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ajor consumer goods manufacturer PT Unilever Indonesia called on its strategic overseas-based suppliers to invest in establishing production outfits in the country to cut the production materials bind straining the company.

Marc Engel, chief procurement officer of the Unilever Group of Companies, said the group had invited 32 key suppliers from countries such as the US and Latin America to Indonesia to review investment possibilities in the country.

“These suppliers basically supply us with all that we need to make products from chemicals to food ingredients and from commodities to packaging,” he said on Tuesday.

He added that through this first of its kind gathering, entitled Partner to Win, Unilever wished to shed light on the investment potential in Indonesia, which has been a “blind spot” for investors who were unsure of the domestic investment climate.

“What we would like to say is that Indonesia is actually a place to invest,” he said.

He added that Unilever, traded on the Indonesia Stock Exchange under the code UNVR, sought to draw more of its suppliers to Indonesia, given that they expected operations in the country to ramp up along with the growth of the middle class.

Research firm McKinsey Indonesia estimates that 90 million people will have entered the consumer class — a class, with an annual net income surpassing US$3,600 — by 2030, opening up fresh business
opportunities worth $1.8 trillion.

Engel said the mood among the suppliers had been “positive”. “I think we will see 10-12 people come up with concrete plans,” he said.

He said Unilever found it essential to have suppliers close to its eight factories in Indonesia because the insufficiency of raw materials would bind Unilever from sprinting to meet the future spurt in market demand.

Unilever, one of the top 10 companies in market capitalization, booked solid growth in the first nine months of 2012. Net sales increased by 17.4 percent year-on-year to Rp 20.3 trillion (US$2.09 billion) while net profits surged by 20.8 percent to Rp 3.6 trillion.

“Essentially, we are in a constraint with the existing supply base and if we don’t have the necessary materials, we will not grow,” he said.

“That is why we are asking our strategic suppliers to come and invest in Indonesia,” he added.

Unilever has invested over Rp 4 trillion over the last three years to boost growth in Indonesia, where a majority of its domestically produced goods are sold.

Engel further added that Unilever Indonesia had been importing “a lot” of raw materials, packaging and finished products from nearby countries such as the Philippines and European countries.

He further noted that chemicals and packaging were notable materials that Unilever wanted to see manufactured domestically. As much as 54 percent of Unilever’s chemical came from imports, while 8 percent of its packaging was sourced from overseas.

“These imports are costly,” he said.

Domestic suppliers, albeit an “excellent set”, still lacked the technological know-how to generate metallic ink printing, for example. Another issue for domestic suppliers, he said, was their “financial capacity to invest”.