Business players see opportunity in the ASEAN Economic Community
Business groups have said that the upcoming economic integration, known as the ASEAN Economic Community (AEC), will create more opportunities than threats to local businesspeople as they will gain greater access to a bigger market.
The Association of Indonesian Automotive Manufacturers (Gaikindo), Indonesian Retailers Association (Aprindo) and Indonesian Food and Beverage Association (Gapmmi) have come with one voice, positively welcoming the single market, which is set to open at the end of this year.
“For us, the single market is an opportunity for Indonesian car makers as the market could expand,” Gaikindo secretary-general Noegardjito said recently at a discussion held by Maybank in Jakarta.
According to Noegardjito, the country has huge potential, particularly in car exports to its ASEAN neighbors, as it supplies only around 222,000 units for the Southeast Asian region, where demand hit around 3.2 million units a year.
Indonesia’s car manufacturers produced 740,385 units during the January-August period of this year, of which 30 percent was exported to ASEAN countries.
The country is now the second-largest car manufacturer in the region after Thailand, which produced over 1.8 million units last year.
According to data from Gaikindo, Indonesia’s auto production gradually increased from 1.07 million units in 2012 to 1.29 million last year, while Thai production declined from 2.4 million units in 2012 to 1.8 million units last year.
The AEC, which comprises Indonesia, Brunei Darussalam, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, is set to provide freer movement of goods, people and services in the region.
It will also form a giant block of 620 million people with a combined gross domestic product (GDP) of US$2.7 trillion.
Voicing a similar view, Aprindochairman Roy Mandey said Indonesian retailers welcomed the upcoming single market as it would provide more market options.
He said, however, that the government needed to facilitate local businesspeople by providing guidance on the best places outside Indonesia to market products,among others.
Roy added that local retailers did not have to worry about the possible inflow of foreign retailers into the Indonesian market as long as local food and beverage product supplies met national demand.
A number retailers from neighboring countries have started eyeing the Indonesian market, which accounts for 40 percent of Southeast Asia’s market.
Malaysian retail conglomerate Texchem Resources Bhd. and Philippine fast food icon Jollibee stated previously that it would enter the Indonesian market.
Meanwhile, Indonesian retailers and food chains have also been expanding into other ASEAN countries.
Gapmmi chairman Adhi S. Lukman said food and beverage businesses would remain prospective amid the implementation of the single market.
“[…] I think the food and beverage business is very prospective as ASEAN people [comprising mostly millennials] like to try new products,” he said.
In Indonesia, food and beverage consumption accounts for around two-thirds of total household expenditures, according to him.