Golden Agri, Indofood Get Kudos for Global Ambitions

By webadmin on 05:27 pm Jan 28, 2013
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Hayley Ann Davis

Indonesian companies Golden Agri-Resources and Indofood Sukses Makmur have been declared new “global challengers” in the Boston Consulting Group’s list of 100 fast-growing companies from emerging markets that are reshaping global industries.

The growing Indonesian conglomerates have managed to combine strong sales at home with ambitious plans to expand overseas, a path Indonesian companies have shown a greater willingness to embrace in recent years.

In a report released on Jan. 15, BCG, a global consulting company, identified 100 companies from 17 emerging nations that “are growing so quickly overseas that they are reshaping industries and surpassing many traditional multinational companies.” Eight of those listed are from Southeast Asia.

Singapore-listed Golden Agri, which is owned by Indonesia’s Sinar Mas Group, and Indofood, which is controlled by the Salim family, have diverse businesses.

Sinar Mas Group, founded by Chinese Indonesian tycoon Eka Tjipta Widjaja, has businesses including pulp and paper, agriculture, property, telecommunications, mining and financial services.

The group’s pulp and paper and crude palm oil businesses are among the biggest in the world and have operations outside Indonesia, including in China.

Indofood has diversified businesses, mainly in the manufacturing of foods such as instant noodles and flour-based goods. Indofood is the biggest noodle maker in the world and its products are sold across Southeast Asia and in the Middle East.

“Challengers from Southeast Asia are riding on the trend of rising consumers and accelerating private consumption in emerging markets,” said Michael Meyer, a co-author of the BCG report who is based in Singapore.

Shares in Golden Agri and Indofood have been little changed since the report was released almost two weeks ago.

The Finance Ministry has tipped Indonesia’s economy to grow at 6.6 percent in 2013, Bambang Brodjonegoro, the ministry’s fiscal department chief, said on Friday. His forecast is lower than the target of 6.8 percent set in the state budget, but analysts say that such growth will provide a good environment for companies to expand their businesses.

“Growth rate in private consumption in Asean [Association of Southeast Asian Nations] is expected to increase by 19 percent in the next five years, compared with the period of 2006 to 2011,” BCG said in the report.

“Southeast Asian Challengers are winning by strengthening their capabilities, pursuing innovative business models as well as forging partnerships with companies from developed markets.”

The other six companies from Southeast Asia in the list include AirAsia, a Malaysia-based low-cost carrier; Charoen Pokphand Foods, Thailand’s biggest food exporter and animal feed producers; and Indorama Ventures, a global textile company.

The trio have significant presence in Indonesia through their affiliates and units.

Also listed are Petronas, Malaysia’s biggest oil and gas company; PTT, Thailand’s biggest energy company; and Thai Union Frozen Products, which owns the Chicken of the Sea canned tuna brand.

It is the largest group of Southeast Asian companies to be included in the list since 2006, coinciding with a decline of global challengers from Brazil, Russia, India, China, collectively known as BRIC.

At the same time, the consulting group said that Wilmar International, an Indonesian palm-oil producer, was among seven companies globally that moved beyond BCG’s “challenger” status.

Last November, Golden Agri announced it would pursue opportunities for land acquisitions by issuing 5 billion ringgit ($1.6 billion) in Islamic bonds in Malaysia.

Indofood entered into a joint venture with Japan’s Asahi to manufacture non-alcoholic beverages in July last year, taking advantage of an Indonesian beverage market predicted to more than double by 2020 from 2011, according to Asahi Group president Naoki Izumiya in an interview with Reuters.

BCG said that the 100 global challenger companies — many of which were little-known in the West — have added 1.4 million jobs in the past five years. Meanwhile, employment at nonfinancial companies in the Standard & Poor’s 500 index “stayed flat,” it said.

The 100 companies generated an average revenue of $26.5 billion in 2011, compared with $20 billion for the companies on the S&P 500, BCG said.