The increasing prominence of Indonesia’s F&B industry has caused many a prospective business owner to consider starting an F&B company there. Such business owners may take advantage of the currently favorable market conditions to achieve a great deal of business success.
The food and beverage (F&B) industry facilitates sales of food and drinks, both locally and for export. Countries’ economies cannot survive in the world today without an active and thriving F&B industry. Governments, therefore, take a close interest in this industry for the purposes of economic growth as well as regulation. Such has also been the case in Indonesia. There, the Indonesian government has set up the National Agency of Drug and Food Control which oversees all activities which take place within the F&B industry. There is a need to prevent the sale of prohibited food substances as well as to regulate the business environment for both local and foreign F&B business owners alike. Thus, the Indonesian F&B industry is full of regulations which have been put in place by the Indonesian government; however, all of these regulations are generally well-planned and necessary.
Current Condition of the F&B Industry in Indonesia
Before venturing into the F&B industry, prospective business owners are to assess the current status of Indonesia’s F&B industry, then identify the factors which would make the country suitable for the entry of businesses. There are a great many lucrative business opportunities for anyone who plans to enter the Indonesian F&B industry. There are several reasons as to why such is the case.
As an aside, if you are interested in starting an F&B or any other company in Indonesia, you can always contact us at Paul Hype Page & Co to receive our services. Our incorporation team will enable you to begin running your Indonesia-based company as soon as possible. We will see to it that you will encounter as few problems as possible during the incorporation process.
Large Consumer Population
Indonesia’s population of approximately 271 million is one of the largest in the world. This fact works in the favor of all who choose to start an F&B business in Indonesia because it proves that there is a potential market food products. Most of this population are part of the growing middle class and spend large amounts of money on food every day. Therefore, there is much potential to sell finished and raw food products alike in Indonesia market.
The average income of the typical Indonesian consumer has risen in recent years. This has thus led increased spending from such people. This increase in the income of the Indonesian middle class has in turn caused their spending on food and food–related items to increase. Thus, F&B businesses entering the Indonesian market will benefit from these favorable economic conditions.
Growth of Retail
The increasing prevalence of malls, supermarkets, and online food stores across Indonesia present many opportunities for suppliers of food and beverages to increase their impact in the Indonesian market. Instead of joining the F&B supply chain at its end, new entrants to the industry could consider playing an intermediary role in serving customers across Indonesia. Annual growth rates of the F&B industry in Indonesia have been growing every year and are expected to continue doing so for the foreseeable future.
The Indonesian government through its Ministry of Industry has increased the amount of money which it has spent for the benefit of the country’s burgeoning F&B industry. The F&B industry is the primary contributor to Indonesia’s total gross domestic product (GDP) other than its world-famous oil and gas industry. Therefore, the Indonesian government decided to increase the budget allocated to the F&B industry from approximately US$4.4 billion in 2018 to US$4.8 billion in 2019. This increased level of spending presents Indonesian business owners with a lucrative opportunity to enter the Indonesian food and beverage market.
Specialization is one way of gaining an added advantage in the business world. Businesses usually choose to specialize in certain products in order to maximize their profits. Due to the fact that 87% of the population is Muslim, specialization within the Indonesian F&B industry is not difficult; the market for halal foods is therefore extremely large. The Indonesian government has introduced the halal food certification which dictates the standards to be fulfilled during the preparation, packaging, handling, and distribution of halal foods. Current F&B businesses are to comply with the halal food certification. Failure to do so will render their products non-halal and therefore unable to be consumed by Muslims, thus causing them to miss their window of opportunity to cater to the Muslim populace in Indonesia by producing food products which comply with halal certifications.
Why One Should Start an F&B Company in Indonesia
It has thus been shown that any prospective business owner in Indonesia should consider venturing into the Indonesian F&B industry. The large population provides business owners with much demand for food and beverage products. The country’s large middle class which has increasing amounts of income and expenditure will lead to F&B businesses in Indonesia becoming able to generate much more revenue from food and beverage sales. Most importantly, the high level of demand for food products spares businesses from having to spend much the on marketing and promoting food products.
There are many ways in which one could enter the Indonesian F&B market. One could enter the market as a restaurant owner, a distributor of finished food products, or a supplier of raw food products to companies in need of such products.
How to Start an F&B Company in Indonesia
Registration of an F&B business in Indonesia is compulsory before it may begin its business operations. A business has to register its food products with the National Agency of Drug and Food Control so that it will receive an ML number for every food product it sells.
There are many business entity options which an F&B business in Indonesia may select. Indonesian company laws allow for the setting up of public companies, limited liability companies, partnerships, and sole proprietorships. New business owners must follow the due registration processes as dictated by Indonesian company laws.
However, unlike other industries, an F&B business in Indonesia cannot begin its operations before receiving approval for the food products it intends to sell. The National Agency of Drug and Food Control is responsible for assessing the sources, quality, and usage for both raw materials and finished food products prior to presenting the F&B business in question with an ML number. However, restaurant owners do not have to obtain licenses for ingredients which are to be used to make finished products which will subsequently be sold in restaurants. The restaurant owners must, however, obtain a license for the finished food products. The process of license approval takes a period ranging from about six months to one year in order for all compliance regulations to be completed; these regulations are to be performed on the premises of the location where the sales and distribution of food and beverage products will take place.
Licenses Related to Indonesian F&B Companies
Unlike other industries, the F&B industry in Indonesia demands that business owners own many licenses before the company can be fully registered. There are many licensing requirements which have been imposed by the National Agency of Drug and Food Control. Some of the licenses which are required prior to registration of an F&B company in Indonesia include but are not restricted to a Certificate of Free Sales from the country of origin, HACCP validation, a certificate of Analysis of Finished Products, a Certificate of Analysis of Raw Materials and Ingredients, halal certification, a company registration license, and import licenses for externally sourced raw materials.
If you are seeking any assistance regarding licensing or any other compliance regulations of your company, we at Paul Hype Page & Co can be of assistance. We will work with you to ensure that all of your compliance-related requirements have been fulfilled. We will also help you contact any relevant government authorities in Indonesia, should you require their input.
There are many favorable factors which make Indonesia an excellent destination for F&B business owners. However, those who deal with non-halal food products will be at a disadvantage due to Indonesia’s massive Muslim population. Nevertheless, the Indonesian F&B industry remains one of the most lucrative investment sectors which all prospective business owners in Indonesia should consider entering.
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Starting an F&B Company in Indonesia FAQs
The National Agency of Drug and Food Control oversees many different yet important matters to preserve the health and safety of everyone living in Indonesia today. Some of these matters include regulation and supervision of medicine, cosmetics, vaccines, and dietary supplements in Indonesia. It is also in charge of all issues related to food safety.
Approximately 87% of the Indonesian population today is Muslim. Thus, they will require assurance that the food which they are to consume is not in violation of their religious beliefs. This also means that an F&B business’s failure to obtain halal certification will cause them to be unable to sell products to the vast majority of Indonesians.