Opportunities abound in agribusiness sector

Opportunities abound in agribusiness sector

JAKARTA (JP): Indonesia's food and agribusiness still offers
significant opportunities for both local and foreign companies,
according to a study by Netherlands-based Rabobank.

The bank states in its latest study that the rapidly growing
industrial and manufacturing sectors are still heavily dependent
on agriculture as a source of raw materials.

Ongoing improvements in the production of agro-raw materials
such as milled rice, palm-oil clove cigarettes, urea fertilizer,
rubber, wood products, and pulp and paper are vital to
Indonesia's manufacturing and export-oriented industry, the bank
states.

"Further development of these and other related sectors form a
cornerstone in the government's attempts to create a strong
industry and foster self-sufficiency," it said.

According to the bank, if government policies are to succeed
in this crucial area, serious investment is required from both
the public and private sectors.

Government objectives, the study suggests, should include
improvements in the quality of human resources, technology and
science, the development of agricultural institutions, the closer
integration of the sector with industrial and services sectors,
and the establishment of a productive agro-industry.

According to the study, achieving these objectives will
require deregulation, liberalization and the participation of
foreign investors.

The need for foreign input is clear in a number of sectors, as
the study shows. Indonesia's domestic market is immense, with
about 200 million people. And increasing prosperity, particularly
in urban areas, is generating growing demand for a diversified
range of food and agricultural products.

In addition, its very physical composition -- Indonesia
consists of about 13,500 islands -- means ensuring delivery of
essential agro-inputs, such as high-quality seeds, fertilizers,
equipment and machinery, which is crucial for the transformation
of this sector.

Moreover, investment and knowledge transfers in horticulture,
aquiculture and livestock are high priority and could represent
interesting prospects, it reported.

While the Rabobank study is cautiously positive on Indonesia's
prospects, especially in food and agricultural sectors, it also
cautions that sound preparation is essential.

Indonesia is a country of major opportunity but it is still a
nation in transformation. "Continued liberalization, the creation
of a truly stable political system, and improvements to education
and infrastructure, are all vital if this country is to fulfill
its potential," the study notes.

Food and agribusiness (F&A) in Indonesia is only one of an
ongoing series of in-depth food and agribusiness studies compiled
and produced by the bank's F&A research department.

The study gives a positive outlook on Indonesia's overall
economic performance.

With a consistent annual growth for around 7 percent per year
for the last two decades, Indonesia is a prime example of a fast-
developing economy, it states.

Comparative core economic and sector figures for the past 10
years provide excellent insight into how Indonesia has managed to
transform itself from an oil and gas-dependent economy into a
more balanced economy.

The share of the oil and gas in the country's exports declined
to 24 percent in 1994 from around 70 percent in 1985. (hen)