North Asia wears Indonesia’s garment!

The textile and garment industry is an important contributor to Indonesia’s economy, serving as a large source for jobs and export earnings. Being the largest textiles and apparel producers in the region, it has a long tradition of producing and exporting ready-made garment and home- fashion textiles.

Exports of manufactured goods reached USD 22.63bn in 2012, a decrease of 11.19% year-on-year. The export value of textile yarns, fabrics, and made-up articles reached USD 4.55bn in 2012, down 5.02% from USD 4.79bn a year ago. Meanwhile, the textile, leather products and footwear sectors combined were the fourth largest contributor to the manufacturing industry with a market share of 9.81% for the quarter ending December 2012.

Textile companies across north Asia, especially from South Korea, Taiwan and China, have been making significant investments in Indonesia with the aim of exporting to their home country. These foreign entrants are anticipated to boost total investment in the textile industry to about IDR 6tr (USD 702mn), according to Ade Sudrajat, Chairman of the Indonesian Textile Association.

Salient Points

• The textile, leather products and footwear sectors combined were the fourth largest contributor to the manufacturing industry with a market share of 9.81% for the quarter ending December 2012.
• The export value of textile yarns, fabrics, and made-up articles reached USD 4.55bn in 2012, down 5.02% from USD 4.79bn a year ago.
• Imports of clothing registered a staggering growth of 47.88% year-on-year in 2012. The figures in 2012 were more than doubled the USD268.88mn recorded in 2009.

Souce: CEIC

This is just a quick glimpse into the EMD Report: Indonesia Textile & Garment Industry. Learn more and purchase now>>

 

Malaysia’s palm oil industry wading through slippery future

Following rapid growth in the past few years, the Malaysian palm oil industry experienced unprecedented lower productivity in 2012 with lower crude palm oil (CPO) production, as well as lower palm oil prices and exports. The average CPO price for the year slipped 14% to MYR 2,764 per tonne from a record-high of MYR 3,219 per tonne in 2011, while export revenue for palm products declined 11% to MYR 71.5bn.

CPO production in 2012 declined marginally to 18.79mn tonnes, attributed to lower fresh fruit bunch (FFB) yield due to tree stress after a strong FFB production period in 2011. Higher palm oil opening stocks, higher imports by 6.5% and lower palm oil exports by 2.4% contributed to the huge closing stocks for the year. Meanwhile, the oil palm planted area in 2012 increased 1.5% to 5.08mn hectares due to increase in planted area in Sarawak.

Effective Jan 1, 2013, Malaysia lowered its CPO export tax rates to create a level playing field vis-à-vis its Indonesian peers and provide an export outlet for the huge stockpiles. The government has also shown keen interest in subsiding oil palm replanting scheme and raising domestic demand for palm biodiesel to prevent escalating stockpile. CPO prices are envisaged to stage a modest recovery in 2013, barring any changes to the global economic recovery.

Salient points 

• Palm oil stocks  in 2012 closed at record-high 2.63mn tonnes, a surge of 27.7% y/y.  Higher palm oil opening stock and imports as well as lower palm oil exports contributed  to the huge closing stocks. 
• The average CPO  price in 2012 was MYR 2,764, down 14.1% against record-high MYR 3,219 in 2011, mainly due to concerns over the build-up in palm oil stocks. 
• The average FFB yield decreased 4.1% to 18.89 tonnes per hectare in 2012 after  experiencing a year of high yield, while the national oil extraction rate (OER) remained steady at 20.35%.

Source: MPOB

Much more in the EMD report: Malaysia Palm Oil Industry 

 

Indonesia Pharmaceutical Industry has great future

Indonesia has a fairly small but fast-growing pharmaceutical market, with an estimated value of USD 7.31bn in 2012. The pharmaceutical market is projected to grow at a compound annual growth rate of 10.8%, reaching a value of USD 12.2bn by 2017. It is expected that the market will further grow as current drug consumption per capital is relatively lower than neighbouring countries at about USD 20 in 2011, hence there likely will be  increases in health spending in the future.

Due to a large population size and relatively strong production base, Indonesia has the potential to be a lucrative pharmaceutical and healthcare market. The country has a huge generic drugs sector, which is likely to see consolidation as larger companies seek to maximise profits through acquisition of smaller domestic companies. However, it is noteworthy that part of the generics market is made up of counterfeit drugs. Over-the-counter (OTC) segment has also shown steady growth in recent years, attributed to increased self-medication and accessibility to more affordable drugs.

Majority of the local pharmaceutical companies achieved better sales growth in 2011-12, supported by improved macro-economic conditions and stable raw material import prices. The leading players include PT Kalbe Farma Tbk, PT Merck Tbk, and PT Kimia Farma Tbk.

Salient Points 

• Indonesia’s      pharmaceutical market is projected to grow at a CAGR of 10.8% over the      next five years, reaching USD 12.2bn by 2017, and will rank as the sixth      largest pharmaceutical market in the Asia-Pacific region.
• According      to industry estimates, drug expenditure is projected to reach IDR 84.8tn      (USD 9.5bn) by 2016, with a CAGR of 10% during the 2011–2016 period.
• Healthcare      spending in Indonesia, which is equivalent to 2.6% of GDP, is projected to      nearly double over the next five years, driven by strong economic,      demographic and income growth, as well as the eventual introduction of the      national health insurance system by 2014.

Indonesia’s Projected Pharmaceutical Market, 2012–2017 

	2012	2013	2014	2015	2016	2017
Market Value (USD billion)	7.31	8.05	8.89	9.98	11.14	12.20
% GDP	0.8	0.8	0.7	0.7	0.7	0.7
% Health Expenditure	30.3	29.3	28.4	27.4	26.6	25.8
Per Capita Expenditure (USD)	29	32	35	39	43	47

 Source: Espicom Business Intelligence

Much more in the EMD report: Indonesia Pharmaceutical Industry

 

2011-12_ a difficult period for Malaysian steel industry

 

The global steel industry continued to face a challenging period in 2011-12, arising from higher input costs and an increasingly adverse external environment. Global steel demand softened while raw material prices remained volatile. In line with tough market conditions, Malaysia’s steel consumption decreased slightly to 8.2mn tonnes in 2011. Meanwhile, crude steel production grew at a lower rate of 4.3% to 5.9mn tonnes in 2011.

In Malaysia, the steel industry was further affected by the influx of imported steel products which tend to reduce market prices. Under these unfavourable competitive conditions, performances of steel companies generally declined. Nevertheless, most companies managed to increase sales volume but with much reduced profits.

According to the Malaysian Iron and Steel Industry Federation (MISIF), the domestic steel industry, in consumption terms, will grow at a rate of 2–4% in 2012-13. More demand for domestic steel products is expected with the stepping up of the implementation of various mega-projects under the government’s Economic Transformation Programme (ETP).

Salient points 

• In line with the unfavourable global economic situation, Malaysia’s total steel demand was 8.2mn tonnes while crude steel output reached 5.9mn tonnes in 2011. 
• The performance of the local steel industry in 2012-13 will depend mainly on the rate of construction projects implemented under the government’s ETP. The MISIF expects domestic steel demand to reach 8.4mn tonnes this year. 
• Due to the scale of China’s production and Malaysia’s progressive liberalisation policy, local steel players fear that an influx of imported steel products into Malaysia would continue to exert pressure on prices and margins.

Source: South East Asia Iron and Steel Institute (SEAISI)

Much more in the Intellinews report: Malaysia Steel Industry Report

 

Indonesia’s steel industry growing strong

Indonesia’s steel consumption grew robustly by 22.4% y/y to 10.95mn metric tonnes in 2011 in line with the growth in domestic steel demand. As the country with the largest economy and highest population in ASEAN, its share of steel consumption reached 20.9% making it the top second steel consuming country in the region.

With about 300 domestic players, the steel industry of Indonesia employs more than 500,000 people and is capable of producing 5.5mn tonnes of total steel products annually including hot-rolled steel products (bars, wire rods and plates) and crude steel products (billet and slab). And more production is expected in the coming years.

Salient points 

• The significant increase in Indonesia’s steel consumption in 2011 was supported more by import, which was 32% higher than the 2007 level, and not from domestic production. 
• The country’s domestic steel production increased 4.5% y/y to 5.45mn tonnes in 2011. Bars and wire rods are the primary steel products and account for the largest annual production output of the industry. 
• The gross domestic product (GDP) of the Indonesian iron and basic steel industry increased 3.4% y/y to IDR 8.0tn in Q2/2012.

Much more in the Emerging Markets Direct report: Indonesia Steel Industry 1H12