Evaluation Of Indonesias Market Export Of Sabah Tea Marketing Essay

Evaluation Of Indonesias securities industry Export Of Sabah teatime leaf Marketing Essay1.1 An oerview of Malaysia and IndonesiaMalaysia is a shoot downed e deposit that fit(p) in aboriginal of South- tocopherol Asia, bordering Thai demesne in the north with Singapore to the sulphur and Indonesia to the south and west. The capital of Malaysia is Kuala Lumpur. The nation alike entangles Sabah and Sarawak on the island of Borneo to the east. Sarawak has an bothuvial blur and swampy coastal plains with rivers pe elucidaterating the jungle-covered hills and mountains of the interior. This enriches the nation with great agri cultural strength. untold or less of the argona in Malaysia is covered by quality, with a mountain align running the length of the peninsula. Extensive fo perchs provide ebony, sandalwood, teak and different wood. The nation is among of the instaurations plumpingst producers of computer disk drives, c argon oil, rubber and timber. Nevertheless, it has a state controlled elevator car jell outr, Proton and tourism has consider equal to(p) room for expansion. Major agricultural products ar rubber, palm oil, cocoa, rice, coconuts, timber, and pepper. Major trading partners of Malaysia atomic number 18 Singapore, China, japan, Thailand Hong Kong and Indonesia. (CIA The World Factbook, 6 April 2011) The official quarrel of Malaysia is Malay language (Bahasa Melayu) and cosmos of 28 trillion over, 43th come out of inhabited in the earth. There are three main ethnics groups in Malaysia, the Malays 60%, the Chinese 26% and Indians and the indigenous become up the rest. (BBC NEWS, 9 serve 2011) The climate in Malaysia is tropical with high temperatures and humidity by means ofout the year. The temperature ranges in the midst of (89-72 degrees F). There are two seasons as well as Indonesia, the wet monsoon and dry season. (World Travel Guide, n.d)Indonesia is a nation of islands consisting of 17,508 islands in the Sout h East Asian Archipelago. The capital of Indonesia is Jakarta. Indonesia is know as the worlds largest archipelagic nation. With a population of 200 cardinal over and it is the worlds nearly populous kingdom. This st computegic lieu has a signifi keistert influence towards its Culture, Social, Politics and Economy. Major agricultural products include palm oil, rice, tea, coffee, spices and rubber. Some big industries in Indonesia are petroleum and indwelling gas, textiles, apparel and mining. Indonesias major trading partners are Japan, the United States, Singapore, Malaysia and Australia. (PT Jakarta Setiabudi Internasional TBK, n.d) Indonesias population can be roughly divided into two groups, the west of the rude is broadly speaking occupied by Malay people, while the east is much Pacific. The official language of Indonesia is Indonesian (Bahasa Indonesia) and about 88% of the population is Muslim. An extimated of 10% of Christian and approximately 2% is Hindu and Buddhi st. The climate in Indonesia is mostly equatorial. The temperature ranges mingled with 16-35 degrees Celsius (61-91 degrees F) with humidity ranging from 60- 90 percent. There are two seasons which are the rainy monsoon season (November finished May), followed by the dry season (June through October). (World Travel Guide, n.d)1.1 History of Sabah TeaSabah tea woodlet is the first that cuddle into the tropical wilderness of Malaysias first ever World Heritage Site, setting Kinabalu, and a 6,200 acre (2,509 hectares) land at 2,272 feet above the sea take aim. It is surrounded by the worlds oldest rainforest of about 130 million years. Sabah Tea plantation is the largest superstar commercial tea plantation in Borneo with approximated landing field of 1,000 acres enable with camellia Sinensis, (an interesting plant and agriculture resources).3In 1976, the state government of Sabah had decided to alienate a total of 6,200 acres of land in Kampung Nalapak to Koperasi Desa (KPD). Then, Sabah Tea Sdn Bhd was then incorpo rated on April 26, 1978 as a subsididary of KPD to operate and manage the tea plantation. The Honorable Prime Minister, Datuk Seri Dr. Mahathir Mohammad offici entirelyy capable the Sabah Tea Plantation on February 19, 1984. (Sabah Tea, n.d)Sabah Tea Sdn Bhd is now a section of Yee Lee companionship bhd. Sabah Tea Sdn Bhd sold its good shares to Yee Lee stool Bhd in the year 1997. Yee Lee Corporation is a well alter society with active subsidiaries covering manufacturing, distributing and selling a wide represent of Fast Moving Consumer Goods (FMCG) in both locally and transnationally.1.2 Corporate developmentSabah Tea Plantation is an organic tea plantation in Ranau, Sabah and it is known for its 100% organic tea. On the production of its tea, Sabah Tea Garden is the resole producer of organic tea in Borneo. The company has exports 15% of its products throughout Australia, New Zealand, Canada, Britain and Singapore and 85% are th e keeping for domestic consumption. Sabah Tea sdn bhds export has contributed about 10% to the companys income. Sabah tea has also expanded to bring to pass a popular holiday destination for both the locals and the foreign tourists or so the world, while remaining to produce tea. Sabah tea Garden is the destination which is rigid in one of the oldest rainforests in the world, Mount Kinabalu. The Sabah Tea Garden has an area of 6,200 acre (2,509 hectares) and a total area of 485.6 hectares (1,200 acres) are been use for cultivation of tea and tourism activities while the rest remains a tropical forest rich with flora and fauna.4During the year under review, a decrease of 2.4% of tourism in Sabah Tea Garden as compared to the previous year( 2008). The go of local visitors arrived to Sabah has an increased of 5.3% but a tremendous declined in worldwide Visitors, 19.8%. However, this did non stop Sabah Tea Sdn Bhd from achieving 12.3% (RM0.73 million) of sales ontogeny in 2008 to RM0.82 million in 2009. Sabah Tea is upgrading its facilities as well as creating more tourists to come, betterr with aggressive food marketing strategies, Sabah Tea is confident to increase in tourists.Nevertheless, the match of the global pecuniary crisis in 2008 f legal philosophyed into 2009. As a give of the weak market demand, the revenue of Sabah Tea has dropped to 8.3%, from RM76.07 million, 2008 to Rm69.79 million, 2009. Various solutions were been taken to improve on the delivery efficiency, store coverage and working capital steering to boast sales and profitability. This in the end has maintained its profitability. (Yee Lee Corporation 2009 annual report)2.0 environmental Analysis2.1 Political and Legal factorsIndonesia was a solid ground that was existence governed by Dutch, so the Indonesians legal brass is closely think to the Dutchs systems. Indonesias new bankruptcy, capital market and company laws are now establish on international trump out practice where initiatives aim to provide great certainty to creditors and investors across the Indonesian corporate sector are apply by the government. It is crucial for foreign investor to understand the importance of legal system of Indonesia as it plays an of the essence(predicate) role that may influences the avocation. Political transplant and put right did bring impact to Indonesia economy status. Indonesias president has stress on conceptive political will to reduce corruption, which is the key to solve Indonesias economic problems.5This will lead to newly strengthened independent auditors and greater central bank independence that could enhance the effectiveness of policy implementation and governance efficiency. (Perkins, 2000). Regarding the laws of share ownership, Indonesia Government Regulation No.20/1994, Article 6, the Indonesian partners shares shall be at least five percent (5%) of the total paid- up capital of the company upon its establishment, with that the comp any is not required to divest its shares to Indonesian parties within 15 years and this is also an usefulness upon forming of Joint Ventures. This is a great advantage that Sabah Tea can consider in association chance with other company, like for example BOH Tea and Kurnia Tea (Indonesias Tea Manufacturer) example, they had word venture together. In this case, Kurnia Teas shares will stand approximately 50% of the total brook up capital upon mutual agreement between both parties when establishing BKI (BOH and Kurnia Tea) for tea business. fit to the legal system of Indonesia, company (in this case Sabah Tea) must(prenominal) submit a proof that they consider paid the issued capital, if Sabah Tea would consider about joint venture with other tea company in Indonesia. Also, the funds being transferred have to be reported to the Indonesias Government. They have the right to draw taxes of 20% or royalties from the business since foreign direct investment companies must pay corpor ate income tax based upon Indonesian source revenues. (Introduction to the Indonesian assess System)There are employment rules to oblige to as well jibe to the Employment act of Indonesia. Indonesia has one of the largest labour forces in the world which make it stand on 5thrank. So, to protect the labour rights the government has make a law called Labour lawsArticle 28D (2). According to this law 7-hour workdays and 40-hour workweeks, with one 30-minute rest period6for each 4 hours of work is legal in Indonesia. One day of rest weekly also mandatory in Indonesia. In April 1992, the Government of Indonesia signed a Memorandum of Understanding with the International Labour Organization under the International Program forthe Elimination of kidskin Labour (IPEC) where the minimum working age is 14 years. (Labour Social certificate in Indonesia, 2009). Principally, labor matters in Indonesia are regulated by roughly laws and regulations as belowLaw morsel 13 of 2003 concerning Man world-beaterThis law concerns on Manpower and includes matters of employees minimum wage, working hours, training programs, benefits and allowances.Law outcome 21 of 2000 concerning Labor UnionsLabor Union is formed if on that point are ten or more employees in a company get together the union. Besides, BKI has to tell that their employee is connectedness the right Labor Union and cooperate with the single Union to prevent the occurrence of disputes between the company with union. (Budiardjo et al., 2005)Law Number 1 of 1970 concerning Work SafetyWork Safety concerns on study safe and soundty and the benefits or compensation due when an employee is injured while on duty. It is important for SKI to ensure the workplace safety of the company curiously the company plantation and manufacturing workplace. Inspection on workplace safety has to be carried out for every certain period to ensure the workplace is safe and every employee is following the workplace rules and regulatio ns. (Budiardjo et al., 2005)7Law Number 3 of 1992 concerning Worker Social SecurityIn Indonesia, an employer with 10 employees or more or having a payroll of at least one million rupiah a month is obligated to ensure his or her employees are joining the Social Security for Manpower (Jaminan Sosial Tenaga Kerja), Jamsostek program that consists of employees occupational accident security, finale coverage, old age security, and health maintenance security.5. Law Number 11 of 1992 concerning Pension Funds.A company in Indonesia can provide a pension scheme for its employees by way of pension fund set up and controlled by the Employer, which also known as Employers Pension Fund.Besides, there is law concerning human rights which is Legislation Number 39 Of 1999 Concerning Human Rights character Seven, Right to Welfare. Both men and women who works has the right for pay vestibular sense to work, fair and adequate remuneration. In this case, Indonesia will exercise no variety among ma le or female who will performing equal work load and paid according to their job scope and provide adequate rewards and compensations for the entire employees to ensure it is sufficient for both own and family expenses. (Muladi, 1999)2.2 Economical factorIndonesia is considered as a developing country. Developing country is a term mainly used to describe a nation with a lower level of income. With the Government Policies and Treasure of National Resources, Indonesia gross domestic product has been growing and increase apace from last some years. Indonesia spends gross domestic product of 23.5% to develop their nation. According to the last budget8announcement, Indonesia had revenues of $92.62 cardinal and expenditures of $98,88 jillion in year 2008. It has been 23rd rank in Oil production and 8th position in graphic gas production and export as well. (The World Bank, 2008)GDPIndonesia has do significant economic advances through last years. Indonesias debt-to-GDP ratio in re cent years has declined because of increasingly robust GDP growth which was6.1% ($915.9 billion) in 2008 compare to 5.5% ($811.1 billion) in 2006 and compression to the world. They are on the 54thposition in GDP growth. Indonesias main GDP earning comes from Industry, 48.1%, service sector, 37.5% and lastly, 14.4% of GDP earning from agriculture. (The World Bank, 2009). ostentatiousness ratesOne of the major reasons of Indonesias economic downturn is the inflation rate. splashiness rate is still major but it has come down later on a high of 20.7% in 1999. It was 9.9% in 2008 compare to 6.3% in 2006. (CIA, the world factbook, n.d) present momentIndonesias import and export trade are rapidly increasing every year. In 2008, the total import was $ 1 25 billion compare to 85.26 billion in 2007. The major import for Indonesia are chemicals, fuels, machinery and equipment. Import partners are Singapore 16.9%, China 11.8%, Japan 11.7%, Malaysia 6.9%, US 6.1%,South Korea 5.4%, Thailand 4.9 % (2008). (CIA, the world factbook, n.d)9ExportIn the same way due to economic growth improvement in productivity, governmentpolicies, export is also increasing rapidly. It was $93.3 billion in 2008 compare to $83 billion in2007. The major export are oil and gas, electrical appliances, plywood, and textiles. The major export partner of countries are Japan 20.2%, US 9.5%, Singapore 9.4%, China8.5%, South Korea 6.7%, India 5.2%, Malaysia 4.7%. (CIA, the world factbook, n.d)2.3 Social FactorsIndonesia is one of the large population nations in the world. It has a total of 240,271,522 populations and it is the 5th largest population all around the world. As we all know, Indonesia is a multi culture and multi ethnic country with different religious view. The majority of the religion in Indonesia is Muslim, as much as 86.1%. Protestants, 5.7%, Roman Catholic 3% and lastly, Hindu 1.8%. According to the (CIA, the world factbook, n.d), the age structure of Indonesia is as followAge structure0 -14 years 28.1% (male 34,337,341/female 33,162,207)15-64 years 66% (male 79,549,569/female 78,918,321)65 years and over 6% (male 6,335,208/female 7,968,876)EducationIf a country has good literacy rate then it has bright future. Same issue apply onIndonesia. 90.4% of its populations are literate in which male are 94% and female are 86.8%.3.6% of their GDP is spent on education.Besides, Indonesia is also a collectivist society. It places high importance on group than the10individual. The Indonesian counterparts will ceaselessly place family and union concerns over that of the business or individuals. Other than that, a businesss welfare is important in Indonesians culture, so a business must demonstrate its contributions to the community to ensure the protection gained from the community to protect the business (Foss, 2009). A business that fulfills the pact towards the donjon and community gets to enjoy few advantages. The advantages will be faster bureaucratic cultivatees su ch as obtaining a permit, resolving disputes through the musyawarah (an important process to solve conflict that involves all concerned parties with policeman intervention and the results are based on community consensus) and acts as surveillance of crime and information sharing (Perkins, 2000). Whats more, Sabah Tea can be used as beverages to create a family spirit in a working environment or even create a relaxing environment when families chill at home on a family day to spend some time together. Sabah tea can also always group employees in a company as a team as they bond through the tea sessions during work and this best fit a company when bonded employees comes together to operates the company together as one.2.4 Environmental FactorsIndonesia is an archipelagic island country in southeast Asia, lying between the Indian naval and the Pacific Ocean. It is in a strategic repair astride or along major sea lanes from Indian Ocean to Pacific Ocean. The countrys variations in cu lture have been shaped, although not specifically opinionated by centuries of complex interactions with the physical environment. Although Indonesians are now less dangerous to the effects of nature as a result of improved technology and hearty programs, to some extent their social diversity has emerged from11traditionally different patterns of adjustment to their physical circumstances the geographical resources of the Indonesian archipelago have been exploited in ways that fall into consistent social and historical patterns. Nevertheless, the weather in Indonesia is hot and humid. The landscape ranges from rainforests and steaming mangrove swamps to dry plains and snowcapped mountains. Also, Indonesias climate is almost entirely tropical. The uniformly ardent waters that make up 81% of Indonesias area ensure that temperatures on land remain fairly constant, with the coastal plains averaging 28C, the inland and mountain areas averaging 26 C, and the high mountain regions, 23 C. Temperature varies little from season to season, and Indonesia experiences relatively little change in the length of daylight hours from one season to the next the inconsistency between the longest day and the shortest day of the year is only cardinal minutes. This allows crops to be grown all year round. (CIA, the world factbook, n.d),One of the most important factors is the graphic or environmental disaster. Because of its geographic location, Indonesia has faced galore(postnominal) natural disasters such as temblors and tsunami, for example in December 26, 2004, Indonesia has an earthquake of 9.0 magnitudes which as a result caused a tsunami in the Indian Ocean. These natural disasters had caused 155,000 people died. Nevertheless, deforestation, soil erosion and massive forest fervours were quite a hit in Indonesia. In1983, a 3 million Ha (hectares) cost of US$ 10 Billion were destroyed in a fire and was caused due to piles of dead wood left behind by the timber indu stry. In the mid 1980s, Indonesia was rated as the highest deforestation in Southeast Asia.123.0 Product Description3.1 Sabah Teas Product DescriptionSabah Tea is produces in Mount Kinabalu, Ranau in Sabah. The location of cool hills of Ranau has bring advantages to Sabah tea. According to Sabah Teas tea plantation, Sabahs tea are been carefully harvest and are 100% at large(p) of pesticide which leave the tea untouched and sodding(a). Sabah Teas POP (Point of Purchase) is that the tea is protect to ensure its quality of origin and unlike other tea companies, the leaves are pure and that is free from any substances of chemicals. Due to its location, the tea has preserved it natural bladder fucus without any added colorings. Nevertheless, Sabah Tea has also has an interesting plant added in to their teas, which is Camellia Sinensis, whereby not many organic tea plantations are able to have.Sabah Teas plantation has also been certified for organic production by SKAL Internation B.V of the Netherlands, an internationally recognise organization that performs inspections and grants certification for organic production. (Trademall, Malaysias Leading Trade Portal, n.d).Tea lovers are able to enjoy pure and Borneo rainforest organic tea and health researchers have even analyze that the Sabah Tea has the effect of lowering the essay of heart attack, lowering bad cholesterol (LDL) and promote circulation of blood as well.134.0 Conclusion4.1 Evaluation and Analysis of IndonesiaAccording to the above environmental analysis, Indonesia is a great market to invest in Tea, Sabah Tea. One of the reasons is that Indonesias GDP growth has steadily risen, achieving real growth of 6.3% in 2007 and 6.1% growth in 2008. Although growth slowed to 4.5% in 2009 given reduced global demand, Indonesia was the third-fastest growing G-20 member, trailing only China and India. Growth has rebounded in 2010, with the forecast for growth of 6.0%. Nevertheless, Indonesias GDP earnings for agriculture has the 3rd highest earnings for Indonesia as stated by (The World Bank, 2009) as high as 14.4% of GDP, as follow by Industry, 48.1% and service sector, 37.5%.Poverty and unemployment have also declined despite the global financial crisis, with the poverty rate falling to 13.3% (March 2010) from 14.2% a year earlier and the unemployment rate falling to 7.4% (February 2010) from 7.87% (August 2009). This has a great effect on Sabah Tea, that the buying power of Indonesias customers or potentiality customers increased. Poverty rate decreased and GDP of Indonesias earning also comes from agriculture, Indonesia is no doubt a place to invest Sabah Tea. Although the competition in Indonesia is no question is high, Sabah Tea can take into consideration on joining venture with one of the Indonesias tea manufacturer, as what BOH tea has did, joining venture with Kurnia Tea (Indonesias tea company) to form BKI, BOH and Kurnia tea Industry.Indonesias overall macroeconomic picture has also stable. By 2004, real GDP per capita returned to pre-financial crisis levels and income levels are rising. In 2009, domestic14consumption continued to account for the largest portion of GDP, at 58.6%, followed by investment at 31.0%, government consumption at 9.6%, and net exports at 2.8%%. Investment realization had climbed in each of the past several(prenominal) years, until the global slowdown in 2009. It is again rebounding in 2010. (TDS, n.d).In the social factors, Indonesias culture and Malaysias culture have no much difference in terms of religions, demographic and geographical factors. To succeed in Indonesia, the first thing to achieve is to establish a face to face relationship, preferably with a person of similar age and status quote from (Perkins, 2000). This has not a problem as the religion in Malaysia is similar as well, Malaysia is able to send a mediator or translator. This is because Indonesians communicates in English or Bahasa Indonesian and Malaysia is able to present a well communicable Malay as a mediator, so that a message is transmitted understandably to every business partners or employees of the company. Also, a business that fulfills the obligation towards the living and community gets to enjoy few advantages. The advantages will be quicker bureaucratic processes such as obtaining a permit, resolving disputes through the musyawarah (an important process to solve conflict that involves all concerned parties.Environment of Indonesia has a lissom difference compare to Malaysia, but overall, Indonesias climate and environment is a suited place for growing teas and people tend to enjoy a warm cup of tea. The weather in Indonesia is hot and humid. The landscape ranges from rainforests and steaming mangrove swamps to arid plains and snowcapped mountains. Also, Indonesias climate is almost entirely tropical. The uniformly warm waters that make up 81% of Indonesias area ensure that temperatures on land remain fairly constant. Thi s allows crops to be grown all year15round. (CIA, the world factbook, n.d). Sabah Tea can even consider on turn up a tea plantation to avoid International trades limitation and policies impose by Indonesias Government.16Executive SummaryThis report determines to evaluate the Indonesias market for export of Sabah Tea, Sabah Tea Sdn Bhd. It intends to determine the effective of market as a potential market for investing and exporting Sabah Tea over to Indonesia through the Environmental Analysis, which includes, Political and Legal, Economic, Social, and Environmental. The environmental analysis of Indonesia, shows that Political and Legal, Economic, Social and Environmental have great opportunities for Sabah Tea to invest and export to Indonesia One, the economics of Indonesia has showed that husbandry of Indonesia as the 3rd highest GDP earning. Secondly, Cultural factors have also showed that Indonesia and Malaysias cultural background is quite similar and they shared similariti es. A business that fulfills the obligation towards the living and community gets to enjoy few advantages. The advantages will be quicker bureaucratic processes such as obtaining a permit, resolving disputes through the musyawarah (an important process to solve conflict that involves all concerned parties. Lastly, environment of Indonesia has not many differences as it is a suitable place for crops to grow. It is recommended that Indonesia is a potential market to invest and export over to.