Foreigners are flocking to pump resources into fisheries
THE INDUSTRY IS BEING REHABILITATED WITH THE HELP OF OVERSEAS AID AND PRIVATE INVESTMENT

MANY COMPANIES export block frozen raw shrimp, but Wirontono Baru aims to sell products with added value through a partner in the U.S.

Foreign investors are keeping an eye on Indonesia’s fishery sector, aware of its potential as an important contributor of hard currency export earnings for the country.
Indonesia has established itself as one of the world’s biggest exporters of shrimp (where it is second only to India), prawns and other fishery output.
The fishery sector is being rehabilitated with assistance from international aid organizations as well as private sector investment.

China has so far invested $630 million in the development of fish-processing and cold-storage facilities in Indonesia, and several European countries including France and The Netherlands are said to have expressed interest in investing in the Indonesian fish industry.
One recent report went so far as to say that a senior Indonesian fishery official had claimed that Canadian investors, whom he did not name, were prepared to sink a massive $5 billion into the fish-processing industry.

The growing interest of the European countries has prompted hopes that the European Union (EU) is planning to end trade barriers on fishery products from Indonesia and other Asian countries.
Measures imposed by the EU in September last year included an embargo on Indonesian shrimp and officials in Jakarta say that the removal of trade barriers could restore exports of shrimp to the EU to their formal value of about $100 million a year.
Indonesia’s overall fishery exports to the EU average about $500 million a year, making Europe the third largest export market after Japan and the United States.
In the absence of a clear response from the EU, companies in Indonesia’s fishery sector intend to boost their exports to alternative markets including the US, and they are open to approaches from potential investors and foreign business partners.

YOSUA DEDY HANAFI President Director of Wirontono Baru

Among the companies open to such joint ventures is Wirontono Baru, one of Indonesia’s leading shrimp processing and cold storage businesses, where President Director Yosua Dedy Hanafi says: “I would like to have a new alliance or partner, especially one from the U.S. to explore and develop new markets and products there.”
Whereas many Indonesian companies export block frozen raw shrimp to the US and other overseas markets, Wirontono Baru is more interested in selling products with added value. At present, these products account for about half of the company’s output, but the plan is to increase this to 100 percent.
“If we want to make more added-value products, we are going to have to renovate our factories and also increase the volume of production,” says Mr. Hanafi. This is where the idea of a partnership with a foreign investor based in a key export market enters the equation.

Wirontono Baru, which produces some 3,000 tons of shrimp at three factories in Indonesia, already has a strategic partnership in operation with the Marubeni Corporation of Japan, and Mr. Hanafi says the arrangement is working to the benefit of both sides.
“We have a special agreement with Marubeni in which they do all the selling and we produce as much as we can,” he says. “Of course, they can sell more than we can produce here, so we are now sitting in a very safe and comfortable position.”
For Marubeni, the advantage of the deal with Wirontono Baru is that it provides a secure source of supply. “A lot of supermarkets or distribution companies in Japan have to buy via a trading house, and Marubeni is one of Japan’s top trading houses,” Mr. Hanafi explains.

“In the past, if Marubeni got an order from a Japanese buyer, it would have to look for a factory overseas, but now it can fulfill the order by buying from us. In a sense, our factories become their factories, and shipment from Jakarta to Japan takes less than 14 days. So when they get an order, they can take delivery of it within a month.”
Mr. Hanafi emphasizes the need to look after the interests not only of his customers but also of his own labor force. “If you want to run a business, you have to be sure to maintain good relations with the workers,” he says.
“In most Indonesian companies, the human resources department is the one that controls the workers, but in our company it’s a service company. We make sure that we help our workers, rather than being there to control them. A good working relationship between workers and management is very important at a food processing factory.”