F&B Companies Hold Off on Investment Amid Weak Growth, Rupiah Pressure
Jakarta. Indonesian food and beverage producers have cut their investment target for the year by 11 percent, saying the combination of weak demand and a slumping rupiah has hurt margins.
Companies grouped under the Indonesian Food and Beverage Association (Gapmmi) had planned to invest a combined Rp 60 trillion ($4.2 billion) this year, but have now dialed back that figure to match last year’s realized investment of Rp 53 trillion, said Adhi S. Lukman, the association chairman.
“The market now is stagnant,” Adhi said over the weekend, noting that producers had reduced their output and cut employees’ working hours to stave off layoffs.
Low global commodity prices have taken a toll on Indonesia’s resource-dependent economy, dragging GDP growth down to the slowest pace in six years and undermining consumer purchasing power. The rupiah, meanwhile, has lost 15 percent of its value against the US dollar this year, raising costs for food and beverage producers who depend on imported ingredients, Adhi said.
Gapmmi members plan to maintain their prices and brace for lower margins to maintain sales, he added. The producers are targeting Rp 1,050 trillion in combined sales this year, up from Rp 1,000 trillion last year.
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