Global Business Guide Indonesia

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Export | Joint Ventures
Magfood Inovasi Pangan | Mrs Yanti Isa
Mrs Yanti Isa

Developing the brand equity is also very important to build an emotional bond with the Indonesian consumer through packaging and marketing rather than trying to compete on price.

Mrs Yanti Isa, President Director

PT Magfood Inovasi Pangan was established in 2001 and specializes in industrial food products such as snack seasonings as well as a fast food franchise chain called Amazy. What can you tell us about the background to the founding of the company as well as the current corporate strategy being followed?

I started the company by myself with just one employee and today all of my workers are professionals. We began with very little investment and were working out of my house using the garage as the training and meeting room. I had previously worked for multinational companies and learnt many skills during that time that I have now applied to my own business.

I offer services to micro and small companies who do not have their own research and development divisions to produce flavourings for snacks and customised food stuffs. Most of these companies do not employ best practices and use harmful chemicals in the production of their goods so I want to contribute to their business development and ensuring that their products are safe as well as offering a competitive advantage. Our product development mainly focuses on the snack industry and we work with clients to develop unique and creative products as well as on the branding. Depending on their target market we can produce the colouring, flavour and other requirements such as no MSG for their targeted export markets.

For the franchise business, this began as I wanted to contribute to Indonesia’s development. In 2002 I established a foundation that was focused on improving Indonesia and addressing issues such as corruption in the government. This foundation made me think about the need to help people start their own businesses. I have also written a series of books on sustainable business management in Indonesia as well as offering seminars and workshops on this subject. It was in 2003 that I started thinking about the franchise business and ‘Magfood Red Crispy’ was the name of the first restaurant. The chicken and crisps were created through our own research and development and then sold from a small restaurant. I then offered seminars on launching ‘hawker stalls’ and very quickly 50 people bought into the franchise; this then expanded to 270 outlets within 3 years. After splitting with my partner I rebranded the franchise business under the name ‘Amazy’ and moved onto small restaurants targeted at families and young children.

The franchise business has been very successful as franchisees can make their investment back in 1-2 years. This is achieved through keeping operational costs low in order to be able to compete with the big fast food players while still keeping the same quality. We pay close attention to details such as cooking methods, the temperature at which the oil is used to save energy and extend the length that the cooking oil can be used for and this enables us to keep costs down. Developing the brand equity is also very important to build an emotional bond with the Indonesian consumer through packaging and marketing rather than trying to compete on price. Currently we are opening 3-5 outlets every month but we have to be very selective about the franchise partners that we work with as the brand is still relatively new.

What can you tell us about the main challenges that you perceive in doing business in Indonesia?

The main challenge as a small company is in developing the people and how to attract good people to the company. I prefer to recruit fresh people such as graduates and develop their work ethic and culture from scratch as opposed to hiring those with experience in other companies. As we are really about creating systems; taking employees with experience in other companies makes it more difficult to adapt to our systems. Another area is the reliability of supply of raw materials for our seasonings and flavourings as many items must be imported as they are not being produced in Indonesia.

What further business areas does the company plan on exploring in the future and what is your vision for the company?

I am very interested in going into the production of the raw materials needed for our seasonings such as garlic powder and chicken powder. Indonesia is a very rich country but we import many products such as onions and turmeric as we are lacking the technology and knowhow to produce them effectively. Therefore I want to build up the business to an economy of scale and produce our own raw materials.

I would be interested in working with foreign companies and investors on developing this. I am happy to work as a local partner with companies that have experience in this sector.

In what capacity would you be interested in working with international partners in the food & beverage sector who are looking to tap into the Indonesian market?

Export is not our focus today but we do have some small scale clients in Malaysia, USA and Saudi Arabia. This began around ten years ago but it is not our focus. In the future we may develop this further through exhibitions but at the moment such exhibitions are high cost and we need to have the internal capacity to be able to cater to more export clients.

I have been working as a local partner for a frozen food company from Singapore which offers dim sum. We are working on a model to develop a franchise business in Indonesia. I am happy to work with companies in the food industry looking to come into Indonesia that share my vision and values. This vision is for clear, corporate governance as I want the businesses that I work in to be an asset to the nation by helping develop Indonesian human resources.

What should potential partners remember about Indonesia as a final message?

Indonesia is a very promising market despite the political issues that the country faces. However, I believe that the business community should help the government rather than ask for help. I also believe that Indonesia needs to develop its entrepreneurs; they need to use the resources that they have available to them now to create sustainable businesses.

Global Business Guide Indonesia - 2012

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