FYIstival Business Discussion: Indonesia’s Food Market Opportunities
By: Galih Akmal Latif
Tags: Bright Indonesia, Opportunity, Fyistival, Sbf, Business

FYIstival Business Discussion: Indonesia’s Food Market Opportunities

On May 28, 2021, Singapore Business Federation in collaboration with BRIGHT Indonesia and Warees Halal Singapore held an online business discussion carrying out the theme Indonesia’s Food Market Opportunities. FYIstival: The ASEAN Edition 2021 is an annual program of the Singapore Business Federation in collaboration with BRIGHT Indonesia and Warees Singapore that aims to develop the business of Singaporean companies in various countries, especially in the food and beverages (F&B) industry. This year, the event was virtually held due to the global pandemic and was attended by 60+ Singaporean companies and Indonesian partner nominees.

FYIstival: The ASEAN Edition 2021 by Singapore Business Federation in collaboration with BRIGHT Indonesia and Warees Halal aimed to support Singaporean businesses looking for the right Indonesian business partner nominees in FnB industries. The event mostly talked about the benefits of Free Trade Agreements (FTA), the halal regulations in Indonesia and Singapore, supporting Singaporean enterprises to expand their market to Indonesia, and closed by a talk show with the panelist from Indonesia food distributors.

The Benefits of Free Trade Agreements (FTA)

The Free Trade Agreements (FTA) is a legally binding agreement between 2 or more countries to reduce or eliminate barriers to trade in, and facilitate the cross-border movement of goods and services between the territories of the parties. The FTA would assist the business companies in the trade of goods such as to assure the quality of the global market, trade of services such as to safeguard market access, and investment such as providing opportunities and protection of the business companies.

FTA provides a conducive investment environment such as protection for investors and investment, a transparent, facilitative, and secure environment, also a legal resource. The benefits of FTA through the Singapore Business Federation would include the company attending seminars and training for their business, 1–1 advisory service coaching, and also industry consultation that would assist the business company to expand to the foreign market.

The Halal Regulations in Indonesia and Singapore

The Singapore Business Federation is working together with BRIGHT Indonesia and Halal Warees in Singapore as the supporting entities to assist the Singaporean FnB businesses in terms of looking for business partner nominees that are suitable to enter the Indonesian F&B market. Singapore Business Federation is aware that Indonesia and Singapore, both countries have large Muslim communities that are required to consume foods and beverages that are considered as ‘Halal’. ‘Halal’ is literally interpreted as something that is permitted. This term could refer to anything including foods and beverages. Hence, to enter the business market in Indonesia and Singapore the FnB industries should pay attention to these halal requirements.

Understanding the Halal regulations in Indonesia and Singapore, the enactment of halal certification in both countries should pass several tests and phases before the halal certificate could be issued and enacted to the products. In addition, The products that enter, circulate, and trade in Indonesia must be Halal-certified from October 17, 2024 (in phases), followed by each product type in 2026–2034. The Halal certification in Indonesia is authorized by Halal Product Assurance Agency (BPJPH) under the Ministry for Religious Affairs. Meanwhile, the Halal certification in Singapore is considered voluntary and authorized to responsible by Majlis Ugama Islam Singapura (Muis).

Halal Registration

The Halal regulations must include the trade entry requirements, product labeling, and certification conditions supervision. For Indonesia, the trade entry requirements should consider the products that enter, circulate, and be traded embedded by Halal-certified. The imported products must be recognized as Halal certificates with BPJPH. The product labeling should contain at least a logo and certificate or registration number, and for the conditions supervision, the products must derive from Halal-dedicated supply chain, including processing, equipment, packaging, storage, and distribution.

Key Industry Actors

Both countries have key industry actors that consist of the regulations or standardization entities, the enforcement entities, and the research and development entities.

Regulations and standardizations entities

The regulations and standards authorities are responsible for deciding the halal products whether it is allowed to be circulated, traded, or even consumed by the customers. The regulations and standardizations entities consist of the parliament, the national standards body, and the Islamic fatwa authority. In Indonesia, the entity that is responsible to regulate the Halal certification is Majelis Ulama Indonesia (MUI) under the Ministry of Religious Affairs. On another side, Singapore’s Halal certification is handled by Majlis Ugama Islam Singapore (Muis).

The enforcement entities

The enforcement authorities are responsible to inspect and give licenses for the products as Halal-certified. The enforcement entities consist of the accreditation body, the certification bodies, the inspection bodies, and the licensing bodies. Indonesia has National Accreditation Committee (KAN), BPJPH, and LPPOM MUI as the entities to accreditation the products. Meanwhile, in Singapore, the entities that have the Halal certification are Singapore Accreditation Council (SAC) and Halal Singapore.

Research and development entities

The research and development authorities are responsible for researching and testing the products whether it is considered as Halal or not. The research and development entities consist of the research/testing laboratories, the tertiary institutions, and the training providers. The entities that are responsible in Indonesia are Lab Halal LPPOM MUI and Indonesia Halal Training Education Center (IHATEC). Singapore’s research institute is handled by WAkafREalEState (Warees Halal) Singapore.

Supporting Singaporean Enterprises to Expand to Indonesian Market

The food and beverage industry in Indonesia is planned to grow 5–7% in 2021, driven by economic growth. This shows the great potential for Indonesia to develop the market in the food and beverage industry. In addition to food and beverage Indonesia companies, of course, this potential can be done by overseas food and beverage companies to expand their market in Indonesia. Singapore as one of the countries closest to Indonesia geographically and has several large food and beverage companies such as BreadTalk certainly have great potential to enter the Indonesian market.

Singapore and Indonesia have been growing together with closer business partnerships for a long time. Both countries are part of the ASEAN Free Trade Area and have a double tax agreement that provides relief from double taxation in the situation where income is subject to tax in both countries. These agreements not only increase trade and investment flows but also provide a greater incentive for Singaporean companies to expand into Indonesia.

Before the entry of a food and beverage product to Indonesia, there are a series of stages that must be passed. In addition to having to take care of halal certification, the product must be under a distributor company in Indonesia. In this event, there are two speakers who act as distributors of food and beverage products from abroad who enter Indonesia. Mr. Danny Wishnu Wardhana from PT. Raja Pangan Sejahtera and Mr. Helmut Schafer from PT. Gautama Indah Perkasa. Both of them explained the bureaucracy of the entry of foreign products to Indonesia. This is very important to discuss because one of the challenges of business expansion in Indonesia is the regulation of the government that often changes. Therefore, to support Singaporean enterprises who want expansion in Indonesia, an expert is needed.

Enter the Indonesian Market with BRIGHT Indonesia

Based on the Indonesian Investment Coordinating Board (BKPM), Indonesia has a good economic condition that continues to offer vast potential thanks to the country’s sustainable economic growth, political stability, large young population, and growing middle class, as well as abundant natural resources. To enter Indonesia’s industrial market, it is the best option for foreign businesses to have the right local partner in Indonesia.

BRIGHT Indonesia would help foreign businesses to enter the Indonesian market through our services such as Business Partnership Engagement, Management and Strategy Consulting, Business Registration and Establishment, and Foreign Direct Investment Promotion. The services will help your business to:

Secure the agreement between our foreign client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy. Help our foreign client companies obtain the work and stay permit for your foreign employee in the Indonesian office: expatriates utilization plan (RPTKA), expatriates utilization permit (IMTA), and limited stay permit (KITAS). Link our foreign client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

With exceptional local market expertise and networks in Southeast Asia, BRIGHT Indonesia will offer excellent services designed specifically to achieve your business company expansion’s goals.

For more information, email info@brightindonesia.net.

This article is written by Galih Akmal Latif and Sintya Nur Muftiana.