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Nikkei Forum Jakarta

Salim Group vows to help food SMEs create jobs and exports

Heir-apparent says Indonesian conglomerate is willing to share knowledge

Salim Group executive director Axton Salim speaks during Nikkei Forum in Jakarta via Skype on Feb. 25. (Photo by Ken Kobayashi)

JAKARTA -- Salim Group, one of Indonesia's biggest conglomerates, has vowed to support the country's numerous small and midsize food businesses in order to create more jobs and bolster the country's export sector.

Speaking at Nikkei Forum Jakarta 2020 on Tuesday, Executive Director Axton Salim said the noodle-to-autos conglomerate can share its experience, markets and supply chains with small and midsize companies.

Salim Group, founded by Axton's grandfather Sudono Salim, is best known for controlling Indofood Sukses Makmur, Indonesia's largest food company and one of the world's biggest instant noodle makers. The group has a sprawling distribution network in the country built on its 17,000 Indomaret convenience stores.

While Salim has a firm grip over conventional retail and distribution channels, startups like Gojek, with its food delivery service, and the Tokopedia online marketplace have created alternative channels. The two have also significantly lowered the barrier for entry into the food business.

Some estimates put the number of Indonesia's small and midsize food businesses at 2 million, close to 1% of the country's population of 260 million.

However, "there is still a lack of match and link between services and products to the market," Axton said. "There is an opportunity for standardization ... [to] create economies of scale for big progressive markets, and of course, for the export market."

Salim runs a food-focused accelerator program called Accelrice, which provides startups with physical kitchens, product testing and networking opportunities along with support for production, distribution and legal matters. The program has already helped 52 startups and more are ready to enter the program.

The heir-apparent to one of Indonesia's largest conglomerates said aiding Indonesia's food businesses also creates jobs.

Youth unemployment has risen over the past several years, hitting 16% in 2019. "If you look at a restaurant, it probably needs about one or two people helping," Axton said. "If you help business grow to a certain scale, that would actually help a lot of business to hire new people and help job creation."

Indonesia's food and agricultural sector could become a key source of exports as well, according to Axton. The government has been trying to diversify away from raw commodity exports. In 2017, for example, mineral products comprised 23% of exports compared with 4% for food stuffs and 2% for vegetable products.

"Indonesia is big in biodiversity ... If we look at the history of Indonesian using plants as [traditional herbal medicine], which is only at this point, a local industry, how can we help such businesses grow internationally?" he said.

"Sometimes it is overlooked, but our geographical along the equator is blessed, with lots of sunshine, land and rain." The country is ideal for food and agricultural businesses. "Indonesia is definitely poised to be the leader in supplying [food], not only to local markets, but to the rest of Asia."

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