Investment In Indonesia’s Processed Food And Beverage Industry Expected To Surpass US$3.9 Billion

Monday, July 25th, 2016 | 600 Views

Investment in Indonesia’s processed food and beverage industry is expected to surpass IDR50 trillion (US$3.9 billion) in 2016, up 16 percent year-on-year from IDR43 trillion in 2015.

Adhi Lukman, general chairman of the Indonesian Food and Beverage Association (GAPMMI), said investment in this industry has been recovering in 2016 after a weaker 2015 when foreign direct investment into Indonesia’s processed food and beverage industry fell 50 percent to US$1.5 billion.

Currently, three companies are in talks with GAPMMI regarding their investment plans in Indonesia. Mr Lukman noted that there has been a positive development in regards to companies looking to build factories producing raw materials. This development would reduce the Southeast Asian country’s reliance on imports of raw materials for processed food and beverages.

According to information from the Indonesia Investment Coordinating Board (BKPM), two companies from South Korea are interested to build two factories in Indonesia. Both are looking at an investment valued at approximately US$300 million each.

Indonesia’s processed food and beverage industry is expected to grow eight percent year-on-year in the second quarter of 2016, improving on the 7.5 percentage point growth recorded in the same quarter in the previous year.

The Indonesian economy is expected to improve in 2016 compared to last year. Accelerated economic growth would impact positively on Indonesia’s food and beverage industry as people’s purchasing power strengthens. This will be augmented if prices in the food and beverage sector do not rise significantly. Mr Lukman noted that prices will stabilise following measurements by the central government to scrap fuel subsidies as well as heavy rupiah depreciation last year.

In general, investment in Indonesia’s food and beverage industry is centred on Java, Indonesia’s most populous island mainly due to the good infrastructure there.