ChileCarne’s President visited Indonesia for the first meeting of the Chile-Indonesia Business Council, headed by the Chilean Industry Federation (SOFOFA) and the Indonesian Chamber of Commerce and Industry (KADIN). The delegation was headed by the former President of Chile, Eduardo Frei Ruiz-Tagle.
The first meeting of the Chile-Indonesia Business Council was recently held in the Asian country. The President of the Council’s Chilean chapter is Juan Carlos Domínguez, President of ChileCarne. He explained that the meeting is a symbol of the commitment of both countries to a robust and dynamic business partnership. “Our meeting here in Jakarta is not just about two business organizations getting together; it represents the creation of a business network between two countries rich in culture and potential. Chile and Indonesia, although geographically distant, are united in the search for growth, innovation, and sustainable development. Our bilateral trade relationship is flourishing but has not yet reached its full potential, and that is what we are exploring here today,” Domínguez said.
“With a population of 280 million people and a sustained annual growth higher than 5% in the last 20 years, Indonesia is one of the most relevant economies for Chile to set its sights on in the coming years,” he continued.
Indonesia is a potentially significant market for the Chilean pork exporting industry. Although it is the fourth most populous country in the world and its capital, Jakarta is highly populated, the Asian country has unique features that represent both opportunities and challenges for Chilean exporters.
The predominantly Muslim country, where 87.5% of the population practices Islam, has limited pork consumption. However, the 10% Christian population represents nearly 28 million consumers and the growing tourism with Western consumer habits open a market opportunity for pork-based products.
Purchasing power in Indonesia is uneven. Despite the modest per capita income of 4,788 USD, a segment of the population has high purchasing power. The country, which hosts around 14 to 17 million tourists each year, is undergoing a transformation in its foodservice industry that used to be dominated by small local establishments, which could drive the demand for high-quality pork-based products.
Meat consumption in Indonesia is relatively low, around 1.1 to 1.4 kilos of pork per capita each year. This makes Indonesia one of the least developed pork markets in Asia. Most of the country’s pork production comes from small farms, although in recent years commercial farms have flourished to cover growing industrial and commercial demand.
In December 2019, an African swine fever outbreak in Indonesia posed a significant challenge that impacted domestic production. However, pork production has grown 25% between 2012 and 2021, with government plans to support its continued increase.
Indonesia imported 3,250 tons of pork and pork-based products in 2021, with China, Denmark, Spain, and the US as its main suppliers. Chilean exports have the potential to capture a share of this market, especially if the European Union-Indonesia Free Trade Agreement is signed.
To export to Indonesia, Chilean producers must comply with European public health and animal health regulations, while undergoing official audits and authorization processes. These regulations guarantee compliance with the quality and safety standards required by the Indonesian market.
Juan Carlos Domínguez highlighted the need to address and eliminate non-tariff barriers that hinder the full realization of trade potential, underscoring the entry into force of the Comprehensive Economic Partnership Agreement (CEPA) between Chile and Indonesia in 2019. In his opinion, the agreement is a demonstration of the mutual understanding and shared view of a free market and fair trade environment, which provides opportunities for companies both in Chile and Indonesia. However, the work of both trade associations does not end with the signing of agreements, Domínguez explained: “as leading business organizations, SOFOFA and KADIN have a decisive role to play. We must work together to identify barriers and design effective strategies to overcome them, which was one of the goals of our visit to Jakarta.”
In all, the Indonesian pork market has several challenges due to religious and cultural preferences, but it also offers growth opportunities for Chilean exporters. The key to success lies in understanding the complexities of this emerging and diverse market and adapting to them.