Malaysian franchises quietly thriving in Indonesia
Without much ado, a host of Malaysian enterprises, particularly some in the food and beverage sector, have successfully expanded into Indonesia.
Malaysia Franchise Association (MFA) chairman Abdul Malik Abdullah said that Malaysian franchising firms had opened many outlets in the Indonesian capital and in other cities throughout the nation.
With intense support by the Malaysian government, the association hopes to help about 40 franchise companies open outlets in Indonesia by 2014, Abdul said. At present, there are 18 Malaysian franchises operating in Indonesia.
“We have agreed with the government to focus on Indonesia, the Middle East and China. I would say that with 18 brands, Indonesia is our biggest overseas market by far [….] We would be happy if we could double the brand numbers within two years,” he said during the International Franchise License and Business Concept Expo & Conference (IFRA) in Jakarta recently.
Malaysia’s Rotiboy made Indonesia its first international stop by establishing an outlet in Surabaya, East Java, in 2004. Currently, the firm sells butter-filled and coffee-flavored buns in more than 50 outlets across Indonesia.
Meanwhile, a cake and café chain, Secret Recipe, entered the country in 2003 and currently operates 14 outlets in Greater Jakarta. It plans to open three more stores by the end of the year.
“We are still focusing on expansion in the Greater Jakarta area. However, we expect to open outlets in Bandung and Makassar in the next two years,” Secret Recipe Indonesia spokesperson Titis Elok Paramita Hapsari told the Post.
A new entrant, Bangi Kopitiam, has achieved even faster growth in Indonesia than in Malaysia.
“Bangi Kopitiam was established seven years ago and has 20 stores in Malaysia. In just eight months, we have established six stores in Jakarta and Surabaya. With the support of investors, we will have 14 more stores by the end of this year,” Bangi Indonesia’s marketing director Peter Halim said.
Other rising Malaysian brands in Indonesia include leather boutique Bonia; and corn-in-a-cup companies Daily Fresh and Nelson’s, both of which can easily be found in shopping malls.
Anang attributed the expansion to Malaysia’s Franchise Development Program (FDP), which provided education and financial support worth RM 100 million (US$31.42 million) from 2001 to 2005.
Further, Malaysian franchisers continue to receive assistance from Perbadanan Nasional Berhad (PNS), a Malaysian government agency specializing in product development and global market expansion.
“Unlike as in Indonesia, Malaysian enterprises have ensured their business concept, legality and financial support before establishing an overseas branch,” AFI member and franchise broker Rachmat Agung Nugroho said Malaysia has 603 franchisers, 70 percent of which are local brands. Last year, the franchise sector contributed around 2.5 percent to Malaysia’s gross domestic product (GDP), or roughly US$7 billion.
There are about 400 overseas franchises in Indonesia, comprising 70 percent of the nation’s total franchise revenues of Rp 120 trillion in 2011. Indonesia’s franchise sector recorded 21.6 percent growth last year. (yps)