Update COVID-19 in Indonesia: 563,680 confirmed infections, 17,479 deaths (4 December 2020)
4 December 2020 (closed)
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Besides infrastructure, Indonesia's food and beverage sector remains a favorite of Indonesian banks for the disbursement of loans in 2016 as this sector is regarded promising. Meanwhile, a good supply of food products also supports a stable inflation rate (apart from administered prices, volatile food prices are a key contributor to inflation in Indonesia). Roy Armand Arfandi, General Director of Bank Permata, said Indonesia's economic growth is still highly dependent on people's purchasing power (household consumption accounting for nearly 56 percent of the nation's GDP), hence those sectors that support domestic consumption are attractive for banks.
Regarding loan disbursement in 2016, the first priority of Bank Permata, Indonesia's fifth-largest lender, is the nation's infrastructure sector (in line with the government's push for infrastructure development across the archipelago). However, the portion of Bank Permata's infrastructure loans remains small at below 5 percent of the bank's total loan disbursements.
Sunarso, Vice General Director at Bank Rakyat Indonesia (BRI), said basically all sectors will see subdued performance in 2016 (particularly sectors related to commodities). However, he agreed that the food & beverage industry remains one of the more attractive sectors. This year, BRI continues to focus on lending and banking services for the nation's micro, small, and medium enterprises (the bank's core business). Last year, BRI (Indonesia's second-largest lender by assets) disbursed a total of IDR 558.4 trillion (approx. USD $41.1 billion), up 13.9 percent year-on-year.
Meanwhile, Irfanto Oeij, General Director at Bank Mayora, said the bank will focus on the small and medium enterprises in the food and beverage sector this year. This statement should not be a surprise given that this bank is part of the Mayora Group, one of Indonesia's largest fast moving consumer goods companies and particularly known for its food brands.
Late last year the Indonesia Investment Coordinating Board (BKPM) stated that Indonesia's food and beverage industry is one of the most popular investment destinations of foreign direct investment (FDI) in Indonesia. Whereas local investors' applications for principle business licenses in Indonesia's food and beverage sector reached IDR 21.2 trillion in full-year 2015, foreign investors' applications for licenses in this sector were worth IDR 163.7 trillion.
Foreign and domestic interest in Indonesia's food and beverage industry is explained by the huge size of the nation's population and the expanding middle class segment within this population. As food and drinks are among people's basic needs it implies a huge market. The Indonesian Food and Beverage Association (Gapmmi) stated in December 2015 that turnover in Indonesia's food and beverage industry stands at about IDR 1,200 trillion (approx. USD $87.6 billion) in 2015, up from IDR 1.020 trillion in the preceding year (despite the slowdown of the country's overall economy).