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With Indonesia's construction and infrastructure sectors expected to grow in 2016, backed by government support, Indonesia-based steel pipe manufacturer Steel Pipe Industry of Indonesia should manage to see higher net profit this year. The company, with its factories in Sidoarjo and Surabaya (East Java), has the largest steel pipe production capacity of all steel pipe producers in Indonesia. With its six factories - and 34 production lines - the company's production capacity currently stands at 588,600 metric tons per year.
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Investment in Indonesia's furniture and handicraft industries is expected to slow in 2016 due to subdued global demand and the lower competitiveness of these industries in Indonesia. Local furniture companies are moving away to Vietnam due to issues related to logistics costs, minimum wages and workers' productivity. For example, Taiwan-based Woodworth Wooden Industries Indonesia, the first Taiwanese furniture company that entered Indonesia (with a USD $40 million investment), decided to exit Indonesia, leaving 200 workers unemployed.
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The year 2015 was a sluggish year for Indonesia's cement industry amid the country's slowing economic growth. Total cement sales only rose 1.8 percent year-on-year (y/y) to 61 million tons, the slowest growth pace since 2009. In the first month of 2016, however, a positive sign was detected. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said Indonesian cement sales rose 4.4 percent (y/y) to 5.14 million tons in January 2016 (from the same month one year earlier) on the back of government-led infrastructure development.
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Intense competition in the electronics industry forced the management of Panasonic and Toshiba to restructure their businesses in Indonesia. Panasonic closed one factory (located in Cikarang, West Java) and merged two local units. Meanwhile, Toshiba sold its television and twin-tub washing machine manufacturing plant - also located in Cikarang - to China's Skyworth Group, one of the largest television sets producers in China (with the Coocaa brand) and listed on the stock exchange in Hong Kong.
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The views expressed in these business columns are the views of the authors or the interviewed persons only and therefore do not necessarily reflect the views of Indonesia Investments. The authors are free to ventilate their opinions about the Indonesian business climate. Facts presented in these columns are the result of the author's own research or indicated sources, read disclaimer.
