Global Business Guide Indonesia

PT Pura Mayungan PT Pura Mayungan PT Pura Mayungan PT Pura Mayungan PT Pura Mayungan PT Pura Mayungan PT Pura Mayungan PT Pura Mayungan
Joint Ventures | Export | Distribution
PT Pura Mayungan | Mr Ferri Limputra
Mr Ferri Limputra

I believe there is still room for us to work with respectable European medium sized companies that are very focused on a particular area in order to complete our range

Mr Ferri Limputra, President Director

PT Pura Mayungan was established in 1975 specialising in electricity switchboards and switchboard components. Please present the company to GBG’s audience and explain the current strategies in place to further expand the business.

We are part of an affiliated group as opposed to a holding company with all of the companies engaged in the electricity sector. Our flagship company is Trafoindo Prima Perkasa which is recognised as number one or number two in the distribution of transformers both for the private sector and utility providers. We also have affiliates representing international companies for distribution in Indonesia and a joint venture company with Singapore for the distribution of European multinationals for electrical projects. Pura Mayungan concentrates on manufacturing as well as our own research and development. It also represents several Spanish companies for sales and marketing. We are currently trying to complete our product range for components for low and medium voltage switchboards to support Indonesia’s more than 500 switchboard and panel producers (300 in Jakarta, Bogor, Tangerang and Bekasi alone).

We are a family business, previously competition in our sector was not so fierce but now there is a large influx of cheap Chinese made goods. Therefore we saw that we needed to provide not just generic products but value added products to compete effectively in the market such as switchboards. In the group we already have a transformer manufacturing plant and now we offer medium voltage switchboards which are needed for infrastructure projects, buildings and utilities. I benchmark the company against what the largest multinationals are doing as Indonesia is always behind. I travelled to Hanover to see Schneider Electrics and what I see there now is what Indonesia will be doing in the next three to four years. We do not want to be behind the trend; photo voltaic for example which has been around in Europe for several years is just beginning here in Indonesia.

As a young team we face challenges. Indonesia has a lot of potential and competitive advantages as a manufacturing base. In terms of labour costs, Indonesia is very competitive although not as skilled as other countries; however it has a lot of potential for switchboard and component manufacture for export in the ASEAN as well as for the domestic market. There is plenty more for us to do to dominate the Indonesian market, but South East Asia as a whole is double the size of Indonesia. The way I see it, China cannot continue as a low cost producer so I believe we can position ourselves as a manufacturing base for switchboard components for South East Asia rather than relying on imports.

For now our focus is on Indonesia and keeping up with market demand. Our challenge is therefore expanding our capacity and to provide more products for the range. For new products and distribution of new principals in switchboards, we have to do a lot of research to ensure that all the materials, spare parts and support services can be provided.

What do you believe to be the main challenges and opportunities in Indonesia’s electricity sector?

PLN recently celebrated Indonesia’s electricity day to mark 67 years since their establishment. However to date there is only 71% of Indonesia covered by electricity which means there is nearly 30% of the population without electricity. Also recent studies show that Indonesia’s electricity consumption per capita is much lower than developed countries which means that there are a lot of opportunities in power generation as well as distribution of components such as transformers and switchboards. When you look at the home as well, there is greater demand for smart technology that allows you to control and monitor your usage.

Therefore there is demand for new installations, the replacement market and also for improving the efficiency of the existing electricity infrastructure. The mindset here is to overlook the inefficiency of the current system and to focus on building more but there is a lot that can be done to improve what Indonesia already has to avoid waste. There is also a disjointed view in the desire to be green but also to have cheap power generation such as building more coal fired power plants. Renewable energy is really just beginning here so I think the industry needs to be supported and incentivised by regulations that place demands on electricity players and companies. PLN has also been heavily subsidised such as for oil powered plants but these subsidies should go towards supporting renewable energy as without it, progress will be very slow.

You mentioned Indonesia’s potential as a manufacturing base for electrical components in South East Asia; what plans do you have in place for international export?

This has been on the horizon for the past two years. However we are trying to keep up with the current domestic demand in Indonesia. I am very confident that we can compete in other South East Asian markets as countries such as the Philippines and Myanmar offer a lot of opportunities but there is plenty of bureaucracy to overcome. Many of these countries are where Indonesia was ten years ago in terms of development and are lacking electrical and power generation products.

By 2015 we would like to be exporting to ASEAN Countries as due to our labour costs in Indonesia we can be very competitive there. Therefore by 2015 when we are 40 years old we do not want to only be a local player but a regional player.

The company already represents several foreign principals. Which types of products would you be interested in distributing for the future?

There is always room to complete the product range. Many of the large multinationals are becoming more integrated and providing a more complete range such as Schneider Electric through acquisitions. For us as a company we have to prepare ourselves as in the future multinationals will be able to provide the entire product range and they are consolidating so we must be capable of providing the same to the end user in order to compete.

Previously we worked with international manufacturers in India and Italy for example who were acquired by major multinationals and so they cannot supply to us anymore. However I believe there is still room for us to work with respectable European medium sized companies that are very focused on a particular area in order to complete our range. We have two divisions, one doing switchboard components which are sold to switchboard manufacturers and I want to complete the range with products outside of the main components. For our other division which produces switchboards, we would like to offer end users smarter power distribution systems, combining switchboards with an energy management system so users can increase efficiency by monitoring their consumption.

How is the company positioned towards establishing joint ventures with foreign players looking to enter the Indonesian or ASEAN market?

In a joint venture capacity is where I would be the most interested in working with European companies. I would like to create a relationship where we are not just a supplier or a distributor but we work together on the manufacturing and sales or even assembly which is labour intensive. We can begin working together in stages and go from there.

We are interested in investing in technology and focusing on innovation through the use of the latest machinery in addition to utilising Indonesia’s low labour costs and labour availability. Our interest in a joint venture partner would be a company that can provide know how as well as capital. In solar cells for example, this is very capital intensive but also requires technology and equipment. The most important element for us is a partner that has a long term vision and to collaborate for mutual benefit. We do not want to be a sleeping partner as we have a lot to bring to the table with access to the Indonesian market of some 250 million people as well as the South East Asia region as a whole.

What should potential partners and investors in Indonesia remember as a final message?

Indonesia is a country that offers great opportunities with exciting prospects. It may involve some adaptation such as everyday living standards, but the payoff is worth it. I strongly believe in Indonesia as a manufacturing base for the local market and for the region plus there is plenty of room for collaboration with potential partners.