Wed, 28 Apr 2010

From: The Jakarta Globe

By Arti Ekawati
Poor infrastructure is eroding Indonesia’s competitiveness in exporting fresh produce and needs to be addressed before the Asean Economic Community single market becomes a reality in 2015, horticultural leaders said on Tuesday.

Slow transport links, substandard storage facilities and poor packaging were among problems that would put Indonesia at a major disadvantage, they said.

“If there is no improvement in infrastructure, which leads to poor-quality produce, it will be difficult for us to sell fresh produce and compete with produce from other countries in the Asean Economic Community,” said Hasan Johnny Widjaja, chairman of the Indonesian Fruits and Vegetables Exporters Association.

Asean leaders agreed in 2007 to establish a single market, known as the Asean Economic Community, with no trade tariffs, streamlined customs clearances and free movement of capital and professionals by 2015.

The deterioration in Indonesia’s competitiveness in horticultural exports was demonstrated by its shrinking share of the Singaporean fresh produce market over the last 20 years, Hasan said.

“Singapore is an important market that provides an indication of our ability to compete with fresh produce originating from other countries such as Malaysia and China,” he said. If Indonesia was able to increase its market share in Singapore it would be ready to enter other Southeast Asian markets because Singapore’s quality standards were the highest in the region, Hasan said.

However, Indonesia’s share of Singapore’s fresh produce import market has dropped markedly from around 30 percent 20 years ago. According to data from research and consulting company Frost & Sullivan, only 6 percent of the fresh produce imported by Singapore in 2009 came from Indonesia, while 28 percent came from China.

R. Gopal, a director of Frost & Sullivan Asia Pacific, said there are several logistics and transportation problems related to exporting fresh produce from Indonesia to Singapore.

It took three to four days to ship produce from East Java to Singapore and by the time it arrived it was often not in very good condition, he said.

“Low quality of packaging for export, not enough proper storage facilities, poor quarantine inspections and the lack of cold storage are common problems,” Gopal said.

Adi Putra Tahir, acting chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said that although the Asean Economic Community would not become a reality until 2015, Indonesia needed to start preparing for it now.

“We don’t want what happened with China to happen in the horticulture sector in 2015,” he said, referring to calls from some sectors of Indonesian industry to postpone the implementation of the Asean-China trade pact, after it had already started to be implemented.

Without improvements to its infrastructure, Indonesian fresh produce would not be able to compete in export markets with producers from countries such as Malaysia, Thailand and Vietnam, Adi said. Indonesian producers would also find themselves under pressure at home, he said.

Over the last few years Indonesia has been importing more fresh produce from its neighbors. In 2008, it imported $124 million worth of oranges from China, up from $71.8 million worth in 2006. Meanwhile, in 2008 Indonesia imported $30.8 million worth of durians from Thailand, up from $15.4 million in 2006.