Global Business Guide Indonesia

Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia
Technology Transfer | Joint Research | Export
Sido Jodo | Mr Kus Hadianto
Mr Kus Hadianto

The government’s recent crackdown on illicit producers was hard-hitting as it resulted in only 4-5 companies, including Sido Jodo, remaining in operation from previously 78 in East Java; the government should continue to take such stern actions.

Mr Kus Hadianto, President Director

PT Sido Jodo is one of the most experienced producers of natural based health products in Indonesia specialising in jamu, herbal extracts and health drinks. What more can you tell us about your company’s background and its strategies going forward?

Sido Jodo was founded in 1967 in Mojokerto, East Java, having been inspired by a neighbour of our family who was very knowledgeable about jamu. The extent of her expertise drew the attention of many jamu enthusiasts which led to her house becoming a gathering place for drinking jamu. Due to the lack of a successor as she did not have any children, she shared the recipes with my parents. As a result, we found ourselves in possession of almost every jamu formula in Mojokerto. Over the course of history, Sido Jodo eventually sought to relocate from that community seeing that it was necessary in order to further develop our production capacity. The company had a moment of misfortune in 1994 when our factory burned down. Nonetheless, we subsequently managed to move to a larger facility.

To develop our particular industry, the main constraint in Indonesia is the continued use of outdated production technology. The outcome of this commonplace practice is that most jamu producers in Indonesia are only able to prepare their products in powder form. Sido Jodo carries out extensive research and development as well as makes use of advanced technology to resolve this constraint. In making research and development our priority, we even succeeded in earning a partnership with the government to develop a herbal-based contraceptive medicine as part of Indonesia’s Keluarga Berencana [family planning] programme. The partnership put us working together with Prof. Bambang Prajogo from Airlangga University. Hopefully in a few years from now, the formula will be announced as safe for men to consume.

Another strategy we are currently engaging in is introducing jamu to consumers at an early age. Hence, one of our main products is health drinks for children. As for adults, Sido Jodo plans to combine herbal extracts with mainstream drinks such as coffee which will allow them to enjoy their favourite beverage while simultaneously obtaining health benefits from the herbs. We have achieved initial success in this regard by already having received many orders for our natural extract products from various Indonesian companies for use in their beverage products.

President Joko Widodo built his election campaign on the promise of improving the country’s business climate. In your opinion, what are the steps that the government needs to take in order to boost the growth of your particular sector?

President Joko Widodo recently invited us and other members of the industry’s association to meet him at the state palace. As a fan of jamu himself, he certainly took an interest and was already aware that the industry has yet to be developed to its full potential. At the moment, with most of his administration’s focus being on streamlining business licenses, he specifically encouraged us to come up with our own creative ways to develop the sector. That said, I hope that the government consistently enforces the law that prohibits the circulation of illegal jamu which often contain dangerous chemicals.

The government’s recent crackdown on illicit producers was hard-hitting as it resulted in only 4-5 companies, including Sido Jodo, remaining in operation from previously 78 in East Java; the government should continue to take such stern actions. The availability of skilled human resources, the continuously-rising minimum wage requirements, and high logistics costs are also a challenge, but we have identified export markets to provide an immense opportunity because there is a sizeable profit margin to take advantage of.

Indonesia appears set to undertake greater regional integration following on from the implementation of the ASEAN Economic Community in January 2016. What are Sido Jodo’s objectives from an international point of view?

Sido Jodo plans to sell products in other ASEAN countries although Indonesia will likely continue to be the most prospective market by far. We ourselves are all set to carry out any export and import activities having already obtained all the necessary licenses. One of our immediate target markets is actually India given that we have been invited to that country. Overall, we are hoping to supply the end-product, namely the jamu itself, or the standardised raw material thereof to global markets, or at least to East Asian markets. Through our international expansion, we are aiming for 20% of our revenue to come from abroad by 2016 with the rest coming from the domestic market; this is our short-term goal.

Foreign investors have been quite active in Indonesia in recent years. How is Sido Jodo positioned towards working with international firms?

We are keen on inviting prospective foreign investors provided that they share the same passion for jamu as well as for the herbal medicine industry. Domestically, we already have a partnership in place with Bank Rakyat Indonesia, one of the largest banks in the country, because banks in general have recognised the sector’s vast potential. Sido Jodo hopes that foreign investors can see that too. At present, we are most interested in partnerships pertaining to technology transfer and research and development. The latter is especially related to our own research activities which have so far been confined to consumers in Indonesia. By having a partner with a better understanding of the international market, we will be able to develop more suitable products for export. Additionally, Sido Jodo can also serve as an OEM manufacturer for foreign counterparts.

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

Indonesia is not as scary or as complex as some might have perceived. Foreign investors in particular should see Indonesia as a market possessing enormous potential, so come visit our country! Furthermore, smaller cities in Indonesia such as Tulungagung, Madiun, or Kediri in the East Java region offer certain advantages as manufacturing bases given their population size and minimum wage standards.

Global Business Guide Indonesia - 2016

icone share