PROPOSAL

Study of :

REVITALIZATION PROGRESS OF COCOA INDUSTRY DEVELOPMENT IN INDONESIA, 2011
(Post Implementation of Custom Duty / BK Cocoa) June, 2011 Cocoa is one of the leading plantation commodities of Indonesia, which has substantial potential with plantation area and production that tended to increase every year. Even in 2010, Indonesia ranked second, shifting Ghana as the global cocoa bean producer after Ivory Coast. The government, through the Ministry of Agriculture, since 2009 until 2011, has revitalized old cocoa plantation with a budget of Rp 13.7 trillion. The government also conducted National Movement of Cocoa Production and Quality Improvement (Gerakan Peningkatan Produksi dan Mutu Kakao Nasional - Gernas), in order to accelerate the productivity improvement of cocoa plant and quality, consisted of rejuvenation, rehabilitation, and intensification of people’s cocoa crop with the latest technology.

With the area width of 1.7 million hectares, the current cocoa production of Indonesia has reached more than 800 tons. However, the abundant production was not balanced with the increase of its processing industry. About 80% of cocoa production was exported in form of bean. While the domestic processing industry has difficulties in obtaining raw material, if there is any, the price is quite high. This condition made the domestic processing industry halted their factory operation. Out of the existing 15 factories, at the beginning of 2010, there were only 5 factories that were operating.

Based on the Minister of Finance Regulation No. 67/PMK.011/2010 about Determination of Exported Goods that is imposed by Custom Duty and Custom Tariff, cocoa bean export is imposed by “Bea Keluar” starting 1 April 2010. Cocoa is imposed by tiered custom duty following the price development in the global market. The higher the cocoa price, the custom tariff is also greater. Cocoa bean is not imposed by BK if the price in the global market is less than US$ 2,000 per ton. However, if the price ranging between US$ 2,000 - US$ 2,750 per ton, BK is set at 5%, BK 10% is imposed if the price ranging between US$ 2,750 – US$ 3,500 per ton, and 15% if the cocoa bean price is above US$ 3,500 per ton. 1

The discussion in this study book, aside from covering the development of national and global cocoa production, it also discussed the condition and problem faced by the domestic cocoa bean processing industry, covering the aspects of marketing, government policy, strategic analysis, and risk faced by the cocoa industry. Finally, the opportunity and prospect of domestic cocoa industry is presented, including the banking sector and the directory of cocoa industry.

It is expected that this study book would be useful for the business circle, especially the decision makers in the cocoa industry sector, and for the business circle that is related directly or indirectly, such as food and beverages industry, and banking sector. This report would also be useful for the investor or potential investor that would cooperate with the company that is active in the cocoa business in Indonesia.

This 350 pages thick study book would be offered with the price of Rp 6,000,000 (Six Million Rupiah) for the Indonesia version and US$ 850 (Eight Hundred and Fifty US Dollar) for the English version. For order and information, please contact PT Media Data Riset by telephone number (021) 809 6071 and facsimile (021) 809 6071 by filling the attached form. For overseas and outside Jakarta order, delivery fee would be charged. Thank you for your kind attention.

Jakarta, June 2011 PT Media Data Riset

Drh. H. Daddy Kusdriana, M.Si President Director

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TABLE OF CONTENT

REVITALIZATION PROGRESS OF COCOA INDUSTRY DEVELOPMENT IN INDONESIA, 2011
(Post Implementation of Custom Duty / BK Cocoa) June, 2011
1. INTRODUCTION 1.1. Background 1.2. Scope of Study 1.3. Information Source 2. POPULATIN AND GENERAL DESCRIPTION OF INDONESIAN ECONOMY 2.1. Population of Indonesia 2.1.1. National population growth 2.1.2. Population growth by province 2.1.3. Population composition by Age group 2.1.4. Projected Population Growth of Indonesia 2.2. General Description of Indonesian Economy 2.2.1. Economic Growth in 2009 exceeded the target 2.2.2. Economic growth in 2010 was projected 5.5% 2.2.3. Potentially revised 2.2.4. Economy in quarter II grew 6.2% 2.2.5. Inflation rate 2.2.6. 2010 reached 6.96% 2.2.7. TDL increased by more than 15% 2.2.8. Income Per Capita Indonesia 2.2.9. Rupiah Exchange Rate 2.2.10. Foreign Exchange Reserve 2.3. Current Transaction Balance Sheet 2.3.1. New Foreign Loan US$18 billion 2.3.2. Business Tendency increased 2.4. Undang-Undang APBN 2011 is enacted 2.5. Deficit Assumption Missed 3. CONDITION OF COCOA INDUSTRY RAW MATERIAL 3.1. Description 3.2. Raw material of Cocoa industry 3.3. Characteristic of Cocoa Plantation 3.3.1. Labor Intensive 3.3.2. Price 3.3.3. Intensive Maintenance 3.3.4. Maintenance Season 3.3.5. Export Commodity 3.3.6. Domestic Processing 3.4. Cocoa Growing Requirement 3.5. Plant Material 3.6. Cocoa Type 3.6.1. Cocoa Edel (Fine flavor cocoa) 3.6.2. Bulk Cocoa 3.7. Growing Pattern 3.7.1. Intercropping 3.7.2. Maintenance 3.7.3. Harvest 3.8. Potential Land 3.9. Area Width is increasing 3.10. Cocoa Plant Spreads 3.10.1. Sulawesi is the Production Center 3.10.2. Bengkulu Rehabilitated 1,700 Hectares 3.11. Productivity 3.12. Quality and Standardization 3.12.1. Physical Character 3.12.2. Contamination and Pollution 3.12.3. Fat content 3.12.4. Organoleptic 3.12.5. Quality Standard 3.12.6. Quality Requirement 3.12.7. Standard and Requirement of Cocoa Product Exported to Partner Country 3.13. Revitalization of Cocoa Plantation needs fund of Rp 13.7 Trillion 3.14. Gernas Program 3.14.1. Background 3.14.2. Objective 3.14.3. Activity in 2009 3.14.4. Implementation 3.14.5. Benefit 3.15. Cocoa Plantation Company 3.16. Production Development 3.16.1. Production grew 2.1% per year 3.16.2. Production by Concession 3.16.3. Sulawesi is the largest 3.17. Year 2015, Indonesia is the largest Producer in the world 3.17.1. Competing Countries 3.18. New Investment in Cocoa Plantation Sector 3.19. Custom Duty (Bea Keluar - BK) of Cocoa Export 3.19.1. Background

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3.20.

3.21.

3.22. 3.23.

3.19.2. Benefit of Cocoa Bean Export BK 3.19.3. Mandatory Fermented 3.19.4. Notification of Cocoa Bean Export Development 3.20.1. Export tended to decrease 3.20.2. Export decreased 67.8% 3.20.3. Malaysia is the largest 3.20.4. Exporter held cocoa bean 3.20.5. BK Cocoa bean in May 2011 is 10% Import Development 3.21.1. Import tended to decrease 3.21.2. Ghana & Cote D‘Ivoire supplied 55.8% National Cocoa Consumption Price Development 3.23.1. Local cocoa price continues to decrease

4. MACRO CONDITION OF COCOA RAW MATERIAL 4.1. Supply Aspect of Raw Material 4.1.1. Local Cocoa Supply was increased 4.1.2. Cocoa bean would absorb 80% 4.2. National Cocoa Consumption 4.3. Price 4.4. Mandatory SNI would increase Cocoa price 4.5. Cocoa Main Producer Harvest Season 4.6. International Arrangement 4.6.1. ICCA-1972 4.6.2. ICCA-1976 4.6.3. ICCA-1980 4.6.4. ICCA-1986 4.7. Position of Indonesian Cocoa 5. CONDITION OF COCOA PROCESSING INDUSTRY 5.1. Cocoa industrial Tree 5.2. Cocoa Bean processing 5.3. Cocoa Processing 5.3.1. Process technology 5.3.2. Production Process Phase 5.4. Cocoa Processing Industry 5.4.1. PT General Food Industry is the largest 5.4.2. Six Plants operate again 5.5. Production was decreased 19.9% 5.5.1. Sarinah developed Cocoa industry 5.5.2. Pro and Contra 5.6. SNI of Cocoa Powder Product 5.6.1. SNI is tightened 5.6.2. Europe Protested Mandatory SNI of Cocoa Powder

5.7. Development Post BK Cocoa Bean determination 5.8. Development of mandatory SNI of Cocoa Powder implementation 5.9. Aimed by Global Producer 5.9.1. Foreigner ready to invest 5.9.2. Large Industry obtains Tax Holiday 5.10. Export - Import 5.10.1. Export of processed cocoa 5.10.2. USA and European Union are Potential Market 5.10.3. Import of Processed Cocoa 5.10.4. Asean is the largest 5.11. Consumption of Semi finished processed Cocoa 5.11.1. Consumption of Chocolate Industry 5.11.2. Consumption of Biscuit Industry 5.11.3. Consumption of Candy Industry 5.11.4. Consumption of Bread Industry 5.11.5. Consumption of Milk Industry 5.11.6. Consumer of Ice Cream Industry 5.11.7. Total consumption of processed cocoa 6. GOVERNMENT POLICY IN THE INDUSTRY 6.1. Domestic Trade 6.2. Export Trade 6.3. Import Policy 6.4. Valid Industry Standard 6.6. Environmental Impact 6.7. Investment 6.8. Action Plan of Priority Industrial Cluster 6.8.1. Development of Priority Industrial Cluster 6.8.2. Catalyst 6.8.3. Infrastructure needs 6.9. Action Plan of Cocoa Industry 6.9.1. Development of cocoa cluster 6.9.2. Development of Cocoa Industry 7. TECHNICAL ASPECT 7.1. Cocoa Plantation 7.1.1. Location Suitability 7.1.2. Cocoa Plant Type 7.1.3. Cocoa Seeds 7.1.4. Cocoa Cultivation and post harvest 7.1.5. Cocoa Plantation Productivity 7.1.6. Equipment and Machinery of Post Harvest 7.1.7. Cocoa Seed Quality 7.2. Cocoa Processing Industry 7.2.1. Processing Technology

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8. MARKETING ASPECT 8.1. Competition level 8.1.1. Competition in the Export market 8.1.2. Competition of Trader and Exporter 8.1.3. Competition in the Processing Industry 8.2. Saturation Level 8.3. Distribution System 8.4. Production Center and Main Player 8.4.1. Plantation 8.4.2. Trading 8.4.2.1. Foreign Trader 8.4.2.2. Local Trader 8.4.3. Downstream Industry 8.5. Company Profile 8.5.1. PT Perusahaan Perkebunan London Sumatera Indonesia Tbk (PT Lonsum) (Plantation / Cocoa Bean Producer) 8.5.2. PT Davo Mas Abadi, Tbk (Processed Cocoa Producer) 8.6. Prospect of Cocoa Commodity 9. INDUSTRIAL RISKS, CRITICAL POINT, AND ANTICIPATION ACTION 9.1. Risk for Plantation 9.2. Risk for Exporter 9.3. Risk for Processing Industry 9.4. Anticipation Action 9.4.1. Anticipation for Plantation 9.4.2. Anticipation for Exporter 9.4.3. Anticipation for Processing Industry 9.5. Financial Aspect 9.5.1. Standard Cost of Cocoa Plantation Project 9.5.2. Project Feasibility Analysis 9.6. Investment project of Cocoa Processing Plant 9.7. Standard Total Project Cost 9.8. Cost Structure and Revenue 9.8.1. Cost Structure 9.8.2. Revenue Structure 9.9. Feasibility Analysis 9.10. Financial Standard Ratio

10. PROSPECT OF COCOA INDUSTRY 10.1. Short term Prospect 10.1.1. For farmer /plantation 10.1.2. For Processing Industry 10.2. Long term Prospect 10.2.1. Plantation 10.2.2. For Farmer and Trader 10.2.3. For Processing Industry 11. BANKING OPPORTUNITY TO FINANCE COCOA INDUSTRY 11.1. Banking Opportunity 11.2. Appropriate Credit Scheme 11.2.1. Investment Credit 11.2.2. Working Capital 11.3. Needs fund of Rp 16.72 Trillion

12. STRATEGIC ANALYSIS 12.1. Cocoa Seed Plantation 12.1.1. Competition among players 12.1.2. Competition from the new player 12.1.3. Bargaining Power of the trader / Buyer 12.1.4. Strategy for plantation 12.2. Processing Industry 12.2.1. Competition among players 12.2.2. Bargaining Power of the Supplier 12.2.3. Competition from the new player 12.3.4. Strategy for Processing Industry 13. CONCLUSION AND RECOMMENDATION 13.1. Conclusion 13.1.1. Cocoa Commodity 13.1.2. Cocoa Trading 13.2. Processing Industry 13.3. Proposal and Recommendation 13.3.1. Proposal 13.3.2. Recommendation 13.3.3. Policy to Support Cocoa Industry 14. DIRECTORIES 14.1. Cocoa Company 14.1.1. Processed Cocoa Industry 14.2. Cocoa Plantation 14.3. Trader and Exporter

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Study of :

REVITALIZATION PROGRESS OF COCOA INDUSTRY DEVELOPMENT IN INDONESIA, 2011
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