Firms can tap OCBC’s network to expand in Indonesia amid push to boost local manufacturing

JAKARTA - OCBC, Singapore’s second-largest bank by assets, has an extensive network in Indonesia that is drawing the attention of businesses looking to expand in the regional giant.

Firms are growing their manufacturing footprint in Indonesia, driven by the promise of South-east Asia’s largest consumer market and the country’s push to build domestic supply chains.

OCBC Indonesia director Martin Widjaja said companies from China have made inquiries that are generally focused on how to set up local production facilities to cut logistics costs and sell directly to consumers in Indonesia.

“Indonesia is an attractive market for them to have a local presence in and meet consumer demand more easily,” he said.

Speaking to The Straits Times at the Fairmont Hotel in Senayan business district, he said firms can tap OCBC’s deep network across Indonesian industries and stakeholders.

The bank can help companies, from finding a good location for their franchises to finding the correct local partner as a distributor for them, he said.

OCBC has more than 200 branches in Indonesia, catering to businesses that want to access a range of banking services, including multi-currency accounts, working capital financing and merchant acquiring solutions.

Mr Widjaja noted that there has been a wave of food and beverage brands taking root in Indonesia, including local coffee chain Tomoro Coffee and Chinese hotpot chain Haidilao.

Young people in Indonesia are heavy consumers, and this creates demand for such brands, he said.

OCBC’s head of enterprise banking international Roy Tan added that the Indonesian marketplace is huge, and the young population is open to trying new things. “E-commerce is also widely used,” he said.

Indonesia is home to a vibrant young set, with 64.2 million people aged between 16 and 30 in 2024, comprising about 20 per cent of the nation’s population, according to BPS-Statistics Indonesia.

Mr Widjaja said the F&B chains that are making inroads in Indonesia already have successful and efficient operations, which enable them to scale rapidly.

“The pricing point is also a second factor to consider. Given efficient operations and a lean structure, they can meet the prices most consumers are looking for. And I think that’s the secret to their success and why they can scale very quickly,” he said.

Shandong-based medical device maker Wego began expanding its presence in Indonesia following a government policy requiring products be made with a minimum percentage of local components to be eligible for government procurement.

The local content requirement policy is aimed at building domestic supply chains and manufacturing capabilities.

Wego’s South-east Asia general manager Vivienne Zhang said the Indonesian government’s preference for locally made goods over imports accelerated the company’s global expansion.

“We have to put our footprint in Indonesia, not just by selling, but also by manufacturing. I think that was the major driver,” Ms Zhang said.

In July, Wego entered a joint venture with Indonesian consumables producer Oneject to manufacture medical consumables for the local market.

OCBC first connected the two companies in 2023 via its One Connect programme in Indonesia.

Ms Zhang said: “I see so many opportunities, like in healthcare services – where, in China, we are not a key player – and in consumable products.”

The firm aims to have a factory in Indonesia up and running in 2026, she said.

Wego chose the joint venture option over a wholly owned subsidiary, as it aims to tap Oneject’s local expertise.

“We are new so we have to count on our local partners, and Oneject is a perfect candidate. In the meantime, I think it also takes time for Wego to build its own team, attract local talents, speak the language and get to know the hospital system,” said Ms Zhang.

Oneject Indonesia commissioner Jason Tabalujan said the policy to localise manufacturing accelerated due to the Covid-19 pandemic, which disrupted supply chains.

“Critical sectors like healthcare cannot be dependent on imports, because otherwise, if there’s a war or a pandemic again, Indonesia will be at risk,” he said.

“So I think that’s why the current government is very focused on… localisation, and for the healthcare sector in particular, we are definitely beneficiaries of that. Government hospitals and clinics have to buy products with a certain amount of local components,” he said.

He added that Oneject is well placed to capture this opportunity, given its 20-year experience and the permits under its belt.

“We are well placed to serve the local market in Indonesia… we can do it on our own as well, right? So there are always options. You can either do it on your own or with a partner, but partnering accelerates the expansion of the product portfolio.”