AN AN OVEROVERVVIEWIEW OFOFTHE INDONESIAN WHEAT FLOURTHE INDONESIAN WHEAT FLOUR INDUSTRYINDUSTRYTHE INDONESIAN WHEAT FLOUR THE INDONESIAN WHEAT FLOUR INDUSTRYINDUSTRY

By: By: FranciscusFranciscus WelirangWelirang

Chairman:  APTINDO (Association of Flour Producers in Indonesia)Chairman:  APTINDO (Association of Flour Producers in Indonesia)Director:  PT Indofood Director:  PT Indofood SuksesSukses MakmurMakmur TbkTbk ((BogasariBogasari Flour Mills)Flour Mills)

Melbourne, July 25 Melbourne, July 25 –– 27, 201127, 2011AUSTRALIAN GRAINS INDUSTRY CONFERENCEAUSTRALIAN GRAINS INDUSTRY CONFERENCE

DEREGULATION OF THEDEREGULATION OF THEDEREGULATION OF THEDEREGULATION OF THEINDONESIANWHEAT FLOURINDONESIANWHEAT FLOURINDONESIAN WHEAT FLOUR INDONESIAN WHEAT FLOUR 

INDUSTRY (1998) ANDINDUSTRY (1998) ANDINDUSTRY (1998) ANDINDUSTRY (1998) ANDWHEAT FLOUR INDUSTRY UPDATESWHEAT FLOUR INDUSTRY UPDATES

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INDONESIAN FLOUR INDUSTRY DEREGULATION (1998)INDONESIAN FLOUR INDUSTRY DEREGULATION (1998)Flour deregulation has changed business paradigm and industry structure

“BULOG” ERA POST “BULOG”

Flour deregulation has changed business paradigm and industry structure

Wheat Flour Trade was monopolized by the Board of Logistics (BULOG)

Wheat Flour Industries are free to import and  sell wheat flour

Wheat Flour was produced only by companies appointed by  the Government Agency

The market is open to new products

g y

Imports of Wheat Flour were banned

Wheat Flour import ban was lifted

I 1998 2000 l i i d i iIn 1998 – 2000, large imports raised suspicions of dumping, under invoicing, illegal labeling and falsification of local brands.

The Government set regulations to protect customers by imposing 5% import duty, SNI and labeling system

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INDONESIAN WHEAT FLOUR MILLS LOCATIONINDONESIAN WHEAT FLOUR MILLS LOCATION

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INDONESIAN WHEAT FLOUR MILLS CAPACITY INDONESIAN WHEAT FLOUR MILLS CAPACITY NO COMPANY LOCATION

CAPACITYNO COMPANY LOCATION

MT/Day MT/Year

1 PT ISM ‐ Bogasari Flour Mills Jakarta 9,340 2,802,000

2 PT ISM ‐ Bogasari Flour Mills Surabaya 5,120 1,536,000

3 PT Eastern Pearl Flour Mills Makassar 2,250 675,000

4 PT Sriboga Ratu Raya Semarang 1,400 420,000

5 PT Fugui Flour & Grain Indonesia Gresik 1 080 324 0005 PT Fugui Flour & Grain Indonesia Gresik 1,080 324,000

6 PT Pundi Kencana Cilegan 1,080 324,000

7 PT Pangan Mas Inti Persada Cilacap 1,000 300,000

PT C Fl Mill l8 PT Cerestar Flour Mills Cilegon 500 150,000

9 PT Berkat Indah Gemilang Tangerang 300 90,000

10 PT Halim Sari Gandum Medan 300 90,000

11  PT Lumbung Pangan Nasional Cibitung 300 90,000

12 PT Asia Raya Sidoarjo 110 33,000

13  PT Pakindo Jaya Perkasa Sidoarjo 110 33,000

14 PT Purnomo Sejati Sidoarjo 110 33,000

15 PT Jakaranatama Medan 75 22,500

TOTAL NATIONAL 23,075 6,922,500

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TOTAL NATIONAL 23,075 6,922,500

INDONESIAN NEW FLOUR MILLSINDONESIAN NEW FLOUR MILLS

NO COMPANY LOCATION CAPACITY(MT/Year)

1 PT Sari Pangan Makmur Sejahtera

Medan 250,000

Palembang 250,000

kPontianak 198,000

2 PT Sarana Prima Makmur Sejahtera

Bangkalan 375,000

Serang 250,000

Banjarmasin 198,000

3 PT X ?!! Medan Na

l ( ) k4 PT Bumi Alam Segar (BAS) Bekasi Na

5 PT Golden Grain Mills Cilegon Na

6 PT Tarlindo Makmur Abadi Na Na6 PT Tarlindo Makmur Abadi Na Na

7 PT Istana Kanya Na Na

TOTAL >1,521,000

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INDONESIANINDONESIANINDONESIAN INDONESIAN WHEAT FLOUR CONSUMPTIONWHEAT FLOUR CONSUMPTIONWHEAT FLOUR CONSUMPTIONWHEAT FLOUR CONSUMPTION

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INDONESIAN WHEAT FLOUR CONSUMPTIONINDONESIAN WHEAT FLOUR CONSUMPTION

SOURCES 2007 2008 2009 2010 2011SOURCES 2007 2008 2009 2010(up to June)

000 MT % 000 MT % 000 MT % 000 MT % 000 

MT %MT MT

Local Production 3,384 85 2,997 85 3,325 84 3,631 82 1,954 86

Wheat Flour Import 581 15 531 15 645 16 776 18 323 14

Total 3, 965   100 3,528   100 3,970  100 4,407  100 2,277 100

A li dAnnualizedGrowth, in %INC (DEC)

‐ (11.01) 12.54 10.99 10.37

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WHEAT FLOUR ENDWHEAT FLOUR END‐‐USERS PROFILEUSERS PROFILESmall Medium Enterprises (SME)-Traditional management-Family-owned business

SME66%

-Community oriented, tradition-minded

PancakeWet Noodle

9%

Traditional Cake6%

Cake2%

Biscuit4%Bakery

22%

66%

Pastry

Pancake2%

9%

1%Big & Modern

Industry34%

Retailer20%

Big & Modern Industry-High-tech machinery-Professional managementP bli l li t d-Publicly-listed company

WHEAT PER CAPITA CONSUMPTION IN ASIAN COUNTRIESWHEAT PER CAPITA CONSUMPTION IN ASIAN COUNTRIES(Kg/capita/yr) (Kg/capita/yr)  Source: http://faostat.fao.orgSource: http://faostat.fao.org

NO COUNTRIES 2007

1 Azerbaijan 219.91

2 United Arab Emirates 204.16

3 Turkmenistan 196 28

NO COUNTRIES 2007

21 Kuwait 85.9

22 Cyprus 73.98

23 China 67 443 Turkmenistan 196.28

4 Turkey 191.03

5 Kazakhstan 178.57

6 Uzbekistan 174.06

23 China 67.44

24 Malaysia 65.93

25 Maldives 65.54

26 India 60.2

7 Tajikistan 163.07

8 Georgia 160.44

9 Syrian Arab Republic 153.84

10 Iran (Islamic Republic of) 151 91

27 Republic of Korea 50.79

28 Japan 44.56

29 Sri Lanka 44.11

30 Nepal 37 9310 Iran (Islamic Republic of) 151.91

11  Kyrgyzstan 137.65

12 Jordan 135.03

13  Mongolia 115.06

30 Nepal 37.93

31 Brunei Darussalam 36.47

32 Indonesia 21.52

33 Philippines 18.73

14 Israel 113.84

15 Armenia 113.53 

16   Lebanon 110.9

17 Pakistan 106.12

34 Democratic People’s Republic of Korea 18.48

35 Thailand 15.05

36 Vietnam 14.79

37 Bangladesh 14.717 Pakistan  06.

18 Occupied Palestinian Territory 104.65

19 Yemen 99.91

20 Saudi Arabia 94.03

37 Bangladesh .

38 Myanmar 5.55

39 Timor‐Leste 5.15

40 Cambodia 2.98

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Indonesian Wheat consumption (kg/capita/yr:) 2007 = 21.5; 2010 = 24.8  (Source: APTINDO)

O SO SINDONESIAN INDONESIAN WHEAT GRAIN IMPORTWHEAT GRAIN IMPORTWHEAT GRAIN IMPORTWHEAT GRAIN IMPORT

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WHEAT GRAIN IMPORTS TO INDONESIA, 2008 WHEAT GRAIN IMPORTS TO INDONESIA, 2008 ‐‐ 2011 2011 NO COUNTRY OF ORIGIN 2008 2009 2010 2011 (up to May), in NO COUNTRY OF ORIGIN 2008 2009 2010 MT & %

1 Australia 1,757,280 39.2% 2,650,732 57.0% 3,159,131 66.0% 1,299,252 62.8%

2 Canada 1,258,755 28.1% 885,306 19.0% 758,313 15.8% 447,510 21.6%

3 United States 1,100,646 24.6% 602,059 12.9% 633,112 13.2% 288,709 14.0%

4 Russia 42,497 0.9% 283,385 6.1% 72,625 1.5% 0 0.0%

5 Lithuania 0 0.0% 0 0.0% 28,327 0.6% 205 0.0%

6 Ukraine 8,743 0.2% 178,679 3.8% 17,964 0.4% 224 0.0%

7 Brazil 8,054 0.2% 25,000 0.5% 0 0.0% 22,500 1.1%

8 Bulgaria 0 0.0% 22,900 0.5% 0 0.0% 0 0%

9 Singapore 0 0.0% 1,003 0.0% 0 0.0% 0 0%

10 Taiwan 0 0.0% 63 0.0% 0 0.0% 0 0%

11  China 172,358 3.8% 0 0.0% 0 0.0% 0 0%,

12 Argentina 27,642 0.6% 0 0.0% 0 0.0% 0 0%

13  France 13,310 0.3% 0 0.0% 0 0.0% 0 0%

14 Vietnam 7,500 0.2% 0 0.0% 0 0.0% 0 0%

TOTAL 4,478,383  100% 4,649,182  100% 4,786,590  100% 2,068,380  100.0%

GROWTH, % ‐ 3.8% 3.0% 8.6%

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WHEAT PRICE MOVEMENT IN INDONESIAWHEAT PRICE MOVEMENT IN INDONESIA(Source: BPS, 2011)(Source: BPS, 2011)

20 0 20TYPE OF WHEAT

2010 2011 MAY11 vs

MAY10

JAN

FEB

MAR

APR

MAY

JUN

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

LOW PROTEIN 264 240 246 258 258 259 247 249 247 354 367 360 375 357 379 404 56.6%

MEDIUMPROTEIN 274 274 275 275 275 275 260 260 317 376 367 384 332 374 395 421 53.1%

HIGH PROTEIN 293 284 295 295 295 295 289 293 331 396 396 379 446 426 436 405 37.3%PROTEIN

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INDONESIAN INDONESIAN WHEAT FLOUR IMPORTWHEAT FLOUR IMPORTWHEAT FLOUR IMPORTWHEAT FLOUR IMPORT

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INDONESIAN WHEAT FLOUR IMPORTINDONESIAN WHEAT FLOUR IMPORT(2000(2000 vsvs 2010)2010)

NO COUNTRY 2000

in MT2010

in MT & in % 2010 vs 2000

(2000 (2000 vsvs 2010)2010)

1 Turkey 14,347 3.1% 454,768 58.6% 3069.8%

2 Sri Lanka 0 0 0% 166 919 21 5%2 0 0.0% 166,919 21.5% ‐

3 Belgium 53,496 11.4% 58,905 7.6% 10.1%

4 Australia 53,761 11.5% 57,626 7.4% 7.2%

5 Japan 12 015 2 6% 5 093 0 7% (57 6%)5 Japan 12,015 2.6% 5,093 0.7% (57.6%)

6 China 21,969 4.7% 374 0.0% (98.3%)

7 Others 313,477 66.8% 31,850 4.1% (89.8%)

TOTAL 469,065 100.0% 775,534 100.0% 65.3%

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INDONESIAN WHEAT FLOUR IMPORTINDONESIAN WHEAT FLOUR IMPORT(2008(2008 –– 2011)2011)

NO COUNTRY 2008in MT & in %

2009in MT & in %

2010in MT & in %

2011(up to May)

(2008 (2008  2011)2011)

1 Turkey 227,472 42.8% 382,145 59.2% 454,768 58.6% 151,515 55.6%

2 Sri Lanka 61,067 11.5% 132,336 20.5% 166,919 21.5% 86,263 31.6%

3 Belgium 70,704 13.3% 76,371 11.8% 58,905 7.6% 12,688 4.7%

4 Australia 146,145 27.5% 42,245 6.5% 57,626 7.4% 5,469 2.0%, , , ,

5 Japan 5,286 1.0% 5,566 0.9% 5,093 0.7% 2,341 0.9%

6 China 13 718 2 6% 1 164 0 2% 374 0 0% 0 06 China 13,718 2.6% 1,164 0.2% 374 0.0% 0 0

7 Others 6,522 1.2% 5,183 0.8% 31,850 4.1% 14,440 5.3%

TOTAL 530 914 100 0% 645 009 100 0% 775 534 100 0% 272 716 100%TOTAL 530,914 100.0% 645,009 100.0% 775,534 100.0% 272,716 100%

Growth YoY, % 11.1% 21.5% 20.2% (2.9%)

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IGC PRICE INDEX IGC PRICE INDEX vsvs INDONESIAN FLOUR PRICEINDONESIAN FLOUR PRICE(( ))(2009 (2009 ‐‐ 2010)2010)

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O S O OO S O OINDONESIAN EXPORT OFINDONESIAN EXPORT OFWHEAT FLOURWHEAT FLOUR BASED PRODUCTSBASED PRODUCTSWHEAT FLOURWHEAT FLOUR‐‐BASED PRODUCTSBASED PRODUCTS

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EXPORT OF FLOUREXPORT OF FLOUR‐‐BASED PRODUCTSBASED PRODUCTS(SOURCE: BPS)(SOURCE: BPS)

NO HS CODE PRODUCTS 2009 2010GROWTH, %

10 / 09

1 1902301000 Instant Noodles 71,402,290 83,446,581 16.9

2 1902309000 Other Stuffed Pasta 19,411,072 21,422,231 10.4

3 1905100000 Crisp Bread 485,298 2,233,582 360.2

4 1905311000 Sweet Biscuits not containing Cocoa 8,095,676 24,493,452 202.5

5 1905311000 Sweet Biscuits containing Cocoa 19,603,094 25,453,167 29.8

6 1905320000 Waffles and Wafers 11,771,901 16,763,298 42.4

7 1905400000 Rusk, toasted Bread & similar toasted Products 140,018 148,372 6.0

8 1905901000 Unsweetened Teething Biscuits 1,666,924 2,972,337 78.3

9 1905902000 Other Unsweetened Biscuits 4,834,401 663,117 (86.3)

10 1905903000 Cakes 247,891 102,096 (58.8)

11  1905904000 Pastries 280,222 131,421 (53.1)

12 1905905000 Bakery products made without Flour 3,342 ‐ (100.0)

13  1905907000 Communion wafers, sealing wafers, rice paper and 15,153 33,903 123.7

14 1905908000 Other crisp savory Food products 748,875 558,789 (25.4)

15 1905909000 Other baker wares 10,633,893 11,407,920 7.3

TOTAL 149,340,050 189,830,266 27.1

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A. QUANTITY in KGsA. QUANTITY in KGs

EXPORT OF FLOUREXPORT OF FLOUR‐‐BASED PRODUCTSBASED PRODUCTS(SOURCE: BPS)(SOURCE: BPS)

NO HS CODE PRODUCTS 2009 2010GROWTH, %

10 / 09

1 1902301000 Instant Noodles 94,928,632 114,777,745 20.9

2 1902309000 Other Stuffed Pasta 16,869,759 18,370,328 8.9

3 1905100000 Crisp Bread 789,764 9,553,326 1,096.0

4 1905311000 Sweet Biscuits not containing Cocoa 22,197,522 55,697,367 150.9

5 1905311000 Sweet Biscuits containing Cocoa 47,435,428 58,208,419 22.7

6 1905320000 Waffles and Wafers 28,329,271 41,350,698 46.0

7 1905400000 Rusk, toasted Bread & similar toasted Products 436,154 361,796 (17.0)

8 1905901000 Unsweetened Teething Biscuits 3,417,852 5,780,066 69.1

9 1905902000 Other Unsweetened Biscuits 10,461,464 1,338,789 (87.2)

10 1905903000 Cakes 683,199 377,611 (44.7)

11  1905904000 Pastries 320,890 240,102 (25.2)

12 1905905000 Bakery products made without Flour 13,586 ‐ (100.0)

13  1905907000 Communion wafers, sealing wafers, rice paper and 50,613 112,102 121.5

14 1905908000 Other crisp savory Food products 1,341,028 967,814 (27.8)

15 1905909000 Other baker wares 20,575,942 22,023,544 7.0

TOTAL 247,860,104 329,159,707 32.8

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B. VALUE in USD (FOB)B. VALUE in USD (FOB)

ADDITIONAL NOTESADDITIONAL NOTES

• THE MINISTER OF AGRICULTURE REGULATION No. 27/Permentan/PP.340/5/2009,REGARDING FOOD SAFETY CONTROL OVER THE IMPORT AND EXPORT OF FRESHREGARDING FOOD SAFETY CONTROL OVER THE IMPORT AND EXPORT OF FRESHFOOD OF PLANT ORIGIN (PSAT), to assure the imported fresh food of plant origininto the territory of Indonesia complies with the plant quarantine requirements anddoes not contain chemical contaminants exceeding maximum limit thus it is safe anddoes not contain chemical contaminants exceeding maximum limit thus it is safe andconsumable. (pesticide residues,mycotoxin and/or heavy metal contaminants)

• Dumping Import Duty (BMAD) After an in depth investigation of the Anti Dumping• Dumping Import Duty (BMAD). After an in‐depth investigation of the Anti DumpingCommittee of Indonesia (ADCI; Komite Antidumping Indonesia – KADI) finallyrecommended the imposition of anti dumping import duties (ADID) to all exportersor producers of wheat flour from Turkey with ADID ranging from 19 67% ‐ 21 99%or producers of wheat flour from Turkey with ADID ranging from 19.67% 21.99%

• Indonesia Custom Tariff (Buku Tarif Bea Masuk Indonesia – BTBMI), will be issued in2012 Th i HS C d f Wh t G i (1001 99 ) Wh t fl f f d2012. There is a new HS Code for Wheat Grain (1001.99….), Wheat flour for food(1001.00….) & Wheat flour for feed (1001.00….) .

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