Economic developments in the agrifood sectors of Indonesia, Malaysia and South Korea

368 Pages·1999·1.36 MB·English

Economic developments in the agrifood
sectors of Indonesia, Malaysia and South
Korea: Background Working Papers

RIRDC Pub. No. 99/157
Project No. STA-1A
i
© 1999 Rural Industries Research and Development Corporation.
All rights reserved.
ISBN 0 642 57991 1
ISSN 1440-6845
Economic developments in the agrifood sectors of Indonesia, Malaysia and South Korea:
Background Working Papers.
Publication no 99/157
Project no.STA-1A
The views expressed and the conclusions reached in this publication are those of the author and
not necessarily those of persons consulted. RIRDC shall not be responsible in any way
whatsoever to any person who relies in whole or in part on the contents of this report.
This publication is copyright. However, RIRDC encourages wide dissemination of its research,
providing the Corporation is clearly acknowledged. For any other enquiries concerning
reproduction, contact the Communications Manager on phone [phone].
Researcher Contact Details
Name Dr Ray Trewin
Address C/O AJRC, Building 13, ANU, ACT 0200
Phone: [phone]
Fax: [phone]
Email: [email protected]
Website: http://www.anu.edu.au
RIRDC Contact Details
Rural Industries Research and Development Corporation
Level 1, AMA House
42 Macquarie Street
BARTON ACT 2600
PO Box 4776
KINGSTON ACT 2604
Phone: [phone]
Fax: [phone]
Email: [email protected]
Website: http://www.rirdc.gov.au
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Foreword
The Asian agrifood markets have been of growing importance to the Australian agrifood
industry. In the last financial year Australia exported A$10.4 billion of food to Asia.
Japan, Indonesia, Malaysia and the Republic of Korea were the major markets, in that
order. The last three markets have been adversely affected by the Asian economic crisis.
Australian industry and policymakers need to understand the changes in trends occurring
in these markets and the possible impacts these may have on Australian industry.
In response to these needs, Supermarket to Asia Ltd initiated a review of economic
developments in the agrifood sectors of Indonesia, Malaysia and South Korea. The
research was funded by the Rural Industries Research and Development Corporation
(RIRDC), with supplementary funding provided by Supermarket to Asia Ltd and the
Department of Industry, Science and Tourism (DIST). The research was contracted to
the Australian National University (ANU) and the Meyers Strategy Group. In
conjunction with researchers based in the three countries, the ANU and Meyers Strategy
Group produced background papers on each economy, and across economies, that are
incorporated into this publication and were drawn on in the main reports.
The publication is structured into two volumes and four parts. The first three parts cover
the individual country papers for Indonesia (volume one), Malaysia and South Korea
respectively, and the fourth part contains across-country reports. Within the country
parts, there are reports written by the local research groups, in conjunction with the
ANU, on economic developments in the agrifood sectors up to the crisis and then
following the onset of the crisis, and by the Meyers Strategy Group on the food retailing
and services markets. The across-country section contains a paper comparing and
reviewing the literature on economic developments in the Indonesian and Malaysian
agrifood sectors, plus an overview paper of the three country reports. A bibliography of
references drawn on in the background papers completes the publication.
Peter Core
Managing Director
Rural Industries Research and Development Corporation
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FOREWORD III
LIST OF AUTHORS XIV
EXECUTIVE SUMMARY XV
CHAPTER 1 KEY AGRICULTURAL AND AGRIBUSINESS POLICY
ISSUES IN INDONESIA. 1
1.1 Introduction 1
1.2 The share of agriculture in GDP 1
1.3 Production 3
1.3.1 Food crops 3
1.3.2 Horticultural crops 6
1.3.3 Estate crops 7
1.3.4 Livestock and fisheries 8
1.4 Consumption 10
1.4.1 Food crops 10
1.4.2 Horticultural and estate crops 12
1.4.3 Livestock and fisheries 13
1.5 Trade 14
1.5.1 The importance of international trade for Indonesian agriculture 14
1.5.2 Agricultural trade performance 15
1.5.3 Direction of agricultural trade 17
1.6 Indonesia’s agribusiness: the concept and practise 19
1.6.1 The concept 19
1.6.2 The policies 20
1.6.3 Investment in agriculture 21
1.6.4 The structure of Indonesian agroindustry 24
1.7 Assessment of the current crisis 28
1.7.1 Economic crisis: the wind of change 28
1.7.2 Crisis impact assessment: the issues 33
1.8 The new vision and mission 36
1.8.1 Agricultural development on Java 37
1.8.2 Agricultural development Off Java. 37
1.9 Conclusion 38
1.10 References 40
Appendix 1.1: Agribusiness investment policies – pre-reform 42
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CHAPTER 2 INDONESIA’S PRE-CRISIS AGRICULTURE
PROFILE: RECENT POLICY CHANGES AND INVESTMENT
OPPORTUNITIES. 69
2.1 Introduction 69
2.2 A brief background to the crisis 69
2.3 Implication of the crisis for the agricultural sector and rural economy 70
2.4 The crisis and Indonesia’s agricultural policies 72
2.4.1 Pre-crisis policies 72
2.4.2 Crisis-induced policies 78
2.5 Production and consumption 88
2.5.1 Production 88
2.5.2 Consumption 98
2.6 Exports and Imports 101
2.6.1. Cereals, roots, tubers and pulses 101
2.6.2. Vegetables 102
2.6.3 Fruit 103
2.6.4 Tree Crops 104
2.6.5 Livestock commodities 105
2.6.6 Fishery commodities 106
2.7. Investment opportunities for agribusiness 107
2.7.1. Prospective commodities for agribusiness 107
2.7.2 Resource potential 108
2.7.3 Suggested investments 109
2.8 References 111
CHAPTER 3 INDONESIA: RETAIL AND FOOD SERVICE
MARKETS. 123
3.1 Structure and developments in the retail sector 123
3.1.1 Overview 123
3.1.2 Market structure 124
3.1.3 Consumer and retail trends 127
3.1.4 Impact of the crisis 128
3.1.5 Competitor responses 130
3.1.6 Implications for Australian trade 130
3.1.7 Products 131
3.2 Structure and developments in the food service sector 132
3.2.1 Overview 132
3.2.2 Market structure 133
3.2.3 Consumer and food service trends 136
3.2.4 Impact of the crisis 137
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3.2.5 Competitor responses 138
3.2.6 Implications for Australian exports 138
3.3 Company profiles 139
PT Matahari Putra Prima 139
Pt Hero Supermarket Tbk 139
Ramayana Department Store – PT Ramayana Lestari Sentosa Tbk 140
PT Gelael Supermarket 140
Golden Truly Supermarket – PT Golden Truly 140
Makro 140
Goro 140
Circle K Convenience Store - Circle K Indonesia Waserda 141
Fresh Mart Convenience Store - The Fresh Mart 141
AM/PM Indonesia Convenience Store - PT Sinar Sahabat 141
KFC/PT Fast Food Indonesia Tbk 141
McDonald’s/PT Ramako Gerbangmas 141
Texas Fried Chicken/PT Cipta Selera Murni 142
California Fried Chicken (CFC)/PT Putra Sejahtera Pioneerindo Tbk (PSP) 142
PT Wendy’s Citrarassa 142
A & W Family Restaurant/PT Biru Fast Food Husantara 142
Other Fast-Food Outlets 143
3.4 References 144
VOLUME TWO 1
CHAPTER 4 THE IMPACT OF TRADE LIBERALISATION IN
ASEAN/APEC ON AGRICULTURAL TRADE AND INVESTMENT IN
MALAYSIA. PHASE I. 11
4.1 Introduction 11
4.2 Trade impact studies: the conceptual framework 11
4.3 Survey of literature 12
4.4 Recent economic performance 15
4.4.1 Trade Performance 18
4.4.2 Trade Policy 27
4.4.3 The place of agriculture in an industrialised economy 30
4.5 Incentive policies in the agricultural sector 31
4.5.1 Export agriculture 31
4.5.2 Domestic Agriculture Production Sector 35
4.6 Current Issues and Concerns 39
4.7 References 42
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CHAPTER 5 RECENT ECONOMIC AND AGRIFOOD POLICY
DEVELOPMENTS IN MALAYSIA. 43
5.1 Current status of and prospects for the economy 43
5.1.1 Before the crisis 43
5.1.2 Current economic situation and macro policy changes 43
5.1.3 Medium-term outlook 45
5.1.4 Macro factors affecting agrifood policy 46
5.2 Structure of the agrifood sector (structure–conduct–performance since 1990)
47
5.2.1 Production and consumption structures (including key products) 47
5.2.2 Trade and competitiveness 52
5.2.3 Australia’s market share 57
5.2.4 Business structures 58
5.2.5 Organisational issues 58
5.3 Policy overview 61
5.3.1 After the Uruguay Round until the crisis 62
5.3.2 Current situation and outlook 63
5.4 References 65
CHAPTER 6 MALAYSIA: RETAIL AND FOOD SERVICE
MARKETS. 67
6.1 Structure and developments in the retail sector 67
6.1.1 Overview 67
6.1.2 Market structure 68
6.1.3 Consumer and retail trends 70
6.1.4 Impact of the crisis 71
6.1.5 Competitor responses 72
6.1.6 Implications for Australian exports 73
6.2 Structure and developments in the food service sector 74
6.2.1 Overview 74
6.2.2 Market structure 75
6.2.3 Consumer and food service trends 78
6.2.4 Impact of the crisis 78
6.2.5 Competitor responses 79
6.2.6 Implications for Australian exports 79
6.3 Company profiles 81
Dairy Farm International/Wellsave/Cold Storage/Guardian 81
Jaya Jusco Stores Bhd 81
Metrojaya Berhad/Metrojaya Department Stores 81
Giant Cash and Carry 82
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Aktif Lifestyles Stores Sdn Bhd ( formerly Yaohan) 82
MAKRO Cash and Carry Distribution 82
Royal Ahold/TOPS 82
The Lion Group/Parkson Corporation Sdn Bhd 83
Antah Holdings Berhad/7-Eleven 83
KFC Holdings (Malaysia) Bhd 83
McDonald’s 84
Berjaya Land Bhd ( formerly Berjaya Leisure Bhd) 84
Shakey International (Shakey Restaurants) 85
Tricon Restaurants International (TRI) 85
Genting Bhd/Resort World Bhd 85
6.4 References 87
CHAPTER 7 ECONOMIC AND POLICY DEVELOPMENTS IN THE
KOREAN AGRIFOOD SECTOR. 89
7.1 Introduction 89
7.2 Economic developments in Agriculture 90
7.2.1 Agriculture in the national economy 90
7.2.2 Consumption development 92
7.3 Socio-economic factors contributing to agricultural protectionism 94
7.3.1 Income disparity between urban and rural areas 94
7.3.2 Food security 96
7.3.3 Changing socio-economic conditions 96
7.4 Changing pattern of agricultural policies 97
7.4.1 Rice 97
7.4.2 Beef 98
7.4.3 Other grains 99
7.4.4 Effects of the policy 99
7.5 Effects of protection: some empirical evidence 101
7.6 The Uruguay Round and the agricultural policy reforms in Korea 103
7.6.1 The Uruguay Round of GATT 103
7.6.2 New agricultural policy reforms in Korea 105
7.6.3 Subsidy issues 107
7.7 Conclusion 107
7.8 References 108
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CHAPTER 8 CURRENT ECONOMIC DEVELOPMENT AND
OUTLOOK FOR THE KOREAN AGRIFOOD SECTOR:
IMPLICATIONS FOR AUSTRALIA. 115
8.1 Introduction 115
8.2 Korea’s economic developments and outlook 115
8.2.1 Korea’s macroeconomic outlook 116
8.2.2 Production and consumption outlook 117
8.2.3 Korea’s trade and investment outlook 118
8.2.4 Outlook for the world economy 119
8.3 Developments in Korea’s agrifood sector 119
8.3.1 Outlook for major agrifood products 119
8.3.2 Food processing structures 122
8.4 Agrifood policies 123
8.4.1 Trade and investment policies 124
8.4.2 Production and processing policies 127
8.5 Trade and investment opportunities in Korea 130
8.5.1 Trade opportunities in the Korean agrifood market 130
8.5.2 Investment and business opportunities 131
8.6 Implications for Australia 132
8.6.1 Opportunities and challenges 132
8.6.2 Specific strategies 134
8.7 Bibliography 137
CHAPTER 9 SOUTH KOREA: RETAIL AND FOOD SERVICE
MARKETS. 139
9.1 Structure and developments in the retail sector 139
9.1.1 Overview 139
9.1.2 Market structure 139
9.1.3 Consumer trends 142
9.1.4 Retail trends 145
9.1.5 New retail strategies 147
9.1.6 Liberalisation of the market 148
9.1.7 Impact of the crisis 148
9.1.8 Competitor responses 149
9.1.9 Implications for Australian exports 150
9.2 Structure and developments in the food service sector 152
9.2.1 Overview 152
9.2.2 Market structure 152
9.2.3 Consumer and food service trends 156
9.2.4 Impact of the crisis 158
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