The country’s leading businesses see growth in catering to Indonesia’s expanding consumer market as they seek out ways to give back.
December 6, 2019
Having won a second term in office, Indonesian President Joko Widodo and his new government will be looking to continue their mission to develop the country’s infrastructure and attract foreign investment. Jakarta announced a US$400 billion infrastructure plan following President Widodo’s re-election, including more than two dozen new airports and power plants, aimed at boosting economic growth.
Both large conglomerates and newer emerging firms are looking to capitalize on Indonesia’s continued economic growth, even as they seek to contribute back to society.
One company that has grown along with Indonesia is Astra Group. Since its founding more than 60 years ago, the leading diversified conglomerate has been committed to prospering with Indonesia, a journey that it continues on to this day. In order to realize this vision, the group has been working to promote sustainable growth in Indonesia that balances economic priorities with social and environmental concerns.
In the consumer sector, Indonesian companies have benefited from the growing ranks of middle-class consumers with higher purchasing power. One such success story is PT Nippon Indosari Corpindo Tbk, the leading bread company in the country that owns the top-selling brand Sari Roti. With an overwhelming 90% market share in Indonesia’s mass production of bread, the company is now looking to replicate its recipe for success in overseas markets such as the Philippines.
Retailers have also cashed in on the rising number of shoppers with fatter wallets. Alfamart has expanded over the past 20 years to become one of the largest minimarket chains in Indonesia, serving over 4.1 million customers every day. Meanwhile, Kawan Lama Group grew from a single kiosk in 1955 to become a billion-dollar retail giant today boasting market-leading brands such as Ace Hardware.
Indonesia’s fast-growing technology scene is another bright spot in Southeast Asia’s largest economy. Indonesians are among the world’s biggest users of Facebook and Twitter, and a global leader in digital applications such as ride hailing and e-commerce. In 2018, the country’s digital economy had an estimated value of US$27 billion, and is expected to grow further on the back of government incentives including tax breaks.
Unsurprisingly, Indonesia’s startup scene is one of the most dynamic in Asia. During President Widodo’s first term, Indonesia saw the emergence of four startups, each with a value of more than US$1 billion, including ride-hailing service Gojek and online store Tokopedia.
With an aim to support the country’s newest entrepreneurs, Alpha JWC established itself as a leading venture capitalist in Indonesia in less than four years. With one of the largest VC teams in the country, Alpha JWC has a deep understanding of local market conditions.
Amid the country’s growing prosperity, Indonesia’s financial services sector is also stepping up to help manage the growing wealth of its people. For instance, Bank Mandiri, Indonesia’s largest financial institution, has been a leading player in managing and growing the assets of Indonesia’s affluent.
As uncertainty persists in the global economy, these and other dynamic Indonesian businesses will continue to prosper on the back of resilient and sustainable business models that have successfully delivered superior value.
Astra Group: Prospering with the Nation
The Indonesian company builds on its core values to balance its business growth with initiatives that give back at home.
Since its founding 62 years ago, leading diversified conglomerate Astra has been committed to prospering with Indonesia to deliver superior value to its stakeholders. In order to realize this vision, the group has been working to promote sustainable growth in Indonesia that balances economic growth with social and environmental concerns.
Starting as a commodity trader in 1957, Astra today is a leading player in seven sectors: automotive; financial services; heavy equipment, mining, construction and energy; agribusiness; infrastructure and logistics; information technology; and property. It encompasses 234 subsidiaries, joint ventures and associates, and employs 226,504 staff across Indonesia. The group’s parent company, PT Astra International Tbk, has been listed on the Indonesian Stock Exchange since 1990, and today has a market capitalization of about Rp267 trillion (US$19 billion).
With a large presence across Indonesia, Astra is aware of its responsibility to be a good corporate citizen. It balances its business activities with a comprehensive suite of sustainable public contribution initiatives that aim to give back to its home country. Sustainable public contributions are intrinsic to the core values of the group, as expressed by Astra Founder William Soeryadjaya: “We would like Astra to grow and flourish like a shady tree that serves as a shelter for many during rain or shine.”
A Road Map for Success
In driving toward its mission, Astra is guided by its strategy known as the Triple P Road Map, which refers to “Portfolio, People and Public Contribution.” The Portfolio aspect of the road map is designed to help Astra become one of the best-managed company in Asia-Pacific, with an emphasis on sustainable growth, by building competence through people development, a solid financial structure, customer satisfaction and efficiency.
The strategy has proven successful in boosting the group’s performance. In its automotive business, for instance, Astra’s share of Indonesia’s car market rose to 53% in September, up from 50% a year earlier. Its market share of the Honda motorcycle market inched up to a commanding 75%. This achievement is also backed by the group’s financial services, which offer convenient financing facilities for cars and motorcycles.
In its heavy equipment, mining, construction and energy division, Astra is aiming for a more balanced portfolio, given its investment in two 1,000-megawatt coal-fired power plants in Central Java, a coal-fired power plant in Borneo, and in Agincourt Resources, a gold-mining operator in Sumatra.
In its infrastructure logistic division, Astra has interests in 339 kilometres of operational toll roads along the Trans-Java network and a further 11 kilometres currently under construction in the greater Jakarta area. Astra has also made a mark on Jakarta’s skyline through its newest business division, property—launched in 2016—and its Menara Astra and Anandamaya Residences development.
Astra’s move into the digital space was initiated through the establishment of Astra Digital, which will support Astra’s group companies in developing new digital competencies in areas such as artificial intelligence, blockchain, cloud computing, data analytics and security. In financial services, Astra has formed a fintech joint venture company with Hong Kong-based WeLab, which offers mobile lending products to retail consumers and provides financial technology solutions to companies. In addition, Astra has partnered with Indonesian decacorn startup GOJEK, and recently launched a company that provides and manages vehicles for door-to-door online transportation in Jakarta.
Over the years, the group has garnered a number of industry awards for the effective management of its businesses. Most recently, it was named “Most Outstanding Company in Indonesia” by financial publication Asiamoney. Reflecting investor confidence in the firm, S&P Global Ratings raised Astra’s rating to A- for local currency, and BBB+ for foreign currency, with a stable outlook.
Astra recognizes its people are the key to its success, and has invested heavily in its talent. Catur Dharma, the philosophy of Astra, continues to be the fabric that binds all companies under Astra Group, to enable Astra’s future sustainable growth. Catur Dharma consists of four principles, namely, to be an asset to the nation, to provide the best service to the customers, to respect individuals and promote teamwork, and to continually strive for excellence.
Through the People Road Map, the group has rolled out a series of human-capital strategies with the aim to make Astra “The Most Preferred Company to Work For.” Since 1982, Astra has annually held Innovastra, a competition that encourages Astra’s employees to build Astra Group into a world-class company through continuous innovation and a global orientation.
Giving Back to Society
Finally, the Public Contribution Road Map is critical to Astra’s goal of being an asset to the nation. Through its nine foundations, the group contributes to provide better healthcare and education, works to protect the environment, and supports local communities in their efforts to improve their standard of living.
Through various initiatives, Astra has been actively conducting environmental conservation efforts, supporting the development of small and midsize enterprises, promoting access to healthcare services, and supporting the development of schools.
In terms of community development, Astra helps villages in Indonesia through its flagship programs: Semangat Astra Terpadu Untuk (SATU) Indonesia Awards, Kampung Berseri Astra (KBA) – Desa Sejahtera Astra (DSA).
Astra shines the spotlight on youth who give back to their communities through programs that aim to inspire others to do the same. The SATU Indonesia Awards program—now in its tenth year—has recognized 305 young people, including 59 national-level recipients and 246 provincial-level recipients, in the fields of health, education, environment, entrepreneurship and technology.
SATU Indonesia Awards recipients have collaborated with Astra in 86 KBA and 645 DSA initiatives in 34 provinces throughout Indonesia. KBA is a community-development program that integrates the four pillars of Astra’s Sustainable Social Contribution program initiatives in one village community. DSA is a community program that focuses on entrepreneurship development and other Astra public contribution initiatives.
Astra Beyond 2020
Astra will continue with its goal to be the pride of the nation for the next decade as it becomes a proud nation company for Indonesian society. In reaching this goal, Astra will prioritize product and service development with export orientation and import substitution that will directly and positively impact the country’s foreign exchange reserves. It will also proactively offer solutions to challenges faced by the country.
PT Nippon Indosari Corpindo: Growing From Strength to Strength
Indonesia’s largest bread company maintains a competitive edge at home while building its presence across the region, recently expanding its reach to the Philippines.
As the largest and most successful bread company in Indonesia, PT Nippon Indosari Corpindo Tbk and its top-selling brand, Sari Roti, has gone from strength to strength since the firm’s establishment almost 25 years ago. The company has an overwhelming 90% market share in Indonesia’s mass production of bread, having leveraged technology and a comprehensive distribution network to meet fast-rising demand for bread and cakes by Indonesia’s middle-class consumers.
Last year, the company expanded its regional footprint to the Philippines by operating its first plant in Laguna, Manila, through SariMonde Foods Corporation (SMFC), a joint venture with Monde Nissin Corporation. Within just one year, Sari Roti bread has become available in 1,800 outlets across the Philippines.
Indosari was founded by the Salim Group, the Yap family and Pasco Shikishima of Japan. Wendy Yap—the daughter of the late Piet Yap, one of the founders of Bogasari Flour Mills of Indonesia—is the President Director and Chief Executive Officer of the company. In 2010, Nippon Indosari became the only bread-producing company listed on the Indonesia Stock Exchange with ticker code ROTI.
In November 2017, private equity giant KKR became the company’s third-largest shareholder through a rights issue.
A Recipe for Success
Sari Roti’s achievements can be attributed to a combination of factors. The brand uses Japanese technology to ensure a standard of high quality and hygiene, but tailors its products specifically for Indonesian tastes. Sari Roti products are also distributed through an extensive network, including modern trade channels, such as minimarts and supermarkets, and general trade outlets, such as small shops, tricycles and direct sales to homes and schools. In total, Sari Roti is distributed through more than 90,000 outlets in Indonesia. The company is now looking to replicate the same success in the Philippines.
Indosari today operates 14 factories, with 13 strategically located across Indonesia and one in the Philippines. Currently, these facilities are baking more than five million pieces of bread and cakes a day. Another two new plants are scheduled to come online in 2020, ensuring that the company has sufficient capacity to meet the country’s growing demand for bread over the next few years.
As part of its environmental, social and corporate governance, in 2016, Indosari started a corporate social responsibility program called Miss Roti, which aims to improve the quality of life of Indonesian families by offering income opportunities to housewives. Miss Roti has so far helped 800 women across the major Indonesia islands of Java, Sumatera and Kalimantan.
With exciting growth plans in place, Sari Roti will continue to be the dominant brand in Indonesia, even as it expands more widely in the region.
Kawan Lama Group: Growing A Billion Dollar Business
Group head Kuncoro Wibowo discusses the importance of having agility in the marketplace, growing a sustainable business and fostering strong relationships with partners and customers.
Founded in 1955 by Wong Jin, the Kawan Lama Group started life as a small kiosk in Glodok, West Jakarta, offering tools and equipment for household needs. After Wong passed away in 1981, the business was taken over by his eldest son, Kuncoro Wibowo.
Under his stewardship, Kawan Lama has grown into a company with almost 40,000 workers and more than 700 outlets across 45 cities in Indonesia. The group has three major business lines: industrial supply, home improvement, furnishing and lifestyle as well as food and beverage. Recently Wibowo spoke about the challenges faced and lessons learned over the course of his successful entrepreneurial career.
The Kawan Lama group has grown rapidly in the past few decades. What would you say are the key factors to the company’s success?
We have succeeded because we are an organization that continuously learns and has acquired strong expertise in the industry. We are also good at anticipating and adapting to changes in market trends and customer behavior, and are agile in transforming new directions into opportunities.
Furthermore, we offer a comprehensive range of high-quality products, excellent customer service and an extensive distribution network through our more than 700 stores spread across 45 cities.
We have also fostered long-term partnership with key stakeholders, such as our suppliers and customers. Finally, our operations are supported by a professional team and a system that is fully integrated with today’s technology.
Which business achievements make you the most proud?
I am proud of the fact that we are the market leader in every business sector that we operate in, and have been continuously growing even when markets are weak. We have consistently received awards and recognitions for our strong business performance and excellence in customer service. We introduced and popularized the DIY concept in a market so customers can do the work themselves or with other family members, creating special moments for families.
I am also proud that as our business has grown, our people have also progressed in their careers, improving their standard of living.
What is one of the toughest challenges you have faced and how did you overcome it?
As a pioneer in modern DIY furnishings, it was not easy in the beginning as our customers were used to more traditional stores where prices were not fixed. However, we saw this as an opportunity to create a new, more competitive market. We made an extra effort to educate customers and highlight the benefits of transparent pricing, guaranteed quality and services and a more convenient and modern shopping experience.
What key lessons have you gained from your entrepreneurial journey so far?
To run a business successfully and sustainably, it is important to maintain long-term partnerships with vendors and suppliers as well as with customers, and not just focus on profitability. We need to be able to capture new business opportunities by identifying market trends and anticipating our customers’ needs. Only then can we provide solutions that impact their lives in a positive manner.
I have also learned about the importance of leadership development. I trust that everyone matters, but this is only possible when our leaders, including myself, have strong self-awareness. When we know who we truly are, we can build meaningful relationships with others.
What are your thoughts on succession?
While we have taken some initiatives to prepare our next-generation family members to be ready as our successors, we do not hesitate to groom employees with high potential. We want the business to run effectively and sustainably—and not just rely on the bloodline—to ensure that it is a professional enterprise with clear competency-based measurements.
Alpha JWC Ventures: A Rising Star in Southeast Asia’s VC Industry
With a deep understanding of the local tech sector, the venture capital firm is expanding its reach across Southeast Asia to support innovators and their startups.
In less than four years, Alpha JWC Ventures has established itself as a leading venture capitalist in Indonesia’s dynamic technology sector. Even before the firm was set up in 2016, its Co-founder and Managing Partner, Chandra Tjan, had already made a name for himself as an astute investor in Indonesia. His investments include unicorns such as Traveloka and Tokopedia at his previous role as the Co-founder and Managing Partner of East Ventures.
Alpha JWC’s main offering are two Southeast Asian venture funds with a strong Indonesia focus. The firm invests primarily in early-stage Indonesian startups—with the aim of discovering and actively empowering exceptional entrepreneurs to create enduring Industry champions—and also in regional companies wanting to enter the Indonesia market. About two-thirds of its investments are in Indonesia-based companies.
Besides Chandra, the firm is also led by Co-founder and Managing Partner Jefrey Joe, formerly COO of Groupon Indonesia and one of the founders of Indonesia’s leading bill payment aggregator, Alterra. With one of the largest VC teams and with one of the largest early-stage funds in the region, Alpha JWC has a deep understanding of local market ecosystems. This allows the firm to better support startups as they progress on their journey of expansion. “We take pride in our high-quality team, which is our biggest asset. They come from prestigious and complementary backgrounds and are the best in their class in the industry,” Chandra says.
Founders First Philosophy
Alpha JWC prioritizes the vision, passion and grit of a company’s founder when it comes to assessing potential investments. Indeed, Alpha JWC believes it is this focus that made it the top-choice partner to firms.
“As a startup founder myself, I understand the challenges and hardship that founders will need to endure in order to build a successful company. That’s why we are obsessed with being the trusted and value-adding partners to our founders, and working side-by-side with them during the ups and downs,” Jefrey says.
Alpha JWC has shaped its portfolio into a support network, endearingly called the Alpha JWC Family, which encourages the startups’ leaders to work together. The firm also encourages the companies to collaborate and learn from each other through regular events, trainings and non-poaching agreements.
“We’ve built strong and close working relationships with our Alpha JWC Family. We envision a collaborative and positive ecosystem within our network,” Jefrey explains. “Building a startup is not an easy journey; supportive ecosystems can go very far to increase the entrepreneurs’ chance of success.”
Ahead of the Curve
To stay ahead of the competition, Alpha JWC has shown it is not afraid to make bold strategic decisions. In 2015 for instance, at a time when many investors were still infatuated with e-commerce, Alpha JWC had already turned its gaze to the horizon to seek out the next big thing: fintech.
Today, the firm’s financial technology investments, which include peer-to-peer lender Funding Societies, OnlinePajak and digital credit card provider Kredivo, have become market leaders in Indonesia and Southeast Asia. For now, Alpha JWC continues to be bullish on fintech in the region, and is on a constant lookout for the next innovator in the sector.
“Financial inclusion is a big target for Indonesia and there’s still a long way to go. The pie is big enough for multiple market leaders, sector-wise or brand-wise, thus we’re always open to invest in exceptional founders who build exciting and innovative fintech companies. We’re excited to see what the landscape looks like in the next few years,” says Chandra.
He noted consumer technology and SaaS (Service as a Software) solutions could also emerge as big winners in Indonesia. “While SaaS provides scalable and practical solutions, consumer tech will continue to shift our lifestyles,” he says.
Moreover, a year ago, Alpha JWC began to invest in promising seed-stage, food and beverage companies, such as coffee chain Kopi Kenangan and the Indonesian beverage brand Goola, as it bets on the growth of Indonesia’s vibrant consumer sector and the potential to take local champions global.
Further Into the Region
After making its mark in Indonesia, Alpha JWC is eyeing the broader region and looking to expand its footprint in Southeast Asia. The firm’s team has doubled in size since 2018, and has set up an office in Singapore for wider regional reach. It is also looking to build a significant presence in Vietnam, even as it continues to focus on its home market.
“The past four years have been great, but now that we have a bigger fund, a global network and a bigger team, we can do so much more than before. We strive to discover and support exceptional founders in the region, and to play a pivotal role in Indonesia and in Southeast Asia’s rise as the world’s next major internet ecosystem while also creating significant impact to Southeast Asia’s digital ecosystem,” Chandra explains.
Alpha JWC is an institutional and independent venture capital firm with two funds under its umbrella—both have performed well since their launch less than four years ago—and a lineup of high-quality limited partners from Southeast Asia, Korea, Japan, China and Europe.
Alpha JWC Ventures’ first fund was launched in 2016. The US$50 million fund has been fully invested in 23 startups in Southeast Asia and has achieved a net asset value (NAV) of 3.3 times in less than four years.
Portfolio companies Funding Societies, subscription–based, clothes rental company Style Theory, online automotive marketplace Carro and OnlinePajak all have raised substantial follow-on funding from regional and global investors. In total, more than 90% of startups in Alpha JWC’s first fund have received follow-on investments. The fund has also made two successful exits: Spacemob (acquired by WeWork in 2017) and DealStreetAsia (acquired by Nikkei in 2019).
The second fund was launched mid-2018 and closed oversubscribed at more than US$120 million, exceeding the US$100 million target. Its NAV has increased to over 2 times since the launch. The fund has been invested in 12 companies, with Kopi Kenangan receiving US$8 million in seed funding.
By the end of 2019, the second fund expects to have at least 15 companies in its portfolio.
The Indonesian minimarket chain provides reliable services to its customers, knowing what their needs are today and anticipating what they will be in the future.
Over the past two decades, Alfamart has grown to become one of the largest minimarket chains in Indonesia. To mark its 20th anniversary in October, the company held a month of celebrations at its 32 Alfamart branch offices across the country.
Founded by Djoko Susanto in 1989, Alfamart started as a trading and distribution enterprise under the name PT Sumber Alfaria Trijaya Tbk. In 1999, the company entered the minimarket sector, and was renamed Alfamart in 2002.
Today, Alfamart is one of the leaders in the retail industry, serving more than 4.1 million customers every day at more than 14,000 stores and 32 warehouses spread across Indonesia. Supported by about 120,000 employees, Alfamart offers affordable basic merchandise in comfortable shopping venues that are easily accessible.
Despite its success, the company shows no signs of slowing down. Leveraging its strategy in Indonesia, the company entered the Philippines six and a half years ago and has rapidly expanded there. It plans to add an additional 200 stores this year, bringing the tally to about 700 stores.
Preferred Retailer for Consumers
Alfamart CEO Anggara Hans Prawira believes the use of data analytics to stay ahead of the competition has become increasingly important in today’s changing retail landscape.
“It has become critical to understand and provide relevant offerings to the customer, and data allows us to do that,” he says. This helps Alfamart to enhance the overall shopping experience and delight its customers.
While shifting consumer behaviour remains a challenge, this has been partly offset by a robust macroeconomic environment that is driving greater purchasing power among shoppers. Alfamart has crafted a business strategy that capitalizes on this positive trend over the longer term.
The company will continue its efforts to develop value-added services and customized products that are based on consumer preferences in a bid to increase its sales.
Alfamart For All
Alfamart has built a corporate culture driven by the tagline: “Alfamart For All.” This involves adopting an ethos of giving back to society. Simply put, “Alfamart For All” is a way of thinking that guides the company as it moves forward and addresses major local and global issues.
Its efforts in this endeavor are focused in the fields of education, social development, supporting small and medium-sized enterprises (SMEs) and environmental causes. For instance, Alfamart offers eco-friendly bags to its customers.
Alfamart has also been providing work opportunities to people from all backgrounds, including the disabled. Furthermore, it helps micro SMEs through a company known as Outlet Binaan Alfamart (Alfamart Guided Outlet). It manages more than 43,000 member outlets in Indonesia through this program.
“We will keep striving to provide reliability to our customers and the surrounding community and earn their trust, not only to know what their needs are, but to anticipate what their needs will be,” says Hans Prawira.
He adds: “As we celebrate the 20th anniversary of our amazing company, our market has never been larger, and we have never had more choice for consumers than we have today. We’re just getting started, to make history again.”