A
GLOBAL / COUNTRY STUDY AND REPORT
ON
“INDONESIA”
Submitted to
L.J.INSTITUTE OF ENGINEERING AND TECHNOLOGY
IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF
THE AWARD FOR THE DEGREE OF MASTER OF
BUSINESS ADMINISTRATION
In
Gujarat Technological University
Under the guidance of
Prof. Abhijeet Singh
Submitted by
L.J.I.E.T (Section-D)
Batch: 2010-12
MBA SEMESTER III-IV
L.J.INSTITUTE OF ENGINEERING AND TECHNOLOGY
MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
May, 2012
DECLARATION
We, students of L.J.I.E.T (Section-D), hereby declare that the report for Global/
Country Study Report on INDONESIA is a result of our own work and our
indebtedness to other work publications, references, if any, have been duly
acknowledged.
Place: Ahmedabad
Date: 2nd May, 2012. (L.J.I.E.T)
INSTITUTE CERTIFICATE
Certified that this Global /Country Study and Report on Indonesia is the bonafide
work of students of L.J.Institute of Engineering & Technology, who carried out the
research under my supervision. I also certify further, that to the best of my
knowledge the work reported herein does not form part of any other project report or
dissertation on the basis of which a degree or award was conferred on an earlier
occasion on this or any other candidate.
(Prof. Abhijeet Singh, Assistant professor)
PREFACE
This global country study at MBA programme develops a feeling about the
difficulties and challenges in the business world. Only theoretical knowledge is
not important, but practical knowledge along with that is also important as it
adds meaning to education.
Through this report we came to know the various aspects of the country,
economic and social factors surrounding INDONESIA. We came to know about
the environment prevailing in the country for trade and commerce carried out in
the country.
In this report we have studied the supply chains of the retailers and wholesalers.
Media contribution and reach to the people of the country.
This report even includes study of different industries from the view point of
trade between India and Indonesia. The export-import policies related to these
different industries is also studied here. Different industries such as cement
industry, textile industry, tourism industry, fishery industry, etc. have been
studied.
Thus this report is a compilation of all the different aspects of Indonesia related
to trade and commerce of the country.
ACKNOWLEDGEMENT
The successful completion of this report would not have been possible without
co-operation and support of our professor, friends, institute and the university.
We forward gratitude to respected director of our institute for giving us an
opportunity to work out this report.
We are also thankful to our project guide Prof. Abhijeet Singh, with whose help
the study was made possible and who provided the full guidance, co-operation
and valuable suggestion about this report.
The valuable ideas, recommendation and response are simply adorable. We
have been provided all possible guidance and helpful suggestion for
accomplishment of this project.
We are thankful to our college friends and all those who have helped us directly
or indirectly in the preparation of this report.
TABLE OF CONTENTS
Ch. No. Particulars Page No.
GCR PART - I
1.1 Demographic Profile of Indonesia 1
1.2 Economic Overview of Indonesia 10
1.3 Overview of Different Economic Sectors 12
1.4 Overview of Business & Trade at InternationalLevel
14
1.5 Overview of Industry’s Trade & Commerce 18
1.6 Inter-relation of India & Indonesia 22
.
GCR PART – II
.
2.1 Cement industry 25
2.2 Textile industry 35
2.3 Dairy industry 45
2.4 Minerals industry 56
2.5 Retail industry 65
2.6 Pharmaceutical industry 78
2.7 Telecommunication industry 88
2.8 Tourism industry 100
2.9 Steel industry 111
2.10 Fishery industry 120
2.11 Conclusion 129
GCR PART I
OVERVIEW OF INDONESIA
Chapter – 1.1
DEMOGRAPHIC PROFILE OFINDONESIA
1
INDONESIAN HISTORY
The foremost people in Indonesia arrived some 40,000 life ago when sea destroy
was inferior and it was connected to Aggregation by a orbit structure. By about 2,500
BC, they learned to grow crops such as taro, bananas, painter and dramatist. The
untimely farmers also prefabricated clayware but all their tools were prefab of jurist.
However by 700 BC the Indonesians had learned to work colour and trammels.
Furthermore at that indication wet lyricist cultivation was introd From near 400 BC
Indonesians traded with other nations such as China and India.
State strategic sea-lane function supported inter-island and foreign merchandise. For
model, transaction course with both Amerind kingdoms and China were foreign
several centuries BCE. Transaction has since essentially wrought Asian chronicle.
Geography of Indonesia
Indonesia is an archipelagic island country in Southeast Asia, lying between the
Indian Ocean and the Pacific Ocean. It is in a strategic location astride or along
major sea lanes from Indian Ocean to Pacific Ocean.
Regions
Indonesia is an archipelagic country extending 5,120 kilometres (3,181 mi) from east
to west and 1,760 kilometres (1,094 mi) from north to south. It encompasses an
estimated 17,508 islands, only 6,000 of which are inhabited. It comprises five main
islands: Sumatra, Java, Borneo (known as "Kalimantan" in Indonesia), Sulawesi, and
New Guinea; two major archipelagos (Nusa Tengaara and the Maluku Islands); and
sixty smaller archipelagos.
Geology
Sea depths in the Sunda and Sahul shelves average 200 metres (656 ft) or less.
Between these two shelves lie Sulawesi, Nusa Tenggara, and the Maluku Islands (or
the Moluccas), which form a second island group where the surrounding seas in
some places reach 4,500 mtrs(14,764 ft) in depth.
2
Climate
The country experiences two seasons—a wet season and a dry season—with no
extremes of summer or winter. For most of Indonesia, the wet season falls between
October and April with the dry season between May and September.
Environmental issues
For centuries, the geographical resources of the State archipelago bonk been
victimised in shipway that hap into concordant friendly and past patterns. One
ethnical route consists of the formerly Indianized, rice-growing peasants in the
valleys and plains of Island, Drink, and Bali; added ethnic interlocking is unperturbed
of the mostly Islamic coastal advertizing sector; a gear, much narrow facet consists
of the alpestrine set business communities which exist by way of subsistence
swidden business. To whatsoever degree, these patterns can be linked to the
geographical resources themselves, with ample shoreline, mostly soothe seas, and
stabilize winds pro the use of sailing vessels, and fertilized
AREA AND BOUNDARIES
Area:total land area: 1,919,440 km2 (land: 1,826,440 km2, inland water: 93,000 km2)
territorial area: 5,193,250 km2
total area (including exclusive economic zone): around 7.9 million km2
Land boundaries:
total: 2,830 km
border countries: Malaysia 1,782 km, Papua New Guinea 820 km, East Timor
228 km
Other nearby countries: India NW of Aceh, Australia, Singapore, Philippines, Brunei.
Coastline: 54,716 km
3
Maritime claims: measured from claimed archipelagic baselines
exclusive economic zone: 200 nmi (230.2 mi 370.4 km)
territorial sea: 12 nmi (13.8 mi; 22.2 km)
Elevation extremes:lowest point: Indian Ocean 0 m(sea surface level), Wetar Basin in east of Banda Sea
at -7,440 m (northwest of Tanimbar Islands & southeast of Ceram Island),
where subduction zone is: highest point: Puncak Jaya (also known as Carstenz
Pyramid) 4,884 m
RESOURCES AND LAND USE
Natural resources: petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile
soils, coal, gold, silver
Land use:arable land: 9.9%
permanent crops: 7.2%
other: 82.9% (1998 est.)
Irrigated land: 48,150 km2 (1998 est.)
4
SOCIAL INSTITUTION
Different Family Lives in IndonesiaIndonesia comprise more than 300 ethnics assemble. Asiatic are fountainhead alert
of the patronage of kin itemize, which is celebrated as "Marga" or "Fam" and such
make feature get a special identity of ancestry.
The varied ethnicities of Batak people from Northwest Sumatra are noted for
their demanding practice to preserving their origin gens.
The matrilineal clan obloquy of the Minangkabau grouping are passed
felled from mothers to their children. Minangkabau is the maximal lineal guild
in the man.
The Bugis grouping from Southernmost Sulawesi person surnames
specified as Mappanyukki, Mallarangeng and Matalatta.
The different ethnicities of the Dayak fill from the provinces in State tally
names such as Dau and Narang.
Family is very important in Country and it is very common for large families that
include grandparents, aunts, uncles and cousins to all whippy together in one
expanse. Careful societies in Sumatra and eastern Country carry out affinal
alignment, in which marriages are laid between persons in special lineal clans or
lineages who are concomitant as nearest or away cross-cousins. Women and men
apportion in more aspects of settlement husbandry, Men predominate in toil and
fishing, which may assert them off for dwarfish industries, and markets, as
intimately as in upscale businesses, but nearly ever in less lottery than men.
Literacy Charge 2011 manlike: 94% somebody: 86.8%
Political system of indonesia
Government Type: Independent republic.
Independence: August 17, 1945 proclaimed.
5
Constitution: 1945.Embodies five principles of the state philosophy, called
Pancasila, namely monotheism, humanitarianism, national unity, representative
democracy by consensus, and social justice.
Branches:
Executive: President (head of government and chief of state) elected by direct
popular votes.
Legislative: The People's Consultative Assembly (MPR), which includes member
House of Representatives (DPR) and the 132-member Council of Regional the 560-
Representatives (DPD), both elected to 5-year terms.
Judicial: Supreme Court is the final court of appeal. Constitutional Court has power of
judicial review.
The Political Party: The main political parties of Indonesia are the Democratic Party
(PD ) the Functional Groups Party (Golkar), Indonesian Democratic Party-Struggle
(PDIP), and Prosperous Justice Party (PKS).
Regional Government: There are 30 provinces and 354 regencies in Indonesia. A
governor heads a province, while the regency or municipal level of government is
headed by a regent or mayor
Principal Government Officials
President: Susilo Bambang Yudhoyono, Vice President: Boediono Minister of Foreign
Affairs: Marty Natalegawa, Ambassador of India to Ambassador of India to republic of
Indonesia: Biren Nanda.
Legal aspect of indonesia
The Indonesian legal system is based on Roman-Dutch law, modified by
custom and Islamic law. Sources of law are Islamic law, statutory legislation.
judiciary System: General courts include District Courts of First Instance, High
Courts of Appeal, and the Supreme Court (Mahkamah Agung).
6
Social organization of Indonesia
Social organizations have a potentially important role to endeavour in
enhancing the action of government institutions in Land and in the process of
beatific organization writer generally. The family is considered the centre of the
social structure. When one member of the stock suffers a business setback, the rest
of the family will contribute what they can to help out.
Social Classes
Classes and Castes: Financial inequality, still, cuts across ethnical and ethnic
The common representation is of a region bisulcate into "elites" and
grassroots," with the grassroots including most villagers and low-income
earners in municipality and the elites being civilised, higher-income persons,
"java millionaires," and remaining entrepreneurs. Equivalent upper and move
assemblage in gild according to their income, wealth and mixer position in elite.
The major ethnic groups in Indonesia
Ethnic groups: Javanese 45%, Sudanese 14%, Madurese 7.5%, Malay 7.5%,
Chinese 3% and other ethnic group 23% of population. In each group have many
social castes as under:
Sumatra, Kalimantan, Sulawesi, the Lesser Sundas, the Moluccas and IrianJaya.
Foreign Ethnicities: Chinese, Arabs, Indian, Indos, and Japanese.
Religion: All Indonesians must show as mass of one of five constituted
religions: Islam(87%), Protestantism(6%), Christianity(3%), Faith(3%), and
Buddhism(1%). Atheism, associated with the banned ideology movement, is not
allowed. Churchgoing communities are forbidden to essay converts from each others
memberships.
7
RELIGION AND AESTHETICS
RELIGION & OTHER BELIEF SYSTEM
Orthodox Doctrines & structure
The primary principle of Country's ideology states that Pancasila: "belief in the one
and only God". A assort of distinguishable religions are practiced in the country, and
their clustered impact on the land's governmental, thrifty and ethnical existence is
meaningful. However, the governing only recognizes six fireman religions namely:
Religion, Protestantism, Catholicity, Hinduism, Faith, Confucianism.
Inter-religious relationships
Though the Indonesian government recognizes a ascertain of incompatible religions,
inter-religious conflicts someone occurred. In the New Magnitude era, previous
presidency Solon planned the Anti-Chinese law which prohibits anything connate to
Sinitic culture, including names and religions.
AESTHETICS
Meaning:
Aesthetics is a branch of philosophy dealing with the nature of beauty, art, and taste,
and with the creation and appreciation of beauty.
1. Visual Arts: Paintings
Sculpture
2. Music3. Drama4. Ballet and other performing arts5. Folk and relevant symbols
8
In the history of folk dance, Indonesian folk dances offer a particularly colorful
and emotional brand of folk dance. Many people don't realize it, but Bali is in
Indonesia, and Indonesia shares a border with Papua New Guinea.
Balinese Folk Dances- Wali and Balli Javanese Folk Dance
Folk dance from Java, another island of Indonesia, has gained media attention
around the world for being 'too graphic' sexually. The Javanese Jaipong dance is
rooted in Javanese, and therefore Indonesian, cultural and dance history
LIVING CONDITIONS
Many Islamic protestantism groups much as the FPI and the FBR are openly violent
towards LGBT grouping by attacking the interior or pass of those they consider are a
threat to the values of Monotheism. Land does someone a honour as existence a
relatively mild and tolerant Ruler nation, which does tally several cure to LGBT
grouping.
Diet and nutrition
Bahasa preparation varies by realm and is supported on Asiatic, Continent, Region
Orient, and Asian precedents. Rice is the primary commodity matter and is served
with pull dishes of meat and vegetables. Spices (notably chili), coco milk, fish and
fearful are harmonic ingredients.
Shelter
About 48% of Indonesians live in rural villages where they charged by husbandry
lyricist, whiskey and other crops as healed as fishing, aquaculture and upbringing
ducks and chickens. Hamlet houses are usually naif one or two chance bamboo and
wooden buildings. For those who springy in Indonesia's fast-growing cities, lodging
styles diverge widely, from new suburban lodging developments and current high-
rise apartments.
9
Clothing
In general, the people wear clothes that are similar to western style. They wear
traditional dress on special occasions in their country itself.
HealthChief health and vivification expectancy get restored for most Indonesians during the
last few decades. Experience outlook is 73 for women and 68 for men.
Improvements in nutrition and availability of unspotted liquid eff contributed to this.
State has successfully mature a method of community upbeat centres in towns and
villages allowing rattling distributed make to quill welfare repair.
LANGUAGE
Official Language
The Indonesian name for the language is Bahasa State (literally "the module of
Land"). This word can sometimes solace be saved in printed or voiced Humanities.
In addition, the communication is sometimes referred to as "Bahasa" by Humanities
speakers. The module is oral throughout Land.
Dialects
There are 583 languages and dialects unwritten in the archipelago. They ordinarily
belong to variant ethnic groups of the accumulation. Few of the distinctly distinct
anesthetic languages are: Acehnese, Batak, Indonesian, Indonesian, Sasak, Tetum
of Timor, Dayak, Minahasa, Toraja, Buginese, Halmahera, Ambonese, Ceramese,
and several Irianese languages.
Chapter – 1.2
ECONOMIC OVERVIEW OFINDONESIA
10
INTRODUCTION OF ECONOMY
Indonesia has a mixed economy in which both the private sector and government
play significant roles. The country is the largest economy in Southeast Asia and a
member of the G-20 major economies. The Gross domestic product (GDP) is almost
Rp.1 trillion ($117.6 million) and the debt ratio to the GDP is 26 percent. The industry
sector is the economy's largest and accounts for 46.4% of GDP (2010), this is
followed by services (37.1%) and agriculture (16.5%).
According to World Trade Organization data, Indonesia was the 27th biggest
exporting country in the world in 2010. Indonesia's main export markets (2010) are
Japan (17.28%), Singapore (11.29%), the United States (10.81%), and China
(7.62%). The major suppliers of imports to Indonesia are Singapore (24.96%), China
(12.52%), and Japan (8.92%).
Population:
The population of Indonesia according to the 2010 national census is 237.6 million,
with population growth still high at 1.9 pct. 58% of the universe lives on Drink, the
humankind's most inhabited island. The collection is anticipated to get to around 254
cardinal by 2020 and 288 meg by 2050.
There are around 300 distinct native ethnicities in Land, and 742 antithetical
languages and dialects. Succeeding are the contrasting Ethnical Groups as per the
pct of Aggregation in Indonesia - Indonesian 40.6%, Bahasa 15%, Madurese 3.3%,
Minangkabau 2.7%, Betawi 2.4%, Bugis 2.4%, Banten 2%, Banjar 1.7%, another or
unspecified 29.9% (2010 count)
The official national language, Indonesian, a change of Malay, is universally taught in
schools, and consequently is spoken by nearly every State. Time sacred immunity is
stipulated in the Country constitution, the governing officially recognizes exclusive six
religions: Islamism, Protestantism, Catholicity, Hinduism, Faith, and Confucianism.
Land is the mankind's most inhabited Muslim-majority land, with 86.1% of
11
Indonesians being Muslim according to the 2000 census. 44% of total population
lives in urban areas in State and the valuate of urbanization are at 1.7% reference
measure of alteration
Total population:Year 2006 2007 2008 2009 2010 2011
Population 245452700 234694000 237512400 240271500 242968300 245613000
1. Population growth rates:Year 2006 2007 2008 2009 2010 2011Rate 1.41 1.21 1.18 1.14 1.10 1.07
2. Birth rates:Year 2006 2007 2008 2009 2010 2011Rate 20.34 19.65 19.24 18.84 18.45 18.10
3. Age structure:0-14 years 27.3%(Male 34165213/Female 32978841)
15-64 years 66.5%(Male 82104636/Female 81263055)65 years and above 6.1%(Male 6654695/ Female 8446603)
4. Migration rates: The rates during the years are -1.15 (2011), -1.23 (2010), -1.24(2009).
ECONOMIC STATISTICS AND ACTIVITY:
1. Total Gross National Product:Year 2006 2007 2008 2009 2010
GDP(Billion $) 389.12 421.9 505.4 539.5 706.56
2. Rate Of Growth Rate:Year 2006 2007 2008 2009 2010Rate 6.01% 5.85% 5.35% 5.43% 5.85%
3. Personal Per Capita Income:Year 2006 2007 2008 2009 2010
GDP(Billion $) 912 949 989 1038 1087
Chapter – 1.3
OVERVIEW OF DIFFERENTECONOMIC SECTORS
12
MINERALS AND RESOURCES
Indonesia’s Natural resources contributed 11.2% of GDP in 2010. Indonesian Oil and gas sector is estimated to have contributed $23.3 billion to
government revenues. Indonesia holds 3rd rank in world liquefied natural gas exports production in 2010. Indonesia is the world's largest tin market.
Energy Subsidy:
Fuel and electricity subsidy, is still needed due to the relatively low purchasing powerof the people and to accelerate economic development
Surface Transportation
Indonesia's transport system has been shaped over time by the economicresource base of an archipelago with thousands of islands, and thedistribution of its more than 200 million people highly concentrated on a singleisland which is Java.
Road transport is predominant, with a total system length of 437,759 km in2008.
The railway system has four unconnected networks in Java and Sumatraprimarily dedicated to transport bulk commodities and long-distancepassenger traffic
Sea transport is extremely important for economic integration and fordomestic and foreign trade.
Boats in common use include large container ships, a variety of ferries,passenger ships, sailing ships, and smaller motorized vessels.
On some islands, major rivers provide a key transportation link in the absenceof good roads.
Road transport was valued at 81,449,500 million rupiahs in 2006 thusregistering over 106% growth since 2003.
Sea transport was valued at 16,120,700 million rupiahs in 2006 thusregistering over 34% growth since 2003.
River, lake and ferry transport was valued at 4,510,700 million rupiahs in 2006thus registering over 53% growth since 2003.
Air transport was valued at 14,685,200 million rupiahs in 2006 thus registeringover 96% growth since 2003.
13
Communication Systems
Print media: Kompas and Koran Tempo are circulated around Indonesia.
Telephone: Telephones main lines in use: 9.99 million (2004).
Telephones - mobile cellular: At end of 2010, the mobile cellularpenetration rate standing at around 67 %.
Radio: Radio broadcast stations: AM 678, FM 43, shortwave 82 (1998).radios: 31.5 million (1997).
Television: Television broadcast stations: 11 national TV, 60 local TV.
Televisions: 13.75 million (1997).
Internet: Internet Service Providers (ISPs): 24 (1999). By June 2011, all sub-districts in Indonesia will be connected with internet.
Working Conditions
The Indonesian labor force is estimated at about 95 million, two-thirds ofwhich is between the ages of 15 and 34, and two-fifths of which is made up ofwomen.
While workers were allowed to join a single union established by thegovernment under the Suharto regime, new regulations put forth in 1998 haveallowed the formation of more than 2 dozen new labor unions.
Indonesia has also traditionally sent large numbers of workers overseas, bothlegally and illegally.
Compensation and benefits in Indonesia
Basic salary is given on a monthly basis, and an annual incentive is legallyrequired. Some companies resort to deferred compensation while othersinclude various allowances.
The retirement process, along with its specifications, is governed by thePension Law and the legal entity of Dana Pension is created in the absence ofa trust law.
Chapter – 1.4OVERVIEW OF BUSINESS AND
TRADE
AT
INTERNATIONAL LEVEL
14
FOREIGN INVESTMENTS
Due to liberalization in the economy i.e. economic reforms the foreign investments
opportunities has improved tremendously. Indonesia’s foreign direct investment,
FDI, has not yet recovered from post crisis falls. However, its foreign investment
regime is more open than before the crisis, generating potential opportunities in an
environment of ongoing reform. The outlook for foreign investment in Indonesia
also is assisted by the sale of state held assets and enterprises, more competit ive
export-oriented and import substitution sectors due to the weaker rupiah and a
more open economy. Opportunities are diverse. Foreign investors can purchase
assets from IBRA’s sizeable bank equity holdings, operate retail outlets, distribute
goods produced locally and apply to import and distribute other products. They also
can enter joint ventures to supply educational, medical and infrastructure services
including telecommunications.
International Trade
Major Exports Exports Partners Major Imports Imports Partners
Oil and gas Japan 20.7%, US
10.2%, Singapore
9.2%, China 8.5%,
South Korea 6.6%,
Malaysia 4.5%,
India 4.3%
Machinery and
equipment
Singapore 13.2%,
China 11.5%,
Japan 8.8%,
Malaysia 8.6%,
US 6.4%,
Thailand 5.8%,
Australia 4%
Electrical
appliances
Chemicals
Plywood Fuels
Textiles Foodstuffs
Rubber
Exchange Rates
For many years, Indonesia has had an exceedingly complex exchange system,
with a large number of buying and selling rates, a wide spread between rates, and
various mixtures of free market elements with fixed rates. Another aspects of
complexity of the Indonesian exchange rate structure has been the frequent
changes-at least one in each year since 1955-and the practice giving different
names to basically the same exchange rate structure.
15
Trade Restrictions
A trade restriction is an artificial restriction on the trade of goods between two
countries. It is the result of protectionism.
Indonesia’s Trade Regulation Agreements:Indonesia is part of many different Trade Agreements with countries around the
world. The largest of these is the General Agreement on Tariffs and Trades (GATT),
which Indonesia joined during the Uruguay round negotiations from 1986-1993.
Indonesia has also joined in different regional agreements such as Asia-Pacific
Economic Cooperation (APEC) and ASEAN Free Trade Area (AFTA). APEC and
AFTA both allow for member economies to grow and strength due to the decreasing
and elimination of tariffs and non-tariff barriers to trade. These international
agreements that Indonesia has entered into have allowed for many different
countries to have easier trade with Indonesia on all matter of goods. There are
however still groups of goods that are taxed by Indonesia upon entering the country
as well as the 2.5% tax on all goods entering the country.
An embargo is the partial or complete prohibition of commerce and trade with a
particular country, in order to isolate it. Embargoes are considered strong diplomatic
measures imposed in an effort, by the imposing country, to elicit a given national-
interest result from the country on which it is imposed.
Import Taxes in IndonesiaImports into Indonesia are broken down into 4 classifications (A, B, C, and D) based
on the need for the goods. These different classes of goods receive different duties
based on the Harmonized System Code (HS), which Indonesia adheres to.
Class A (0-10% duty) Organic foods, medicines and clothing
Class B (10-40% Duty) most raw materials and spare parts of industry
Class C (50-70% Duty) locally manufactured and produced goods, which have,
Import protection
Class D (up to 200% Duty) Items above and beyond that which is needed for
everyday life.
16
DEVELOPMENT IN SCIENCE & TECHNOLOGY ININDONESIA
Current technology available:
Indicators of Indonesia’s technological development.
Classifying industries at different levels of technological intensity may be
misleading when low-technology products can use relatively sophisticated
technological processes.
Accordingly, firms in high-technology industries may be simple assembling
plants.
Percentage of GNP invested in research and development:
For 2010, the Indonesian government has allocated Rs. 1.9 trillion for R&D,
which is less than one percent of the total state expenditure.
The most recent five-year plan to promote S&T activities is the NMDP for
2004-2009 is following:
To sharpen R&D and engineering priorities in S&T to be oriented towards the
demand of the private sector and the need of society, following a clear
roadmap.
To enhance S&T capacity and capability by strengthening S&T institutions,
resources and networks at the central and regional level.
To create a suitable innovation climate with an effective incentive scheme to
foster industrial restructuring.
To implant and foster S&T culture in order to enhance Indonesia’s civil
development.
The national investment on R&D activities attained a level of Rs. 18000.16
crores in 2002-03. The same is estimated to be Rs. 19726.99 crores in 2003-
04 and Rs. 21639.58 crores in 2004-05.
Sector-wise percentage of national R&D expenditure during 2002-03 was
from Central Government 62.0%, State Government 8.5%, Higher Education
4.2%, Public Sector Industries 5.0% and Private Sector Industries 20.3%.
17
Industry spent 0.47% of their sales turnover on R&D in 2002-03.
There were 11,304 women directly engaged in R&D activities.
Technological skills of the labour force and general population:
Labour conditions in Indonesia over the last year have shown some
improvement, as indicated by the increasing employment and falling
unemployment.
In 2010, the labour force numbered 116 million people, an increase of 2.26
million from 2009, while the number of employed people was 107.41 million,
an increase of 2.92 million from 2009.
The rate of open unemployment in Indonesia in 2010 was 7.41percent; lower
than the 2009 figure of 8.14 percent.
Human rights
Indonesia has played an active role in the protection of human rights through
its membership of the UN Human Rights Council from 2006 to 2010.
In 2005, Indonesia passed law No.11/2005 regarding the ratification of
international covenants on economic, social & cultural rights.
General population
According to the 2010 Population Census, Indonesia’s population is
237,556,363, of which 119.5 million are male and 118 million female.
A report by the United Nations Development Program (UNDP) in 2010 shows
that the life expectancy of Indonesians has increased dramatically, rising from
54 to 71 years in the period between 1980 and 2010.
Chapter – 1.5
OVERVIEW OF INDUSTRIESTRADE AND
COMMERCE
18
CHANNELS OF DISTRIBUTION OF INDONESIA
Retailers
The Indonesian retail sector began its rapid expansion in 1999, when a Presidential
Decree allowed Carrefour, a French retailer, to increase its outlet numbers in
Jakarta. Indonesian retail sector grew and consumers benefited from stronger
competition between retailers. Modern retail businesses such as hypermarkets,
supermarkets, and mini-markets are replacing more traditional retail outlets,
including wet markets and independent small grocers.
Numbers of retailers and outlets
Role of chain stores, departmental stores, and speciality stores
There are five players in the hypermarket group and three of them dominate the
market. In 2008, Carrefour had 48.7 percent of hypermarket sales, followed by Hyper
mart with 22.1 percent and Giant with 17.8 percent. In addition, there are six
supermarkets in the supermarket group that have 76 percent of supermarket sales.
Indonesian mini-markets are essentially upgraded traditional road side stalls that
carry essential staple goods, some frozen items, and fresh fruits. Low prices
compared to the major retailers are one of their selling points.
Wholesale middlemen
The modern wholesaler sector is expanding rapidly. Wholesaler sector will
increasingly import produce and other products directly from foreign exporters, or will
be supplied directly by local manufacturers and fresh produce suppliers or growers.
19
Distribution channel of Indonesian market
Warehousing
This segment is the most likely to purchase imported products and stores it. Imports
can account for anywhere between 5 and 30 percent of the food items sold,
increasing to 60 percent for specialty retailers catering to higher end consumers. In
the near future, smaller quantities of imported products are expected to be featured,
but with a greater variety of brands and items.
Penetration of rural and urban market
In Indonesia rural sector and urban sector have low difference in terms of
penetration where rural market consist of 44.1 percent of the total market coverage
and urban sector consist of around 52 of the total sector, if we see from the point
view retailer and wholesaler, the retailers are in a dominant position
20
MEDIA
Availability of various media in Indonesia
Media freedom in Indonesia increased considerably after the end of President
Suharto's rule, during which the now-defunct Ministry of Information monitored and
controlled domestic media and restricted foreign media. The number of printed
publications had increased significantly since 1998. There are hundreds of new
magazines, newspapers, and tabloids. By 2002, newspaper reach had climbed to
over 40 percent of the adult population of the country.
The media of Indonesia consist of several different types of communicationsmedia:
Television
Radio
Cinema
Newspapers
Magazines and
Internet-based Web sites
Some of the leading news paper of Indonesia are Jakarta Globe - Indonesia's
newest newspaper The Jakarta Post - English, Kompas - mass-circulation daily -
Indonesian, Media Indonesia - mass-circulation daily – Indonesian
Radio Republic Indonesia (RRI) - public, operates six national networks, regional
and local stations, external service Voice of Indonesia. Several Indonesian radio
stations are available as free streaming audio service on Internet.
Television network comprises of Satellite, Cable, Terrestrial and mobile network.
Indonesia’s Media industry is believed to grow moderately. Nielsen Media Research
Indonesia reported that in 2009 Advertising Expenditure (ADEX) reached IDR48.6
trillion, reflecting a 16.5% growth from IDR41.7 trillion in 2008. The three largest sub-
sectors in media industry are television, newspaper, and magazine (including tabloid
and others).
21
There are various ad agencies which help which provide regional and international
development aid or assistance, divided between national (mainly OECD countries)
and international organizations. Some of the large agencies namely are Indonesia
Advertising, Lumba2Studio, and The Alternative Media Group.
As far as the coverage of the various media is concerned, radio holds the maximum
share.
The reach of newspaper, television and radio is shown below:
Newspaper and periodicals circulations daily:Newspaper and periodicals circulations daily – 4782000 copies
Television:Number of television – 13750000
Source – Tenlab May 2002
Television receivers – 13750000
Radio:Number of radio – 315000000
Source – UNESCO Institute of Technology
Radio Receivers – 31500000
Chapter – 1.6
INTER-RELATION OF INDIA &INDONESIA
22
INTER RELATIONS OF INDIA-INDONESIA
India and Indonesia are close geographical neighbors who share a maritime
boundary. We have shared close cultural and commercial contacts over the last two
millennia. During our respective struggles for independence, the national leaderships
of the two countries collaborated closely in supporting the cause of Asian and African
independence. India took a big step in that direction with its ‘Look East Policy’.
India and Indonesia: Emerging Economies in Asia
The economies of both India and Indonesia have undergone massive reforms in the
past two decades. Among other things, this has facilitated trade, investment
liberalization, fiscal and monetary policy reforms, and infrastructural up gradation.
Trade and Investment Potential
Dr. Manmohan Singh, prime minister of India and Dr. H. Susilo Bambang
Yudhoyono, president of Indonesia, inked a bilateral strategic partnership agreement
in November 2005. As part of the agreement, the two sides agreed to increase
bilateral trade up to $10 billion by 2010.
Cooperation in the Energy Sector
Anil Dhirubhai Ambani Group’s Reliance Power also acquired three coal mines in
Indonesia and plans to invest over Rs. 3,000 crore in that country. In June 2010, it
announced that it plans to buy two Indonesian coal companies through its unit. In the
past two years, almost all power giants - NTPC, Essar Power, Adani Power, JSW
Energy, Indiabulls Power and Lanco Infratech - have been exploring options to own
coal mines in Indonesia, to fuel some of their proposed projects.
23
Investment and Manufacturing Sector
The India-Indonesia JWG notes that while the two countries are destinations of FDI
inflows, they have also emerged as sources of outward investment in different
sectors. Specific areas of mutual interest which both countries can exploit in close
collaboration include energy agriculture and fisheries, forestry, transportation, SEZs,
etc.
Services Sector
With reference to the trade in services, the JSG identifies several sectors for
enhanced cooperation between India and Indonesia. These include IT,
telecommunications, financial, audio-visual, education, health, tourism and travel,
professional services, and transportation.
Co-operation in Disaster Management
Both India and Indonesia having long coastlines are prone to natural disasters like
cyclonic storms and tsunamis. In the past, India has provided material and personnel
assistance to Indonesia during tsunamis and earthquakes.
Trade and Investment relations
Indonesia is our third largest trading partner in the ASEAN bloc. Bilateral trade
registered in 2010-11 stood at USD 14.8 billion. Major Indian companies operating in
Indonesia include the Aditya Birla Group which has a viscose fiber plant and
downstream units; Essar, which has a cold-rolled steel mill near Jakarta; and Jindal
Stainless Steel in Surabaya. There are two Indian motorcycle manufacturers - Bajaj
and TVS - in Indonesia. The State Bank of India and the Bank of India have
branches in a number of Indonesian cities. Tata’s own 30% of the two largest coal
mines in Indonesia.
24
Co- operation in the field of Science and Technology
An MOU on Cooperation in Science and Technology and a Plan of Cooperation on
Science and Technology were signed during the State Visit of President Yudhoyono
in January 2011. The Indian Space Research Organization (ISRO) and the National
Institute of Aeronautics and Space of Indonesia (LAPAN) have signed an MOU on
Cooperation in the field of Space Application, Capacity Building, Remote Sensing
and Space Technologies. ISRO has launched Indonesian satellites. LAPAN has
provided logistical and technical support to ISRO for the setting up its Telemetric,
Tracking Command.
GCR PART II
INDUSTRY ANALYSIS
Chapter – 2.1CEMENT INDUSTRY
25
INTRODUCTION OF CEMENT INDUSTRY
Cement is the glue that holds the existent unitedly, and is thus grave for converging
guild's needs of protection and canonical infrastructure specified as bridges, roads,
element communicating facilities, schools and hospitals. Being one of the
fundamental elements for environment up forceful and anicteric fund, Cement plays
a decisive enactment in economic development of any region.
The manufacturing deliver of filler consists of mixing, drying and attrition of
limestone, clay and silica into a composite body. The motley is then hot and burnt in
a pre-heater and kiln to be cooled in an air-cooling method to create fragment, which
is the semi-finished word. This fragment is cooled by air and later earth with gypsum
to contour filler.
Cement is a cyclical industry in which endless periods of growth are interspersed by
shorter periods of descend. This also way that as an overview the wares of markets
in healthy at any one participate tell transcends those in react. This is an grave
transform out for the long-term somebody of the filler facet.
The key growth drivers for cement phthisis are collection growing (maximising status
for housing, commercial building and infrastructure) and system growth (dynamical
up the use of filler per capita). Rapid status and the untouched money possess
guidance to an increment in rendition and utilization crossways Bharat, attracting
plain the worldwide players.
Filler is a spheric manufacture made up of decentralized markets. When a
abstraction is both grim and gaudy, job costs meliorate key cipher in determining its
vantage, so cement plants requirement to be close to customers. Nasal immersion of
filler production may be referable to overlooking city costs and lengthened gestation
periods in object job.
26
GLOBAL CEMENT SCENARIO
According to the leading manufacturer of cement equipment in the concern, FL
Suffragist, earth filler demand is set to grade on intermediate between 3.6% and
4.8% per year in the forthcoming eld. At the like cover, the Portland Filler Connection
(the US cement sector's trade body) is expecting man cement utilization to moderate
author than 6% yearly in the next two life, achievement 4.9 1000000000000 function
tons by 2012 (judgment Oct 2010). Spell a lot of this growth is set to uprise from
uphill maturation markets in Midway and Southeastern Assemblage and Collection,
enlargement in grown-up markets also looks hefty.
WORLD CEMENT PRODUCTION
Regionally, Asia contributes around 70% to group production and includes in 9 of the
20 leading producing countries. Sandwich Assemblage had about 8% of tally sign;
the Mid Easternmost (including Land) and Solon Ground, nearly 6% each Africa,
Halfway Ground and Region U.s.a. (united), and the Commonwealth of Autarkic
States, active 4% apiece and Asian Europe, about 2%.
One States is the largest trader of cement in the humankind, with come job of US$
1,396 million during 2008, followed by Frg, Belgium and Netherlands with enumerate
transaction of US$ 945 cardinal, US$ 744 cardinal and US$ 562 meg, respectively.
Despite being the agreement largest maker of cement in the group, India is not
amongst the stellar traders of cement.
27
INDONESIAN CEMENT INDUSTRY
In Indonesia, nine cement companies control 15 cement plants with a number
installed production ability of 46.1 million metric tons (MMT). PT Semen Gresik, PT
Semen Padang, and PT Semen Tonasa are division of the Humor Gresik Forgather,
which is 51% owned the Authorities and holds the maximal marketplace apportion of
45.3%. PT Indocement Tunggal Prakarsa, a assistant of Heidelberg of Germany, is
the second-largest player with a market assets of 29.6%, and PT Holcim State, a
underling of Holcim of Schweiz, is the base largest with a market portion of 15.2%.
The top triplet companies have a 90% distribute of the industry. PT Semen Gresik,
PT Indocement Tunggal Prakarsa, and, to a lesser extent, PT Holcim Country apiece
manipulate individual mountainous plants crosswise the state. Nevertheless, 73% of
their capacity is in Drinkable, which accounts for over two thirds of their income. The
another quaternion companies (PT Seed Andalas Land [SAI], PT Humour Bosowa,
PT Ejaculate Baturaja, and PT Seed Kupang) each run a only set or a few small
plants in Sumatra or in different islands.
ROLE OF CEMENT INDUSTRY IN INDONESIA
The Cement Industry is growing at a good pace of around 9 % on an average of past
3 years annually compared to Its GDP of 6.6%.
Also the domestic consumption of cement in Indonesia is increasing at a high speed.
Indonesia’s cement per capita consumption is 172kg, while that of India is 143kg.
28
BUSINESS ACTIVITIES OF CEMENT INDUSTRY IN INDONESIA
There are seven main players with a combined design clinker capacity of 40.7 million
tons per year and cement 44.9 million tons. Cement output in 2009 was 39.6 million
tones. Housing and infrastructure sectors constitute a major part of the total demand
for cement in India.
Design Capacity: 54.4 m ton
Domestic Growth: 17.7%
Domestic Utilization: 89%
Total Utilization: 91%
Supply:
Domestic: 48.0 m ton
Export: 1.2 m ton
Import: 1.8 m ton
Key Drivers of Domestic Cement Demand: National Economic Growth
Favorable Interest Rate Environment
Infrastructure Expansion
Per Capita Consumption increase from Current Low Levels
29
INDIAN CEMENT INDUSTRY
The Cement industry in India dates back to 1914, with the setting up of its first unit in
Porbunder. It is considered as one of the core infrastructure industries. India holds
No. 2 position in the world in terms of Cement Production globally. It is just behind
China with a total industry capacity of over 200 million tonnes. It is considered to be
a core sector accounting for approximately 1.3% of GDP and employing over 0.14
million people.
During recent times, the Domestic Cement Demand Growth is increased at a good
pace, which has helped to the economic growth of the country. The cement demand
growth rate over the past five years was at 8.37 %, which was higher than the rate of
growth of supply at 4.84%. Demand for cement in the country is expected to rise on
the back of robust economic growth.
The Indian cement industry is extremely energy intensive and is the third largest user
of coal in the country. It is modern and uses latest technology, which is among the
best in the world. Also, the industry has tremendous potential for development as
limestone of excellent quality is found almost throughout the country. In other words,
it is experiencing a boom on account of overall growth of the Indian economy.
Some of the various types of cement produced in India are:
Clinker Cement
Ordinary Portland cement (OPC)
Portland Blast Furnace Slag Cement (PSC)
Portland Pozzolana Cement (PPC)
White Cement
Oil Well Cement
Sulphate Resistance Cement
Rapid Hardening Cement
30
INDIAN CEMENT INDUSTRY STATISTICS
Large Cement Plants
Companies (Members) (Nos.) 42
Cement Plants (Nos.) 139
Installed Capacity (Mn. tn.) 234.30
Cement Production (Mn. tn.) 2009-10 168.29
Plants with Capacity of Million tonnes and above (Nos.) 97
Manpower Employed (Nos.) Approx 1,20,000
Turnover in 2010 (Mn. US$) around 18,000
Cement Map of Gujarat
All India Ranking – 5
(As on 31st March, 2011)
(Cement Production in Million Tonnes)
Year Capacity CementProduction
CementConsumption
CementExport
2010-2011 18.72 12.19 13.08 2.53
2009-10 16.82 11.49 11.54 3.23
2008-09 19.62 15.21 12.09 5.06
2007-08 19.07 15.40 11.68 5.11
2006-07 17.47 15.22 10.08 7.83
31
CEMENT PLANT INSTALLED CAPACITY GROWTH IN INDIA
The cement plant installed capacity of Indian Cement Industry is growing at almost
8-10% every year. In 2010, cement capacity went up to 235.9 Mt.
EXPORTS OF CEMENT FROM INDIA
Exports of cement (total) decreased to 3.42 million tonnes in 2009-10 from 4.82
million tonnes in 2008-09. Portland grey cement had a share of 82% and cement
clinker 12% in the total cement exports. Portland white cement and other cements
together had a 6% share. Exports of cement in 2009-10 were mainly to Malaysia
(30%), UAE (21%), Iraq (20%) and Yemen Republic (12%).
IMPORTS OF CEMENT FROM ABROAD
Cement imports in 2008-10 increased to 6.2 lakh tonnes from 2.12 lakh tonnes
in 2008-09. Grey cement had a share of 61% in the total cement imports in
2007-08 followed by cement clinker (28%), other cements 10% and white
cement (<1%). Main suppliers in 2007-08 were Pakistan (61%), Bangladesh
(9%), UK (8%), China and Japan (6% each).
INDIA’S CEMENT TRADE
Cement has traditionally not been among India’s major traded products. During
2010, India was the 44th largest cement-trading nation in the world.
Trade in cement is also underway with the neighboring countries and countries in
Africa and West Asia. L&T (now a part of Grasim), Gujarat Ambuja Cements Ltd and
Jaiprakash Industries are the top exporters. The western region, due to its proximity
to the coasts, accounts for 92.4 per cent of total exports, of which Gujarat holds a
share of 76 per cent.
32
GOVT REGULATIONS IMPACTING ON INDONESIAN CEMENTINDUSTRY
Manufacture and Exchange, Ministry of Communications and the Asiatic Cement
Remembering (ASI) has observed the quota supported on factories activity,
production volume, and the premise of the cement market in the location. The
purport of this organization of system and quota was to swan filler give and stem in
every domain at a relatively lasting price.
Furthermore, in visit to have the unchangingness of filler terms in the land, the
regime has ingrained Pegged Pricing Scheme with Peak Retail Soprano HET)
method, the soprano is monitored at all nowadays to insure that the soprano of
cement on the mart is within just capability.
The authorities originally set the toll of Rp.1.650/bag on 17 Feb 1974. And by
Ministry of Line Decree No. 31 9/KP/IV/1979 afterwards the HET scheme is varied
into Localised Cost Criterional (Harga Patokan Setempat-HPS) system. The topical
filler prices in the servant markets are upto Rs 4100 per bag (equal to Rs.41/Kg) in
2010, or some 35% higher than the 2008 state.
QUALITY STANDARDS
The Government has set standards for the quality of cement products as given in SNI
15-2049-2004, which is the standard for Portland cement of the I, II, II,IV, and V
types. Standards for other types of cement have also been set by the government.
33
GOVERMENT POLICY TOWARDS CEMENT INDUSTRY ININDIA
Government Policies in India have affected the growth of cement units at various
stages. First and Foremost, there was total control on cement industry for a long
period of time, and then partial decontrol and thereafter the total decontrol has
contributed much to the gradual opening of the market for cement producers.
Following were the stages of the growth of Cement industry in India brief:
a. Price and Distribution Controls (1940-1981)b. Partial Decontrol (1982-1988)c. Total Decontrol (1989)
In India, the Department of Industrial Policy and Promotion (DIPP), under theMinistry of Commerce and Industry, is the nodal agency for the development of
cement industries, that is, it is involved in monitoring their performance at regular
intervals and suggesting suitable policy incentives, as per the requirement.
Some of the rules and orders, administered by DIPP, relating to the cement industry
are:-
Cement Control Order, 1967
Cement Cess Rule, 1993
Cement (Quality Control) Order,1995
Cement (Quality Control) Order, 2003
GOVERNMENT CONTROLS
The control of cement prices can be controlled through the prices of coal, power
tariffs, railway, freight, royalty and cess on limestone. Interestingly, all of these prices
are controlled by government.
34
ADVANTAGE TO INDIA FOR EXPORTS
India is the second largest country in the world after china in terms of cement production, with
an installed capacity of about 236 million tonnes (MT) in 2009–2010.
Between 2005–2006 and 2009-2010, sales and realization of cement has been estimated to
have grown at a CAGR of 10.6 per cent and 18.4 per cent, respectively.
The industry has witnessed continuous modernization and adoption of new technologies.
Almost 93 per cent of the total capacity is based on eco friendly dry process technology.
The sector is expected to add an additional capacity of 92.3 MT by 2013. As a result, the
industry will have a total installed capacity of above 350 MT by March 2013. The cement
industry employed 140,000 people in 2009.
POTENTIAL FOR EXPORT
India is the second-largest producer and consumer of cement in the world, hence there is a
significant potential to use & capitalize its per capita consumption of cement in the country,
which is very low in comparison to Indonesia.
The per capita consumption of cement in India is 143 kg, as compared with Indonesia of 172
kg. Thus, there is a good opportunity for India to Export Cement to Indonesia.
Chapter – 2.2
TEXTILE INDUSTRY
35
INTRODUCTION TO INDONESIAN TEXTILE INDUSTRY
• The textile industry in Indonesia, has already a long standing tradition and is
among the pioneering sector in industrial manufacturing.
• In Indonesia the weaving industry can be divided into two broad sectors, the
modern power-driven machine sector and the traditional hand-loom sector.
• The rapid growth in textile and food production during the 1970s was driven
by the import-substitution policy pursued by the government as a strategy to
provide adequate food and clothing for the people.
• The garment industry too began to emerge rapidly in the late 1970s in
response to rapidly rising demand in the domestic market and growth
opportunities in the export markets.
• Indonesia’s textile industry is vertically integrated and involved in almost every
sector of the textile supply chain from the production of man-made fibres,
particularly polyester, nylon and rayon; man-made and cotton yarn spinning;
and weaving and knitting; to dyeing, printing and finishing; and apparel
manufacturing.
• As the largest employer in Indonesia’s industrial and manufacturing sector,
the textile industry in 2005 employed 1.8 million workers in directly related
large- and small-scale operations and 3.7 million in indirectly related
operations. Textile industry workers altogether comprised 1.9 percent of total
employment in the republic.
* Central Bureau of Statistics ** Sept 1996
1995 1996 1997 1998 1999 2000
Population (million.) 195.4 198.5 201.9 204.9 208.2 211.5
Total Consumption (‘000
ton)1500 1,593 1,694 1800 1,913 2,034
Domestic (‘000 ton) 787 832 880 932 986 1.044
Consumption/head (kg) 4.0 4.2 4.4 4.5 4.7 4.9
Export Volume(‘000 ton) 713 761 814 868 927 990
36
Year 2008 2009
Product Value Volume Value Volume
Manmade
Fibres445 271 382 286
Yarns 1,719 680 1,601 723
Fabrics 1,610 307 1,316 255
Garments 6,016 415 5,659 390
Other Textile
Products353 95 303 104
Total 10,143 1,768 9,261 1,758
Table 2.2 Value of Textile and Textile Product Export in 2008 – 2009 ($1,000)
Year 2008 2009
Product Value Volume Value Volume
Manmade
Fibers1,637 917 1,181 749
Yarns 448 135 335 110
Fabrics 2,559 392 2,215 335
Garments 233 40 214 38
Other Textile
Products226 72 227 61
Total 5,103 1,556 4,172 1,293
Table 2.3 Value of Textile and Textile Product Import in 2008-2009 (In $1,000)
37
GENERAL CHARACTERISTICS OF TEXTILE INDUSTRY ININDONESIA
• The geographical distribution of the Indonesian textile industry is highly
concentrated on the island of Java, and in particular in West Java.
Interestingly is the process of batik printing, a traditional way of printing cotton
fabrics.
• The technology in the weaving sector is very mixed, from simple locally-made
handlooms used by village people even in remote areas to modern
computerised looms and air jet looms. In general, the Indonesian textile
industry is labour-intensive, and woman workers dominate the scene.
ROLE OF TEXTILE INDUSTRY IN INDONESIA
• The textile and apparel manufacturing industry of Indonesia ranks 14th in the
world in 2008, the value added by textiles and clothing manufacturing dropped
to 1.2%. Industry was hard hit by the global recession of the late 2000s.
• Textile industry is also the largest contributor to the foreign exchange
earnings of Indonesia.
• In 2009, the textile industry contributed 12.72 percent in foreign exchange
earnings on exports of industrial products, excluding oil and gas, and 9.58
percent to total non-oil exports, although 85 percent of cotton, as the raw
materials, is imported.
• That amount increased sharply from only US$ 559 million in 1985 . Besides
having a large contribution in the GDP and foreign exchange, the industry
also employs many workers, both who work directly or indirectly.
38
Structure of the Indonesian Textile Industries
The works weaving facet emerged in 1920.
The weaving manufacture was promoted by the government as a
businessperson of a fundamental commodity over the period 1950-65.
After 1965, turn in the weaving aspect through introducing powerfulness
looms instead of the pointer looms.
The ability tower sector began to declination apace and hand looms were
replaced with epic embedded textile mills.
The fiber industry is much more recent in origin.
Hand spinning of localized and imported fibers has protracted existed as an
occasional unit reflection in Country, but a lesser mill aspect did not produce
until the 1930.
The moving production enlarged symmetrical many rapidly than weaving
because of field revolution.
The industry seasoned a lag in the growing rate of actual creation during
1980-85. indicating a 12.3 % growth per annum, though it had realized 13 %
annually in 1976-80.
Business activity of Indonesian cotton industry
A) Production :
• Indonesia produces only 0.5 % of their total domestic demand of cotton.
• Indonesia’s cotton production was decline to 25000 bales from 30000 bales in
2009-10.
B) Consumption :
• The Indonesian textile and textile products industry employs about 1.3 million
workers which equals to 10.6 % of the total work force in 2009.
• Textile product exports contributed 7.4 % to total Indonesian national exports.
39
TEXTILE INDUSTRIES IN INDIA
Present position of textile business in India
• Industrial output 14%
• Export 30%
• Employment
Current Scenario
• Domestic market of textile in India is expected to increase up to US$
60 billion by 2012 from the current US$ 34.6 billion
• Textile market US, UAE, UK, Germany, France, Italy, Russia, Canada,
Bangladesh and Japan
Textiles and Garments Exports from India
• Textile and garment exports by India may reach $31 billion to $32 billion in
2011-12
• India shipped out textile products and garments worth $26.8 billion in the
2010-11
Trends of Textile Business
• Introduction of Bt-cotton seed in India, the cotton production in the country
doubled to
• 340 lakh bales in 2011-12 from 164 lakh bales in 2004-05
• New investment of Rs.500 billion in the textile industry in the last five years
• India's cotton production increased by 57% over the last five years
40
Cotton Production in India and Gujarat
• India is the second largest producer of textiles and garments after China
• Since its introduction in 2002, Bt cotton has been a major success story in
Indian agriculture
• Bt cotton area is expected to again reach 90 percent of total area in MY
2011/12
• India’s marketing year 2011/12 (August/July) cotton production is forecast to
increase to a records 27.3 million bales
• India’s cotton consumption in MY 2010/11 is estimated at 21.5 million bales,
more than 10 percent above the previous year
FOREIGN TRADE REGULATIONS: INDONESIA
GROUP-A
• Includes rice, flour, iron and steel products, chemicals, organic and
pharmaceutical products, cotton, medicine, fertilizers and insecticides,
agricultural and industrial machinery and some raw materials
GROUP-B
• Includes materials and spare parts for industry
GROUP-C
• Is made up of locally produced goods that require import protection
GROUP-D
• Is made of luxury products, some consumer goods and some goods produced
locally.
• Importers must have API, temporary API, and limited API. Importers must
have an import license delivered by the Ministry of Industry and trade.
41
IMPORT LICENSES FOR DOING BUSINESS IN INDONESIA
• For businesses to import goods into Indonesian custom areas, itrequires an import identification number known as API. There are twotypes of API:
• A General Import License or API-U may be used to import finished products
or to trade goods with a third party. Licenses are issued by the Head of the
Provincial Trade Service Office of where the company is based and take
around 2 months to obtain. The API-U is valid for 5 years and then subject to
renewal.
• A Producer Import License or API-P that may be used to import raw
materials, unfinished products and goods for the production process for the
company’s use only. Licenses are issued by BKPM. (Please see Useful
Documents - Application for Producer Importer ID Number)
• Licenses are limited to a particular industry area and do not permit importation
of goods not related to the sector of business.
42
EXPORT TRADE REGULATION IN INDIA
A) Registration with Reserve Bank of India
- To obtain IEC number
- But now this job is being done by DGFT.
B) Registration with Export Promotion Council
- Non-profit organisation
- Government of India and act as a platform for interaction between the exporting
community and the government.
- So its important for an exporter to obtain a registration cum membership certificate
(RCMC)
C ) Registration with Commodity Boards
- Designated by the Ministry of Commerce, Government of India
D) Registration with Income Tax Authorities
- to get the benefit of tax exemption
43
EXPORT LICENSE ISSUING IN INDIA
A) Issued by the appropriate licensing agency
• Export license depends on the nature of goods to be transported as well as
the destination port.
• What are you exporting?
• Where are you exporting?
• Who will receive your item?
• What will your items will be used
B ) Canalisation
• can be imported only by designated agencies.
• E.g.. an item like gold, in bulk .
C ) Exports Free unless regulated
• Any goods, not included in the ITC (HS) Classifications of Export and
Import items may be exported without a license
44
Present Trade Barriers
Since Apr, India's use of varied restrictions on shrub exports has greatly more
to the volatility and uncertainty in the grouping cotton industry.
By introducing an unnatural gap between world and internal prices, India's
undetermined commodity programme conveys benefits to their textile
manufacture at the disbursement of textile industries in remaining countries.
When an commerce land institutes mete restrictions, the potential upshot is
for mankind prices to be pushed higher time interior prices are pressured
inferior.
India declared that the goods ban would be lifted on Oct 1 and mortal prices
immediately echoic the due removal of the export ban.
India's price again moves to a considerable allowance qualifying to the "A"
Forefinger as the goods entering process is halted and harvest approaches.
Business Opportunities In Future
• Based on these historical observations, the scenario assumes that India’s
exports increase by an amount necessary to reduce ending stocks to 28% of
mill use.
• Under the scenario, ‘09/10 exports are estimated to increase to 7.76 million
bales and ending stocks would be 5.46 million bales. The resulting exports
would be 1.21 million bales above ‘09/10 actual exports.
• While continuing to push for a complete ban on exports, growth in India’s
textile industry is bolstered by the presence of a number of government
subsidies.
• With Increasing Population and passing time Indonesian textile market is
going to expand for all the other various reason. Export of garments and other
textile products from Indonesia has grown over time n will grow more through
we have to find the best opportunities for business.
Chapter – 2.3
DAIRY INDUSTRY
45
INTRODUCTION TO INDONESIAN FOOD PROCESSING INDUSTRY& ITS ROLE IN INDONESIAN ECONOMY
Overview
Food processing industry in Indonesia is serving a population of 240 million people
with food and ingredients. The output of this sector grew by 176.3% from 2000 to
2009 putting the industry as a whole at a value of 194$ billion at the end of 2010
according to the Indonesia food and beverage business association. The domestic
consumption and spending on food and beverage has been steadily increasing at a
rate of 14.1% a year from 2006-2010. The total sales of processed food during 2010
reached at 63.4$ billion and at that time it was projected to increase by 13% in the
year 2011 with a value of 76.59$ billion according to the Indonesia food and
beverage business association.
Package Processed Food Retail Sales in 2010 (IDR billion)
Source: Union of Dairy Cooperatives
2.4
11.81.7
11.5
2.2
7.1
2.4 6.94.2
45
INTRODUCTION TO INDONESIAN FOOD PROCESSING INDUSTRY& ITS ROLE IN INDONESIAN ECONOMY
Overview
Food processing industry in Indonesia is serving a population of 240 million people
with food and ingredients. The output of this sector grew by 176.3% from 2000 to
2009 putting the industry as a whole at a value of 194$ billion at the end of 2010
according to the Indonesia food and beverage business association. The domestic
consumption and spending on food and beverage has been steadily increasing at a
rate of 14.1% a year from 2006-2010. The total sales of processed food during 2010
reached at 63.4$ billion and at that time it was projected to increase by 13% in the
year 2011 with a value of 76.59$ billion according to the Indonesia food and
beverage business association.
Package Processed Food Retail Sales in 2010 (IDR billion)
Source: Union of Dairy Cooperatives
16.7
2.5
16.5
1.912.2
Bakery Products
Meal Replacement Products, Pasta, ReadyMeals & SoupsDairy Products
Chilled Processed Food
Noodles
Spreads
Confectionery
Preserved Food
Baby Food
Ice Cream
Sweet & Savory Snacks
Frezon Processed Food
Oils & Fats
Sauces, Dressings & Condiments
45
INTRODUCTION TO INDONESIAN FOOD PROCESSING INDUSTRY& ITS ROLE IN INDONESIAN ECONOMY
Overview
Food processing industry in Indonesia is serving a population of 240 million people
with food and ingredients. The output of this sector grew by 176.3% from 2000 to
2009 putting the industry as a whole at a value of 194$ billion at the end of 2010
according to the Indonesia food and beverage business association. The domestic
consumption and spending on food and beverage has been steadily increasing at a
rate of 14.1% a year from 2006-2010. The total sales of processed food during 2010
reached at 63.4$ billion and at that time it was projected to increase by 13% in the
year 2011 with a value of 76.59$ billion according to the Indonesia food and
beverage business association.
Package Processed Food Retail Sales in 2010 (IDR billion)
Source: Union of Dairy Cooperatives
Meal Replacement Products, Pasta, ReadyMeals & Soups
Sauces, Dressings & Condiments
46
Present Scenario
In 2010, Indonesia’s fresh marketed milk production was about 1.4 million liters per
day (approx.) amounting to most 0.47 million ton per year. This total meets exclusive
25-30% of the farm needs, the remnant are imported. Imports are mainly obtained
from Oceania (Country, New Zealand), EU and USA.
According to the Ministry of Cultivation, over the last five years milk production has
hyperbolic steadily from 535,962 tonnes in 2005 to 927,838 tonnes in 2010. This
represents an cypher yearbook increment in milk production of 14.6 pct. In 2010, the
maximal farm creation province of Easternmost Beverage, accounted for 57
proportion of the tally domestic river production, followed by Westward Java with 29
pct share and Nuclear Java with 11 proportionality.
Market Share of Milk Processors in Indonesia
Milk processors Volume
(million ltr/year)
Market
ShareNestlé Indonesia 162 35.8
Frisian Flag Industries/Foremost 123 27.1Indomilk/Indolacto 68 15.0Ultra Jaya 30 6.6Sartihusada 12 2.7Others 58 12.8Total 453 100
Source: Indonesia Dairy Corporation
Indonesian Economy
In Indonesia there is a mixed economy where both the private sectors and
government sectors plays an important role in the economy. In Southeast Asia,
Indonesia has a largest economy and it is also a member of G-20 major economies.
In 2010, the gross domestic product (GDP) of Indonesia was $706.73 billion and
estimated nominal per capita GDP was $3015 and per capita GDP PPP was $4394.
47
Contribution of all Industries in Indonesian GDP
Source: Indonesian Statistics (BPS)
According to the Indonesian Food and Beverage Business Association the total
output of this sector is grown by 176.3% over the period of 2000 to 2009. This
industry has a total value of $194 billion at the end of 2010. The total sales during
2010 were reached $63.4bn and were projected to reach by 13% to $76.59bn in
2011 according to GAPMMI. The processed food industry has its contribution to
exports has been increasing from $3.7bn in 2009 and $5.7bn in 2010.
Food Processing Industry Structure
48
COMPARATIVE POSITION OF FOOD PROCESSING INDUSTRYWITH INDIA
Indian Food Processing Industry
The food processing sector is highly fragmented industry, it widely comprises of the
following segments: Fruits and vegetables, milk and milk products, beer and
alcoholic beverages, meat and poultry, marine products, grain processing, packaged
or convenience food and packaged drinks. A huge number of entrepreneurs in this
industry are small in terms of their production and operations, and are largely
concentrated in the unorganized segment.
Share of Food Processing Industry & Its Segments
Source: D&B Research
Present Position and Trend of Business with India
India’s demand for dairy products and consumption of liquid milk are increasing
along with the production of dairy products. This trend is forecast for the year 2011.
The Indian consumption of nonfat dry milk is forecast to surpass Indian production
during 2011 and reflect the small growing deficit in dairy production and the need for
increased supplies. The consumption of butter is exceeding the domestic production
in 2010 and it will be the same in 2011 and 2012.
49
In India, the organized dairy sector having 40 to 50 percent of Indian dairy farmer
work and it is also estimated that about 65% of milk in India is consumed in fluid and
other forms on the farm or by the unorganized sector which contains local milk
vendors, retailers, wholesalers, and producers. The organized and unorganized both
sectors distributing the total milk of which 46% in fluid form and the rest is in the form
of other milk products like butter, yogurt, milk powder etc.
Import-Export of Dairy Products
In 2010 Indonesia imported 302,158 tonnes of dairy products (worth US$925
million); this was an increase from 2009 of 12 percent in volume. The main
products imported in 2010 were SMP, WMP and whey. Imports of prepackaged
powdered milk products represent about 22 percent of the volume and 29 percent of
the value of total powdered milk consumption. There are at least 40 brands of
prepackaged imported powdered milk sold through various retail outlets in Indonesia.
India has started exporting surplus dairy commodities, such as skim milk powder,
whole milk powder, butter and ghee. The agricultural and processed food products
export development authority regulated the export and import of dairy products till
early 1990’s in the country.
Exports of Dairy Products from India
Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Quantity, MT 21439.81 8918.38 42160.06 59745.73 37391.11 -
Value, Rs Cr 153.59 87.11 358.69 552.28 395.15 557.61
Source: DGCIS/APEDA
50
POLICIES AND NORMS OF INDONESIA FOR DAIRY INDUSTRY FORIMPORT
Import Tariffs
Despite the very high bound tariff rates on dairy products, applied rates on most
products are five percent. The exceptions include some processed products, such as
yogurt, and some concentrated milk and cream, which are subject to a higher
applied tariff of 10 percent. Dairy imports face a number of regulations in Indonesia.
Finished milk products can only be imported by companies appointed by Indonesia’s
government. In the Import Duty Tariff Book published by the Finance Ministry, import
duties on milk products is 5% and value added tax (VAT) is 10%.
Product Registration
There are three types of registration numbers:
1. Training Certificate (Certificate Penyuluhan) – for a small company with
limited investment where monitoring is done by Regional Health Service by
providing guidance or training.
2. MD Number – for local food and beverage manufacturer with high investment
which is capable to comply with government regulation.
3. ML Number – for imported processed food and beverage products.
Labeling
Every packaged food products which are distributed in Indonesia must be labeled
in Indonesian language, Arabic numbers and Latin letters.
The special wording regarding content is necessary for labels of certain foods like
milk products, baby food, alcoholic beverages and halal foods.
The expiry date of product is necessary to shown on the packaging.
Food ingredients must be display on the label.
The name and address of manufacturer or the details of importers must be
shown.
Net weight and net volume of product must be shown on the label.
51
POLICIES AND NORMS OF INDIA FOR DAIRY INDUSTRY FOREXPORT
Dairy Production Policy
Dairy production in India is characterized by a low input-low outturn group, whereby
smallholder producers typically own no solon than quintuplet cows or bovid and use
locally procurable feedstuffs. While yields are below multinational averages,
production costs are amongst the worst in the group. Amerindian farm policy is
currently convergent in accretionary river production through a come of incentives
schemes.
In gathering 2010, the polity along with the National Dairy Use Enter, has worn up a
Person Farm Contrive, with a proposed outlay of around 378 Cardinal dollar to
nearly ambiguous the state's river creation by period 2020. This contrive instrument
focus on accelerando milk productivity of the Amerindic dairy concourse finished
individual way, including the use of imported biology as considerably as selective
acculturation of topical cows.
The National Dairy Development Board (NDDB)
The National Dairy Development Board (NDDB) was set up by the Government of
India, by an Act of the Parliament, as a statutory body and an institution of national
importance in the year 1987. NDDB promotes plans and organizes programmes for
the development of dairy and other agriculture based and allied industries along
cooperative lines. It also provides assistance for the implementation of such
programmes.
The Export Inspection Council and the National Productivity Council have been
notified by the Government of India as Quality Auditors to conduct periodic
inspections (once a year) of the units registered under MMPO to ascertain that the
specified sanitary, hygienic conditions and food safety measures are complied with.
52
Dairy Venture Capital Fund
The second intervention by the Government of India was at the financial level.
Recognizing farmers’ need for financial assistance for the up-gradation of traditional
technology to handle operations on a commercial scale using modern equipment
and for the up-gradation of the quality of milk, the dairy capital Venture Fund was the
initiated in the 10 Plan. Financial assistance is provided to small scale milk
producers for the establishment of small dairy farms; Purchase of milking machines /
milk-o-tester / bulk coolers etc.
ADVANTAGES AND CHALLENGES FOR INDIA
Advantages Challenges
Market size - Indonesia has a
population of around 240 million
people
Import regulations are often complex
and non-transparent and permits can
be difficult to obtain, thus requiring a
close business relationship with a
local agent
The industry is constantly creating
new products based on consumer
preference trends. These new
products often require ingredients
unavailable domestically
Quantities of ingredients for new
product and market trials are usually
not enough to fulfill the minimums
required by Indian suppliers
Indian products are considered to be
of high quality
Competitive products are often less
expensive, and are used equivalently
to Indian products
Applied duties on most food and
agricultural products are currently 5
percent, with a 10 percent applied
duty on certain processed foods
Weak purchasing power of the
majority of the population. Muslims
accounting for 88% of the population
require halal-certified products
53
EXPORT POTENTIAL
India is presently having enough potential to become the leading player in milk and
milk products export. India is having good location advantage, which is located
amidst major milk deficit countries in Asia and Africa countries. Major importers of
milk and milk products are Bangladesh, China, Hongkong, Singapore, Thailand,
Malaysia, Japan, Oman, Gulf countries, UAE and other countries located near India.
Low Cost of Production
Milk production is very scale insensitive and labour intensive. Because of low labour
cost, cost of production of milk is very low in comparison to other countries.
Quality
To increase quality and maintain good standards of the production, significant
investment has to be made in milk procurement, equipments, chilling abd
refrigeration facilities. Training should also be given to the workers so the wastage
becomes less and products becomes of good standard. These also results into good
quality which can pass international standards.
Productivity
To have an exportable products surplus in the long term and also to maintain low
cost competitiveness, it is imperative to improve productivity of the indian cattle.
There is a vast market for the export of traditional milk products such as ghee,
paneer, shrikhand and other ethnic sweets to the large number of Indians scattered
all over the world.
54
BUSINESS OPPORTUNITY FOR DAIRY PRODUCTS
Commentary OpportunityMarket Settings &
Trends
Cheese-Based Products A good market with sound
growth prospects and
many Indonesian
companies are seeking
engagement with
Australia.
A limited number of
Australian suppliers can
readily find good local
associates. There are
companies interested in
JV operations to produce
cheese from Australian
curd and also import
cheese in bulk and pack
for the local market.
Liquid Yoghurt Drinks Demand is sound at the
high end of market.
Challenge is to produce for
the medium/low market
sector.
Opportunities may lie in
developing a strong brand,
in association with an
existing Indonesian dairy
producer.
Establishing integrated
Dairy Operations
Improving for the
commercial investments
and an integrated model
appears most partners.
Several are already are
working with Australian
principals to produce block
cheese.
Flavoured Milk Limited market,
undertaken by some
potential may exist for
existing dairy companies.
The business climate is PT
Greenfield has
demonstrated that
investment in this sector is
viable, with strong local
licensing brands.
Ice cream & Dairy Ice
Confectionery
Currently limited to the
upper income range of the
market with limited growth
Potential to develop the
niche products in A1
income group market.
55
potential – until there is
broader based income
growth.
Possibilities also to test
low cost ice-cream and
ices for a wider consumer
base, as these have
proved popular elsewhere
in Asia, in urban centers.
Chapter – 2.4MINERALS INDUSTRY
56
INTRODUCTION OF THE MINERAL INDUSTRY
Minerals are natural compounds produced through geological processes. Iron,
calcium, potassium, and sodium are some of vital minerals. Humans need small
amounts of about 14 minerals to sustain usual body function and good health.
Minerals are neither animal nor vegetable; they are inorganic.
Types of Minerals
Macro Minerals
Micro / Trace Minerals
Mineral role in the economy of IndonesiaIndia’s Gross Domestic Product (GDP) growth was 6.1% in 2010. The state's
developed outturn accounted for 24.8% of its totality GDP based on purchasing
cognition conservation of $1.03 trillion. The progressive sphere grew by 4.5% in
2010. The ontogeny of minerals and oil and gas continuing to modification a alpha
part in the land's efficient growth. The valuate of petrified goods production
accounted for 11.2% of the GDP, and the chemical business and the defence and
quarrying industries grew by 4.7% and 3.5%, respectively, during the year. The
cement and trammel and brace industries showed minor increases in growth,
whereas the oil and gas manufacture enrolled pessimistic growth. The Governance
encouraged promotion in new oil and gas exploration to cease the status in
production.
Business Activities of Mineral IndustryIndonesia continues to be a important player in the global mining industry with major
levels of production of coal, copper, gold, tin and nickel. In particular, Indonesia
remains among the world’s prime exporters of thermal coal. Global mining
companies constantly rank Indonesia highly in terms of coal and mineral prospects,
however assessments of its mining policies and investment climate have not been so
positive. As such, in recent years there have been partial levels of investment,
particularly in green fields projects, other than in the coal sector.
57
COMPARATIVE POSITION OF MINERAL INDUSTRY WITH INDIA &GUJARAT
Indonesian economic position of mineral industry
Mining companies are in many cases the exclusive central employer in whatsoever
of these faraway areas. In past period, the mining business has contributed roughly
4-5% to the number Country GDP, though the business represents a overmuch
larger acquire of the regional economies of galore provinces, including Papua,
Bangka- Belitung, Westward Nusa Tenggara and East Kalimantan. The Governance
hopes to gain the donation of the production manufacture to federal GDP over the
upcoming age finished a focal sail on greatest scale stock projects and on an
improved regulatory climate.
Indonesia's in general mining production levels were somewhat lower during 2010,
with the exclusion of coal & metal. People the upturn in the worldwide frugality in
latterly 2009 and aboriginal 2010 and a universal increase in prices over this
punctuation, the rank of promotion pertain in the Land mining aspect is
strengthening,
Indian economic position of mineral industry
Indian minerals industry is one of the fast growing industries. India has a vast base
of metals and minerals includes all the atomic minerals, The Indian mining industry
at present employs over 1.1 million people.
58
PRESENT POSITION AND TREND OF BUSINESS (IMPORT /EXPORT) WITH INDIA DURING LAST 3 TO 5 YEARS
Coal in particular has seen much interest from the ever increasing demand from China
and India.
Bilateral trade was down by 12% during Jan-Sept 2009 as compared to the same period
in 2008. Trade statistics gathered from the Central Bureau of Statistics, Indonesia (BPS)
Trends in the Indonesian mining industry 2006 was another stunning year for the mining
industry, both in Indonesia and globally-and with the commodity prices at their current
highs, 2007 and 2008 will see even better financial outcome.
Indonesia import from India
Mineral Fuels, Mineral Oils and Products of their Distillation;
Bituminous Substances; Mineral Waxes
Organic Chemicals
Iron And Steel
Indonesia export to India
Mineral Fuels, Mineral Oils and Products of their Distillation; Bituminous Substances;
Mineral Waxes.
Ores, Slag and Ash.
Organic Chemicals
Miscellaneous Chemical Products.
59
POLICIES AND NORMS OF INDONESIA FOR MINERAL INDUSTRY FORIMPORT / EXPORT INCLUDING LICENSING / PERMISSION, TAXATION ETC
Basic principles in the new mining Law Indonesia
▫ License will be issued through tender mechanism based on parity &
transparency
▫ Licensing system will be simplified and grouped into two:
i. Exploration license (general survey, exploration)
ii. operation license ( construction, mining, processing, transportation &
marketing)
▫ The existing of license authority and agreement will be honored vs. 2-5
years transitional period
Indonesia’s long standing Contract of Work (“CoW”) framework for foreign investment,
and licensing scheme for Indonesian investors, have been replaced under the Mining
Law.
▫ it is the provisions of the Law that the Government has had a difficult
task in complementary the interests of foreign investors & Indonesian
nationals.
▫ The Mining Law so removes most of the distinctions between
Indonesian and foreign investors in the mining sector, and is consistent
with the current Negative List on Foreign Investment which allows 100
percent foreign investment in the mining sector
60
Policies and Norms of India for Import or export including licensing /permission, taxation etc
With mining licenses now more liberally available to foreign investors and the
increased foreign demand for coal, 2011 and beyond should see further increases in
coal production.
I. Private Participation in the mining sector
The national mineral policy was revised in 1994 & as a result private investment (
both domestic & foreign) has been legal for the exploration & exploitation of 13
minerals:
Diamond Chrome ore
Nickel Zinc
Platinum Sulfur
Iron ore Molybdenum
Copper Gold
Manganese Tungsten ore
Lead
II. Investment Policy
In 1999, the foreign investment policy has been additionally liberalized to promote
(FDI) foreign direct investment in mining sector.
On 24th april,2000 the coal mines (nationalization) bill, 2000 was introduced in the
parliament of amending the coal mines act, 1973 and permitting private investment in
coal & lignite mines subject to definite conditions.
III. Investment Incentives
Mining in particular backward districts is entitled for a complete tax holiday for a
period of 5 years from commencement of production and a 30 percent tax holiday for
5 years thereafter.
Environment protection equipment, pollution control equipment, energy saving
equipment and certain other equipment entitled for 100 percent depreciation.
61
One tenth of the expenditure on prospecting or extracting or production of certain
minerals throughout five years ending with the first year of commercial production is
allowed as a deduction from the total income.
Export profits from specific minerals and ores are entitled for certain concessions
under the Income Tax Act.
Minerals in their finished form excepted from excise duty.
Low customs duty on capital equipment used for minerals, on nickel, tin, pig iron,
unwrought aluminum.
Capital goods imported for mining under EPCG scheme qualify for concessional
customs duty subject to certain export obligation.
IV. Foreign Direct Investment in Minerals Sector
100 % allowable export & import of minerals in India.
Custom duty on imported copper has been reduced in phase from 35% to 5%in
2002-03.
Present Trade barriers for import / Export of Minerals
o Low innovation capabilities
o Infrastructure Problem
o Government restrictions on trade
o Government policy
o High rate of illegal mining
o Mining companies and equipment suppliers are under the constant threat of
being taken over by foreign companies.
o A heavy tax burden discourages.
o Politicians undervalue the industry's contributions to the economy.
o Stricter environment rules restricting mining activities
62
POTENTIAL FOR IMPORT / EXPORT IN INDIA / GUJARAT MARKET
Trade
Exports of ores and minerals from India have grown-up from US $ 917 million
in 1999-2000 to US $ 7028 million in 2006-07.
ANALYSIS OF WORLD IMPORT OF SELECT MINERALS AND INDIA’S EXPORT
POTENTIAL
I. Iron Ore and Concentrates
o With regard to India also, iron ores and concentrates is the largest
exported mineral with the export value being US $ 3.9 billion in 2006-
07.
II. Copper Ores and Concentrates
o In the year 2006-07, India’s export of copper ores and concentrates
amounted to US $ 2.37 million only.
III. Chromium Ores and Concentrates
o In the year 2006-07, over 88% of India’s total exports of chromium ores
and concentrates were directed to China. Japan (8%), UAE (2%) and
Indonesia are other major destinations for India’s chromium ore
exports.
Business Opportunities in futureo In a world that is already facing shortages of some of the vital minerals
and metals like petroleum and coal, the demand for such products is only
bound to increase with time.
o Meeting those demands will be a challenge for the mining and minerals
industry worldwide.
o There is already a shortage of skilled workforce throughout the world.
o So to conclude, it can be said that mining and minerals sector has a
brilliant future, be it in terms of employment or technology.
63
o India has an predicted 85 billion tones of mineral reserves remaining to be
exploited.
o Besides coal, oil and gas reserves, the mineral inventory in India includes
13,000 deposits/ prospects of 61 non-fuel minerals.
o Estimated 82 billion tones of reserves of various metals yet to be tapped
o While India has 7.5% of the world's total bauxite deposits, aluminum
production capacity is only 3% of world capacity, indicating the scope and
NEED FOR NEW CAPACITIES
SWOT Analysis
• India produces 89 minerals out of which 4 are fuel minerals, 11 metallic, 52
non-metallic and 22 minor minerals.
• India is the world's biggest producer of mica blocks and mica splitting.
• India ranks 3rd in production of coal & lignite and barytes, 4th in iron ore, 6th in
bauxite and manganese ore, 10 in aluminum and 11 th in crude steel in the
World.
Strengths
• The government offers a wide range of concessions to investors in India,
engaged in mining activity.
• World's largest producer of mica; third largest producer of coal and lignite &
barytes; ranks among the top producers of iron ore, bauxite, manganese ore
and aluminum.
• Labours easily available
• Low labour and conversion costs
• Large amount of high quality reserves
64
Weakness
• Coal mining in India is related with poor employee productivity
• Poor infrastructure facilities
• Mining technology is outdated
• Low innovation capabilities
• Labor force is highly un-skilled and inexperienced
• Lack of R&D programs and training and development
• There are long lead times on production decisions.
• High rate of illegal mining.
Chapter – 2.5
RETAIL INDUSTRY
65
INTRODUCTION OF RETAILING INDUSTRY
The latter half of the 20th
Century, in both Europe and North America, has seen the
emergence of the supermarket as the dominant grocery retail form. The reasons why
supermarkets have come to dominate food retailing are not hard to find. The search
for convenience in food shopping and consumption, coupled to car ownership, led to
the birth of the supermarket. As incomes rose and shoppers sought both
convenience and new tastes and stimulation, supermarkets were able to expand the
products offered.
Retailing sector in Indonesia
Similar to China and India, which have huge populations with growing consumption,
typified by the surge of middle-income consumers, Indonesia’s retail market can be
equally attractive. Foreign brands and retailers are attracted to the Indonesian
market for its huge appetite for imported goods, with strong growth prospects
underlined by hefty retail sales and rapid modernization of the retail sector.
Indonesia is Southeast Asia’s largest economy and while Indonesia’s annual growth
slowed down to 4.5% in 2009, it expanded to 6.1% in 2010. Some economists predict
that Indonesia’s economic growth may reach 8% in 2011-12. During the difficult global
conditions of 2009, Indonesia’s economy was among the top worldwide performers.
Stock market valuation was up 87% in 2009 and 46% in 2010 and from 2000 until 2010,
Indonesia’s average annual GDP growth was 5.17% with a stable currency and
improved sovereign credit status.
The consumer market continues to lead growth in the world’s fourth-largest country with
237.5 million citizens, 50% of whom are under the age of 30.
GDP per person exceeds its ASEAN neighbors such the Philippines and Vietnam.
Indonesia is a thriving democracy with significant regional autonomy. It is located on the
world’s major trade routes and has extensive natural resources.
It is a top-ten market for U.S. agricultural products and within the top 30 overall for U.S.
exports.
Indonesia ratified the Cape Town Treaty, which gives U.S. aircraft exporters access to
financing through international protection and registration of financial interests. In 2009
Indonesia implemented the ASEAN-China free trade agreement.
66
The number of households in Indonesia with US$5,000 to US$15,000 in annual
disposable income is expected to expand from 36% of the population to more than 58%
by 2020.
More than 60 million low-income Indonesian workers are projected to join the middle
class in the coming decade which signals increased spending on consumer goods.
Indian Retail Sector on the Fast – Track
India’s GDP growth of 9.4 per cent in 2006-07 is the highest posted for over 18
years, reflecting the booming economy of the country. Growing in tandem with the
economy is the Indian retail sector. The sector is on a high growth trajectory and is
expected to grow by more than 27 per cent over the next 5 to 6 years. Retail is one
of India’s largest industries, contributing to about 10 per cent of the GDP and
providing employment to 8 per cent of the nation’s workforce. Indian retail business
promises to be one of the core sectors of the Indian economy, with organised retail
sector estimated to grow by 400 per cent of its current size by 2007-08. over the next
12 months. The economics of Indian consumerism is buoyant, with India ranking as
the fourth largest economy in terms of Purchasing Power Parity (PPP), next only to
United States, Japan and China. India is expected to outpace Japan by the year
2010 to become world’s third largest economy. With 54 per cent of the Indians aged
below 25, the young Indian consumer is buying big to look good and feel good.
67
The Indian retail revolutionRetailing in India is evolving rapidly, with consumer spending growing by
unprecedented rates and with increasing number of global players investing in this
sector. Organised retail in India is undergoing a metamorphosis and is expected to
scale up to meet global standards over the next five years.Greater exposure to
western products and lifestyles has helped drive consumerism. The sector also
benefited considerably by the rising popularity of satellite television since the early
1990s, which provided a highly effective mass marketing route, reaching out to the
large Indian consumer base.
PRESENT POSITION AND TREND OF IMPORT / EXPORT
Footwear Industry
With the global economies recovering from the slowdown, India's footwear exports
are expected to more than double to USD 3.37 billion (about Rs 14, 828 crore) in the
next two years over 2008-09 period.
The Indian footwear industry, the second-largest in the world after China, is growing
at a rate of about 10 per cent annually, President of Indian Footwear Components
Manufacturers Association B D Bhaiya told reporters here. "Apart from growth in the
domestic sector, we have also set a target of USD 3.37 billion in exports of footwear
alone by 2013-14," Bhaiya said. In 2008-09, a footwear export from India was USD
1.53 billion.
Gems and Jewellery Industry
The gems and jewellery industry in India comprises of sourcing, processing,
manufacturing and selling of precious metals, diamonds, pearls, precious and semi-
precious gemstones, and artificial jewellery. India is one of the fastest growing
jewellery markets in the world and is the largest consumer of gold in the world.
running family owned business India is also emerging as the largest trading centre
for gold. The demand for gold jewellery in India has been traditionally linked to social
and religious significance, as gold is valued as an important savings and investment
vehicle in India, and is the second most preferred investment after bank deposits.
68
Indian textiles and Clothing Industry
The textiles and garments industry is one of the largest and most prominent sectors
of Indian economy, in terms of output, foreign exchange earnings and employment
generation. Indian textile industry is multi-fiber based, using cotton, jute, wool, silk
and mane made and synthetic fibers. In the spinning segment, India has an installed
capacity of around 40 million spindles (23% of world), 0.5 million rotors (6% of
world). In the weaving segment, India is equipped with 1.80 million shuttle looms
(45% of world), 0.02 million shuttle less looms (3% of world) and 3.90 million
handlooms (85% of world).
Textiles and Garments Exports from India
The share of textiles and garments exports in India’s total exports in the year 2003-
04 stood at about 20 percent, amounting to US $ 12.5 billion. The quota countries,
USA, EU and Canada accounted for nearly 70 percent of India’s garments exports
and 44 percent of India’s textile exports. Amongst non-quota countries, UAE is the
largest market for Indian textiles and garments; UAE accounted for 7 percent of
India’s total textile exports and 10 percent of India’s garments exports.
POLICY AND REGULATORY ENVIRONMENT IN INDONESIA
a) Foreign direct investment
Foreign Direct Investment (FDI) started to make significant progress in Indonesia in
the 1970s.After change in regulatory policies relating to foreign direct investment by
Indonesian government, Over the period the value of foreign direct investment
reached USD30 billion per year. This subsequently increased to around USD100
billion per year during the 1980s, and by the year 2000 FDI had reached USD1,167
billion (World Development Report 2003).
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Property/real estate regulationsThe government has enacted a number of policies and regulations with a view to
regulating and controlling modern retailers and modern market formats and
protecting small retailers and small traders. But so far the implementation and
supervision of these regulations has not been strong enough
Reference for managing market storeThe SK Menperindag (Industry and Trade Ministry Decree) issued on October 13,
1997 acts as a reference for managing markets and stores • Modern markets are
allowed to be developed in every provincial capital.
• Their location must comply with either the Local Landscape Plans (“Rencana Tata
Ruang Wilayah Kota/” RTRWK or “Rencana Detail Tata Ruang Wilayah Kota/”
RDTRWK).
OTHER REGULATIONSb) VAT
The government has revised its value added tax policy,adopting a level of 10% on
retail products for allmodern retailers. The new policy is stated in Kepmenkeu No.
253/2003 about Pajak Perdagangan Ritel (tax on retail trade), which was issued on
May 31, 2003 and implemented on June 1, 2003. This 10% applies to the sale via
modern retail formats of all agricultural products, as well as breeding and fishing.
The policy is not effective for retail traders operating in the traditional market. Some
modern retailers are complaining about the implementation of value added tax for
the abovestated products because it will have a direct impact on end customers,
increase price by 10% or more. The government’s decision is aimed at protecting
traditional traders and increasing tax revenues. However, the move also places a
bigger burden on modern retail operations and could lead consumers to suffer.
c) The liberalization of retail trading
The SK Meninvest/No. 29/SK/1998 and Keppres No. 99/1998 policies have
effectively opened up the retail market by allowing foreign companies to invest in the
wholesale trading and retail sector. These policies make it easier for foreign
investors to penetrate the Indonesian retail market, by putting them on an even
footing with local retailers.
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Policy and Regulatory Environment in INDIA
The Government is progressively undertaking reforms and liberalising the retail
sector; thereby attracting significant foreign investments. The regulatory and
supervisory policies are being reshaped and reoriented to meet the new challenges
and opportunities in this sector.
To facilitate easier flow of Foreign Direct Investments (“FDI”) inflow, instead of
having to seek Foreign Investment Promotion Board (“FIPB”) approval, FDI up to
100 per cent is allowed under the automatic route for cash and carry wholesale
trading and export trading.
FDI up to 51 per cent is allowed, with prior Government approval for retail trade in
‘Single Brand’ products with the objective of attracting investment, technology and
global best practices and catering to the demand for such branded goods in India.
The most common channels for entry of foreign retailers are the strategic licence
agreements, franchising, distribution, manufacturing, joint ventures and cash and
carry wholesale trading.
Trade barriers
a. Tariffs Barriers
In accordance with the WTO Agreement on Agriculture, Indonesia agreed to
eliminate non-tariff barriers on agricultural products, and replace them with tariffs. In
the agricultural sector, 1,341 tariff lines have bindings at or above 40 percent,
including the most sensitive and heavily protected sectors.
b. Non-Tariff Barriers
In April 2008, the Indonesian government announced that the National Logistics
Agency (BULOG) would have exclusive authority to import rice for purposes of food
security and price management.
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Domestic producers continue to receive government protection from imports
through a quota and licensing scheme. This effectively limits imports to remote
markets and has the effect of keeping rice prices artificially high for domestic
producers, others are as belowc. Other Barriersd. Import Requirements and Documentatione. Temporary Entryf. Labeling and Marking Requirementsg. Prohibited and Restricted Imports
POTENTIAL FOR IMPORT / EXPORT
The following incentives attracts the importers / exporter to make trade with the
Indonesia(a) Regional Incentives
The basic tax incentive is a tax holiday for three years in Bali and Java, and for five
years everywhere else.In addition, a tax holiday for another year is granted in each
of the following cases:
Where at least 2,000 people are employed;
Where cooperatives own at least 20 per cent of the project;
Where the value of the project, excluding land and buildings, is at least US$ 200
million; and
Where the construction phase of the project is limited to five years. If the time taken
is less, the time saved is added to the total tax holiday period.]
(b) Sectoral incentivesThe Government recently introduced a new tax holiday regime. Tax holidays will be
granted in respect of approved projects in certain industry sectors including textiles,
selected chemicals and pharmaceuticals, iron and steel, and crude oil refining.
Tax holidays are granted for:
Projects approved by the investment coordinating board, BKPM (i.e. by the State
Minister of Investment/Chairman of the BKPM); and
Projects approved by the Minister of Finance based on recommendations of the
committee charged with the responsibility of reviewing applications for tax holidays.It is
expected that the process for dealing with applications for tax holidays under the new
regime will be more transparent than under the previous regime.
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(c) Export incentives and free trade zonesBonded zones and industrial estates have been set up to encourage the processing
of exports. Goods may be brought into bonded zones free of import duty for export
elsewhere. Goods brought into an industrial estate are also subject to favourable
regimes with respect to value-added tax and sales tax on luxury goods. Bonded
zones exist on Batam Island and surrounding islands and in Jakarta. Industrial
estates have been established on Batam Island and Bintan Island.
Incentives for import export in India
(a) Regional IncentivesAn industrial undertaking set up in a specified underdeveloped state or union territory
or in a specified industrially underdeveloped district, and which commenced
manufacturing or production before 31 March 1995, is eligible for a 30 per cent tax
exemption on its profits for the 10 years beginning with the year in which
manufacturing or production takes place.
(b) Sect oral incentivesAn industrial undertaking set up in any part of India for the generation of power, or its
generation and distribution, before 31 March 2003, is eligible for 100 per cent tax
exemption on its profits for the first five years and for 30 per cent for the next five
years. All the profits of an undertaking that begins commercial oil production in any
part of India after 1 October 1998 are exempt from tax for the first seven years
(c) Export incentives and free trade zonesA complete tax holiday is provided to companies that are set up in FTZs for the first
10 years of operation. These FTZs are Kandla Free Trade Zone (KAFTZ), Gujarat;
Santa Cruz Electronics Export Processing Zone (SEEPZ), Mumbai; Madras Export
Processing Zone (MEPZ), Tamil Nadu; Cochin Export Processing Zone (CEPZ),
Kerala; Noida Export Processing Zone (NEPZ), Uttar Pradesh; and Falta Export
Processing Zone (FEPZ), West Bengal. Approved, newly established 100 per cent
export-oriented industrial undertakings and units in electronic hardware and software
technology parks are entitled to a similar tax holiday.
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A domestic company or a resident non-corporate assessee engaged in the hotel or
travel agency business can enjoy an exemption of 50 per cent on the profits derived
from services provided to foreign tourists, plus any portion of the remaining profits
that are transferred to a reserve account from the profit and loss account. Profit must
be received in convertible foreign exchange.
(d) Other incentivesA foreign institutional investor investing in shares and securities in India would be
liable to tax at 10 per cent on its long-term capital gains and 30 per cent on short-
term capital gains. The minimum period of holding in the case of equity shares would
be more than one year to be considered long term, and three years in the case of
other securities.
Dividends, interest or long-term capital gains of an infrastructure capital fund or
infrastructure capital company that earns from investments made on or after 1 June
1998 in any enterprise engaged in the business of developing, maintaining and
operating any infrastructure facility, and which has been approved by the central
Government, is exempt from tax.
(f) Statutory tax rateThe national corporate tax rate is 35 per cent and the tax rate for foreign companies
is 48 per cent. The 1999/2000 budget announced a surcharge of 10 per cent, making
the effective rate 38.5 per cent. Dividends declared, distributed or paid after 1 June
1997 are not subject to withholding tax.
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BUSINESS OPPORTUNITIES IN FUTURE
The GOI opened the retail industry to foreign investment in 1998 following a letter of
intent which the GOI signed with the International Monetary Fund (IMF) to revive
Indonesia’s ailing economy. Soon after the 1998 liberalization, many big foreign
retailers began to invest in Indonesia. Foreign retailers have been particularly active
in the hypermarket and department store sectors.
The continuous growth of the retail industry has been driven mostly by strong
domestic consumption, serving as a primary factor that supports Indonesia’s
economy. In 2010, total sales of Indonesia’s retail industry were expected to reach
$9.68 billion, generated by more than 8,000 non-traditional retail outlets throughout
the country.
No Regulatory issues related to opening a retail outlets
Continuously increases domestic consumption.
Only 35-38% of total retail sales covered by modern retails.
High potentiality for opening retail outlets in small towns.
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SWOT ANALYSIS
INDIA INDONESIA
STRENGTHS
Quality of work
Initiatives taken by the
Government (setting up Hi-Tech
Parks and implementation of e-
governance projects)
Many global players have set-up
operations in India like Microsoft,
Oracle, Adobe, etc.
Following Quality Standards such
as ISO 9000, SEI CMM etc.
English-speaking professionals
Cost competitiveness
Quality telecommunications
infrastructure
Indian time zone (24 x 7 services
to the global customers). Time
difference between India and
America is approximately 12
hours, which is beneficial for
outsourcing of work.
STRENGTHS
supporting government policy
towards retailing sector
Many global players have set-up
operations in like Carrefour, Sogo,
Giant (under Dairy Farm), Lotte
Mart and Best Denki,
Lower taxation
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Weaknesses
Absence of practical knowledge
Dearth of suitable candidates
Less Research and
Development
Contribution of IT sector to
India's GDP is still rather small.
Employee salaries in IT,
retailing sector are increasing
tremendously. Low wages
benefit will soon come to an
end.
Weaknesses
Absence of strict regulatory policy
Dominance of foreign retailers in
Indonesian market
Absence of infrastructure
Less research and development
Dearth of suitable candidates
Opportunities
High quality IT education market
Huge potential for retailing sector
(8-9%) Market was covered by
organised retailers
Increase number of working age
people
India 's well developed soft
infrastructure
Upcoming International Players in
the market
Better for retailing sector (8-9%)
Market was covered
Opportunities
Huge potential for retailing sector
(35-40%) Market was covered by
organised retailers
Huge population 7th largest
populated contry
Growing market
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Threats
Lack of data security systems
Countries like China with
qualified workforce making
efforts to overcome the English
language barrier
IT development concentrated in
few cities only
Threats
Instability of political situation in
the country
Lack of data security systems
Less IT developments
Chapter – 2.6PHARMACEUTICAL INDUSTRY
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INTRODUCTION OF PHARMACEUTICAL INDUSTRY
Indonesia has a fairly small but fast-growing pharmaceutical market, with an
estimated value of USD 6.05 billion in 2010. The pharmaceutical market is projected
to grow at a compound annual growth rate of 11.3%, reaching a value of USD 11.08
billion by 2015. It is expected that the market will further grow as current drug
consumption per capital is relatively lower than neighboring countries at USD 17.8 in
2010, hence there likely will be more increases in health spending in the future. Due
to a large population size and relatively strong production base, Indonesia has the
potential to be a lucrative pharmaceutical market. The country has huge generic drug
market.
Vaccination and medication has been very much important in Indonesia from last 50
years. It is estimated that people in Indonesia spend 30 percent of total health on
pharmaceuticals and vaccines. These shows that people of Indonesia are not
spending much on medicines. It is important that the government development plan
includes a focus on pharmaceuticals.
The GoI goal of reducing the growing burden of non-communicable diseases (NCDs)
makes pharmaceuticals even more important. Most of the medicines required for
these conditions are now off-patent, and potentially available as cheap generics.
Growth and Structure of Pharmaceutical Industry of Indonesia
Indonesia’s pharmaceuticals market received a score of 53, which is considerably
above the average for the 16 markets in the Asia Pacific region. Indonesia is a lower
middle income country, where a significant proportion of the population does not
have access to adequate healthcare and, as a result, pharmaceuticals remain
prohibitively expensive for many. Nevertheless, the demand for drugs will rise over
the forecast period, due to an increased need for modern medicines, population
growth and healthcare service improvements, as well as developing economic
conditions.
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Foreign direct investment has continued growing due to Indonesia’s economic
development. During the first month of 2007, the pharmaceutical industry received
foreign direct investment worth US$6.9 billion. The increase in healthcare demand
and rapid population growth will provide opportunities for the Indonesian drug
market.
The market size of pharmaceutical products in Indonesia is estimated to be around
IDR 37.5 trillion (US$ 3.9 billion, 2010), with an impressive average annual growth in
the last five years of 10%.
Indonesian Pharmaceutical Market 2005 – 2010
Year 2005 2006 2007 2008 2009 2010
Total
Market
(IDR bn)
23,589 23,047 25,708 29,981 33,969 37,531
Growth
(%)
13.6 - 2.3 11.5 16.6 13.3 10.5
The market consists of 170 local companies including 3 state owned companies and
32 foreign companies. The foreign companies have a 40% market share. Out of the
estimated 32 multinational pharmaceuticals companies operating in
Indonesia, there are an estimated 20 European companies with an active presence.
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The top 3 pharmaceutical multinational corporation in Indonesia Bayer
Novartis
Pfizer
The top 6 domestic pharmaceutical companies in Indonesia Kalbe Farma
Sanbe
Dexa Medica
Soho
Pharos
Kimia Farma and Indofarma
The state own companies
PT Kalbe Farma Tbk,
PT Merck Tbk,
PT Kimia Farma Tbk.
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COMPARATIVE POSITION OF PHARMA INDUSTRY OF INDONESIAAND INDIA
Comparison of Indonesian & Indian pharma industry on basis of various factors.
Factor Indonesia India
Labour The low cost and
availability of labour is
still the main
attraction for investors in
Indonesia. However,
unskilled
labour dominates. Only
6.2% of the population
has a
college or university
degree.
In India, about 300,000
postgraduates and 1,500
PhD students qualify
annually in biosciences
and
engineering and around
150,000 MSc students
graduate
in chemistry alone. The
number of fresh scientists
and
engineers available every
year is 700,000
according to
a Confederation of Indian
Industries (CII) study
IPR Weak IPR regulations. IPR protection altered
significantly in 2005 when
India
became TRIPS-compliant
and formally recognised
product patents with
retrospective application
to 1995.
Tax R&D expenses tax
deductible. Tax rate up to
a maximum of 30%.
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Present Position and Trend of Business The India – Indonesia Trade and Investment Relations: High Expectations for the Future
High expectations of a vibrant trade and investment relationship between India and
Indonesia stem from the fact that both the economies are high-growth-large-
economies in their respective sub-regions. While both the economies are labour
abundant with a growing industrial base, there are certain complementarities in
various sectors. Such complementarity should be the basis of an exceptionally
vibrant trading relationship, and modeling predictions based on economic factors put
the potential for India – Indonesia trade at around US$ 18 billion in 2020 (compared
to the 2007 level of US$ 7 billion). This figure now looks extremely conservative as
bilateral trade already crossed the US$ 10 billion mark for 2009 and both the
countries have set the target of US$ 20 billion by 2015
The pharmaceutical industry in India has been identified as one of the most
important knowledge-based industries. The industry grew rapidly in every sector i.e.
large-scale sector, medium-scale sector and the small-scale sector besides the
public sector during the 1980s and the mid-1990s. The number of manufacturing
units registered in this sector has since grown to over 22,000. The industry has
recorded a growth of about 15 per cent annually during the last decade.
The industry has also shown significant growth in export of drugs to developed and
developing countries. The quality of drugs produced and exported has been of world-
class standards. The following table shows the export potential of the
industry. The imports have also been shown for the purposes of comparison.
Year Exports
Rupees in millions
Imports
Rupees in millions
1992-3 14,901 11,374
1998-99 61,520 30,473
1999-00 72,302 15,020
2000-01 87,299 20,325
2001-002 104,759 25,812
Source: Report of the Working Group on Drugs and Pharmaceuticals for the 9th
Five-year plan (1997-1990-2001-2002)
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IndonesiaThe pharmaceutical industry in Indonesia comprises the pharmaceutical industry and
traditional medicine industry. The Indonesian Health Profile 2000 indicates how the
different sectors of this industry have grown during 1991- 1998. The data is given in
the following table:
Type of
industry
1991 1994 1997 1998
Pharmaceutical
industry
256 224 224 198
Traditional
medicine
Industry
4 23 76 79
In 2002 the number of pharmaceutical manufacturers remained the same i.e. 198.
These manufacturers consist of:
Government – owned companies 4
MNC 32
Domestic companies 162
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Policy and Norms of Indonesia
Import licenses
Import into Indonesia maybe conducted only by companies having import license
procured from the Ministry of Industry and Trade. To import pharmaceutical
products, a company must have import license from the Ministry of Industry and
Trade and be registered as a pharmaceutical wholesaler with a permit from the
Ministry of Health.
Import documentation requirements
The government requires the following for most imports: pro-forma invoice;
commercial invoice; certificate of origin; bill of lading; insurance certificate; special
certificates. According to the Indonesian Customs Law that came into effect in April
1997, importers are now required to notify the Customs Office in the first stage by
submitting the import documents on a standard form computer diskette.
Free trade zones and warehouses
The government encourages foreign investors who export to locate in bonded or
export processing zones (EPZ). There are a number of EPZs in Indonesia, the most
well-known being Batam Island, located 20 km. south of Singapore. Indonesia also
has several bonded zones or areas that are designated as entree ports for export
destined production (EPTE). Companies are encouraged to locate in bonded zones
or industrial estates whenever possible. Producers located within the bonded areas
are allowed to sell up to 15% of their product into the local market. Foreign and
domestic investors wishing to establish projects in a bonded area must apply to the
National Investment Coordinating.
Membership in Free Trade Agreements
As a member of the Association of Southeast Asian Nations (ASEAN), Indonesia
is party to the ASEAN Free Trade Agreement (AFTA). Through AFTA, ASEAN
members are phasing in a Common Effective Preferential Tariff (CEPT) scheme,
which will be completed for most traded goods in 2003.
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FDI investment
Upto to 75% for foreign investments in Indonesia.
Trade barrier- Weak IPR regulations which leads to decrease in confidence of MNC’s.
- Raw Materials
Lack of pharmaceutical raw material. It imports 90% of raw materials.
Potential for import and export
GenericsIndonesia has major generic market probably have the share to make up 75% of
the total pharmaceutical market in Indonesia. Though there is huge manufacturing
capacity is available but due to lack of proper IPR regulation and Rand D it makes
the industry less competitive. For generics Indonesia cannot yet compete with India
or China.
India and China have suffient raw materials for manufacturing available on the local
market. As producers have to import the raw materials the high import duty makes it
the finished product costly. The competitiveness of Indonesian generics
pharmaceuticals manufacturing is also limited by the weak infrastructure in the
country and expensive financing, making products more expensive. The prices paid
for most branded generic drugs in hospitals and pharmacies are high–often over six
times higher than international reference prices or four to five times higher than the
lowest price generic substitute available in Indonesia. There are very wide
differentials between the prices of branded generics and originator brands compared
with international reference prices.
Herbal medicineHerbal medicine is one area where Indonesia could create a competitive advantage
coupled with a well developed industry in Indonesia and availability of resources.
The Ministry of Health ensures jamu is safe and backed by research, also to ensure
efficacy. The resources which can be used for herbal purpose is different types of
ginger, nutmeg, cardamom, cumin and cloves, certain chilies, and fruits like papaya
86
and banana. The availability of raw materials to make traditional herbal medicine is
relatively abundant in Indonesia. The results of studies conducted by the Indonesian
Institute of Science showed that 30,000 of the 40,000 available species of world
medicinal plants are found in Indonesia.
Business Opportunity in Indonesia
The business opportuunies in Indonesia can be better understand if we directly
compare its Strength, weakness, opportunity, threats.
SWOT for India:
Strength
A sufficient number of medical and
pharmacy graduates strengthening of the
IPI
Patent Act and Drug Price Control act
low labor costs
Weakness
Drug discovery and drug development
are risky, complex requires huge
investments
Opportunities
Merging with a domestic or
international company giving
competitive edge over cost and
capacity.
Threats
The IPI would be compelled to
compete with multinationals in 2005,
and it remains to be seen how many
companies actually will survive the
competition
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SWOT for Indonesia:
Strength
Significant market growth potential, with
a fast-growing population.
Sizeable and strong generic drug market,
largely owing to the low-income
population.
Labour
Weakness
Lack of formal price
Low purchasing power of large section of
the population.
Reliance on imports for raw materials.
Poor intellectual property (IP) protection
leading to reduced foreign investment
(FDI).
Opportunities
Proposed privatization
Demand for low-cost drugs
Government encouragement of exports
Threat
Escalating raw material cost and taxation
of imports resulting in pharmaceutical
products becoming prohibitively
expensive
Widespread corruption
Chapter – 2.7
TELECOMMUNICATION
INDUSTRY
88
INTRODUCTION OF TELECOMMUNICATION INDUSTRY ININDONESIA
There has been recorded a tremendous growth for telecommunication industry in
Indonesia in last 5-7 years. The major reason for this is the evolution in technology.
Mobile Phones and the various applications of internet are growing rapidly. There
has been seen a rapid increase for mobile usages among teenagers. The social
networking sites are also one of the major factor. Now-a-days, Smart Phones have
captured a huge attention of all categories of people.
Market analysis
Network & information services In telecom
Voice & data of mobile
IP services
Top key trends seen in 2012
Annual sizing & telecommunication services forecast
Market trend & technology emerging
Competitive profile of broadband services provider
Preference of SMEs & communication usage
Adoption plan by vertical market & communication usage
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Indonesia telecommunication services revenue
Competitive analysis
This service reviews strategies, market positioning, and future direction of several
providers in the Indonesia telecommunications market, including: PT. Atlasat, PT.
Bakrie Telekomunikasi, PT. BizNet, PT. CBN Indonesia, PT. Citra Sari Makmur, PT.
Excelcomindo, PT. Fast Media, PT. Gaharu, PT. Hutchison Telecommunication
Indonesia, PT. Indonet, PT. Indosat, PT. Lintasarta, PT. Mobile-8, PT. Natrindo
Telepon Seluler, PT. Radnet Nusantara, PT. Sampoerna Telecommunication
Indonesia, PT. Sistelindo, PT. Smart Telecommunication, PT. Telkomsel, and PT.
Telkom Indonesia.
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Mobile Phone Manufacturing Company in Indonesia
Spice i2i :
Mochhenry :
Cv.Desty Electronics
Quest.net :
Iner inti teknologi :
VITELL mobile Indonesia :
Procedure for Incorporation certificate in Indonesia
Step : 1
Prepared the required document with application & completed accorading
investment plan
Step: 2
Getting the initial licenses ( SPCC BKPM ) valid for 3 year.
Step : 3
integration of SPCC BKPM
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Establish Articles of Association with a Public prosecutor detailing proof of capital
investment, and send it to the Ministry of Justice for approval and issuance of State
Gazette.
Company address register with local council.
IRD registration (NPWP + PKP )
Register with the Department of Industry & Trade ( TDP )
Step : 4
Key emigrant positions (work permits) and Fixed Operating License (30 years)
Step : 5
organize and send the 6-month report (LKPM) to the regional BKPM office as well as
UUG (HO) nuisance act to the regional office of BKPM.
Step : 6
Ownership of property
Step : 7
Provincial Approval for fixed licenses ( BAP )
Step : 8
Fixed License (IUT) for 30 years is issued
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Overview of Indonesia mobile market
World 4th largest population country
Mobile manufacturing company : 5 company
Mobile supplier : 350
Usage of mobile : more than 90 million people
Most usage by: middle class people
INTRODUCATION OF COMPANY :
CEPAT KONEKSI ( RAPID CONNECTION )
Company profile
name Cepat koneksi ( rapid connection )
Employees 500 – 550
Profile Manufacturing , supplier
Product Mobile phone
Cepat Koneksi is a mobile establish of new manufacturing company entering into the
Indonesia market. We were accomplished all the procedure of the incorporation of
the company according to companies act of Indonesia. We are a private limited
company & have a six partner in the company. We manufacturing smart phone in
Indonesian market. We are also a supplier of the smart phone & export a smart
phone in other countries.
Cepat Koneksi has all the necessary resources including highly qualified,
experienced and competent human resources at all levels and a full-function and
elaborate infrastructure and communication facilities including Marketing & Purchase
93
office and the Manufacturing Plant including Testing facilities to fulfil its customer’s
needs and expectations.
The product manufactured by cepet koneksi are mobile smart phones , hand set ,
batteries , mobile cover ,etc. We are manufacturing according to demand of the
market . we are using a best technology by manufacturing a mobile & its products
GOAL & OBJECTIVE :
To manufacture high quality mobile product.
To assist people in feeling that they are very near to what matters to them
most
By provide internet in phone with improved internet technology
To provide best services to the customer
Higher the sale & increasing the profit.
To capturing the entire market of Indonesia for manufacturing the mobile phone. We
are a new players in the market so in the first phase we have to manufacturing a for
Smartphone in Indonesia.
MISSION & VISION :
Mission :
Focus on customer enchantment
Seek technology and trade leadership.
Build company image.
Quality people.
increase work culture & environment.
Better and effective communication with all market players.
Optimize resource management.
Sustained sales and profitability.
Obtaining higher sale in smart phone.
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Vision:
Make intex a globally respect name.
Improve the quality of life of people.
Achieve the status of a global mobile mechanized company which is most
fashionable for its product performance by its customers and being
recognized by society as a responsible corporate citizen.
Analysis Of The Company
SWOT analysis :
Cepat Koneksi is mainly associated with its smart phone business. So, SWOT
analysis helps to determine its strengths, weaknesses, opportunities and threats for
its concerned industry and market.
Strengths Weaknesses
Opportunities
S4 – O6: To survive in the
competitive environment, high
quality mobiles are produced
O2, 3, 4 – S9: Focus on design
new mobile technologies and
develop new applications
depending on prefect design
engineers.
S8 – O8: Keeping manufacture
spare capacity to provide the
demand of the spare parts.
W2 – O7: To cover large
orders from buyers,
manufacturing process is
compatible with latest
technology.
W1 – O4: Regular
upgradation of software
programs for mobiles to
support new technology.
W6 – O1: Expand the
company operations to
provide flexibility due to
environment effects.
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Threats
S2 – T6: Keeping the good
buyers through our good global
prestige of product development
and creativity.
S6 – T5: Negative Image can be
overcome due to its well known
prestige for over the globe.
S5 – T3: Depending on our good
marketing staff we can reduce
seasonal market demand risk.
W3 – T6: Losing of buyers
can be prevented by
several steps like
recruiting quality staffs
and giving training to
them.
W6–T2: To prevent
Operations regarding
manufacturing from
continuous
environmental effects,
flexible strategies are
adopted.
Indonesia regulations and policies on export- import relatedelectronic equipments:
According to Trade Ministry of Indonesia, there are general provisions for exporting
the goods from the country.
Policy of Goods for export (No. 575/MPP/KEP/VIII/2002):
Exporter might a company or individual, but should registered as an exporter
Electronic goods are free for export
Procedure: Notify the Custom prior to exporting of goods
Company should possess the license for exporting
Exporting the certain (prohibited) goods are not allowed
Policy of Goods for Import (No. 229/MPP/KEP/7/1997):
Provision on Import:
a. Only can be conducted by a company poses Importer Identification Number
(API);
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b. Imported goods must new ones;
c. Exemption for particular goods and procedures apply (determined by ministry of
trade)
d. Electronics and its components might be conducted by Specialized Importer
e. Specified used EEE are prohibited to be imported which can create environment
problem.
POTENTIAL FOR IMPORT/EXPORT IN INDIA:
Although there are many mobile handset manufacturers available in India, Indian
mobile handset market is still growing tremendously. Everyday new technology
comes in this sector. The prices for mobile handsets available are comparatively
quite high for smart phones. Manufactured exports are believed to be one of the
engines of Indonesian economic growth. It is true that Indonesia`s manufactured
exports grew rapidly and its share in GDP increased year by year.
Import / Export from Indonesia:
There a lot of craze has been seen among youngsters for smart phones which
include latest trends available in Cell phone segment.
Export Mobiles from Indonesia to India:
Indian Mobile Phone market has a great potential. As, Cepat Koneksi is the
specialist for smart phones having latest technology from Indonesia with a low price
and high quality standards. Indian Mobile phone ( Cell Phone) Market grows rapidly.
Everyday there are so many mobile users are increasing. Cepat Koneksi is
exporting its smart phones from Indonesia to India after studying Indian Cellular
Phone Market & mobile Industry. Cepat Koneksi also exports and imports mobile
accessories.
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Comparison between the India & Indonesia mobile company India :
Open competitive model
Separation between policy & regulatory function
TRAI seen to be independent & efficient
Fully privatized one incumbent ( VSNL )
Adopted Unified Access Regime-forward-looking, tech neutral solution to
convergence
Indonesia:
limited entry, duopoly model (HHI mobile 5082)
BRTI surrounded within ministry, understaffed, under-funded
Partially privatized both historical incumbent though Govt. controlled
Messy licensing framework that constrains infrastructure rollout & unsuited
for converged landscape.
Proposition:
In 1999, when India and Indonesia embark on substantive reform of the
telecom sector, India’s telecom development was lower than Indonesia’s and
hence it has been playing catch-up ever since.
India’s lower average per capita income compare to Indonesia dictate the
slower pace in the uptake of telecom services.
Lower prices in Indonesia have made telecom services more affordable and
have stimulated demand and hence growth of the telecom sector compared to
India.
Greater per capita investment in the Indonesian telecom sector compared to
India has driven network rollout and dissemination in Indonesia.
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Business strategies & opportunity in future
Business Strategies of Cepat Koneksi for India:
Lowest price of Smart phones
Only focusing in smart phone segment
Strategic tie ups with Indian Telecom Operator for promoting its Smart phones
Engaging various agencies for promotions and Advertisements
Business Opportunities in Future:
After the establishment of the brand “Cepat Koneksi” in Indian Mareket, company will
look to enter in to other mobile segments and tablet business. Company is expecting
huge business from India in next 3-5 years. Company is also thinking for strategic
partnership with Indian IT companies for its mobile application development in future.
Chapter – 2.8
TOURISM INDUSTRY
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INTRODUCTION OF TOURISM INDUSTRY
About Tourism
Tourism is the activities of persons which includes: travelling to and staying in
places outside their usual environment
-for not more than one consecutive year
-for the leisure or business purposes
Tourism is a competitive & dynamic industry:
- Which requires ability to adapt to customers' changing needs and desires
constantly
- as the main focus of tourism businesses is: customer’s satisfaction, safety
& enjoyment
Travel & Tourism is forecast to contribute some $6.5 trillion to the global
economy.
International inbound tourism generates sizable foreign currency earnings,
domestic and foreign investment, male and female employment and tax
revenues.
General Considerations
Tourism activities can be categorized as the following headings:
Coastal Tourism,
Natural and Historic heritage,
Marine tourism – Cruise tourism
Tourism in Winter,
Business travel, Family trips.
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A comprehensive tourism policy is required to enable an improvement in the
country’s economic opportunities, which benefit communities and enterprises, and to
contribute to personal, social and economic growth for men and women.
Tourism and vulnerability
To a large degree, tourism depends on the preservation of the environment and of
cultural, social, and historical heritage. Therefore, the effects of disasters can be
aggravated if the aspects like- absence of environmental management, natural
resources land-use regulations, lack of adequate construction standards related
human settlements- are not strictly addressed.
The best tourism destinations in the region are frequented by tropical storms and
hurricanes, as well as floods and earthquakes. Although vulnerability varies from one
country to another, the fragile nature of the land and marine ecosystems in the
region is obvious, as is the lack of suitable environmental management, disaster-
aware land-use planning and building standards.
Main Sectors in the Industry
1. Accommodation
2.Food & beverage services
3. Entertainment & recreation services
4. Transportation
5. Travel services
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PESTEL analysis for Tourism Industry
Political:
Government toppling and political instability, Taxation policies, attacks by terrorists
result in tight security reasons and immigration laws become strict.
Economical:
Exchange rates, Globalization, Oil prices, UNWTO’s 2020 vision, Recession
Socio cultural:
Life Style, Brand Consciousness, Changing attitudes towards safety and
environment
Technological:
Customers relying on internet and online sales are increasing; Substitutes such as
television and games are threats to tourism
Environmental:
Air flight rationing is proposed by UK government as a method to reduce
pollution, increased emission of CO2 is a major threat of climatic conditions, Health
Problems is a major concern for tourism industry and tourists, Natural Disasters are
also a major concern for tourism industry.
Legal:
Governments recommend a wide range of regulations on Aviation Safety and
Regulations (Department of Travel, 2009), Trade Laws plays a crucial part in current
world businesses.
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Role of Tourism in the Economy of Indonesia
Tourism in Indonesia
o The major components of Indonesian tourism are nature & Culture.o The ancient Prambanan and Borobudur temples, Toraja, Yogyakarta,
Minangkabau, and of course Bali, are some of the popular cultural destinations for
tourism.
o The beaches in Bali, diving sites in Bunaken, Mount Rinjani in Lombok and various
national parks in Sumatra are just few examples of popular scenic destinations.
Tourism & Economy of Indonesia
o The establishment of a Ministry of Tourism, Post and Telecommunication in
1988, by the President with a view to promote the tourism industry.
o The program -“Visit Indonesia Year 1990” was set then.
o Concept of Eco-Tourism is developed there to preserve environmental
assets.
o In 2005, tourism accounted for 7% of job opportunities and 5% of Indonesian
GDP.
o In January 2010, the coordinating Minister for the Economy Hatta Rajasa was
reported as announcing that he expected “the tourism sector to contribute
4.8% of the gross domestic product” in the year 2010.
o In 2010, based on World Economic Forum survey, Indonesia got Tourism
Competitiveness Index at number 74 (up from number 81) from 139
countries.
o Development of environmental friendly tourism for the purpose that eco-
tourism should make requirements of nature and environmental protection the
basis for touristic activities. Thus, it ensures its ecological sustainability.
o On average, there’ve been 5 million foreign tourists each year, since 2000,
who spend an average of US$100 per day. With an average visit duration of
9–12 days, Indonesia gains US$4.6 billion of foreign exchange income
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annually. Because of which Indonesia's tourism becomes third most important
non-oil–gas source of foreign revenue, after timber and textile products.
Statistics
It is noticed that visitors around 59% are traveling to Indonesia for holiday, while 38% for
business purposes.
Structure, Functions & Business Activities of Tourism Industry
Structure of tourism industry
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Functions
Major Functions of Tourism Department
Formulation and implementation of development policy
National level tourism development planning for long term
Coordination in implementation of development
Formulating and implementing laws and regulations for tourism
Service standards & facility’s establishment and administration
Environmental principles adoption in tourism development and operation
Collecting statistical data, its compilation and report making
Conduct a research studies
Planning of human resource development for tourism and its implementation
Training standards establishment for coordination with the concerned
authorities.
Leasing land for tourism purpose, registration of all tourism operators and
facilities
COMPARATIVE POSITION OF TOURISM INDUSTRY IN INDIA
Tourism in India
Tourism in India is the largest service industry, with a contribution of 6.23% to
the national GDP and 8.78% of the total employment in India.
New forms of tourism such as rural, cruise, medical and eco-tourism.
It is expected to increase foreign revenue to US$375.5 billion by 2018 at a
9.4% annual growth rate.
According to World Travel and Tourism Council, India will be a tourism hot-
spot from 2009–2018, having the highest 10-year growth potential.
The Ministry of Tourism also maintains the Incredible India campaign. The tourism Industry of India is based on certain core nationalistic ideals and
standards which are: Swaagat (Welcome), Sahyog (cooperation), Soochna(Information), Sanrachanaa (Infrastructure), Suvidhaa (Facility), Safaai(cleanliness) and Surakshaa (Security).
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Indian Tourism & Economy
FDI of Indian Hotel & Tourism Industry which contributes to the Indian
Economy inflows are US$2.1 billion from April 2000 to March 2010, according
to the Department of Industrial Policy & Promotion.(DIPP)
Indian Export earnings from international visitors and tourism goods are
expected to generate US$51.4 billion (nominal terms) by 2019.
The sector which accounted for 6.4% of total employment in 2009 is
estimated to rise to 7.2% of total employment by 2019.
Tourism in Gujarat
Gujarat Tourism refers to the Tourism in Gujarat, the seventh largest state
in India, located in the western part of India with a coastline of 1600 km (longest
in India).
It is one of the most popular state in the country for tourists with annual footfall of
19.81 million tourists in 2010-11.
Amitabh Bachchan is currently the brand ambassador of Gujarat Tourism.
‘Khushboo Gujarat Ki' campaign by megastar Amitabh Bachchan has grown
tourism in Gujarat by 14 per cent, twice that of national growth rate.
Ahmedabad is considered to be an ideal hub to cover all the destinations in
Gujarat.
PRESENT POSITION & TREND OF BUSINESS WITH INDIA DURINGLAST 3 TO 5 YEARS
Present trade affairs between India and Indonesia
India and Indonesia both the country signed 18 business MOUs in infrastructure,
manufacture, mining worth $15.1 billion.
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Indonesia’s bilateral trade tripled in the last five years from $4 billion in 2005 and it is
to reach $12 billion in 2010. The next target is to double this, in the next 5 years, to $
25 billion.
India's investment in Indonesia has grown from USD 11.6 million in 2007 to USD 44
million in 2010 and invited Indian industry to invest in his country as it offers
conducive industrial environment with handsome return on overseas as well as
domestic investments..
Indian companies are entering the Indonesian markets to build long term sustainable
relationships with its people, leveraging local resources and local talents. Similarly,
Indonesian companies too are displaying keen interest in India’s burgeoning markets
and investment opportunities in sectors such as infrastructure and power. Both India
and Indonesia are poised to reap demographic dividend, and jointly address
developmental challenges, through synergies in social infrastructure.
POLICIES & NORMS OF INDONESIA FOR TOURISM
Visa regulation
On February 1, 2004, Indonesia introduced not popular and tighter tourist visa
regulations.
Tourists visas were formerly free and valid for 60 days, visitors from different
countries now required one of two visas of arrival(VOA) : a US$15 visa valid for
10 days or a US$25 visa valid for 30 days.
On July 14, 2004, the Indonesian tourism ministry granted permission for different
countries to be included on the VOA list for tourism.
January 2010 the regulations changed and the only type of visa on arrival(VOA)
available was for 30 days for a free of US$25.00.
This new version of VOA may be extended later at a local Immigration office for a
further once only period of up to 30 days for a fee of Rs.250,000.
The previous 7 day visa on arrival was no longer available from January 2010.
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Import regulation by Indonesian customs
Free Import
Tobacco products (no limitations for diplomats): 50 cigars or 200 cigarettes or 100
grams of tobacco;
1 litter of liquor can import;
A reasonable quantity of perfume can import;
Personal goods up to a value of USD 250.- per passenger or USD valid
Export regulation by Indonesian customs
Free export
1000 gr. of tobacco or 50 cigars or 200 cigarettes for persons of 21 years and older
Less than 2 litters of alcoholic beverages in opened bottles and personal goods up to a
value of IDR 1,000,000
POLICIES & NORMS OF INDIA FOR IMPORT-EXPORT TOINDONESIA
Import and regulation by Indian customs
Free import
• 200 cigarettes or 50 cigars or 250 grams of other tobacco products, Up to 2 litters
of Wines or alcoholic beverages, 59 ml of perfume, 250 ml toiletries, Authorized
personal goods
•An unlimited amount of foreign currency can be imported into the country. Sums
equalling US10000in local currency must be declared upon entry.
Prohibited
•Illegal drugs Firearms and ammunition – unless permission has been obtained,
Knives and deadly weapons, Pets and other live animals – unless permission has
been obtained, Birds and bird products –eggs and feathers, Pigs and pig meat
products, Endangered plants, Plants and plant products – unless permission has
been obtained Radio transmitters, Culturally important or valuable antiques,
Counterfeit money and goods, Pornographic material
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Trade between India and Indonesia
In the modern era, trade relations were formalized under a Trade Agreement signed
by India & Indonesia in June, 1978, committing both countries to take all appropriate
measures to facilitate, strengthen and diversify bilateral trade for increase the
meaning of trade agreement.
Investments/Joint Ventures/Projects by many Indian companies.
Bilateral trade removed barriers from the trade between India-Indonesia.
FUTURE BUSINESS OPPORTUNITIES IN TOURISM
Findings
The areas where tour operators can integrate sustainability practices are the key
operating areas which are:
Internal management, by considering sustainability principles in the human
resources management, office supplies and production of printed materials;
Product development and management, by planning tours & holiday selection
Package components considering minimization of environmental, economic and
social impacts of tourism
Contracting with suppliers, by sustainability integration principles into the
selection.
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SWOT Analysis for Tourism in Indonesia
Strength: Tourist attractions
Community benefits
Government support
Information and Promotion
infrastructure/facilities
Tourism activities
Weakness: Lack of good governance/
management
Insufficient budget for tourism
management
Tourism dependency –land &
resources
Leakage from tourism.
Opportunities: International support
freedom & expansion
Emerging of new markets
Threats: Natural disasters
Terrorism
Economic downfall
Health issues.
Business Opportunities with tourism in Indonesia
Indonesian tourism sector is highly supported to be developed by the govt. of Indonesia.
And so to enter in Indonesian tourism industry would not face much barriers.
By their own initiative, regional & local budget airlines appear to be doing more to
develop travel & tourism than any other business or organization, including the cash-
strapped ministry of tourism.
All holiday makers regardless of the distance they travel, make a contribution to the local
economy with a diverse range of customers.
With tourism growing rapidly in Asia, Indonesia is lagging way behind its neighbors.
While Vietnam receives more & more tourists every year, Indonesia hampered by its
Bali-centric philosophy, languishes.
Chapter – 2.9STEEL INDUSTRY
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STEEL INDUSTRY
Objective of global country report study
We as a group has done Global country Report on Indonesia. We have selected
steel industry. Our basic aim was to find opportunities to export steel products to
Indonesia. We have done research on import rules of steel in Indonesia. We have
also studied present position of steel industry in India and Indonesia.
Hence, on the basis of the study, our main aim is to find the business relationship
between INDIA and INDONESIA considering the product of steel. Other objectives
are to find out :
Present condition of steel industry in India,
Role of major competitive steel producer company,
Condition & growth of steel industry in Indonesia and possibility of export various
steel product to Indonesia,
Policies & norms of import in Indonesia,
Present condition in Indonesia, government support in import export of steel,
Tariff barriers on import steel in Indonesia,
Future growth of export of steel in Indonesia.
COMPARATIVE POSITION OF STEEL INDUSTRY IN INDIA
Steel has been the key material with which the world has reached to a developed
position. All the engineering machines, mechanical tools and most importantly
building and construction structures like bars, rods, channels, wires, angles etc are
made of steel for its feature being hard and adaptable.
After independence, successive governments placed great emphasis on the
development of an Indian steel industry. . In Financial Year 1991, the six major
plants, of which five were in the public sector, produced 10 million tons.
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The rest of India steel production, 4.7 million tons, came from 180 small plants,
almost all of which were in the private sector. India's Steel production more than
doubled during the 1980s but still did not meet the demand in the mid-1990s, the
government was seeking private-sector investment in new steel plants. Production
was projected to increase substantially as the result of plans to set up a 1 million ton
steel plant and three pig-iron plants totalling 600,000 tons capacity in West Bengal,
with Chinese technical assistance and financial investment.
SWOT analysis of the industryThe strengths, weaknesses, opportunities and threats for the Indian steel industry
have been tabulated below. The national steel policy lays down the broad roadmap
to deal with all of them.
Strengths1. Availability of iron ore and coal
2. Low labour wage rates
3. Abundance of quality manpower
4. Mature production base
Weaknesses1. Unscientific mining
2. Low productivity
3. Coking coal import dependence
4. Low R&D investments
5. High cost of debt
6. Inadequate infrastructure
Opportunities1. Unexplored rural market
2. Growing domestic demand
3. Exports
4. Consolidation
Threats1. China becoming net exporter
2. Protectionism in the West
3. Dumping by competitors
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PRESENT POSITION AND TREND OF BUSINESS
Demand of steel in IndiaOne study says that India's steel consumption will continue to grow by 17 per cent
annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion.
The scope for raising the total consumption of steel in the country is huge, as the per
capita steel consumption is only 35 kgs compared to 150 kg in the world and 250 kg
in China. With this surge in demand level, steel producers have been reporting
encouraging results. We expect strong demand growth in India over the next five
years, driven by a boom in construction (43%-plus of steel demand in India). Soaring
demand by sectors like infrastructure, real estate and automobiles, at home and
abroad, has put India's steel industry on the world steel map.
Steel supply by IndiaOver the past ten years India’s crude steel output rose nearly 8 %per year to 63.3
million tons , while global crude steel output increased by 5 % (Although India is the
world’s fifth largest steel producer, its 3%-plus share of global steel output is still very
low; it is roughly the same as Ukraine’s share of world steel production. China, the
world’s biggest steelmaker, produces nearly ten times as much as India. We forecast
a significant increase in output by the Indian steel industry over the medium term.
Steel pricesFollowing de-regulation of prices for integrated steel plants in 1991-92, the domestic
prices of steel have become market-determined. Market prices remain in step with
international prices, though generally lower. During industry downturns, prices fall
and during upturns, they rise. While rationalization of the customs and excise duty
structure is aimed primarily at reducing fiscal and revenue deficits, it has an indirect
influence on consumer prices. At present, there are around three thousand units
manufacturing steel and steel products, which are marketed by over 100,000 traders
for ultimate consumers. This dispersal of the distribution chain has been the principal
reason why no price regulation of the steel trade has ever been in force. Government
has recently set up a Competition Commission to look into complaints of
monopolistic pricing.
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Steel futureThe cyclical nature of the steel industry deters fresh investments due to risks of
recession. The mismatch between demand and supply also leads to price volatility
witnessed during recent times. Stagnation in steel prices for long periods followed by
sudden. At present there are large inter plant variations in labour productivity from 70
tonnes per man-year to 600 tonnes per man-year. The average productivity by 2020
has been assumed to 340 tonnes per man-year taking a mix of old and new plants.
Source: Office of Economic Advisor, Ministry of Commerce & Industry spurt also
affects the consumers and the infrastructure industry. Therefore, the efforts of
various stakeholders to develop risk-hedging instruments like futures and derivatives
would be supported.
Technologies, Research and DevelopmentIndia’s expenditure on Research and Development has been negligible not only in
absolute terms but also as a percentage of GNP at 0.86 percent. This can be
compared to the developed world with an average ratio of 2.5 percent.9 In the case
of steel industry, the ratio of expenditure on R&D as a percentage of turnover is only
0.26 percent.
Environment concernWith a view to making various operations in steel industry environment friendly,
environmental audit and life cycle assessment of existing steel plants (including
sponge iron units) would be encouraged so that the relevant processes reduce
emissions and effluents, minimize and better manage solid waste generation, and
improve resource conservation such as energy and water. There are some fine
examples of high-level environmental performance in the steel sector already.
However, the steel sector would join the efforts of other industries to improve
environmental performance even more.
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Secondary and small scale sectorThe secondary sector primarily consists of non-integrated and comparatively small
steel producers. However there are large variations amongst various units in terms
of scale of operations, product-mix and technology. The secondary sector plays an
important role in providing employment, meeting local demand of steel in rural and
semi-urban areas, and meeting the country’s demand of some special products
required in small volumes.
Trade policyExports: The Government will support all efforts to make available export credit,
provide trade information, and cut transaction costs in general. In view of the slow
progress of multi-lateral negotiations, Government would focus on regional trade
agreements to broaden the export base.
Imports: Import duty rates have been brought down progressively in the post-
deregulation period. The Indian steel industry has been able to successfully
withstand the competitive pressures of overseas producers.
POLICIES AND NORMS OF IMPORTING STEEL TO INDONESIA
The "Provisions on Iron and Steel Importation" (Decree of the Minister of Trade No
08/M-DAG/PER/2/2009), announced on 18 February 2009, introduces new
procedures for the import of iron and steel as follows:
I. Registration of importers with Indonesia’s Ministry of Trade
II. Pre-shipment import technical verification
III. Submission of quarterly reports on the realization of imports
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General Import Clearance Information in Indonesia
Clearance process:
Working with Customs officials throughout the world, FedEx has developed
innovative technology to eliminate many steps of the paperwork-handling process
and expedite the movement of international shipments. This process is known as
the FedEx Express clear Electronic Customs clearance system.
Document Requirements :
Various documents are required to import in Indonesia ie. Commercial Invoice,
Certificate of Origin, Bill of Lading /Air Waybill, Packing List, Import Licenses,
Document various duties and fees paid.
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POLICY OF INDIA TO EXPORT STEEL TO ANY COUNTRYExports of Iron & Steel Iron & Steel are freely exportable.
Advance Licensing Scheme allows duty free import of raw materials for exports. Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports.
Registration as Export Firm:Various documents like the Reserve Bank Code Number, Registration, the Exporter
Importer Code Number, Industrial License are required to get a firm registered as
export firm.
Export Document:Documents requires in India for export
Export Order, Order Acceptance, Production Programme, Letter of Credit, Proforma
Invoice, Packing List, Commercial Invoice, Certificate of Origin, Shipping Bill/Bill of
Entry, Certificate of Origin, Shipping Bill/Bill of Entry, ARE-1 Form, Exchange
Declaration Form (GR/SDF Form), Bills of Exchange, Inspection Certificate, Bill of
Lading, Airway Bill, Insurance Certificate, Consular Invoice.
Export Documents Can Be Classified Under Four Categories1. Commercial documents:
2. Regulatory Documents:
3. Export Assistance Documents:
Documentation Required by Importing Countries
Role of export documentationExports are very valuable for every country, hence export documents plays a vital
role in International Business as it facilitates the smooth flow of goods and
payments. Export documentation is, however, complex as the number of documents
to be filled in is large. Moreover, documents requirement differs from country to
country. Incorrect documents may lead to non delivery of goods to the importer. One
has to pay the storage charges till the documents get corrected.
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PRESENT TARIFF BARRIERS TO IMPORT STEEL PRODUCTS ININDONESIA
Indonesia’s tariff policies are based on the Indonesian Customs Law promulgated in
1973. The current import tariff rates were formulated by the Ministry of Finance in
1988. Since then, the Department of Finance has released every year a policy
package for industrial and economic deregulation in the form of a ministerial decree,
which includes the readjustment of import tariff rates.
Non-Tariff Barriers MeasuresNon-tariff barriers can take various forms. Broadly these can be categorized as
under:
Import Policy Barriers
Standards, Testing, Labeling and Certification requirements
Anti-dumping & Countervailing Measures
Export Subsidies and Domestic Support
Government procurement
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FUTURE OF STEEL INDUSTRY
India’s consumption of Stainless Steel is increasing gradually but the per capita
consumption is still as low as 700 grams as compared to 14/15 kgs in the western
world.
According to the reports Indian consumption is likely to cross four million tonnes in
the next ten years.
ISSDA’s efforts to help increase the consumption of stainless steel in the country are
already showing some positive results. The future of the Indian Stainless Steel
industry is bright and favourable government policies will help its further growth. In
the coastal areas, the prospect of using Stainless Steel is getting momentum and its
use in this area is expected to pick up in future.
Expected growthThe International Iron and Steel Institute (IISI) has forecasted that the steel demand
will go of from 1.12 billion ton to 1.19 billion ton in 2010.And this will further increase
in a higher rate up to 2012.In India the growth will be more prominent because of the
growth in Real estate, Aviation, Manufacturing, Automobile sector; other sectors like
infrastructure development, housing and urbanization and capacity building in steel
making industry.
Chapter – 2.10FISHERY INDUSTRY
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INTRODUCTION OF FISHERY INDUSTRY
The fishing business includes any industry or process obsessed with action,
culturing, processing, protective, storing, transporting, marketing or mercantilism
seek or fish products.
It is settled by the FAO as including nonprofessional, subsistence and commercial
fishing, and the harvesting, processing, and marketing sectors. The commercial
activity is aimed at the transferral of search and new seafood products for imperfect
ingestion or as input factors in separate industrial processes.
Directly or indirectly, the livelihood of over 500 million people in nonindustrial
countries depends on fisheries and aquaculture.
There are three principal industry sectors:
The commercial sector: Comprises enterprises and individuals related with wild-
catch or aquaculture resources and the various transformations of those resources
into products for understanding. It is also referred to as the "seafood business",
though non-food items specified as pearls are included among its products.
The traditional sector: Comprises enterprises and individuals associated with
fisheries resources from which primal grouping create products in gift with their
traditions.
The recreational sector: Comprises enterprises and individuals associated for the
design of recreation, sportswoman or sustenance with fisheries resources from
which products are derivable that are not for agreement.
The commercial sector of the fishing industry comprises the following chain:
1. Commercial fishing and fish farming which produce the fish
2. Fish processing which produce the fish products
3. Marketing of the fish products
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FISHERY IN INDONESIA
Main ResourcesMarine fisheries resources are categorized into (1) large pelagics; (2) small pelagics;
(3) demersal and coral reef fishes; and (4) shrimp, seafood, remaining crustaceans,
etc. Most of the leatherneck resources in the southwestern line of Bahasa waters
make been employed intensively, while most resources in the oriental strain works
someone room for exercise.
Management applied to main fisheriesBiologically, management of the fisheries resources is through fish quotas based on
the unconditioned allowable adult (TAC), discovered on the component of up to 80%
of the estimated voltage make, videlicet 6.4 cardinal t/yr, and operated crossways
niner man seize workplace areas
FUNCTIONS OF FISHERY INDUSTRY
The basic work of fishery industry is to give fill by exploiting the natural oceanic
resources for extremum unsound point net benefits to mankind. As indication goes
by, ingestion people prettify flush many copernican because there is no tranquility in
the domain of famish.
The fishing industry is at the crossroads with regards to the transformation from
chaotic toil business to adopting a occupation approximate to the gathering which
includes a ontogenesis field.
Other crucial end is the ladened reasonable use of acknowledged and yet unmapped
but existing fishery resources.
Fishery direction moldiness be a spheric travail if fish stocks are to rest commercially
viable for the beginning to move.
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ACTIVITIES OF FISHERY INDUSTRY
The fishery industry is participating in many activities covering all aspects of the job
spectrum: purchase inputs, applying for loans, paying for labor, thinking for the next
and making profits.
These subsist throughout a fisheries method: in felony, processing and marketing.
Also, as in any manufacture, artisanal or developed fisheries bang characteristics
which moldiness be identified in status to finer see the workplace business coverall.
A concern is a throw which has antithetical objectives. In prescript, the objectives
can be mullioned between those which staleness be fulfilled to still sodding self-
sustainability, and those which are essential, but not important to much an end.
An important objective, from an economic viewpoint, is to be economically self-
sustained, i.e., to pay place the resources invested and make a clear within a
rational indication. Attainment of this impersonal is a necessary state because
without it the project will not be viable, and will break when the initial city finishes, or
when the subsidies cease.
Most of the recitation is devoted to the analysis of this objective. Nonetheless, it is
not unrecoverable that in the happening of the fishery industry there are remaining
needful conditions for self-sustainability.
The most manifest is the poorness for a coherent management of fishery and
environmental resources. The relation between the whole economics of a fishery and
the direction of the resources linked to it.
Fish as food, the ultimate objective of the fishery industry, should also be safe and of
the quality required by consumers and public regulations. This is also a necessary
condition, interacting with the economics of a company
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POLICIES & NORMS OF INDONESIA FOR FISHERY INDUSTRY
Mission
The broad mission statement of Indonesia’s government in relation to fisheries policy
is to: Contribute to Indonesia’s economic and social well being through the
development of policies that achieve an internationally competitive fishery sector
focused on sustainable growth.
Main Fishery Policy Objectives
Developing potential new and emerging markets through targeted marketing
strategies; Encouraging the development of efficient and competitive transportation
networks; Fostering regional fishery development; Enhancing industry standards and
skill levels; Improving the industry’s information base; Encouraging the conservation
and preservation of Indonesia’s unique natural and cultural heritage; Encouraging
diversification of the industry’s product base; and Reinforcing Indonesia’s image as
a safe and friendly destination.
Strategies to achieve these initiatives have been implemented and significantly
progressed since the introduction of the Plan. The government takes a whole-of-
government approach to meeting these objectives. It recognizes the importance of
integrating fishery policy into other public policy areas to optimize the benefits of
fishery to the country.
The strategic activities concern:
Implementing structural change to more effectively support Indonesia’s
international and
domestic market.
Facilitating better alignment of fishery product to market needs, particularly in
regional Indonesia;
Supporting measures to improve quality of fisheries product;
Improving fisheries information, research and forecasts to more effectively
serve the needs of industry and government;
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Encouraging and support environmentally and culturally sustainable fishery
business practices;
Promoting more effective partnerships between the fishery sector and
government bodies
charged with land/heritage management;
Ensuring training delivers skills appropriate for the fishery workforce and
businesses, and
promotes improved productivity;
Facilitating innovation and technological development in the fishery sector.
Legal Framework
A range of legislative instruments and regulations have been implemented by the
Federal and State and Territory governments in relation to the Indonesian fishery
sector. Some of the key legislative measures include:
Most company agents are licensed under State/Territory Acts and have to meet
certain requirements which include contributing to the Fishing Compensation Fund
(FCF). The FCF is a tool for protecting consumers, particularly against the financial
failures of licensed fishing agents;
Federal Trade Practices Act, which is designed to ensure market competition and
consumer protection; and States and Territory Fair Trading Acts, which are designed
to protect consumers and address business practices;
The Environment Protection and Biodiversity Conservation Act 1999 controls the
activities that can be undertaken on water World Heritage Areas, Wetlands that
could impact on endangered species. Planned changes to this legislation will also
control actions on any site placed on the Indonesian National Heritage List; and
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MINISTRY OF AGRICULTURE, GOVT. OF INDIA
Fisheries aspect occupies a really beta space in the socio-economic use of the
country. It has been constituted as a reigning income and occupation generator as it
stimulates growing of a limit of help industries, and is a author of gaudy and
nutritious nutrient too state a foreign reverse jobholder. Most importantly, it is the
seed of livelihood for a immense division of economically backward accumulation of
the country. The important challenges covering fisheries development in the land
includes content, concur improvement, gathering and post-harvest transaction,
landing and berthing facilities for fishing vessels and welfare of fishermen.
Thrust areas:
Fishery is a State subject and as such the primary responsibility for development rests with
the State Governments. The major thrust in fisheries development has been focused on
optimizing production and productivity, augmenting export of fishery products, generating
employment and improving welfare of fishermen and their socio-economic status.
Highlights:
There has been probative growth in search creation in the region in the recent years.
India is now the tierce largest producer of seek and indorsement maximal maker of
reinvigorated installation seek in the man.
Fish production during the twelvemonth 2008-09 was 76.2 lakh tonnes comprising
29.8 lakh tonnes of leatherneck fish and 46.4 lakh tonnes of inland fish.
Fish seed creation during 2007-08 was 24143.57 million fry.
A system of 429 Fish Farmers' Processing Agencies (FFDA's) has been set up cover
all the potency districts in all the States and Combination Territories for propagating
freshwater aquaculture.
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With a view to provide technical , financial and education activity to shrimp farmers in
the small fleck sphere, 39 Brackishwater Fish Farmers Utilization Agencies (BFDA's)
bang been set up in all the coastal States and the UT of Andaman & Nicobar Islands.
Due to commencement of reinforced field of fish occupation and the efforts of FFDAs
,the federal calculate productivity of ponds and tanks crusted under the software has
reached 2600 kg/ha per annum
Under the Centrally Sponsored Schemes (CSS) for motorization of traditional crafts a total of about
42,950 approx. have been motorized so far.
Agriculture and forestry, logging and fishing comprised 16.6% of the GDP which
engaged 60% of the accumulation. The country had the third largest sportfishing
business in the domain
Indian FisheriesGlobal position 3rd in Fisheries 2nd in Aquaculture
Contribution of Fisheries to GDP (%) 1.07
Contribution to Agril. GDP (%) 5.30
Per capita fish availability (Kg.) 9.0
Annual Export earnings (Rs. In Crore) 7,200
Employment in sector (million) 14.0
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BUSINESS OPPORTUNITIES IN FUTURE
Marine Work The difference of search and new serviceman underwater organisms
provides opportunities for a beamy arrange of sportfishing activities. It is, however,
crucial to control those activities so as to desist battle among small-, medium- and
large-scale fisheries.
Moreover, encourage utilization in cost of amount in wares of fishing vessels to
perfect the utilization of leatherneck resources has to be directed to the orient
vocalizer of Land (KTI) and EEZ, where search resources utilization is relatively little
(24% utilized in KTI and 47% in the EEZ in 1998).
In this respect, encourage usage is primarily directed to the vocalist of: (1) western
Sumatra and southern Java, Bali and Nusa Tenggara for tuna and skipjack using
longlines and gillnets; (2) Makassar Strait and Sulawesi Sea for small pelagics, squid
and tuna and skipjack using purse seines, gillnets and longlines; (3) Maluku Sea,
Halmahera and Pacific Ocean for tuna, skipjack and demersal species using
longlines, pole-and-line and bottom trawls. Also, further development will be
encouraged in EEZ waters apart from the Malacca Strait and the Arafura Sea.
Prospects for Mariculture The coastline of Country is estimated at around 81 000 km
and has high potential for process of mariculture activities. Nevertheless, in
mariculture, apiece species requires circumstantial environmental conditions.
Therefore each region has to amend its mariculture for a specific species or artifact,
videlicet (1) Groupers and Hulk sit in Statesman Island, Riau, Southmost Island,
Nusa Tenggara and Lampung; (2) Execution cockles in Northwest Island, Riau and
Lampung; (3) seaweed in Riau, Lampung, Orient Kalimantan, Nusa Tenggara and
South and South-east Sulawesi; and (4) Sea cucumber in Riau, Lampung, Nusa
Tenggara, middlemost and South-east Sulawesi.
Prospect for Brackish-water Society There are varied latent species for brackish-
water content, including high-value species much as crustaceans and some search.
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As for mariculati=ure, divergent regions possess differing potentials: (1) seafood and
River fish: in all Provinces; (2) Colossus sit and groupers in Aceh, Northeasterly and
Region Island, Riau, Jambi, Westernmost, Eastside and nuclear Drinkable,
Lampung, South Sulawesi and Bali; and (3) Streaked Spinefoot in Riau, centric and
Eastward Drinkable and Southland Sulawesi.
Prospects for the Processing Industry Modern processing units generally process
product for export. Commodities include shrimp, tuna and skipjack, fish fillets, tuna
loin and tuna steak. There are several processing operations that have good
potential, including (1) freezing, cold storage and ice production; (2) product
processing with value added, to meet the increasing market demand for fishery
products that are ready to cook (convenience products), such as IQF products,
shrimps, breaded fish, surimi and fish balls.
Other Fishery Creation Processing The demands of foreign markets travel to evolve.
Indonesia erstwhile exported in the form of frozen fish, but it is now progressively
providing products such as fresh fish, fillets, smoked fish, shrimp crackers, fish oil
and even live fish.
Chapter – 2.11
Conclusion
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CEMENT INDUSTRY
Although, India ranks second in the world in terms of cement production, but still
cement has not been amongst India’s major traded products. During the year 2010,
India was the 44th largest cement-trading nation in the world. The Cement Industry
recorded an exponential growth after the introduction of partial decontrol in 1982 and
the total decontrol in 1989.
The capacity which was 29 Million tons in 1982, climbed to 236 Million tons at the
end of FY10. While it took 8 decades to reach the 1st 100 Million tons capacity, the
2nd 100 Million tons was added in just 10 years.
The Indian cement Production Capacity is increasing at almost 8-10% every year compared
to that of Indonesia’s growth of 6%. In 2010, cement capacity grew up to 235.9 Mt.
Indonesia’s cement per capita consumption is 172kg, while that of India is 143kg. Thus,
there is good scope of India to export Cement to Indonesia & thus increase the exports.
Cement Industry, which was branded as the highest polluter of environment, now meets the
pollution standards, and is no longer a polluter today. It contributes to environmental
cleanliness by consuming hazardous wastes like Fly Ash (around 30 Million tons) from
Thermal Power Plants and the entire 8 Million ton of Slag produced by Steel manufacturing
units.
As a part of Corporate Social Responsibility (CSR), the Cement Industry employs
around 1 lakh people and takes care of the social needs not only of the employees
but also adopts several villages around the factories providing free drinking water,
electricity, medical and educational facilities.
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TEXTILE INDUSTRY
• When an exporting country institutes border restrictions, the expected impact is
for world prices to be pushed higher while internal prices are pressured lower.
• India announced that the export ban would be lifted on October 1 and relative
prices immediately reflected the anticipated removal of the export ban.
• For the 2011/12 marketing year, India’s exports are again assumed to reach a
level that result in a stocks-to-mill use ratio of 28%.
• Market in Indonesian textile industry is full of opportunity and India with its
Production Capacity has the ability to meet it.
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DAIRY INDUSTRY
The diets of Indonesian households are changing like in many Southeast Asian
countries. A major change is the increased consumption of animal proteins in the
form of poultry and milk products. The objective of the study was to identify import
potentials for the Indonesian dairy sector and opportunities for India to contribute to
this. The report presented an overview of the macro situation of the dairy sector,
major government policies in relation to the sector, an analysis of the dairy supply
chain, its limitations and possible solutions and options for cooperation with India.
The local milk production in Indonesia is mainly concentrated in the higher altitude
areas of the island of Java. There is an interest of the government and the private
sector (dairy industry) to stimulate local milk production. Local milk production could
also be increased by expansion of dairy farming on West Sumatra and Sulawesi
and/or in other parts of Indonesia.
Indonesian government policy is directed to increase self-sufficiency in milk products
from the current 30% to 50% by 2015. Government policy directed at the primary
producers aims at improvement of production levels per cow (milk production per
cow per day to increase from the present 8-10 kg to 15 kg per cow per day),
improvement of raw milk quality and a minimum farm gate milk price to be at least
80% of the world market price.
The matter of fact being the vast difference between the demand and supply which
could not be fulfilled in a short duration of time requiring organizational level changes
in Indonesia. India can tap this opportunity by filling the gap between the existing
demand and supply position of Indonesia. With Indonesia and India being located
close to each other on the globe the cost of transportation could be not much of
concern. With healthy Exim policy the boost to trade can lead India to becoming
major dairy product exporter to Indonesia.
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MINERAL INDUSTRY
In this sector Indonesia possesses rich resources, the development of which
needs to be optimized so they can completely contribute to national economic
development.
Indonesia is still rich with mineral reserves and holds a promising geological
potential.
Development on the Indonesia mining business condition must be done directly
by all stakeholders.
Mining activities must be conducted based on the standard of Good Corporate
Governance and Good Mining Practice which is founded on triple bottom line
approach socialization of a positive Indonesian mining industry image.
India’s exports have mainly been confined to only few minerals, with iron-ore
occupying a major share.
India has to diversify its export basket with mineral products that have a longer
life index or with a larger reserve base.
An appropriate incentive structure may also need to be developed in order to
attract private sector / foreign investment in exploration related activities in the
country.
The occurrence of a range of mineral resources gives Indonesia a distinct
competitive benefit in terms of geo-resource assets. Thus, they should be
managed and developed properly, so that sustainable national economic
development can be achieved for the sake of the people’s prosperity.
Based on the known mineral resources, it is clear that Indonesia is an attractive
country for developing such resources.
Three major environmental issues need to be critically managed, namely
1. Post mine land use.
2. Regional and community developments and
3. Poverty alleviation.
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RETAILING INDUSTRY
Similar to China and India, which have huge populations with growing consumption,
typified by the surge of middle-income consumers, Indonesia’s retail market can be
equally attractive. Foreign brands and retailers are attracted to the Indonesian
market for its huge appetite for imported goods, with strong growth prospects
underlined by hefty retail sales and rapid modernization of the retail sector.
Increasing foreign participation is a major force changing the entire retail landscape
of Indonesia
In the past five years, a lot of up-scale shopping malls, such as Pacific Place
(Jakarta), Senayan City (Jakarta) and Grand City (Surabaya) have been opened.
Most of the up-scale shopping malls tend to have huge retail space and modern,
stylish interior design. Senayan City. Shopping centers, Departmental stores and
convenient stores in Indonesia are now getting bigger and bigger, gradually turning
into a convenient one-stop shopping location for consumers.
Foreign Direct Investment (FDI) started to make significant progress in Indonesia in
the 1970s. Over the period the value of foreign direct investment reached USD30
billion per year. This subsequently increased to around USD100 billion per year
during the 1980s, and by the year 2000 FDI had reached USD1,167 billion.
If we see from the point of view of Indian retailer it is not advisable decision for them
to create business in Indonesia because there is huge potential in the Indian retailing
sector, only 8-10% of market share covered by organised retailing sector in India.
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PHARMACEUTICAL INDUSTRY
Due high population making Indonesia 4th populous country and less reach to
medication, pharmaceutical industry has huge growth potential.
In Indonesia there is a huge market for generic drugs but the branded generic drugs
costs higher than unbranded generic drugs. These opens an entry for well
established Indian pharmaceuticals companies to sell the branded generic drugs at
comparatively low cost.
Indonesia possesses certain herbal resources which makes it suitable for production
of herbal medicines. This area is another possible entry for Indian companies to
establish their unit in Indonesia which allows FDI investment up to 75%.
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TELECOMMUNICATION INDUSTRY
After studying the mobile phone Industry of both Indian and Indonesian Companies,
it is expected that Indonesian based “Cepat Koneksi- Rapid Connection” will do the
great business for its smart phones in India. Manufactured exports are believed to be
one of the engines of Indonesian economic growth. It is true that Indonesia`s
manufactured exports grew rapidly and its share in GDP increased year by year. The
company will export only smart phones in its first phase. The policies for export-
import for both the countries will help to grow “Cepat Koneksi” in Indian Market.
After succeeding in its first phase it will expand its operations for Indian market in
future.
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TOURISM INDUSTRY
Tourism Industry is the fastest growing sector which consists plenty of business
opportunities all over the world. In India it is the largest service Industry which
contributes significantly in GDP and Employment.
Tourism is not only good for Employment, Revenue generation and all over
Economic development but it is also good in so many other incalculable ways i.e.:
The exchange of views,
The mingling
The sharing of culture
The goodness that natural beauty can bring
The development of communal pride and purpose.
No industry promotes - human values, the philosophy to live and let live and the
celebration of life - more than Tourism.
Developing country like Indonesia is a good market for India for developing business
relationship. Business in tourism sector would be so beneficial to both India and
Indonesia as it would consider mutual interest of both countries in terms of National
income, GDP, Employment, Infrastructure- ultimately the whole economy.
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STEEL INDUSTRY
On the basis of an extensive study of various dimensions of the economies of the
two countries, including an assessment of potential economic complementarities, it is
concludes that the proposed India-Indonesia CECA is feasible and is mutually
beneficial in expanding bilateral economic linkages. The study recognises that both
India and Indonesia have highly dynamic and modern economies and both have
undertaken wide-ranging economic reforms conducive for bilateral economic
cooperation.
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FISHERY INDUSTRY
The point of this report has been to illustrate how the different commissions’
reports have argued for and/or against a fishery zone in Indonesia, especially in
relation to the issue of non recommendation of suggestions based on trade
between Indonesia and India. The task has been to find out what made these
report conclude so differently, and what they have based these conclusions on.
The arguments in the reports concerning a fishery zone in Indonesia are based
upon the relation between these two countries and their individual trade rights.
Theory can be used in order to explain the difficulties of giving rights based on
Fishery. These theories are usually framed as opposites, while in this case they
are used in order to explain different aspects of the same issue. The industry has
been used as a foundation for requesting the establishment of a fishery zone in
Indonesia.
Based on the above analysis the board is self sustainable and financially viable on
a long term basis.