작성일자: 2014.8.5

작성자: 자카르타 무역관 Kim Eun Hee(ehkim@kotra.or.kr), Ruth Duhita(ruth@kotra.or.id)

 

 

1. Market Overview

 

□ Elevator in Indonesia

 

 ○ The first elevator brand entered Indonesian market is the first built elevator in the world, OTIS. It entered the Indonesian market in about 60’s for the development of the high rise government building was started in Jakarta, the capital city.

 

 ○ In early 70s, the Japanese brands started to penetrate Indonesian Market. Mitsubishi, Hitachi and Toshiba start to be installed in some government buildings in Jakarta.

 

 ○ As the country’s rapid growth of economics, the need of elevator and escalator came from the commercial sectors. The Korean brands then started to penetrate the market in 80’s and ruined the domination of the Japanese.

 

 ○ The Korean brands was led by Goldstar(then change into LG, LG-Otis and eventually Sigma in the future) and Hyundai. Their price is lower than the Japanese. It made them be the ruler in the commercial buildings(malls, supermarket, and department stores). Their escalators price, much lower than the Japanese, made it almost impossible for the Japanese to secure the project when they met these Korean brands in the tender.

 

 ○ The European Brands also tried to get the share in Indonesian market. Among them are Schindler, Thyssen and Koppel. They entered the market around 90’s. Schindler was the strongest European brand in the market since they supplied almost the entire moving walk for Carrefour hypermarket of which the leader in the retail industry.

 

 ○ The private high rise building projects in around 90’s was then become the competition among Mitsubishi, Hitachi, Fujitec, Schindler and OTIS. They can enjoy each project they secured with the good profit margin.

 

 ○ In 1997 the monetary crisis hit the country. This crisis hit the infrastructure and property projects very badly. There even some elevator contractor had to lose their money because of abandoned project. This crisis had ended the “golden age” for the Japanese, Korean and European brand. They couldn’t enjoy the good margin profit anymore due to the rapid decrease of the buying power of the Indonesian customers.

 

 ○ When the crisis ceased, the infrastructure and property projects started again and the demand for elevator and escalator started to rise. Nevertheless, the buying power of the customers seemed not to be as high as before. This condition forced the existed brands to change their factory source from the original country to their China factory in order to be able to re-penetrate the market.

 

 ○ Sigma Elevator(previously Goldstar and LG) which was previously supplied from Korea had to supply from China, ThyssenKrupp(Previously Thyssen A.G.) change its source to China, Hyundai also changed from Korea to China factory, Schindler switched to China factory, whereas Mitsubishi switched to Thailand factory, Toshiba switched to Malaysia and Fujitec switched to Singapore factory. Awkwardly for Mitsubishi, there was another local contractor that supplied Mitsubishi from Shanghai. So, there were two contractors supplying Mitsubishi in Indonesian market. One contractor(the bigger and older one) supplied from Japan and Thailand and the other supplied from Shanghai.

 

 ○ In the period after the crisis, the market was flooded by the China made products. The contractors competed merely in term of price in order to secure the projects. The quality and even the safety sometimes had to be sacrificed. This unhealthy competition led into the malfunctions and even incidents later.

 

 ○ Besides the built up China made products, there were also some China OEM company penetrated the Indonesian by selling elevator parts to the local company. This condition resulted the born of some local assembled elevators. Among them are Louser, Pillar, Line(previously indolift) and Koppelindo.

 

 ○ In the government projects, the most stable and strongest organization is Mitsubishi. The effect of the crisis seemed not to hit their share too much. The join cooperation between Mitsubishi Corp. and local half government owned contractor made this happened.

 

 ○ The year 2000-2006 was the booming of commercial and property projects such as integrated malls, apartment and office projects. Hyundai, Schindler and Sigma dominated this sector and enjoyed the huge volume of order. The booming of commercial projects lasted until around 2008 when the US financial crisis affected the Indonesian economics. The commercial projects at the same time were oversupplied.

 

 ○ After 2008, the demand of elevator and escalator declined significantly. There wasn’t big commercial project in early 2000’s. The big project was the only high risen office building which was secured by Mitsubishi and Schindler. In mid 2007 the government led by Susilo bambang Yudhoyono as the president announced the plan to build 1,000 towers of low cost apartment. The only elevator brand that can penetrate this market is the local ones. Louser and Line elevator shared the projects in this sector. However, this program seemed not so much successful as planned. There were only 98 towers built until 2010 from 1,000 towers targeted to be built in 2011.

 

 ○ The elevator market that was not affected too much by the government policy and the world economics for the private residence projects and cargo lift projects. For the cargo lifts projects eventhough they are of small quantity but often high in price and can yield good margin profit for the contractor. This, because of the customer of this sector(mainly factories), often requests special customized cargo lift to suit they need. Mitsubishi can enjoy this project especially from the Japanese based customers but for the other customers, local made cargo lifts often be their choice.

 

 ○ For the private residence project, Mitsubishi, Schindler and Kone can gain the projects for the standard finishing ones, but for customized car finish such as full glass finished the local made suppliers often be the customers’ choice due to their reasonable price and design flexibility. One of the players in this sector is Koppelindo.

 

 ○ The market shares in the various sectors are as follow:

 

 

□ Elevator Market Size in Indonesia

 

 ○ Indonesia is one of the fastest growing economies countries in Asia and has significant market share in building construction in the region. The elevator industry is growing rapidly due to increasing urbanization and the subsequent increase in construction activity in the region. Increasing population numbers and shift from rural to urban areas have led to an increase in construction activities in the metropolitan areas of the country, such as Jakarta and Surabaya. This has created a vast market for elevators and is expected to drive market growth over the next five years.

 

 ○ Analysis from Frost & Sullivan(http://www.buildingtechnologies.frost.com), entitled Elevators Market in Indonesia, finds that the market earned revenues of US$ 164.0 million in 2011 and estimates this to reach US$ 282.4 million in market revenues by 2016.

 

 ○ 90’s percent of market share hold by 5 competitors. The big five companies are Hyundai, Sigma, Otis, Mitsubishi and Schindler. Number of companies in this business about 30 companies which sale the branded and unbranded products.

 

 ○ According to Frost & Sullivan Research Analyst, Vidhi Yaduvanshi, as end users become increasingly comfortable with technology, they will look to adopt more modern mobility systems, hence, most of the upcoming buildings are equipped with elevators and escalators to ensure free and unrestricted mobility. The renewed focus on efficient use of space within a building means that an effective use of elevators is encouraged which will also drive the market.

 

 ○ Although the market has significant potentiality, Indonesia is an extremely price sensitive market and market suppliers can tap it optimally only by strategy resulted from deep consideration of end users' price sensitivity and cyclical demand from the construction market.

 

 ○ The price sensitivity is caused by the low level of awareness about value-driven products in Indonesia. While most of the end user segments, primarily the developers, are focused on the functional aspect of the products.

 

 ○ The price sensitivity in Indonesia has also restricted the entry of certain suppliers that offer premium products and value-added services. Frost & Sullivan predicts that the restraints will affect the market for the next five years.

 

 ○ Over the past few years, the pressure on prices has increased due to the entry of new suppliers in the market, the subsequent price war and also the market stagnation during the global financial crisis and its after effects. However, Indonesia’s elevator market suppliers managed to absorb the higher costs of raw materials due to the intense competition in the market.

 

 ○ Vaduvanshi noted that in order to increase their market share, most branded suppliers – which dominate the market compete on price and offer additional services.

 

 ○ However, suppliers will feel optimistic that the Indonesia Building Code will strengthen the regulations pertaining to building accessibility and maintenance, which will lead to higher quality of equipment in old buildings as well as the newly constructed buildings.

 

 ○ Suppliers are more likely to gain steady revenues from the maintenance market than the new equipment market. This is because, unlike the new equipment market which is dependent on the construction market, the maintenance market is dependent on the existing base of elevators, which increases year on year.

 

 ○ Eugene van de Weerd, Country Director for Frost & Sullivan Indonesia noted that the island of Java witnesses the highest economic development in the country, and this spurs infrastructure and building construction projects in this region. Thus, investment on construction, especially that of residential buildings, remains the prime focus of Indonesia. The market growth can be attributed to the consistent growth in the residential, commercial, hotels, and retail verticals.

 

□ Major Players

 

 ○ Major players of elevator in Indonesia:

 

 

 

2.. Import Trend

 

 ○ According to Indonesian Statistic Agency(BPS), the import of elevator(HS Code 8431.31) into Indonesia increased only 0.30% in 2013. Total import in 2013 reached US$ 26,030,499 with the major origin country was China.

 

Product Description of HS Code 8431.31

 

Import Value of HS Code 8431.31, 2011 - 2013

      Source: BPS

 

Origin Countries of Import of HS Code 8431.31

     Source: BPS

 

 

3. Import Tariffs and Taxes