Indonesia remains an attractive destination for foreign franchising companies especially from other members of the Association of South East Asian Nations (ASEAN) despite the growing competition in the franchising business.
Malaysian Franchise Association (MFA) chairman Abdul Malik Abdullah said on Friday that Indonesia was definitely a potential market for Malaysian franchisors, where they would target not only the food and beverage sector, but also healthcare, beauty and education.
“We currently have 20 franchise brands in Indonesia and we believe that there is good opportunity to tap into the market, especially with easier flow of goods and services under the ASEAN single market in 2015,” he told the Post in the International Franchise License and Business Concept Expo & Conference (IFRA) in Jakarta.
Speaking at similar event, Singaporean Franchising and Licensing Association (FLA) general manager Wesley Goh said that there were at least 10 Singaporean franchises currently operating in the country and there would be some more to come this year.
The advertising and operation manager of Singaporean blended ice franchisor Coolblog, Winson Keh, said that his company planned to open its first outlet in the country by year end following its successful presence in Malaysia.
“We are currently looking for a potential partner here in Indonesia as we already have more than 250 outlets in Malaysia and aim for 400 outlets next year. We have also been granted ‘halal’ certification [permissible according to Islamic law] from the Malaysian government,” he said.
Besides Malaysia and Singapore, the Philippines will also expand its franchise businesses into the country. The Philippine Franchise Association chairman Samie Lim said there were currently five Philippines’ franchises already operating in the country, which range from retail to service sector, such as Penshoppe, Potato Corner and Crystal Clear Water Store.
“We are aware of ASEAN Economic Community and we expect to expand to other ASEAN countries, Indonesia is our top priority considering the huge market population and similarities we share,” he added.
Meanwhile, Indonesian Franchise Association (AFI) chairman Anang Sukandar said that Indonesia was indeed a huge market for everyone, but he was afraid franchising business at home would be dominated by foreign firms.
“We have less than 15 franchisors going global, but there are a lot more foreign franchisors coming in. I think lack of support from the government is still a problem for potential franchisors to expand their business abroad,” he added.
Both Malaysian and Singaporean franchisors enjoyed support from their respective governments. The Malaysian government provides four percent interest rate-loans for their local franchisors and gives financial assistance for those willing to go global. Meanwhile, the Singaporean government provides grants of between 50 to 70 percent of needed fund for local franchisors willing to go global as well as free business consultancy.
Indonesia’s franchising business has grown during the first several years. As of last year, there were more than 2,000 franchises including licensed business opportunities (BOS), more than double from two years previously with an estimated combined revenue of Rp 115 trillion (US$11.74 billion), or up 15 percent up from a year earlier, according to statistics from the Indonesian Committee for Franchises and Licenses (WALI). (koi)
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