At the risk of antagonising Indonesian friends and colleagues, it’s arguable that Thai, Malaysian or even Singaporean food is more favoured by foodies.
However, when it comes to food manufacturing, Indonesia is the unsung hero. In 2020 the food & beverage industry attracted nearly $1b of foreign direct investment, second only to the metal industry.
Indonesia is home to over 7,700 medium or large food manufacturers. One reason is its large domestic market (over 270m population) which thanks to urbanisation, a strong convenience store channel not to mention many interesting food delivery start-ups, fuels growth. Recent surveys show fresh food and FMCG spend are growing, despite the pandemic. The Indonesian F&B entrepreneurs association projects 7% uplift in 2021.
Less well known is that Indonesia exports around $8b of food products annually. One reason is its strategic location in SE Asia, another competitive manufacturing costs; then there is the Halal factor.
Of course some of Indonesia’s biggest investors are multinationals. Nestlé announced a new beverage factory in May 2021, Cargill a new wet corn mill and Frisian Flag, a Dutch cooperative, will build a condensed and pasteurised milk plant.
Less well known globally, Singaporean ice cream business AICE is building its third plant and Diamond is investing in frozen food. Japanese soybean and kelp specialist Fujicco has recently announced a joint venture with a local business, its first venture outside the domestic market.
Despite its growing food manufacturing sector, Indonesia imports over 60% of its raw materials like beef, milk powder, soya and wheat. This surely is a sector where further domestic investment looms in the years ahead.