kecamatan Pantai Semin, Deli Serdang

Phone : +62 (21) 6627658

Fax : -

Website : www.aquafarmnusantara.blogspot.com Main business : Integrated Tilapia farm (processed and frozen fish)

4. PT. Fega Marikultura.

Address : Jatake Indust. Estate Bk. C No.5 Jl. Industri 2 Jatake Tangerang, Banten

Phone : +62 (21) 5901538

Fax : +62 (21) 5901916

Website : www.bestbarramundi.com

Main business : Integrated aquaculture company (hatchery, sea farm, processing and

marine fin fish feed mill

5. PT. Indonesia Mariculture Industries.

Address : Jl. Suwiryo No.1 Menteng Jakarta Indonesia

Phone : +62 (21) 3900880

Fax : -

Website : www.indomarind.com

Main business : Integrated aquaculture company

6. CV. Dewata Laut.

Address : Dusun Penyabangan Buleleng Bali

Phone : +62 8123800201

Fax : -

Website : www.dewatalaut.com

Main Business : Integrated Hatcheries

List of integrated aquaculture players in Indonesia

Appendices List of integrated aquaculture players in Indonesia


7. Bali Samudera Harvest.

Address : Sumberkima Village North Bali

Phone : -

Fax : -

Website : www.balisamudraharvest.com

Main Business : Integrated aquaculture

8. Kawan Abadi Aquaculture.

Address : Gondol Singaraja Bali

Phone : +6281236339169

Fax : -

Website : www.balisamudraharvest.com

Main Business : Integrated hatcheries

Appendices List of integrated aquaculture players in Indonesia


List of equipment companies in Indonesia

1. PT. Aquatic Indonesia

Address : Kawasan Industri Batujajar Permai Jl. Raya Batujajar Km 2.8 Padalarang

Bandung West Java Indonesia

Phone : +62 (22) 6864016

Fax : +62 (22) 6864015

Website : www.aquatec.co.id

Main business : cultivation equipment

2. PT. Batam Usaha Marikultur

Address : Sentra Bisnis Tanjung Duren Blok B No.3A Jl. Tanjung Duren 1/38 West

Jakarta Indonesia

Phone : +62 (21) 5636115

Fax : -

Website : www.duniaperikanan.com

Main business : Cultivation equipment

Appendices List of equipment companies in Indonesia


List of vaccine players in Indonesia

1. PT. Intervet Indonesia.

Address : Gedung S Widjojo Lt.3 Jl. Jend Sudirman Kav.71 Jakarta

Phone : +62 (21) 5206220, 2524185

Fax : +62 (21) 5206221

Website : -

Main Business : Vaccines for Barramundi, Groupers and Tilapia

Products : Norvac Strep-Si, AquavacTM Ga Rvetil Oral, Himmvac Agilban S-Plus,

AquavacTM Strep Sa, Aquavac Irido V

2. PT. Caprifarmindo Laboratories.

Address : Jl. Purnawarman No.47 Bandung

Phone : +62 (22) 4207725

Fax : +62 (22) 4222928

Website : www.caprifarmindo.com

Main Business : Vaccines

Products : Caprivac Aero L, Caprivac Aero, Caprivac Vibrio L, Caprivac Vibrio,

Caprivac ICTA.

3. PT. Indovetraco Makmur Abadi.

Address : Maspion Plaza 9th Floor Jl. Gunung Sahari Raya Kav.18 Jakarta

Phone : +62 (21) 64701200

Fax : +62 (21) 64700967, 64701137

Website : www.ima.co.id

Main Business : Animal health (feed additive, drug & vitamin, vaccine)

Products : Coccidiostat, growth promotor, milk replacer, toxin binder, mold inhibitor,

larvacide, anthelmitic, pellet binder, antimicrobial, anti-oxidant, volvac ae+fp mlv, volvac

nd+ib mass mlv, volvac nd lasota, volvac lt mlv, bursaplex.

4. PT. Behn Meyer Chemicals.

Address : Taman Tekno BSD Blok B No.1 Sektor IX Tangerang Indonesia

Phone : +62 (21) 7565000

Fax : +62 (21) 7560860, 7560870

Website : www.behnmeyer.com

Main Business : Animal health

Products : enzymes, finase, finase EC, wheatease, hemicell, hemicell w.

5. PT. SHS International.

Address : Maspion Plaza 11th floor Jl. Gunung Sahari Raya Kav.18 Jakarta Indonesia

Phone : +62 (21) 64701200

Fax : +62 (21) 64700968, 64701257

Website : www.shs.co.id


Product : bird close 5.1 plus, coryza bivalent, nobilis coryza, nobilis gumboro

228e,nobilis gumboro D78, nobilis IB 4/91, nobilis IB multi+G+ND.

Appendices List of vaccines players in Indonesia


6. PT. Wonderindo Pharmatama.

Address : Jl. Tebet Barat IX No.27 South Jakarta Indonesia

Phone : +62 (21) 8297666

Fax : +62 (21) 8302080

Website : www.wonderindo.com


Products : Lactagen, potahormon, metritin injeksi, ovaluman injeksi, oxytocin,

dexatozon, sulpyrine.

7. PT. Pyridam Farma

Address : Jl. Kemandoran 8 No.16 Jakarta Indonesia

Phone : +62 (21) 53690112

Fax : +62 (21) 5329049

Website : www.pyridam.com


Products : datan forte, nogren, potensik, ferospat, nizol tablet, lodipas, arkine,

levazide, ostepr, xotilon.

8. PT. Petrokimia Kayaku

Address : Jl. Jenderal Ahmad Yani Gresik East Java Indonesia

Phone : +62 (31) 3981811, 3982100, 3982200

Fax : +62 (31) 3981722, 3982272

Website : www.petrokimia-gresik.com

Main Business : Animal probiotic

Products : probiotic petro fish

Appendices List of vaccines players in Indonesia


List of fish feed players in Indonesia

1. PT. Cargill Indonesia.

Address : Wisma 46 BNI Lt.28 Jl. Jend Sudirman Kav.1 Jakarta

Phone : +62 (21) 5746868

Fax : +62 (21) 5745757

Website : www.cargill.co.id

Main Business : Feed mill, feed additive

2. PT. Trouw Nutrition Indonesia.

Address : Jl. Pulau Selayar Kawasan Industri MM2100 BI A 3/2 Cibitung-Bekasi

Phone : +62 (21) 89983325, 89983326, 89983358, 89983360

Fax : -

Website : www.trouwnutrition.com

Main Business : Feed mill

3. PT. Wonokoyo Jaya Corporindo.

Address : Jl. Taman Bungkul No.1-7 Surabaya

Phone : +62 (31) 2956000

Fax : +62 (31) 5679655

Website : www.wonokoyo.co.id


4. PT. Matahari Sakti.

Address : Margomulyo Industri I Blok A10-13 Surabaya,

Phone : +62 (31) 7491199

Fax : +62 (31) 7490545

Website : www.mataharisakti.com


5. PT. Mitra Manggalindo

Address : Jl. Muara Baru Ujung Blok N Kav. 3-4 Jakarta

Phone : +62 (21) 6682077

Fax : +62 (21) 6621578

Website : www.manggalindo.com


6. PT. Cheil Jedang Superfeed

Address : Jl. Jend Gatot Subroto Kav.38 Ged. Menara Jamsostek 21st Floor, Jkt 12170

Phone : +62 (21) 52995000

Fax : -

Website : www.cj.co.id

Main business : Animal feed

7. PT. Wonokoyo Jaya Kusuma

Address : Jl. Taman Bungkul No.1-7 Surabaya East Java

Phone : +62 (31) 2956000

Fax : +62 (31) 5679655

Website : www.wonokoyo.co.id


Appendices List of fish feed players in Indonesia


8. PT. Sinta Prima Feedmill

Address : Jl. Sulaiman No.27A Slipi West Jakarta Indonesia

Phone : +62 (21) 5480959

Fax : +62 (21) 5493313

Website : www.sintafeed.com


9. PT. Matahari Sakti

Address : Margomulyo Industry 1 Blok A10-13 Surabaya 60183 East Java Indonesia

Phone : +62 (31) 7491199

Fax : +62 (31) 7490545

Website : www.mataharisakti.com


10. PT. Gold Coin Indonesia

Address : Jl. Raya Bekasi Km.28 Desa Medan Satria Bekasi 17132 West Java

Indonesia

Phone : +62 (21) 8842445

Fax : +62 (21) 8841061

Website : www.goldcoin-group.com


Appendices List of fish feed players in Indonesia


List of processing companies in Indonesia

1. PT. Fresh On Time Seafood.

Address : Jl. Raya Narogong Km 26.5 Kawasan Industri Kembang Kuning Kec. Klapa

Nunggal Bogor West Java 16820.

Phone : +62 (21) 8233817

Fax : +62 (21) 8233806

Website : www.freshontime.com

Main business : Integrated seafood processor

2. PT. Sekar Bumi.

Address : Plaza Asia Floor 2A Jl. Jend Sudirman Kav 59 Jakarta Selatan

Phone : +62 (21) 51401212

Fax : -

Website : www.sekarbumi.com

Main Business : Producer and seafood processor

3. PT. Lucky Samudra Pratama.

Address : Jl. Muara Baru Ujung Blok F No.1 Jakarta 14440

Phone : +62 (21) 6623275

Fax : +62 (21) 6623276

Website : www.luckysamudra.com

Main Business : Seafood processor

4. PT. Indomaguro Tunas Unggul.

Address : Jakarta Fishing Port Jl Muara Baru Ujung Blok G/1-2 Jakarta 14440

Phone : +62 (21) 29263588

Fax : +62 (21) 29263577

Website : www.indomaguro.co.id


5. PT.Phillips Seafood Indonesia.

Address : Jl. Ir Sutami Desa Sindang Tanjung Bintang Lampung

Phone : +62 (721) 350441

Fax : +62 (721) 350 442

Website : www.phillipsseafood.com


6. PT. Sukses Lautan Indonesia.

Address : Jl. Indrapura Baru 351 Surabaya

Phone : +62 (31) 3555260

Fax : +62 (31) 3532735

Website : www.sulindo.com


Appendices List of processing companies in Indonesia


7. PT. Kelola Mina Laut.

Address : Jl. K.I.G Raya Selatan Kav. C-5 Kawasan Industri Gresik 61121 Surabaya

Phone : +62 (31) 3976351-53

Fax : +62 (31) 3976350

Website : www.kmlseafood.com


8. PT. Dharma Samudera Fishing Industries.

Address : Jl. Laks. R.E Martadinata I, Tanjung Priok, Jakarta 14310, Indonesia

Phone : +62 (31) 4301001, 4300156

Fax : +62 (31) 4303412

Website : www.dharmasamudera.co.id


9. PT. Bone Commercial Company.

Address : Jl. Muara Baru Ujung Blok L No.1 Jakarta 14440

Phone : +62 (21) 351318, 351319, 351320

Fax : +62 (21) 350018

Website : www.bonecom.com

Main business : Integrated fishery company (seafood processing)

10. PT. Inti Luhur Fuja Abadi.

Address : Graha Famili N-169 Surabaya

Phone : +62 (31) 70606638

Fax : +62 (31) 7346781

Website : www.ilufaseafood.com

Main Business : Seafood processors

11. PT. Prima Pangan Madani.

Address : Komplek Ruko Sutera Renata Jl. Jalur Sutera Timur 6A No.20 Alam Sutera

Tangerang

Phone : +62 (31) 70606638

Fax : +62 (31) 7346781

Website : www.madanifood.com

Main Business : Seafood processors

12. PT. Indokom Samudera Persada.

Address : Jl. Ir. Sutami Km.13 Bandar Lampung Indonesia

Phone : +62 (721) 350837-838

Fax : +62 (721) 350839

Website : www.seafood.indokom.co.id

Main Business : Seafood Processor

13. UD. Nagata Tuna

Address : Cot Aron 2 No.2 Punge Banda Aceh

Phone : +62 (651) 43149, +6281360023712, +6282164636000

Fax : -

Website : -

Main Business : Fish processor



14. PT. Prima Bahari Inti Lestari

Address : Jl. Kima 12 Kav. 5C Makassar South Sulawesi Indonesia

Phone : +62 (411) 512688

Fax : +62 (411) 514163

Website : www.primabahari.com


15. PT. Sumina Esktrasindo

Address : Desa Cupel, Pelabuhan Pengambengan, Negara Bali Indonesia

Phone : +62 (365) 44150

Fax : +62 (365) 42185

Website : www.ptsumina.com


16. CV. Bali Omega

Address : Desa Cupel, Pelabuhan Pengambengan, Negara Bali Indonesia

Phone : +62 (365) 42494

Fax : -

Website : www.baliomega.indonetwork.co.id


17. PT. Balinusa Windumas

Address : Jl Ikan Tuna 2 Pelabuhan Perikanan Benoa Bali Indonesia

Phone : +62 (361) 722688, 722091

Fax : +62 (361) 723636, 725160

Website : www.balinusawindumas.com


18. PT. Sari Segara Utama

Address : Pelabuhan Perikanan Benoa Bali Indonesia

Phone : +62 (361) 720853

Fax : +62 (361) 720695

Website : www.ptsarisegarautama.blogspot.com


19. PT. Nusantara Fishery

Address : Jl. Kate Kate Desa Hunud Durian Patah Ambon Indonesia

Phone : +62 (911) 3825158

Fax : -

Website : -


20. PT. Arabikatama Fishing Industries

Address : Komplek TNI AU Ambon Indonesia

Phone : +62811471382

Fax : -

Website : -




21. PT. Mabiru Industries

Address : Jl. Kakialy No.5 Tanah Tinggi Ambon Maluku Indonesia

Phone : +62 (911) 344405

Fax : +62 (911) 314308

Website : -


22. PT. Bumi Menara Internusa

Address : Jl. Margomulyo 4E Tandes Surabaya East Java Indonesia

Phone : +62 (31) 7491000, 7481700, 70989168

Fax : -

Website : www.ptbmi.com


23. PT. Aneka Tuna Indonesia

Address : Jl. Surabaya Malang Km 38 Gempol East Java Indonesia

Phone : +62 (343) 851361

Fax : +62 (343) 851361

Website : www.tunaindonesia.com

Main Business : Tuna processor

24. PT. Mega Marine Pride

Address : Desa Wonokoyo Kecamatan Beji Pasuruan East Java Indonesia

Phone : +62 (343) 656513, 656446

Fax : +62 (343) 656195

Website : www.megamarinepride.com


25. PT. Surya Alam Tunggal

Address : Jl. Raya Tropodo No.126 Waru Sidoarjo East Java Indonesia

Phone : +62 (31) 8667575

Fax : +62 (31) 8667500

Website : www.pt-sat.com


26. PT. Varia Niaga Nusantara

Address : Dusun Dermo Desa Gunung Gangsir No.88 Pasuruan East Java Indonesia

Phone : +62 (343) 655243

Fax : +62 (343) 655244

Website : www.vaninus.com


27. PT. Sukses Lautan Indonesia

Address : Pelabuhan Tanjung Tembaga Barat Probolinggo East Java Indonesia

Phone : +62 (31) 83281333

Fax : +62 (31) 7316801

Website : www.sulindo.com




28. PT. Alam Jaya

Address : Jl. Rungkut Industri 2 No.25 Surabaya East Java Indonesia

Phone : +62 (31) 8495811

Fax : +62 (31) 8496167

Website : www.alamjayaseafood.com


29. PT. Pratama Abadi Gemilang

Address : Jl. Kendangsari No.18 Surabaya East Java Indonesia

Phone : +62 (31) 8433615

Fax : +62 (31) 8431103

Website : www.titanifood.com


30. PT. Tridaya Jaya Manunggal

Address : Rembang Industri Raya 36, PIER Pasuruan East Java Indonesia

Phone : +62 (343) 740399

Fax : +62 (343) 740439

Website : www.tridayaj.com


31. PT. Samudera Kencana Mina

Address : Central Square E31 Jl. Ahmad Yani 41-43 Gedangan Sidoarjo East Java

Indonesia

Phone : +62 (31) 8547202, 70394664

Fax : +62 (31) 8547196

Website : www.skmseafood.com


32. PT. Bali Maya Permai

Address : Jl. Pluit Raya No.19 Block D No.1-2 Jakarta Indonesia

Phone : +62 (21) 66600055

Fax : +62 (21) 66605999

Website : www.bmpfood.co.id


33. PT. Prasetya Agung Cahaya Utama

Address : Jl. A Yani I Dusun Carik Padang Desa Nyambu Tabanan Bali Indonesia

Phone : +62 (361) 812828, 812830

Fax : +62 (361) 812857

Website : www.blessingfish.com


34. PT. Wahyu Pradana Binamulia

Address : Jl. Kima Raya 1D-2C Kawasan Industri Makassar South Sulawesi Indonesia

Phone : +62 (411) 510256

Fax : +62 (411) 512975

Website : www.wahyupb.com




35. PT. Kemilau Bintang Timur

Address : Jl. Kima 3 Kav.2 A Kawasan Industri Makassar South Sulawesi Indonesia

Phone : +62 (411) 512808

Fax : +62 (411) 513000

Website : www.ktbseafood.com


36. PT. Bogatama Marinusa

Address : Jl. Kima Raya 2 Kav.N4 B1 Makassar Indonesia

Phone : +62 (411) 513378

Fax : +62 (411) 513373

Website : www.bomarfood.com


37. PT. Toba Surimi Industries

Address : Jl. Pulau Pinang 2 Kawasan Industri Medan 2 Deli Serdang, Medan

Phone : +62 (61) 6871022

Fax : +62 (61) 6871007

Website : www.tobasurimi.com


38. PT. Lautan Niaga Jaya

Address : Jl. Muara Baru Ujung Blok B 168 Jakarta Indonesia

Phone : +62 (21) 66691965, 6614154, 6617874

Fax : +62 (21) 6619641

Website : www.lautanniagajaya.com


39. PT. Red Ribbon Indonesia

Address : Jl. K. Lyos Sudarso Km 10.5 Medan Industrial Estate, Medan

Phone : +62 (61) 6851924, 6851350

Fax : +62 (61) 6851137

Website : www.redribbonindonesia.com


40. PT. Nusantara Alam Bahari

Address : Kawasan Pelabuhan Perikanan Samudera Nizam Zachman Blok S No.6

N. Jakarta

Phone : +62 (21) 6611061

Fax : +62 (21) 6694637

Website : www.nalambahari.com



Documents

Value Chain Analysis of Marine Fish Aquaculture in Indonesia