Indonesia’s Ministry of Industry is confident that its cosmetics industry will grow 9% this year as demand for domestically-made products continue to increase at home and abroad.
In a statement published by ministry, Director-General for Chemical, Pharmaceutical and Textile Industry, Achmad Sigit Dwiwahjono, said it expected the cosmetics industry to grow up to 90% this year.
Dwiwahjono added that the cosmetic industry would have the support of the Ministry of Industry to achieve this.
“[The Ministry of Industry] will continue to spur on the development of domestic cosmetic industry so it can compete with the global market,” he said.
Minister of Industry Airlangga Hartato stressed that it was important for Indonesia to improve the cosmetics industry as countries in the region have begun to focus on developing the wellness industry, which includes cosmetics.
“We cannot miss it. We will compete with market leader in Asia, namely Korea. At the same time, Thailand is also developing industry in these sectors.”
Industry has government support
Dwiwahjono attributed the ministry’s confidence to rising cosmetic exports and the increasing demand in the domestic market.
The ministry recorded more than 760 companies in the cosmetic industry in 2017, of which 95% were small and medium enterprises (SME)
That same year, the export value of domestic cosmetic products reached $517m, up 16% compared to $470m in 2016.
“Of these companies, some medium and large companies have exported their products to countries in the ASEAN, Africa, the Middle East, and other regions,” said Dwiwahjono.
Hartato believes the size of Indonesia’s cosmetics market itself creates plenty of opportunity for companies.
Additionally, the growing millennial population will continue to contribute to the market
He said: “At present, cosmetic products have become a primary need for women who are the main target of the cosmetics industry. In addition, the cosmetics industry has also begun to explore the market for men and children.”
Dwiwahjono said the ministry hopes to increase competitiveness in the cosmetics industry with strategic programs and policies that will strengthen the sector.
For instance, he said the industry could employ the use of digital technology to keep with today’s industry 4.0.
“The use of digital technology and intelligence starting from the production and distribution process to the consumer level will certainly provide new opportunities to be able to increase industrial competitiveness with change in consumer tastes and lifestyle changes,” he explained.
Competing with K-beauty
Hartato believes Indonesia has the potential to become a cosmetics giant like South Korea.
He said cosmetics companies could capitalize on natural beauty trend by promoting cosmetic products from Bali.
“[Bali’s] spa products are quite attractive to foreign tourists. With good branding, it is expected that national cosmetic products can achieve success like cosmetic products from South Korea.”
He added that Indonesia had a competitive edge in terms of raw materials, owing to its rich biodiversity of its lands and seas.
For instance, Hartato said the industry can develop marine algae and marine collagen as it has potential in the local and global markets.
He also highlighted that the industry could look into local sources for raw materials.
“We need more extraction process for our raw materials. For example aloe vera can produce collagen and there are essential oils, which are currently still imported.”
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