Global Business Guide Indonesia

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Sarana Karya Utama & Gold’s Gym | Mr Francis Wanandi
Mr Francis Wanandi

Sakatama is in an advantageous position in this regard as there are very few toll manufacturers for liquid goods in Indonesia outside of companies that make their own products.

Mr Francis Wanandi, President Director

Sarana Karya Utama [Sakatama] and Gold’s Gym are your core businesses which specialise in toll manufacturing and the fitness industry respectively. What more can you tell us about your companies’ background?

We began to operate Gold’s Gym being influenced by multiple factors, one of which was the regime change from the Soeharto dictatorship to a fixed-term government. We believed this shift could potentially lead to regulation changes from time to time, thus causing a sense of uncertainty for us. To depend only on a particular sub-sector within the healthcare industry therefore became highly sensitive. Prior to Gold’s Gym, I had been involved with Combiphar which specialises in producing consumer goods and generic over-the-counter drugs. I personally wanted to diversify into an industry that is closer to consumers than having to go through layers of distributors and retailers as is the case for a manufacturer. After much thought and looking around, I saw Gold’s Gym as an intriguing prospect and eventually applied for the franchise.

The next step for us was linking the newfound venture with our existing portfolio of businesses. It is worth noting that physicians in recent times have shifted away from their previous mindset of merely treating patients and administering medicine. Indeed, doctors have finally recognised the importance of physical exercise. Furthermore, diseases are increasingly related to our lifestyle; ailments such as cardiovascular disease, high blood pressure, diabetes, cancer, etc. The present effort at Sakatama is in combining the three elements of Gold’s Gym, Combiphar and medical professionals to overcome lifestyle diseases. The synergy between Gold’s Gym, Combiphar and the doctors linked to the latter has seen Combiphar endorsing our facilities. Subsequently, there are already many instances of doctors referring their patients to us because they trust our personal trainers.

With regards to the history of Sakatama as a toll manufacturer, it began when Nestlé approached me for a project in Indonesia in 2005. In the ensuing arrangement, we started with filling operations and soon progressed to making small sachets and packets. We continued the cooperation with Nestlé for the following 10 years as our exclusive partner before adding Danone more recently. Through this longstanding partnership with the French company which of course practised high quality assurance standards, we succeeded in learning as to what it takes to become a good toll manufacturer. Since 2014, we have further identified vast opportunities in serving the beverage industry made available by the rapid growth of convenience store chains in Indonesia. Sakatama is in an advantageous position in this regard as there are very few toll manufacturers for liquid goods in Indonesia outside of companies that make their own products.

President Joko Widodo has launched numerous policies aimed at better improving Indonesia’s business climate. What is your outlook for your businesses in view of the government’s measures?

Our Gold’s Gym operations are perhaps not directly impacted by any national policies or regulations issued by the government.

As long as people are conscious about their own health to any extent, a market will always be there for us to take advantage of. This is even truer given the low penetration level of the fitness industry in Indonesia at just one percent. To put it further into perspective, there are only around 500 fitness clubs with decent facilities serving a population of 250 million people.

Regional integration with the ASEAN Economic Community has begun to be implemented as of 31st December 2015. What opportunities or challenges do you see will come about for your companies?

As soon as the country’s much needed infrastructure can successfully be built by the Joko Widodo administration, especially in the maritime sector, Indonesia will be able to ship its goods directly from various regions of the country to ASEAN markets. In describing this potential, I would like to quote one of our clients who said that having such infrastructure will allow them to send their products to neighbouring countries such as Malaysia, Singapore and the Philippines at a significantly lower cost.

As for the fitness industry, a challenge may come from the possibility of an influx of foreign workers. The reason for concern is that local instructors and personal trainers are still behind those from Singapore, and especially those from the Philippines, with regards to professional skills and English proficiency. Even now, Indonesian workers are increasingly under pressure with many Brazilians already being employed in the sector.

Foreign investors have been quite active in Indonesia over the last decade. How is Sakatama positioned towards working with international firms?

We are definitely open to cross-border partnerships as we are very familiar with it. Since my father founded the family business, we have established countless joint ventures. Some of our foreign partners include Novartis, GSK and Otsuka. If there is value to be obtained, we certainly welcome foreign investments. In my opinion, the best prospect would be technology, know-how or capital from abroad being combined with our own capital and knowledge of the local market.

As a final message, what would you like Global Business Guide's readers to remember about Indonesia?

Whatever industry you are in, there is a potential market here in Indonesia. To succeed, however, you must first learn extensively about Indonesian consumers; this is essential. I also cannot but emphasise enough that success does not only come down to capital and technology, but it is about understanding the needs of the local consumers. That said, we have to be selective in choosing a partner because not all prospective firms share the same interest.

Global Business Guide Indonesia - 2016

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