Food and Beverage Industry in ASEAN - TBA Việt Nam · 4 Beverage Industry in Thailand Beverage...

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March 2015 KASIKORNBANK

Food and Beverage Industry in ASEAN

Market Opportunities for Thai Businesses in Cambodia, Myanmar, Laos, Vietnam and Indonesia

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Prospects of Thai Food &Beverage in the ASEAN

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Food Processing Industry in Thailand

Processed Food Products Exports in ASEAN 2013, by Export Value

Data Source: World Bank’s World Integrated Trade Solution

Description

With a total export value of USD18 billion for processed food in 2013, Thailand was the 11th largest food exporter in the world, and 1st in ASEAN.

Specifically, in the region, it is the top exporter for products such as: (1) processed fruits and vegetables, (2) processed seafood and meat, as well as (3) snacks and seasonings.

Thailand and its ASEAN neighbors maintain ‘strategic trade relationships’ in F&B industry:

ASEAN represents an important export market for Thailand

Thai import is an important source of F&B products for some ASEAN countries (Myanmar and Laos)

Halal Industry – However, Thai Halal products have not been accepted as they should, mainly because (1) it is not recognized as a Muslim country, (2) it lacks of branding as products from advanced technology with superior quality.

Thailand is the top processed food exporter in ASEAN; it maintains strategic trade relationships

with its regional peers.

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Beverage Industry in Thailand

Beverage Exports in ASEAN 2013, by Export Value

Description

Thailand is the 2nd largest beverage products (juice, soft drinks and alcohol) exporter in the region after Singapore.

Over 80% of Thai beverage products are exported to the ASEAN market, especially countries in the Mekong region and Malaysia; most significant exports are (1) soft drinks, (2) juice and (3) beer.

Alcoholic – Alcoholic products by Thai companies are mostly whiskey and beer, mostly produced by large companies with a healthy competitive market.

Non-Alcoholic – With the transforming consumer demand, beverage products that are growing in terms of market value and new product launch are:

Energy drinks: among students and working populations

Ready to drink tea: supported by health consciousness

Functional drinks: drinks containing beneficial ingredients for brain boosting qualities, beauty and skin care, and health improvements, etc.

Thailand is the key beverage exporter in ASEAN, mostly targeting the regional markets, especially

its bordering countries.

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Potential of Thai F&B Industry

Central location with developed infrastructure -> excellent connectivity throughout ASEAN especially in the Greater Mekong Subregion (GMS)

High reputation of Thai F&B products, for its quality and taste.

Accumulated know-how in food processing industry, including production and supply chain management

Established distribution network, stable market channels to export their products regionally and beyond.

Strategic location:

High Recognition:

Experience and Expertise:

Market Access:

With its strategic advantages, F&B would become a highlight industry

that Thailand is competitive to expand regionally along with deeper regional integration.

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Myanmar – Cambodia – Laos: The Border Markets

Dominates the imported F&B products market, at least for some products, especially cooking ingredients, dairy products, soft drinks and juice.

Myanmar Laos

Cambodia Easier market entry for Thai products; High Thai exposure : culture, media, and people movement

MARKET CHARACTERISTICS

THAI PRODUCTS IN THESE MARKET

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Cambodia

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Market Overview

Population Pyramid in Cambodia, 2013

Population in Cambodia in 2015 and 2019, by Area

Basic Cambodia Market Overview

Small market, mainly rural – With slightly over 15 million population, Cambodia is a relatively small market and most of them reside in rural areas.

Young Population – Almost 70% of its population are under 35.

Low income, but improving – At present, the average per capita income per month is less than USD100; with robust economic growth, the figure is expected to reach over USD130 in 2019.

Increasingly Industrialized – Cambodia’s young population is likely to attract more FDI in labor intensive activities. Currently textile dominates the FDI in manufacturing, there is increasing interest in other sectors such as auto parts.

Young population; relatively small market, mostly rural population but increasingly industrialized.

Data Source: World Bank, UN Population Data, IMF World Economic Outlook

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Main Market Segments

Segment High-End Middle Class

Main Targets Upper-class Cambodians (elites from public and private sectors); expats and tourists

Working class Cambodians; small business holders, backpacker tourists

Important Cities Phnom Penh, Siem Reap, Shihanoukville

Phnom Penh, Siem Reap, Battambang, Kampong Cham, Shihanoukville

Potential Food Products

• Premium meat and seafood • Dairy products • Cereal / pasta / flour

• Snacks • Cooking ingredients /

seasonings • Dairy products

Potential Beverage Products

• Premium drinks: wine, liquor, premium beer

• Juice and healthy drinks

• Juice • Soft drinks

Potential Market in Cambodia, by Market Segment

Most potential markets located at the touristic towns and provinces with more active economic activities including industrial agriculture.

Main Cambodia Cities and Border Trade Areas

Most Thai products enter Cambodia via border trades, including F&B products.

1 Sakeo – Poi Pet

2 Trad – Koh Kong

Shihanoukville

Siem Reap Battambang

Kampong Cham

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Processed Food Market

Import Value of Food Products 2013 (USD)

Data Source: UN International Trade Centre

Food Consumption Pattern and Preference

Staple food – Cambodians eat rice and noodle on daily basis; main source of protein is fish, followed by pork, chicken and beef.

Urban – Urbanites often have breakfast at stalls / street vendors, usually rice, porridge and noodles. They cook and have lunch and dinner at home, with ingredients from the fresh market.

Rural – Rural dwellers have most meals at home, with ingredients from their own farm and livestock, but purchase cooking ingredients / seasonings from the village market.

Seasonings – Soup stock, sauce and paste used in Cambodian cuisine are partly similar with Thailand, although Cambodian ones tend to be sweeter in general.

Snacks – Instant noodle, chips and sweets are gaining popularity, especially among young populations.

Dairy products – gaining popularity among young middle-upper class.

Potential products in Cambodia could be the smaller package, lower cost products such as

cooking ingredients.

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Beverage Market

Import Value of Beverage Products 2013 (USD)

Beverage Consumption Pattern and Preference

Tea drinking – common in Cambodia; green tea is widely consumed and is provided complementary with meal.

Soft drinks – Soft drink is gaining popularity; Coca-Cola is expanding its investment in Cambodia. Despite geographical proximity, only 14% of soft drink imports come from Thailand. Over 57% of Cambodia’s soft drinks imports are from Malaysia.

Juice – A lot less popular than soft drink, occasionally consumed by middle-upper class Cambodians.

Beer – the most popular alcohol owing to its low price; the most popular brands are Angkor Beer (Cambodian national beer); Cambodia Beer is gaining popularity with aggressive marketing campaigns.

Food shopping – Modern Aeon Mall and Traditional Central Market

Thai beverage firms could try to expand its market share of soft drinks, juice, and beer (targeting

higher end market).


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Law and Regulations – Imported Food Products

Data Source: Department of International Trade Promotion, Thailand – Cambodia Tariffs and Regulations

Import permission process

There are no products inspection at the Cambodian customs. For Thai products, the food hygiene and safety certificate issued by Thai’s Food and Drug Administration is required.

Before custom clearance and import permission, the goods must transfer to temporary storage or bonded warehouse and not allowed to unload.

After import permission is granted, products could be circulated and distributed in Cambodia. However, the Cambodian customs still preserve the rights to inspect the goods anytime.

Export permission at Thai custom s department

Custom Clearance and import permission

Circulation / Distribution

Procedure Overview Tariff and Further Information:

ASEAN Free Trade Agreement (AFTA): Except some exceptional product such as poultry meat and other meat, import tariff for most processed food products from Thailand to Cambodia is 0%

Further details about law and regulations related to food products imports could be referred at:

Issue Reference

Import Tax General Department of Taxation - www.tax.gov.kh

Cambodia Trade

Ministry of Commerce - www.moc.gov.kh

http://www.tax.gov.kh/

http://www.moc.gov.kh/

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Lao PDR

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Market Overview

Population Pyramid in Lao PDR, 2013

Population in Lao PDR in 2015 and 2019, by Area

Basic Lao Market Overview

Small market size – With its 7 million population, Lao PDR represents a relatively small market size.

Low population density – 30 persons per sq. m. versus 130 persons per sq. m. in Thailand. Indeed Laos has the lowest population density in Asia.

Young population – almost half of total population under 20 years old.

More urbanized – urban population will increase from 2.7 million (39%) in 2015 to 3.3 million (43%) in 2019.

Growing income – per capita income of Lao population is expected to rise from USD150 per month in 2015 to USD206 per month in 2019, thanks to its robust economic growth.

Small market; however, young population with increasing income and more urbanized.


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Main Targets Upper-class Laotians; higher-end tourists and expats

Working class Laotians; small business holders, backpacker tourists

Important Cities Vientiane capital, Luang Prabang, Champasak (Pakse)

Vientiane, Luang Prabang, Pakse, Savannakhet, Takhek, Sayaboury, Houayxay


• Premium meat and seafood • Dairy products • Cereal / pasta

• Snacks • Cooking Ingredients /

seasonings • Dairy products


• Premium drinks: wine, liquor

• Functional drinks: juice, healthy drinks, and beauty drinks

• Juice and soft drinks • Lower price liquor

Potential Market in Lao PDR, by Market Segment

Most potential markets with middle-upper class populations are located at the border towns with Thailand.

Main Lao Cities and Border Trade Areas

Nong Khai - Vientiane

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Mukdaharn - Savannakhet

2

Ubon - Champasak

3

Luang Prabang

Takhek

Houayxay

Sayabouri

Most Thai products enter Laos via border trades, including F&B products.

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Similar with Thai Northeastern (NE) region – Laotians eat sticky rice on daily basis, with meat and vegetable dishes and soup; Lao food is usually spicy and strong taste.

Urban – Normally have home-cooked breakfast and dinner with family, with ingredients purchased from fresh market and small shops near to home. There are increasing supermarkets and convenient stores in Vientiane.

Rural – Usually work in agriculture sector; they eat their own farming products (rice, vegetable, livestock), buy seasonings (salt, sugar, MSG) and occasionally snacks from mom and pop shops.

Snacks – Similar with the Thais, Laotians enjoy snacking; popular snacks are papaya salad, noodle and local sweets. Industrial snacks are gaining popularity.

Owing to (1) geographical proximity and (2) similarity in taste and food preference, most Lao

imported food products come from Thailand.

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Beverage Market



Soft drinks from Thailand – Almost all imported soft drinks (carbonated drinks, ready-to-drink tea, beauty drink) and fruit juices in Laos come from Thailand.

Fun loving – Most Laotians enjoy drinking alcohol, during friends gatherings, festivals and parties.

Beer, most popular alcohol and the favorite Beer Lao – Most commonly consumed, because of its low price. The national brand, Beer Lao is conquering the market.

Urban VS Rural – Urban middle-upper class also consumes more expensive liquor and wine, while rural residents enjoy homemade rice wine (Lao Kao).

Lao urban middle class enjoying dinner at local beer garden, with ubiquitous Beer Lao.

While Thai soft drinks gain popularity in Laos; it is challenging to tackle its alcohol, especially beer

market, owing to strong loyalty to Beer Lao.


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Data Source: Lao PDR Trade Portal; Austrade – Laos Tariffs and Regulations

Inspection and Labelling Insights

Inspection is usually required in the case of food products, by the Food and Drug Department, Ministry of Health.

Most inspections are conducted on documents only; not on the physical product, especially products such as candy and milk which would require sending to a Laboratory, which Laos lacks of the equipment and facility.

Food distributed directly to consumers in Laos must carry Lao language wording. However, in practice this requirement does not appear to be strictly enforced, almost no imported food sold in Laos carries Lao language labelling.


Food and Drug Control Department Inspection

Custom Clearance Circulation / Distribution


ASEAN Free Trade Agreement (AFTA): Except some exceptional product such as meat, frozen food, tea, rice, alcohol beverage, import tariff for most processed food products from Thailand to Lao PDR is 0%


Issue Reference

Lao PDR Trade

Lao PDR Trade portal - http://www.laotradeportal.gov.la/

Import Tax Department of International Trade Promotion, Thailand http://www.ditp.go.th/main.php?filename=aec_intro

http://www.laotradeportal.gov.la/

http://www.laotradeportal.gov.la/

http://www.ditp.go.th/main.php?filename=aec_intro


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Myanmar

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Market Overview

Population Pyramid in Myanmar, 2013

Population in Myanmar in 2015 and 2019, by Area

Basic Myanmar Market Overview

Attractive market size – Myanmar’s over 50 million population offers lucrative market opportunities.

Dynamic Population – Myanmar population is relatively young, mostly young working populations and minors.

Increasing Purchasing Power – Recent political reform has contributed to economic growth; per capita monthly income is expected to rise from USD118 in 2015 to USD175 in 2019.

More tourists – Total tourists topped 3.5 million in 2014, from 800,000 in 2010. Myanmar is expecting 7.5 million tourists in 2020.

More liberalization – The recent reform also entails more market liberalization; many regional and international players are eyeing at Myanmar’s nascent market. This implies tense competition should be expected in mid-long terms.

Attractive market size and positive growth prospects attract regional and global players.

Data Source: World Bank, UN Population Data, IMF World Economic Outlook, the Nation, Myanmar Tourism Statistics

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Main Targets Upper-class locals (elites from public and private sector); higher-end tourists and expats

Working class locals and small business holders ; backpackers tourists

Important Cities Yangon, Naypidaw, Mandalay, Bagan

Yangon, Mandalay, Naypidaw, Bago, Taunggyi (Shan State), Mawlamyine (Mon state), Monywa (Sagaing)


• Premium meat and seafood • Dairy products • Cereal / pasta

• Snacks • Cooking ingredients especially

cooking oil and coconut milk • Dairy products


• Premium alcohol: wine, liquor , premium beer

• Functional drinks: juice, healthy drinks, and beauty drinks

• Juice and soft drinks • Lower price liquor

Potential Market in Myanmar, by Market Segment

Upper-middle segment markets are mostly major cities with more economic and political activities and key tourist destinations.

Main Myanmar Cities and Border Trade

Yangon

Mandalay

Mawlamyine

Bagan

Naypidaw

Bago

Taunggyi

Mae Sot - Myawaddy

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Typical Burmese cuisine – centers around oil-based curries (hi’n), salads and soup.

Opportunity in cooking oil market – usually Burmese food preference is oily and sweet taste.

Snacks – Burmese are fond of snacks; which they consume during tea time or as fast food. The traditional snacks are from glutinous rice and coconut, similar with Thailand.

Processed food and dairy products – Rising income and fascination with new things could contribute to growing popularity of processed meat and seafood, industrial snacks and dairy products.

Rural and Lower Income Urban – Shop at local fresh market, price plays a more important role than quality.

Urban Middle Class – Begin to purchase better quality food at modern supermarkets.

New trend: young middle class, more expats and tourists. Thai restaurants are mushrooming in

major cities to cater foreigners.

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Beverage Market



Thailand tops Myanmar beverage imports – over 80% of imported beverage products come from Thailand.

Tea culture – Myanmar has a strong tea culture, people hang out at tea shops, chatting and having tea and snacks.

Soft Drink – Growth potential with expanding middle income group, Thai products already take major share.

Beer, a luxury for urban middle class – Burmese consume less beer than its regional peers. They consume on average less than 4 liters a year, compared with 25 in Thailand and 30 in Vietnam.

Key Local Players – the top Myanmar beverage firm is the ‘Myanmar Golden Star’ and the bestselling beer is the ‘Myanmar Beer’, by the government.

While Thailand tops Myanmar beverage imports, Thai beverage firms should expect tenser

competition from both local and foreign players in short and medium term.


Tea shops – the favorite local hangouts.

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Import authorizing condition

In 2011, Myanmar government lifts the ban for border import on 15 products, including MSG, soft drinks, Biscuits assorted, chewing gum, cake, wafer, chocolate, Canned food, noodles, Liquor, beer, Cigarettes, Fruit and plastic wares, for Thai exporters only.

Foreigners are not allowed to conduct trading / retail / distribution, except for distribution of products manufactured in Myanmar. The key criteria to export products to Myanmar is finding the good local partner with import license.

Most of imported food products do not need food hygiene and safety examination except raw and frozen meat which needed the food hygiene and safety certificate issued by Thai’s Department of Livestock Development.

Export permission at Thai customs department

Custom Clearance Transfer products to

partner* Circulation / Distribution


ASEAN Free Trade Agreement (AFTA): Except some exceptional product such as a seasoning and rice, import tariff for most processed food products from Thailand to Myanmar is 0%


Data Source: Department of International Trade Promotion, Thailand – Myanmar Tariffs and Regulations

Issue Reference

Food Safety Law

Department of Livestock Development - http://www.dld.go.th/th/

Import Tax Internal revenue department- http://www.irdmyanmar.gov.mm/

Myanmar Trade

Ministry of Commerce - http://www.commerce.gov.mm/

*partner – the company registered at the Export-Import Registration office and obtained import license

http://www.dld.go.th/th/

http://www.irdmyanmar.gov.mm/

http://www.irdmyanmar.gov.mm/

http://www.commerce.gov.mm/

http://www.commerce.gov.mm/

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Vietnam

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Market Overview

Population Pyramid in Vietnam, 2013

Population in Vietnam in 2015 and 2019, by Area

Basic Vietnam Market Overview

Demographic ‘Sweet Spot’ – Most population are in working age, with most just entering working age.

3rd Largest Population in ASEAN – With over 90 million population, Vietnam represents lucrative market opportunities for retail businesses

Increasingly Urbanized – Size of urban dwellers are expected to expand in the next 5 years, from current 31 million to 35 million in 2019.

More Middle and Affluent Class (MAC) – The Boston Consulting Group estimates that MAC in Vietnam will double in size between 2014 and 2020, from 12 million to 33 million.

Per capita income is set to increase from current USD186 per month to USD246 per month in 2019.

Urbanized, more middle income and affluent, and young working populations represent the dynamic

market in Vietnam.


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Main Targets Affluent group, professionals and management in public and private institutions, tourists and expats

Working class Vietnamese, small business holders

Important Cities Ho Chih Minh City (HCMC), Hanoi, Hai Phong

HCMC, Hanoi, Hai Phong, Can Tho, Da Nang, Bien Hoa, Na Trang, Hue


• Premium meat and seafood • Dairy products • High quality confectionary

• Snacks and confectionary • Dairy products


• Premium alcohol: wine, liquor, premium beer

• Asian drinks (ready to drink tea, soy milk, beauty drink) and healthy drinks

• Asian drink and healthy drinks

• Soft drinks • Lower price liquor

Potential Market in Vietnam, by Market Segment

Middle income cities in Vietnam are mushrooming, in Southern, Northern and Central Vietnam, thanks to industrialization process.

Major Cities in Vietnam

Hanoi

Hai Phong

Hue Danang

HCMC

Can Tho

Na Trang

Bien Hoa

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More Opened and Diverse Market – Unlike Cambodia, Laos and Myanmar, Vietnam’s F&B products are sourced around the world, Thai import is only a small fraction.

Taste varies across region –

North: plain and light flavor is preferred

Central: spicy and salty

South: sweeter, greasy and diversified

Dairy products – popular owing to French colonial influence; local player, Vinamilk dominates the milk and yogurt market, TH Milk leads local fresh milk market; there will be stronger demand for dairy products as an essential daily nutritional source.

Snacks, confectionary, processed meat and seafood – these industrial food could be next area of growth due to Vietnam’s young population, more urbanized and improving income.

Higher-value food – the demographic shifts and more MAC also implies that consumers preferences are expected to calibrate towards higher value food, which is safer, more nutritious and more convenient; more hygiene for middle class.

New Trend: Shift to more demand for higher value food, confectionary, dairy products, processed

meat and seafood.

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Beverage Market



Tea and coffee are widely consumed; green tea is indispensable with meal.

Vietnam is the largest producer of Robusta coffee; the locals prefer very strong coffee. Trung Nguyen is the largest domestic coffee brand, it operates a chain of over 1000 shops nationwide.

‘Asian Drink’ such as ready to drink tea, soy milk and healthy drink (fruit and vegetable juice) are gaining popularity due to their health benefits.

Beer is popular among Vietnamese; there are regionally brewed beers that are favored in each region. For instance:

Southern: Bia Saigon (333, 333 Premium, Saigon Export, Saigon Special, Saigon Lager

Central: Huda and Bia La Rue Northern: Bia Hoi

Tea, coffee and beer have penetrated in Vietnamese lifestyle. ‘Asian Drink’ and healthy drink

have growth potential owing to the shift to higher value consumption.


Local middle class enjoys Bia Hoi draft beer with local cuisine after work – typical evening activities among Vietnamese.

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Data Source: Vietnam Ministry of Justice Portal, Vietnam Customs

Hygiene and Safety Examination

Food imported to Vietnam must:

Being granted product standard publication certificate

Having written certification of food hygiene and safety requirements; remaining use time must be at least over two thirds of their use life inscribed on labels at time of import

High Risk Food List (Lengthier examination requirements):

Meat & meat products, milk & milk products, eggs & egg products, fresh, raw and processed aquatics, ice cream / icy water, natural mineral water, functional food, processed food and drinks for instant consumption, frozen food, soya milk and soya product, fresh and raw vegetables, tubes and fruits.


Food hygiene and safety examination

Custom Clearance Circulation / Distribution


ASEAN Free Trade Agreement (AFTA): Except some exceptional products such as liquor, import tariff for most processed food products from Thailand to Vietnam is 0%.


Issue Reference

Food Safety Law

Vietnam Food Administration - http://vfa.gov.vn/

Import Tax Vietnam Customs - http://www.customs.gov.vn/

Vietnam Trade

Vietnam Trade Promotion Agency - http://www.vietrade.gov.vn/

http://vfa.gov.vn/

http://www.customs.gov.vn/

http://www.vietrade.gov.vn/

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Indonesia

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Market Overview

Population Pyramid in Indonesia, 2013

Population in Indonesia in 2015 and 2019, by Area

Basic Indonesia Market Overview

Enormous market, mostly urbanized - with over 255 million populations, Indonesia represents the most populous market in ASEAN. Most of them (over 53%) are urban dwellers.

Young population – Indonesia’s population is relatively young (median age just above 22), which implies a potential large workforce with growing consumption base.

Bourgeoning middle class – With its rapid economic growth, Indonesia’s middle and affluent class (MAC) also expands in tandem. BCG estimates that number of Indonesia’s MAC would expand from current 74 million to 141 million in 2020. Per capita monthly income would increase from current USD299 to USD380 by 2019.

Largest Muslim country - With over 88% of its populations are Muslims, Indonesia is the largest Muslim country in the world, and hence the largest market for Halal food products.

Largest Halal food market in the world. Enormous market – urbanized, young and increasing middle class.


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Main Targets Affluent group, professionals and management in public and private institutions, tourists and expats

Working class Indonesians, small business holders

Important Cities Jakarta, Bali, Surabaya, Medan Java (Jakarta, Surabaya, Bandung, Semarang, Solo, Yogyakarta), Sumatra (Medan), Sulawesi (Makassar), Bali

Potential Food Products • Premium meat and seafood • Snacks and confectionery • Dairy products

• Cooking ingredients • Dairy products • Snacks and confectionery

Potential Beverage Products • Healthy / functional drinks (soy, vitamin nutrients) • Healthy / functional drinks

Potential Market in Indonesia, by Market Segment

Middle and Affluent Class (MAC) in Indonesia is growing in size and purchasing power. Cities with sizeable MAC also increase.

Main Cities in Indonesia

Jakarta

Bandung Surabaya

Bali

Medan

Semarang

Palembang

Makasar

Riau

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Rice = staple food – Standard meal consists of plain rice with curry or other chili-pepper based dishes. Non-rice entities such as sandwich, burger and noodle are perceived as snacks.

Taste preference differ across region – generally Indonesians prefer ‘spicy and fresh’ food; diversity exists across region:

Central Javanese adores sweet taste and dessert West Sumatran food is usually hot and spicy

Seafood and Chicken – both fresh and dried fish are main protein sources; chicken is the most popular meat.

Snacking, strong cultural habit – Popular snacks are fried delicacies, sweets and baked goods. Thai fruits including fruit-based snacks are popular among Indonesians.

Rural – Mainly do subsistence farming, sometimes they will go to local shops to purchase cooking ingredients.

Urban – Middle class go to supermarkets; they often seek for products with discounted / competitive prices; grocery shopping becomes family outing activity. Mini markets and convenient stores are popular too.

Urban middle and affluent class represents the attractive market opportunity. Besides Halal

requirement, Indonesians’ diversity in taste preference across region is also worth-noting.

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Beverage Market



Water, tea and coffee – Indonesians’ staple beverages; tea-drinking (usually strong black tea) is a daily habit.

Fresh juice preferred over processed juice – Iced fresh juice using local tropical fruit is very popular, especially due to increasingly health consciousness.

Soy Milk, Health drink – perceived as healthy beverage; firms could consider introduce other beverage with health benefit

Muslim country; alcohol not popular – beer is not the favorite drink, the non-Muslim locals prefer local brand especially Bintang because of its low price.

Excised tax on alcohol – Tax is higher for products with higher alcohol content, highest is USD10 per litre.

Tough market for alcohol products; soft drinks, especially drinks with health benefits might be

worth-exploring.


Modern and traditional ‘Warung’, local restaurant.

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export permission at Thai customs department

Importer applies for necessary documents

Transfer goods to partner*

Circulation / Distribution

Approximately 7 months



ASEAN Free Trade Agreement (AFTA): Except some product such as sugar and rice (Quota limited and taxed), import tariff for most processed food products from Thailand to Indonesia is 0%


Data Source: Department of International Trade Promotion, Thailand – Indonesia Tariffs and Regulations

Issue Reference

Food Safety Law

The national Agency of drug and Food control http://www.pom.go.id/index.php/home/en

Import Tax and Indonesia Trade

Department of international Trade and Promotion - http://www.ditp.go.th/main.php?filename=aec_intro

Import Procedures

To import the product, the importer needs to apply for:

NIK license – this refers to customs identification number with products categorization and tax payment declared by the Director of Directorate General of Customs and Excise.

ML number – permission to distribute and sell F&B products in Indonesia declared by the Indonesian Food Authority (BPOM)

Foreigners may apply for the import license to become an importer, and the process may take around 25 weeks.

If imported food product needs halal certification, importer must apply online at www.e-loppommui.org, which further on site audit is requested. This process take minimum of 6 months to fulfill.

*partner – the company, whom achieved Import Identification Number (API-U)

http://www.pom.go.id/index.php/home/en

http://www.pom.go.id/index.php/home/en



http://www.e-loppommui.org/







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Conclusion - Implications to Thai Businesses

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CLMVI Market – Summary

Cambodia Lao PDR Myanmar Vietnam Indonesia

Current Thai Product Imports

Relatively high market share for a number of food products: cooking ingredients, dairy products, snacks.

Dominates most food and beverage products, from cooking ingredients to dairy products and soft drinks.

Competitive at several key products, namely cooking ingredients, processed meat, soft drink and alcohol.

Relatively small share at food products market; only soft drink that has major stake.

Meager presence in food products market; however, Thai soft drink products represent 40% of total Indonesia’s imports.

Important Notes Thai products enjoy high recognition, there is considerable Thai exposure and border trade; retail market is growing fast, which may results in more competition.

cultural similarity with Thailand including dietary habits; strong Thai cultural and media influence. Easier market entry, especially through border trades.

Newly open market; still low income but with long term opportunities. Thai products have played a key role owing to border trade activities between both nations.

Largest market in the Mekong region; long coastal line -> fragmented market and taste differences across region. Competitive market with foreign and local players.

Largest Halal market in the world; enormous market opportunity but challenging to enter owing to (1) halal, (2) strong brand loyalty, and (3) increasingly tense competition.

Border Countries – Thai Products already have major market share.

Non-Border Countries – still need to explore and expand the markets.

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Implication to Thai F&B Businesses

Given the current business landscape, Thai businesses

ought to look outward, especially at its neighboring countries at AEC countries,

for (1) market, (2) raw material sourcing, and (3) processing opportunities.

• Industry players should invest in product Research and Development (R&D) and potentially move labor intensive activities to other AEC countries -> to remain competitive in F&B sector

Upgrade Food Technology

• Thailand also experiences urbanization, which results in (1) business opportunities for more convenient products and (2) limit availability of raw materials -> need to look for raw material elsewhere especially in AEC.

Urbanization

• Rising labor cost (at least twice higher than CLMV countries) and highly dependent on migrant workers.

Labor Market Challenges

• Alter types of food demand in Thailand owing to aging society, Thai F&B companies could target F&B products for young population (such as snacks) at the dynamic markets in CLMVI.

Evolving Demography – Aging Population

Outlook of Thai F&B Businesses:

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KBank’s Support

• Financial advisory • Trade finance • Financing

Cross Border Banking Service

• Local branch / representative office support, in Lao PDR, Cambodia, Myanmar, Vietnam and Indonesia.

Regional Support

• Advisory service • Business matching

Non-banking support

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