SINGAPORE - Supply chain company YCH Group's PT YCH Indonesia has signed an agreement with PT Pangan Lestari of Sekar Group, one of Indonesia's largest importers and distributors of food products.
Under the memorandum of understanding, both firms will jointly develop integrated cold chain supply management to facilitate retail, catering and distribution fulfilment.
This will be done through the expansion and use of existing facilities of both companies, as well as the "development of identified sites in the appointed markets in Indonesia", said International Enterprise (IE) Singapore on Friday. (May 27)
Announcing the pact in a statement, IE Singapore said it brought the two companies together last year, given YCH's interest to expand further in Indonesia.
The signing of the agreement was witnessed by Ms Sim Ann, Senior Minister of State for Ministry of Culture, Community and Youth, and Ministry of Finance.
Ms Sim, who also oversees SME-related issues in the Committee on the Future Economy, is currently leading a business mission to Surabaya Indonesia from May 25 to 28.
The mission, jointly organised by IE Singapore and the Singapore Business Federation (SBF), comprises over 20 business representatives from 13 SMEs across business services, environment services, financial and manufacturing sectors.
Ms Sim said: "Given the limited size of Singapore's domestic market, many SME leaders are actively considering internationalisation as a means to bring their business to the next level.
"During the trip, I had the opportunity to meet representatives from the East Java provincial government and I am encouraged by their support for investments from Singapore. Both nations are close neighbours, and Indonesia's young population and growing middle class present good opportunities for our SMEs to tapon."
Indonesia is Singapore's second largest trading partner amongst ASEAN member states, with total trade at S$59 billion in 2015.
Last year, Singapore was Indonesia's top foreign investor, with total realised investments amounting to S$8 billion, IE Singapore added.
Surabaya, the gateway and business hub of eastern Indonesia, presents growth opportunities to local firms.
"The Indonesian government is promoting economic development beyond West Java. Surabaya and East Java offer exciting growth opportunities especially in sectors like trading, services and manufacturing. It is also home to a number of fast growing Indonesian companies and conglomerates which can be partners or customers for Singapore companies", noted Mr Tan Soon Kim, IE Singapore's assistant chief executive.
Surabaya has a population of 3.2 million and its GDP growth reached 6.7 per cent in 2014, exceeding East Java province's growth of 5.9 per cent.
In 2014, total foreign direct investment into Surabaya was at US$45.58 million, up by about 45 per cent from 2013.
IE Singapore noted that Singapore has consistently been among Surabaya's top five foreign investors, and ranked second in 2015.
"Indonesia, as Asean's largest economy in terms of GDP and population, remains an attractive and compelling market for Singaporecompanies," said SBF chairman SS Teo. "The pro-business economic policies introduced by the Jokowi administration also mean it is an exciting and opportune time now to engage Indonesia for business."
Mr Teo added that SBF's survey found that Indonesia is the third most popular market after Myanmar and Vietnam for local companies venturing overseas.