Development of Agribusiness Enterprises - Asian Productivity ...

3. REQUISITES FOR INITIATING
AGRIBUSINESS VENTURES
INTRODUCTION
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Thomas Darmawan
Director
Indonesian Food and
Beverages association
Jakarta, Indonesia
The challenges to be faced by the Indonesian economy in the 21st century will
definitely be even greater and more global than in the past. This is in line with the changing
economic order in the global, regional and domestic environments.
Global transformation is being marked by an increasingly unified market and the
development of free trade. The success of a country is the extent to which it is capable of
entering the global market.
Regional transformation is characterized by the formation of an economic cooperation
network between nations in relevant zones. In the Asia-Pacific region, the Asia Pacific
Economic Cooperation (APEC) group was set up as an economic cooperation forum with 18
member countries. The Association of South East Asian Nations (ASEAN) countries also
set up the Asian Free Trade Area (AFTA) with the economic goal of a free trade area among
the 10 members, similar to the European Union (EU), Mercado Común del Cono Sur
(MERCOSUR), North America Free Trade Agreement (NAFTA), CER, etc.
Globalization poses a threat to national industries and agribusiness in the international
and domestic markets. Large-scale multinational companies have better business networks,
enabling them to operate more efficiently.
Meanwhile, in most of the developing countries, domestic transformation is indicated
by the change in industrialization strategy from import substitution and rice self-sufficiency
to export promotion. The former is oriented to the domestic market whereas the latter is
oriented to the foreign market. Foreign direct investment (FDI) from developed countries
also becomes more important for developing countries entering the global market and
increasing economic growth.
Through sophisticated business strategies, market research and intelligence, business
people still can utilize government incentives, regulations and laws in creating companies and
ventures to ensure that they are able face the tight competition. With some 70 percent of the
population earning a living from the agriculture sector, the development of agriculture
through an agribusiness approach becomes a strategic alternative.
Prior to the Asian economic and financial crisis in 1997 and 1998, Indonesia
experienced 30 years of rapid growth during which it developed human and physical capital.
It also possesses a rich base of natural resources, a large domestic market and an industrious
workforce. The country also has a history of high savings rates.