Frost & Sullivan has expanded its presence in Asia by setting up an office in Jakarta.
"We continue to be upbeat on the Indonesian economy and see tremendous expansion for our operations in the country. Much of our growth will continue to stem from Asia, with Indonesia being a key growth market," says Mr. Aroop Zutshi, Global President & Managing Partner at Frost & Sullivan Inc.
He added that Frost & Sullivan hopes to increase its staff strength in Indonesia to 40 employees in the next 3 years.
"As the business landscape in Asia becomes more competitive, we hope to provide objective advice to help local companies grow. This is what we at Frost & Sullivan do best identify growth opportunities for companies even in tough times," Mr. Zutshi said.
He added that the Indonesian economy is still fundamentally resilient and relatively shielded from the global economic slowdown. He said that the impact of the global crisis is likely to be cushioned by higher Government's spending due to the general election, estimated at Rp20 trillion.
Mr. Zutshi said that there are windows of opportunities even in challenging times, advising local companies to take advantage of business opportunities and fight their instinct to completely freeze or even cutback on their growth plans during times of economic uncertainty.
"It is not uncommon for companies to get distracted and focus inwardly by cutting costs and laying off employees when facing economic uncertainty," he said.
He added that cash-rich Indonesian companies should look to the global market for geographic expansion and consider investing in assets overseas to expand their business as pricing will be attractive.
"Now is the best time for companies with substantial cash reserves to make strategic acquisitions and invest in market segments that present good growth prospects," Mr. Zutshi said, adding that Indonesian companies now have the opportunity to enter the global market and truly become a global player.
"This is also the time for local companies to review their business strategies and investments. It is a good time for companies to invest in innovating products and services as costs are down. These companies should reap the rewards when the economy recovers," he added.
Mr. Zutshi also advised companies to introduce new technologies to meet changing customer needs and introduce innovative operating models to minimize risks and maximize opportunities.
Meanwhile, Mr. Eugene van de Weerd, Country Director at Frost & Sullivan Indonesia said that although growth is at the top of every CEO's to-do-list, navigating through the current crisis has become their priority for now. "An instinctive response by over 50 per cent of companies is to cut budgets across the board and layoff employees, something that should be avoided," he added.
He also advised Indonesian companies to expand the working hours of management, shift responsibility of teams and focus more on supporting sales, lead generation and monitoring sales pipeline and only cut operational costs selectively to match lower demand.
Mr. van de Weerd said that the crisis actually provides good opportunities for Indonesian firms, most notably for an economic rebound exploitation strategy. "Companies should time everything for the rebound and be the first to move, leapfrog competition and gain market share which would typically be difficult to gain in a more normal economy" he said.
He added that companies also should make strategic investments in research, new product development and growth strategies to take full advantage of the economic rebound. "And if it is like the rebound we saw in the 2002 recession, it is going to be fast and strong, and you will want to have your team ready for that rebound," he said.
"The key question then, of course, is when will we see an economic rebound? Based on economic index indicators, we believe that a bottom will occur soon and a slow rebound will begin in the third quarter of 2009 due to the continued massive global response," Mr. van de Weerd said.
Mr. Steve Aditya, Business Development Manager, Healthcare Practice, Indonesia said that the global pharmaceutical market is currently undergoing new challenges which requires industry players to rethink their business models. He added that macro economic factors such as changes in regulatory, economic slowdown and rapid IT development play an important role in changing the dynamics of the pharmaceutical market.
Mr. Aditya said Indonesian pharmaceutical companies are expected to play a more important role in the future and predicts a closer co-operation between government and the private sector to create value-added products for patients.
"There are opportunities for Indonesian pharmaceutical companies to compete in overseas markets by leveraging their competitiveness in cost and resources. Alternative medicine such as herbal medicine could be the next big thing for Indonesian companies," he predicts.
He added that sales of traditional herbal medicines, known as jamu, are expected to considerably outpace those of conventional pharmaceuticals in terms of annual growth, threatening the value of the over-the-counter sector.
"Indonesians have a very strong culture of consuming jamu since childhood. This long tradition is likely to drive the jamu market as Indonesian consumers feel more secure to consume natural medicine as it is cheaper," Mr. Aditya said.
He noted that hypertension, diabetes, and infectious diseases are still prominent cause of death among Indonesians.
Meanwhile, Mr. Mario Montino, Consultant, Automotive & Transportation Practice, Indonesia is maintaining Frost & Sullivan earlier total vehicle sales forecast for 2009 of 427,278 units.
He added that for the first quarter to March 2009, total vehicle sales fell 25.6 per cent to 100,757 units as compared to 135,601 units in Q1 2008 due to the unstable exchange rate of Rp-US$, which impacted sales of new cars in Indonesia.
However, he said that Indonesia could be an attractive destination for major automakers looking at relocating their production hub in Asia due to its strategic location and huge population.
Mr. Montino also noted that Indonesia is the largest CNG (compressed natural gas) producer in Asia and second biggest in the world. He added that a clear policy is needed to attract foreign investments in the infrastructure and CNG manufacturing segments.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 31 offices on six continents.