Global Business Guide Indonesia

Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia
Joint Ventures | Technology Transfer | Export
Makro Group (PT Makro Rekat Sekawan) | Mr Agus Sutantio
Mr Agus Sutantio

Indonesia’s adhesive manufacturing industry is well positioned to flourish over the coming years, given the size of the market and the fact that many of the raw materials needed are already produced within the ASEAN

Mr Agus Sutantio, President Director

Makro Group is a leading manufacturer of adhesives in Indonesia that has grown substantially since its establishment via strategic partnerships and international certification. What more can you tell us about your group’s history and its main strategies going forward?

We entered the adhesive industry in 1996 when we founded Makro Rekat Sekawan as our first company in this line of business. In doing so, we tapped into the expertise of our founders – myself included - as polymer chemists who studied at the Technical University of Berlin. Makro Rekat Sekawan was initially focused on manufacturing adhesives for the local market, and this served as the foundation from which we began producing a more comprehensive range of products including water based and hot-melt adhesives. In 2010, we realised that we were nearing the ceiling of our capabilities to create new adhesive products and as such began looking for strategic partners overseas. This decision coincided with the expansion of our manufacturing facilities to meet international standards and open up new opportunities for collaboration.

In 2011, we focused on Japan as the target market for cooperation with the understanding that many Japanese businesses within our industry were looking to Indonesia as a key investment destination. After identifying a partner that best matched our need for knowhow related to advanced manufacturing techniques, we signed a joint venture agreement with Moresco Japan with the goal of producing hot-melt pressure sensitive adhesives [PSA] for hygiene products. Demand for this type of adhesive was growing by leaps and bounds in line with growing demand for products such as baby diapers and sanitary napkins, and the JV company - Moresco Macro Adhesives - currently serves markets in Southeast Asia as well as India.

What is your outlook for the continued development of Indonesia’s adhesive manufacturing industry?

The adhesive manufacturing industry provides its products to many different sectors. In addition to supplying manufacturers of hygiene products, we also work with the automotive sector and the packaging and bookbinding industries, to name a few. Last year, our industry’s growth rate matched that of consumer products at 15-20%. Prior to 2014, growth typically exceeded 25%. The outlook for our adhesive products varies depending upon the industry being supplied to. For example, in 2013 the market for hygiene products grew considerably but last year experienced a slowdown. We expect to see this market grow by an even slower rate of between 10-15% this year.

Which international markets has Makro Group identified for its exports going forward?

The majority of our exports go to companies in the hygiene product and automotive industries. With regard to our exports for the automotive industry, we are primarily focused on Thailand as the hub for car manufacturing in the ASEAN. Our adhesives for hygiene products are mainly being exported within Southeast Asia, with Thailand once again being one of the largest markets after Indonesia. Vietnam also has considerable potential for this type of product. India is also beginning to show promising signs for the future.

The implementation of a clear framework for free trade within the ASEAN will make it easier for us to export our adhesives as well as import raw materials and we therefore expect the ASEAN One Market to have a positive impact on our group.

Which industries are you seeing the most potential in for Makro Group to serve in the future?

Supplying adhesives to the food and beverage packaging industry will continue to be one of our most important areas of business going forward. To ensure that we maintain our position as the adhesive supplier of choice for this type of client, it is crucial that we anticipate changes in demand and introduce products that meet evolving customer requirements. For example, we have sought to move away from the traditional hydrocarbon based adhesive towards more environmentally friendly products.

In addition to your plan to introduce eco-friendly adhesives, what more can you tell us about Makro Group’s plans to innovate?

Our innovation priorities are centred on the goal of becoming more of a regional player to build upon our success in the Indonesian market. As such, it has been our aim to cooperate with overseas companies able to provide access to advanced technology and knowhow in delivering high value added products. Innovation will be a key driver of our growth and development going forward, and we expect that the involvement of mid-sized companies from areas such as Europe and America will play an important role in this regard.

A lot is expected of the new government to improve upon the business climate in Indonesia. In your view, what should the new administration prioritise in spurring the development of Indonesia’s adhesive manufacturing sector?

Indonesia’s adhesive manufacturing industry is well positioned to flourish over the coming years, given the size of the market and the fact that many of the raw materials needed are already produced within the ASEAN. These factors lead us to believe that local producers of adhesives will be very competitive, irrespective of specific measures carried out by the government to support our industry. With that said, like most businesses in Indonesia, we would benefit from improved infrastructure as we strive to become more competitive on the international stage.

How is Makro Group positioned towards working with international investors and foreign companies looking for an experienced local partner in Indonesia?

A growing number of multinational companies have global supply chains. Though we have been able to provide our adhesives to major companies serving the local market, we have found it difficult to supply conglomerates with a more international focus. To address this challenge, we feel that it is necessary to cooperate with foreign partners. As a well-established company offering a thorough understanding of the Indonesian market, we are selective when it comes to partnering with foreign entities and choose to work with those that are specialists in their industry and have direct access to globally oriented companies. Working with international partners should accelerate our ability to achieve our long-term goal of going public.

As a final message, what would you like Global Business Guide’s readers to remember about Makro Group and Indonesia?

Indonesia has immense potential and is currently in a sweet spot due to the rise of a growing middle class within what is already a big market. Indonesia is the best place to invest compared to other emerging markets in the region, and to have success here it is necessary to work with a serious, honest and hardworking local partner.

Global Business Guide Indonesia - 2015

icone share