24 Nov, 2008 - U.S. agricultural, fish, and forestry exports to Indonesia reached $1.6 billion in CY 2007 and is expected to approach $2.3 billion in 2008.
In recent years, a stabilized macro-economic situation and business climate has provided excellent opportunities for U.S. food and agricultural exports to the rapidly growing Indonesian retail, food service, and food processing sector.
MARKET OVERVIEW
In recent years, a stabilized macro-economic situation and business climate has provided excellent opportunities for U.S. food and agricultural exports to the rapidly growing Indonesian retail, food service, and food processing sector. Despite the recent situation affecting global financial markets, Indonesian GDP growth is projected to remain above six percent in 2008 and growth in consumption – despite an expected slowdown – should remain relatively strong.
Beyond 2008, economic and financial factors that will affect U.S. food and agricultural exports to Indonesia include access to trade financing, commodity prices, the stability of the Indonesian currency (rupiah), comparative exchange rates from competitor countries, government policy on fuel subsidies, trade regulations, and implementation of regional free trade agreements.
The growth in U.S. food and agricultural exports to Indonesia over the past 10 years has been remarkable. After reaching a low of $498 million in 1998, U.S. agricultural, fish, and forestry exports to Indonesia reached $1.61 billion in 2007 and is expected to approach $2.3 billion in 2008. Calendar year 2007 data showed that Indonesia is the eight-largest export market for U.S. agricultural product. U.S. exports in all three sectors – bulk, intermediate and consumer-oriented – will reach record levels in 2008. This will make Indonesia one of the fastest growing emerging markets in the world for U.S. food and agricultural products.
The majority of Indonesians are Muslim, so products produced according to halal requirements sell best. In addition, a growing number of Indonesians have been exposed to developed-country diets and trends, making these different food products more popular. In addition, a rapidly growing trend is the demand for healthier foods – especially those fortified with vitamins and minerals.
In terms of constraints, factors affecting trade include widespread corruption, lack of an efficient and transparent legal system, conflicting and non-transparent rules, inconsistent enforcement of regulations, and lack of infrastructure including port facilities and cold chain facilities.
The Government of Indonesia (GOI) has made efforts to address some concerns. Since December 2007, GOI has implemented the National Single Window (NSW) to push the movement of exported and imported products at the port. The NSW system requires all related government institutions to coordinate the process to clear exported & imported goods through an electronic system.
A pilot program has been conducted for ten food, beverage, and drug importers and involving the National Agency for Food and Drug Control (BPOM) and Customs at Tanjung Priok port in Jakarta. BPOM, Custom at Tanjung Priok, Foreign Trade Ministry of Trade, Agriculture and Fish Quarantine are conducting a further roll out for 100 importers that initiated in April 2008.
Once that pilot program is successful, GOI plans to roll out the NSW system to Tanjung Priok port in Jakarta, Tanjung Emas port in Semarang, Tanjung Perak port in Surabaya, Belawan port in Medan and Soekarno Hatta airport in Jakarta. The NSW system is planned to link with Asean Single Window (ASW) in 2009 and all Asean countries will link completely in 2012.