Global Business Guide Indonesia

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Joint Ventures | Export
AbadiNusa Group | Mr Ade Tarya Hidayat
Mr Ade Tarya Hidayat

There are opportunities for medical equipment businesses here to meet domestic needs as well as to use the country as a manufacturing base for export

Mr Ade Tarya Hidayat, President Director

A family owned company that specialises in manufacturing medical and diagnostic equipment, AbadiNusa Group has had considerable success exporting its products and is positioned as a world leader in the sphygmomanometer industry. What can you tell us about the group’s background and its strategies going forward?

We started in 1980 as a trading company. Our group recognised that Indonesia’s currency devaluation presented opportunities to companies able to sell their products abroad, and so we centred our strategy on exports. In 1990, I made the decision to manufacture our own equipment and chose to focus on making labour intensive products that use natural resources local to Indonesia. We thus began to mainly produce blood pressure meters, also known as sphygmomanometers, which use a lot of latex as well as materials from our local plantations. This particular product is exported to the USA and countries in Europe such as Germany, and we have to ensure that its quality is of the highest standard. This puts us in a higher product bracket than companies from China and allows us to remain competitive in the global market.

Continuing to improve upon product quality will remain our focus but the industry is very dynamic and there are often changes in consumer demand. For example, with regards to blood pressure meters, hospitals now prefer latex free models as well as features such as antimicrobial coatings. As an industry leader, we strive to stay ahead of these trends.

What is your current outlook for Indonesia’s healthcare sector?

Starting next year, the Indonesian government will introduce universal healthcare coverage which means that all of the country’s citizens will be entitled to basic medical services. In the past, poor people could not afford to be sick but now they will be given access to healthcare and have peace of mind knowing that the Ministry of Finance is obliged to cover the cost. This will increase demand in the medical sector in Indonesia significantly and should bring about new business opportunities for companies like ours. With that said, serious questions about the implementation process remain and it will be a challenge for this universal program to keep costs down.

Given the context of Indonesia’s growing healthcare sector and your group’s success in establishing a diverse network of clients abroad, what are AbadiNusa Group’s plans for the future?

The domestic market is now more profitable than export markets; however we must maintain our export presence to know what changes are taking place in the industry. Competition from China is putting pressure on our margins so we have to embrace the advantages that China has to offer.

For instance, it could prove to be beneficial for us to have Chinese manufacturers carry out some product assembly and then import the semi-finished product to Indonesia for us to complete the manufacturing of goods in accordance with high international quality standards.

For export, the USA will remain the largest market in the medical equipment sector but there is tough pricing competition. European customers are much more focused on quality as opposed to price but the volumes are smaller. Our clients in Europe and the USA are leaders in healthcare and medical services so they communicate to us exactly what the market demands as they know the market best.

The future key areas for medical equipment in Indonesia will be in the treatment of diabetes and haemodialysis. Over the next two to three years the number of haemodialysis patients will double but the existing number of dialysis centres is too low considering the size of the population. Currently, people cannot afford the service but with the new healthcare coverage, I think demand will at least double.

Is AbadiNusa Group open to foreign investors looking to work with a local partner?

I am the chairman of the Indonesian Medical Device Association so I can assist companies that wish to outsource production to Indonesia and enter the sector.

Our group is most interested in cooperating with foreign partners in the area of technology transfer such as for the production of disposable products, which are in high demand in Indonesia. Surgical instruments are another area of interest as there is not a single manufacturer of these products here; the highest quality products are imported from Germany, Japan and Pakistan.

What would you like our readers to remember about Indonesia as a final message?

The Indonesian market is becoming increasingly attractive due to the size of the domestic market. Many medical products are still being imported and there are opportunities for medical equipment businesses here to meet domestic needs as well as to use the country as a manufacturing base for export. The standard of medical equipment being used in Indonesia is not good enough which is why low quality Chinese products are quite prevalent but there is room for medium quality products that are competitively priced.

Global Business Guide Indonesia - 2014

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