Expansion, bank lending boost number of start-up firms
Rendi A. Witular, The Jakarta Post, Jakarta
Expansion by foreign companies here and new bank lending are the main reasons for the sharp rise in the number of start-up manufacturing companies last year particularly in the food and beverage sector, an industry expert said.
Chairman of the Indonesian Association of Food and Beverage Companies (Gapmi) Thomas Darmawan said that the country's promising food and beverage sector had pushed both banks and investors to enter the industry.
He told The Jakarta Post on Sunday that industry sales were projected to jump to Rp 190 trillion (US$21.5 billion) this year from Rp 167 trillion in 2002.
Thomas was commenting on the recent corporate survey by the Central Statistics Bureau (BPS) which found that some 1,497 new manufacturing firms were set up last year. This was a 42 percent jump from the 2001 BPS survey.
Most of the new companies were operating in the food and beverage sector, and the textile industry. These labor-intensive sectors generated some 133,973 new jobs, BPS said.
Thomas explained that some foreign food and beverage manufacturing giants had recently acquired local companies and later set up new subsidiaries to capitalize on the promising industry.
Among the foreign giants acquiring local food and beverage firms are Danone and Unilever.
Thomas added that the banking industry had also started to resume new lending in the food and beverage sector, allowing local players to expand and set up new units.
Last year, total new bank lending was Rp 79.4 trillion, a 15 percent increase from the level in 2001.
Thomas said that according to data compiled by Gapmi, the number of new players in the food and beverage industry last year was around 4,460 companies, much higher than the 373 companies reported by BPS.
But chairman of the Indonesian Textile Association (API) Benny Sutrisno questioned the BPS report, saying that many textile firms had gone bankrupt during the past couple of years due to various problems both at home and overseas.
"The figure is not realistic. The textile sector has been experiencing the brunt of the economic crisis. Until now the textile business is still not considered lucrative for a new player," said Benny.
He suspected that BPS compiled the figure based on investment proposals from related government institutions.
Indeed, the BPS survey also revealed that in 2002 the number of large and medium-sized manufacturing companies which had closed and had to downsize their operations jumped to over 1,600, resulting in thousands of workers losing their jobs.
Many of those companies were textile and garment producers.