1.1. Research Background of Indonesia
Indonesia’s position in southeast Asia, the country's Thousand Islands. Islandswith everywhere mountains, seasons are summer, known as the emerald equator,because cocoa and other resources, making it well-deserved, "tropical island."Indonesia has Land area of 1.904.400 square kilometers and huge sea area. Indonesiais number four largest of population in this world. Indonesia's Year 2013’s estimate of250.585.668. Islands in Indonesia so much, approximately more that 17.508 islands.Around 58% of Indonesia’s population live on the Island of Java. Indonesia is acountry known as "tropical island". Where mineral resources, biological resources,agricultural products and abundant in tourism resources, providing favorableconditions for sustained national economic development.Mineral Resources in Indonesia has a lot of variaties, for example Oil, Gas,tint, etc that most important stuff in this world that always be needed for human dailylife. For Oil, this world the tropical country like Indonesia surely has a good quality ofcommodity in Oil sector. Oil can never been separated from human being life.Indonesia also has huge natural gas reserves, which has been proven to 24,230 trillioncubic meters, mainly produced in Sumatra and East Kalimantan and other places. Tinreserves of 800,000 tons, mainly in Bangka and Belitung. Indonesia has goodcondition of mining factory that can produce open-pit coal mine with the good qualityof coal less sulfur contain (4000 until 7000 kcal per kilograms calories). 1.5 millionkarats of diamond, include ranking in Asia. In addition, uranium, town, copper,aluminum soil reserves are also very rich.
1.2. Background Indonesia China bilateral Cooperation
Indonesia and China have a good relationship because in Indonesia there are alot of Chinese born Indonesia. The Chinese connection with the same strain of theChinese culture, so that the dialogue between China and Indonesia have morecommon topics.So that, Chinese enterprises have interest to make investment in Indonesia dueto its social and cultural environment. First, Many Chinese Indonesians have goodposition and have important action to develop economy condition in Indonesia, whichwill undoubtedly give Chinese investors, management companies, to understand thelocal market as well as cultural practices are familiar with this closely relatedspending habits and so provide a convenient; again, addition, the Indonesian people topeople more friendly and kind, and religious conflicts in Indonesia easing, exoticlocales for increased tourism highlights and other favorable factors.In the ASEAN market, 40% of consumers have a country, is undoubtedly amarket full of opportunities. The success of Indonesia's investment in a way that canbe seen as the success of the ASEAN investment.In recent years, the Indonesian government have already done a lot of thingsthat showed much effort to influence and attract foreign investment in this country,step by step to relax control of foreign investment, to make the application of foreigninvestment become more simple to be approved as procedures and reduce time ofprocessing data, not too difficult but still have responsibility, etc. With theincreasingly improved investment environment in Indonesia, the Indonesian shadow-funded enterprises in an increasingly busy and out of the country in which confidencein the enterprise, we see a bright future in Indonesia's economic and trade cooperation.Indonesia is a big country in developing countries. Not only large population, hasmany natural resources, market capacity potential, and political stability andeconomic development of this country also has high speed.
CHAPTER 2REVIEW WITH THE RELEVANT THEORY
2.1. PEST - P(Political), E(Economy), S(Social), T(Technology)
PEST analysis is the basic tool and important role in value creationopportunities for strategic analysis of the macroeconomic and external environment. Itis through P is the political (Political System), E is the economy (Economic), S is thesocial (Sociocultural), T is the technology (Technological).Political environment including the political system and the institutional, legalenvironment including the government enacted laws and regulations.Specifically, political factors for business including as tax policy, labour law,national policy that may can change the law, ethical standards market. Governmenthad signed trade organisation such as such as the European Union (EU), NAFTA,ASEAN, and etc..They are also include:(1) Legislation such as anti discrimination laws or the minimum salary.(2) Market regulations(3) Trade agreements, tariffs or restrictions(4) Taxes.
2.2. FIVE FORCES MODEL
Porter 5 Forces is a tool used to analyze how the competitive environment willaffect the marketing of a product. This tool is a simple but very powerful tounderstand the situation of the business is being run. It also helps in knowing theadvantages of the current competitive position and to be faced later. So companies cananticipating weakness in the company and will avoid making the wrong decision.Conventionally, this tool can be used to identify whether a new product, a service or abusiness can generate a profit. But in addition it would be helpful to understand thebalance of forces that influence the business situation at hand. 5 Forces modelproducing deep impact on global business strategy formulation. Five forces are:bargaining power from suppliers, bargaining power from buyers, alternatives are nowcompetitors in the industry competitiveness.Five forces model will bring together a number of different factors in a simplemodel. Five forces model identify from the current competition between companies inthe same industry. A feasible strategy should include the identification and evaluationof the first five forces, characteristics of different strength and importance varies byindustry and company.
CHAPTER 3 ANALYSIS METHOD WITH PEST ..........20
3.2. ECONOMIC FACTOR.........25
3.3. SOCIAL FACTOR......31
3.4. TECHNOLOGY .........31
CHAPTER 4 ANALYSIS METHOD WITH MICHAELPORTER’S FIVEFORCES MODEL .............33
4.1. THREAT OF NEW ENTRANTS .............33
4.2. POWER OF SUPPLIERS.....33
4.3. POWER OF BUYER......33
4.4. AVAILABILITY OF SUBSTITUTES ......33
4.5. COMPETITION OF RIVALRY .....38
CHAPTER 5 STRATEGY FOR PALM OIL EXPORT FROM INDONESIA..........37
5.1. MARKET POTENTIAL OF PALM OIL ...........37
5.2. PEST METHOD STRATEGY........37
CHAPTER 5STRATEGY FOR EXPORT INDONESIA PALM OIL
5.1. Market Potential of Palm Oil
The need for vegetable oils and fats the world continue to increase in line withpopulation growth. The population in Asia and the far east region has reached 3.2billion, covering 50% of the world population (abundance, Iyung. 2006). The Asiastill has a edible oil consumption level below the average consumption of the world,and in line with the level of prosperity that will continue to increase in this region, theconsumption of edible oil will grow simultaneously.The market in China with large population is a market that should bemaximized by the production of palm oil in Indonesia. The short distance betweenboth countries is advantage for Indonesia. Therefore, maximizing the Chinese marketsclearly more profitable than selling the products to Europe or America region that hasa greater distance range that would require higher transport costs.
(1) Innovation and technology to produce food products by Palm oil(2) Increasing productivity Palm oil(3) Residual of Palm Oil can make BiomassFor Indonesia Palm Oil needs to complete the layout about legal certainty thatabsolutely necessary in order that the business plan can be done well and sustainable.GAPKI should encourage the government can make regulations and set a benchmarkprice in favor of government as well as producers of biodiesel. Government improvetrade relation and conduct cooperation with the country’s major export destinations inorder to trade barriers to the export destination countries can be minimized.Government should make revision of Law about Prevention and Eradication ForestDestruction (Policy of environmentally-friendly). We need legal action of the landlocal communities about land ownership clarification because of Legal and regulatoryuncertainty. We also need to consider about High logistics cost due to the lack ofquality and quantity of infrastructure.