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RAPID GROWTH OF PAINT MARKET FOLLOWED BY INCREASINGLY TOUGH MARKET COMPETITION.



The dometic market for paints has continued to grow with the rapid development of the construction sectors, especially property such as real estates, apartment buildings, hotels, office buildings, and shopping centres. Increases in paint demand have also happened in the automotive sector, which requires paint to produce new cars, and in the other industrial sectors. The domestic market for paint once became slack 1. (operating system) slack - Internal fragmentation. Space allocated to a disk file but not actually used to store useful information.
2. (jargon) slack
 early in the 1990's following the issuance of the tight monetary market policy. Subsequently, however, domestic paint consumption resumed growth. For the past six years (1991-1996), it grew at an average annual rate of 16.9%, namely from 157,011 tons in 1991 to 337,332 tons in 1996. The growth reached its peak level of 30.3% in 1995.

Some of the domestic demand for paint is met with imports. The types of paint which Indonesia imports are mostly those which are not produced here. In 1996, the total volume of such imports reached 11,332 tons worth US$ 42.55 million. Six years earlier, namely in 1991, the total volume of such imports was only 4,787 tons worth US$ 14.09 million. Of the different types of paint, the most imported is solvent-based paint, which accounts for 86% of the total volume of Indonesia's paint imports. Solvent-based paint is mostly used to paint metals.

The higher the population of paint consumers (property, automotive, and industrial companies), the more the domestic demand for paint. Refinishing Refinishing in woodworking and decorative arts means fixing or redoing the finishing paint, varnish or other top coating of an object, from resanding to new paint and new varnish. The artisan or restorer is traditionally aiming for an improved or restored and renewed finish.  is generally conducted on buildings and motor vehicles when the original paint is already blurred blur  
v. blurred, blur·ring, blurs

v.tr.
1. To make indistinct and hazy in outline or appearance; obscure.

2. To smear or stain; smudge.

3.
 or dirty or when the owners want them to have certain visual effects. Improvements in people's income will help increase the frequency of refinishing. Up to now, people have generally conducted refinishing on their houses only towards the Lebaran (Idul Fitri) holiday season.

In Data Consult's calculations, the growth in the domestic demand for paint will remain high in the years to come. Five years from now, such demand is expected to reach 568,200 tons. However, the rapid growth of the paint market will also be accompanied by increasingly high competition among producers, especially as a result of the rapid growth in the number of suppliers and in imports. Currently, there are an estimated 125 paint producers operating in Indonesia with a combined production capacity of 510,000 tons/annum.

Generally, Indonesian paint producers already master the paint production process technology quite well. However, as for the formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating.

American Law Institute Formulation
 technology for the production of high-quality paint for use on motor vehicles and vessels and for heavy-duty coating purposes, most of the local paint producers still rely on overseas technology providers. Some of these producers producer paint products under license from famous foreign brand names to strengthen their market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market
penetration - the act of entering into or through something; "the penetration of upper management by women"
. The foreign brand names which are popular on the domestic market are, among others, ICI/Dulux, Nippon Paint, Pacific, Kansai, Mowilex, and Danapaint.

This report focusses its discussions on paint products which function not only to provide protection (coating) but also to provide color.

Assembling industry

Besides functioning as a decorative material, paint also serves as a film former/coating, whose function is to protect the surface of an object against weather changes, humidity humidity, moisture content of the atmosphere, a primary element of climate. Humidity measurements include absolute humidity, the mass of water vapor per unit volume of natural air; relative humidity (usually meant when the term humidity , corrosion, and scratches. The processes involved in the production of paint are grinding grinding, process by which surface material is removed from an object, usually metal, by the abrasive action of a rotating wheel or a moving belt that contains abrasive grains.  and mixing. The basic materials for paint are resins resins,
n.pl complex, insoluble, sticky substances secreted by plants. Used as astringents, antimicrobials, and antiinflammatories, and are burned as incense. Can cause oral ulcers and epidermal irritations.
, solvents, extenders, additives, and pigments. The last mentioned is used to provide color, and it is made from titanium titanium (tītā`nēəm, tĭ–) [from Titan], metallic chemical element; symbol Ti; at. no. 22; at. wt. 47.88; m.p. 1,675°C;; b.p. 3,260°C;; sp. gr. 4.54 at 20°C;; valence +2, +3, or +4.  oxide oxide, chemical compound containing oxygen and one other chemical element. Oxides are widely and abundantly distributed in nature. Water is the oxide of hydrogen. Silicon dioxide is the major component of sand and quartz.  and ferro oxide. Only a few of the paint producers operating in Indonesia are integrated companies that also produce the basic materials. One of them is PT Warna Agung, which produces emulsion emulsion: see colloid.
emulsion

Mixture of two or more liquids in which one is dispersed in the other as microscopic or ultramicroscopic droplets (see colloid). Emulsions are stabilized by agents (emulsifiers) that (e.g.
 resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing  50%, alkyd resin Noun 1. alkyd resin - a durable synthetic resin widely used in adhesives and paints
alkyd

synthetic resin - a resin having a polymeric structure; especially a resin in the raw state; used chiefly in plastics
 70%, meleic resin 50%, and acrylic acrylic, artificial fiber made from a special group of vinyl compounds, primarily acrylonitrile. Acrylic fibers are thermoplastic (i.e., soften when heated, reharden upon cooling), have low moisture regain, are low in density, and can be made into bulky fabrics.  resin in addition to paint.

The paint industry in Indonesia can be categorized cat·e·go·rize  
tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es
To put into a category or categories; classify.



cat
 as an assembling industry (a formulation industry). One of its main activities is mixing (or blending). The basic materials which this industry uses are ready-for-use basic materials which are readily available on the market. Another main activity of the paint industry is packaging. The middle- and large-scale paint producers generally have their own can production units.

A paint producer usually uses different compositions of basic colors to produce different specific colors. A number of paint producers also customize the colors of their products. Since the production processes and machinery involved in the making of paint are relatively simple, small-scale companies and home industries can also produce paint.

Although Indonesian paint producers have mastered the process technology quite well, most of them still rely on overseas paint producers for the formulation technology, especially as regards high-quality paint for use on motor vehicles and vessels and for heavy-duty coating purposes. Some of them use licenses from famous foreign brand names to strengthen their market penetration.

PT Warna Indah Samatex, for example, uses a license from The Sherwin-Williams Company of the U.S.A. to produce industrial maintenance coating products. PT Pabrik Cat dan Tinta Pacific (Pacific Paint) uses the formulation technology from Carboline Company of the U.S.A. to produce heavy duty coating products and that from Glasurit GmBH of Germany to produce paint products for motor vehicles.

A number of world-famous paint producers operate their plants in Indonesia. They include ICI (language) ICI - An extensible, interpretated language by Tim Long with syntax similar to C. ICI adds high-level garbage-collected associative data structures, exception handling, sets, regular expressions, and dynamic arrays.  Paint (which operates in Indonesia through PT ICI Paint Indonesia), Kansai Paint of Japan (through PT Dayin Prima Indonesia), British Courtauld Coating (through PT Courtauld Coating Indonesia), Wattyl Dimet of Australia (through PT Wattyl Dimet Indonesia), Chugoku Marine Paint (through PT Chugoku Paint Indonesia), and Jotun of Norway (through PT Jotun Indonesia Paint & Chemicals). The marketing of Jotun's paint products is handled by PT Polar Sakti Jaya.

National production capacity 510,000 tons/annum

Since paint production requires relatively small investment, there are quite a number of paint formulation companies operating in Indonesia. Geographically, they are widely distributed Adj. 1. widely distributed - growing or occurring in many parts of the world; "a cosmopolitan herb"; "cosmopolitan in distribution"
cosmopolitan

bionomics, environmental science, ecology - the branch of biology concerned with the relations between organisms
. On one hand, this condition has made it difficult for the Department of Industry and Trade to monitor their operations and production rates, more so because some of them operate not on a regular basis but upon order from customers. As per the end of 1995, according to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

3.
 data from the Department of Industry and Trade, there were 115 producers of decorative, architectural, automotive, heavy equipment, and industrial paint operating in Indonesia with a combined production capacity of 498,000 tons/annum. Now, according to the results of Data Consult's observations, there are 125 of them with a combined production capacity of 510,000 tons/annum. These paint producers are concentrated in Jakarta, West Java, and East Java East Java (Indonesian: Jawa Timur) is a province of Indonesia. It is located on the eastern part of the island of Java and also includes neighboring Madura and Bawean islands. . Only a few of them operate in the other Indonesian provinces.

The largest ones of these 125 paint producers include ICI Paint, Nipsea Paint & Chemicals (Nippon Paint Indonesia), Dayin Prima Paint, Pacific Paint (Pabrik Cat & Tinta Pacific), and Danapaint. These companies are large-scale paint producers with an annual production capacity of more than 10,000 tons each. A medium-scale paint producer has an annual production capacity of more than 1,000 tons, and there are 40 of them operating in Indonesia at the moment. Of these 40 companies, the most famous are Mowilex and Mataram Coating (Emco). The others are small-scale paint producers, each with an annual production capacity of less than 1,000 tons.

PT ICI Paint Indonesia is a subsidiary of Imperial Chemical Industries, which is one of the world's leading producers of paint and upstream From the consumer to the provider. See downstream.

(networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger
 chemical products. PT ICI Paint Indonesia is jointly owned by Imperial Chemical Industries and its local partner, namely PT Dwi Satrya Utama. Since its commencement of operations in 1972, PT ICI Paint Indonesia has been producing different types of high-quality paint products and marketing them under brand name "Dulux."

PT Nipsea Paint And Chemical is a company which was originally named PT Nippon Paint Indonesia and commenced its operations in 1969. In 1989, the company obtained its current name. The majority shareholder of the company is Wuthelam (BVI) Ltd. of Hongkong (64.6%), The other shareholders are PT Nipsea Raya (25.4%) and Agus Nursalim (10%). PT Nipsea Paint And Chemical's leading products are Vinilex (wall paint), Pylox (aerosol paint Aerosol paint (spray paint) – Paint in a sealed pressurized container that is released in a fine spray mist when depressing a valve button located on the top of the can. ), and Nippe (automotive paint). PT Nipsea Paint And Chemical is an affiliate of the Kedaung Group, which is Indonesia's largest glass tableware manufacturer. However, the Kedaung Group is also diversified diversified (di·verˑ·s  to the real estate, shipping, and banking businesses.

PT Dayin Prima Paint is the survivor company resulting from the 1993 merging of PT Indonesia Kansai Perkasa and PT Dayin Prima Paint. This merging was conducted as part of both companies' attempt to increase production, to improve efficiency, and to lower management cost.

PT Pacific Paint originates from a general trading company which was established in 1945. In 1960, this company changed its status from a trading company (PD) into a limited liability company (PT). In 1988, PT Pacific Paint sold 48.1% of its stock to a Hongkong-based company called Carboline (Far East) Co. Ltd. PT Pacific Paint's business has continued to grow, and the company has managed to maintain its position as one of Indonesia's leading paint producers. PT Pacific Paint produces different types of paint products, some of which are produced under license from famous foreign names. Its marine paint products are produced under license from Hempells of Denmark, its automotive paint products under license from Glasso of Germany, and its industrial paint products under license from Carboline of the U.S.A. and Trans Ocean of the Netherlands.

PT Danapaint, which commenced its operations early in 1971, produces architectural paint products for use on buildings and automotive paint products for use by automotive assemblers This is a list of assemblers. Hundreds of assemblers have been written; some notable examples are:
  • ASEM-51 - for the Intel MCS-51 family of microcontrollers; runs on DOS, Win32, and Linux.
, car-body producers, and finishing workshops. Since its establishment, PT Danapaint has concentrated on the production of architectural paint products. Of late, however, this company has also started to produce wood paint and marine/heavy coatings paint, albeit in small quantities. PT Danapaint is an affiliate of the Bimantara Group, which has made a plan on increase its shareholding in the former from the current 28.15%. Currently, the largest shareholder of PT Danapaint is Akzo Nobel Akzo Nobel is a multinational company, active in the fields of healthcare products, coatings and chemicals. Headquartered in Amsterdam, the Netherlands, the company has activities in more than 80 countries, and employs approximately 62,000 people.  Coatings International. The other shareholder is PT Sumber Selatan Nusantara.

Production up 17.1% annually

With increases in production capacity and in domestic demand, Indonesia's paint production has continued to grow significantly. An increase in domestic demand directly drives up the production rates of paint producers, e.g. Danapaint. As an illustration, Danapaint's output grew at an average annual rate of over 20% for the period of 1991-1994, namely from 5,534 tons to 9,698 tons. In 1996, this company operated at its capacity level, turning out 12,000 tons.

Overall, Indonesia's production grew at an average annual rate of 17.1% for the past six years (1991-1996), namely from 152,510 tons in 1991 to 329,422 tons in 1996. It grew the most rapidly in 1994, especially as a result of a high increase in the activity of the construction (property) sector.

Titanium oxide imports up rapidly

The paint formulation industry's demand for certain basic materials has to be met with imports either because they are not produced in Indonesia or because they are produced only in very small quantifies. Among the basic materials that have to be procured from imports are additives and titanium oxide. Titanium oxide itself is a important basic material for pigments (with white as the basic color Noun 1. basic color - a dye that is considered to be a base because the chromophore is part of a positive ion
basic colour, basic dye

dye, dyestuff - a usually soluble substance for staining or coloring e.g. fabrics or hair
). Titanium oxide, which is a mineral, accounts for 70% of the basic material requirements for the production of anorganic pigments. The other basic materials for pigments are ferro oxide, zinc oxide zinc oxide, chemical compound, ZnO, that is nearly insoluble in water but soluble in acids or alkalies. It occurs as white hexagonal crystals or a white powder commonly known as zinc white. , white lead, lead oxide, zinc zinc, metallic chemical element; symbol Zn; at. no. 30; at. wt. 65.38; m.p. 419.58°C;; b.p. 907°C;; sp. gr. 7.133 at 25°C;; valence +2. Zinc is a lustrous bluish-white metal. It is found in Group 12 of the periodic table.  and lead chromate lead chromate  
n.
A poisonous yellow crystalline compound, PbCrO4, used as a paint pigment.

Noun 1. lead chromate - a poisonous chromate of lead used as a pigment in paint
, and carbon black.

According to data from the Central Bureau of Statistics, the volume of Indonesia's titanium oxide imports has continued to pick up. Over the past five years (1992-1996), the volume of such imports doubled from 6,645 tons (worth US$ 13.7 million) to 12,581 tons (worth US$ 27.1 million). In 1996, the growth in the volume of such imports was 27.1%. This condition reflects the fact that domestic paint production has been growing rapidly. The main suppliers of titanium oxide to Indonesia are Germany, South Korea, Japan, Austria, France, Finland, and the United Kingdom.

New investment plans

The Maspion Group, which is one of Indonesia's leading household appliance producers, is making preparations to enter into the paint industry through PT Indal Investindo, a company which it has established in cooperation with Weilburger of the United Kingdom. Weilburger itself is an affilate of the Grebbe Group and is one of the world's leading paint producers. It operates industrial paint factories in a number of countries. The agreement between the Maspion Group and Weilburger on the paint production project was signed in February 1997, according to which Weilburger will control some 51% of the stock. They will establish a plant to produce special industrial paint for use on electronic goods, household appliances, and automotive products. The plant will have an annual production capacity of 2,000 tons. The first phase of this project requires an investment commitment of US$ 2 million. It seems that the license for this project is still being processed by the Investment Coordinating Board.

A number of paint producers which are already in operations have also made plans on expanding their production capacities. PT Danapaint Indonesia, for example, will increase its annual production capacity from 12,000 tons to 18,000 tons on a gradual basis over the next three years. This production capacity expansion will be conducted by adding new shifts. Currently, PT Danapaint Indonesia operates only one shift.

In 1997, the BKPM BKPM Badan Pengawasan Pasar Modal (Indonesian investment coordinating board)  has approved at least two new projects in the paint industry. One of them belongs to Tanabe Chemical Industry of Japan, which has established a joint-venture company under the foreign investment (PMA PMA (papillary-marginal-attached),
n a system of epidemiologic scoring of periodontal disease devised by Schour and Massler in which the symbols denote the areas involved in gingival inflammation.

PMA Progressive muscular atrophy
) scheme with a local investor to set up a paint factory in Serang Se`rang´

n. 1. The boatswain of a Lascar or East Ondian crew.
, West Java. This factory, which requires an investment of US$ 1.8 billion to build, will have the capacity to produce 600 tons of paint and 600 tons of thinner annually. The other project belongs to PT Ganda Kusuma Wisnujaya, and it is also located in Serang, West Java. PT Ganda Kusuma Wisnujaya, which operates under the domestic investment (PMDN PMDN Penanaman Modal Dalam Negeri ) scheme, will set up a Rp 1 billion paint factory with an annual production capacity of 600 tons.

Paint imports up

As has been mentioned earlier, Indonesia has had to import paint products, especially those of the types and quality grades which are not produced here, to help meet some of domestic paint demand. Some paint products which are already produced in Indonesia are also imported for certain reasons, e.g. their domestic production is too low or the price of the import products is good for the importers. The import duties on paint products are still high, ranging from 20% to 30%.

According to data from the Central Bureau of Statistics, the volume of Indonesia's paint imports has continued to increase from year to year. In 1996, it declined slightly but the value rose. This indicates that in the same year, the price of paint products imported by Indonesia hiked quite sharply or most of the volume of such imports was of certain types whose price was higher than that of the others. Overall, the 1996 volume of Indonesia's paint imports was 11,332 tons (worth US$ 42.55 million), as opposed to only 4,787 tons (worth US$ 14.09 million) in 1991.

Solvent-based paint the most imported

Of the different types of paint, the most imported has been solvent-based paint, which is made of polymer dispersed dis·perse  
v. dis·persed, dis·pers·ing, dis·pers·es

v.tr.
1.
a. To drive off or scatter in different directions: The police dispersed the crowd.

b.
 or dissolved dis·solve  
v. dis·solved, dis·solv·ing, dis·solves

v.tr.
1. To cause to pass into solution: dissolve salt in water.

2.
 in a non-water medium. According to data from the Central Bureau of Statistics, Indonesia imported a total of 12,457 tons of paint in 1995, of which some 10,758 tons or 86.4% was solvent-based paint. In 1996, the share of solvent-based paint in the total volume of Indonesia's paint imports declined slightly to 86.1% (9,757 tons out of the total 11,332 tons).

Exports fluctuating fluc·tu·ate  
v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates

v.intr.
1. To vary irregularly. See Synonyms at swing.

2. To rise and fall in or as if in waves; undulate.

v.
 

Apparently, Indonesia's paint industry is oriented o·ri·ent  
n.
1. Orient The countries of Asia, especially of eastern Asia.

2.
a. The luster characteristic of a pearl of high quality.

b. A pearl having exceptional luster.

3.
 to the domestic market. It exports some of its output only when there is some production excess which is not absorbed by the domestic market. In 1994 and 1995, the volume of Indonesia's paint imports continued to decline. In 1996, however, it doubled to 3,422 tons from 1,706 tons in 1995.

The types of paint whose export volume rose in 1996 were mainly those belonging to tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic  items 3208.10.190 (other paint and enamels based on polyester polyester, synthetic fiber, produced by the polymerization of the product formed when an alcohol and organic acid react. The outstanding characteristic of polyesters is their ability to resist wrinkling and to spring back into shape when creased. ), 3208.10.900 (other paints and varnishes based on polyester), 3208.90.110 (anti fouling/corrosive paint for ship hull based other polymer), 3208.90.900 (other paints and varnishes based on other polymer), and 3209.10.190 (other paints and enamels based on acrylic dissolved in aqueous aqueous /aque·ous/ (a´kwe-us)
1. watery; prepared with water.

2. see under humor.


a·que·ous
adj.
 medium).

Consumption up 16.9% annually

With the continued growth in the population of paint consumers (i.e. property, automotive, and industrial sectors), the domestic demand for paint has kept on increasing. Figures on domestic paint consumption can be obtained by finding out those on domestic supply. Figures on the domestic supply of paint can be calculated by adding domestic production to imports and substracting exports from the sum. With the assumption that the initial (beginning of year) stock equals the closing (end of year) stock, the figures on the domestic supply of paint can be seen as indicating domestic consumption.

For the past six years (1991-1996), the domestic consumption of paint grew quite rapidly at an average annual rate of 16.9%, namely from 157,011 tons in 1991 to 337,332 tons in 1996. It grew the most rapidly in 1995, namely by 30.3%, probably as a result of a high increase in the activity of the property sector. Paint demand by the automotive sector also rose significantly in 1994 and 1995, respectively by 18.2% and 19.2%, although it dipped by 32.4% in 1993.

Property sector the largest paint consumer

The largest paint consumer in Indonesia is the property sector, which builds housing complexes, apartment blocks, hotels, and commercial buildings (i.e. office buildings and shopping centres). The second largest consumer is the automotive sector, followed by the industrial sector, especially electronics industries, including those which produce refrigerators and washing machines. Paint demand by the other industries such as heavy equipment, ships, and aircraft has been relatively small because their population is low and because they use paint products which meet specific quality requirements.

The domestic market for paint can be broadly subdivided into four groups of users, and they are the construction/property sector, the automotive sector, the industrial sector, and other sectors. The consumption of wall paint for the finishing of a 54 square meter Noun 1. square meter - a centare is 1/100th of an are
centare, square metre

area unit, square measure - a system of units used to measure areas
 house averages 50 kilograms (2 x 25 kilograms). Meanwhile, a passenger car (either a sedan Sedan (sədäN`), town (1990 pop. 22,407), Ardennes dept., NE France, on the Meuse River. A noted textile center since the 16th cent., Sedan also has metal and brewing industries. The town became part of French crown lands in 1642.  or a minibus min·i·bus  
n. pl. min·i·bus·es or min·i·bus·ses
A small bus typically used for short trips.


minibus
Noun

a small bus

Noun 1.
) requires about 3 kilograms of automotive paint (3 x 1 kilograms). In Data Consult's calculation, the property sector accounted for some 78% of the total domestic consumption of paint in 1996, the automotive sector 11% (including paint demand for refinishing purposes), the industrial sector (refrigerators, washing machines, containers, and others) 7%, and other industries (ships, heavy duty coatings/HDC, aircraft, and others) 4%.

Competition quite tough

Despite the high market growth, competition among paint producers has also been increasingly tough due to the rapid growth in their population. It is suspected that many of the producers of paint products for lower market segments have pushed down their production cost by compromising the quality of their products in a bid to provide retailers with higher profit margins so as to encourage the latter to market their products. Such a measure is not visible among producers of paint products for middle-upper market segments such as ICI/Dulux, Mowilex, Nippon Paint, Pacific, Kansai, and Danapaint. One of Danapaint's leading products which the company relies on to penetrate the upper market segment is Danabrite. These brand names generally have managed to secure stable market shares although the competiton among them has also been quite tough.

Danapaint is one of the large-scale suppliers of automotive paint to the domestic market. Two years ago, Danapaint had a 20% market share for its automotive paint products and concentrated on the middle market segment. Its closest competition for automotive paint in the same market segment is Glasso (Pacific Paint). Automotive paint accounts for 70/% of Dana paint's total income. In the future, the market volume of automotive paint is expected to grow rapidly with increases in the activity of PT Tricitra Karya (the assembler Software that translates assembly language into machine language. Contrast with compiler, which is used to translate a high-level language, such as COBOL or C, into assembly language first and then into machine language.  of Ford and Hyundai) and PT Kawasaki Motor Indonesia (the assembler of Kawasaki motorbikes). These two companies are affiliated to the Bimantara Group, which is one of Danapaint's shareholders.

As for architectural paint, its market volume is relatively small, namely 5% of the overall market volume of paint products in Indonesia. However, architectural paint is Danapaint's second leading product and it contributes 15% to the company's total income. As for the other types of paint such as wood finish and marine & heavy coating, their contributions to Danapaint's total income are relatively small, namely 7.2% and 7.8% respectively. However, Danapaint's market share as regards these two types of paint products is already 10% each. Two years ago, Danapaint's total sales was as high as Rp 65.9 billion.

The main supplier of aircraft paint is PT Sumber Makmur Bahagia, the first company to produce such paint in Indonesia. Its aircraft paint product, which is named Seiv Chemolux, was certified See certification.  by the Directorate of Aviation Safety ten years ago. The first company to use PT Sumber Makmur Bahagia's aircraft paint is Merpati Nusantara Airlines Merpati Nusantara Airlines is an airline based in Jakarta, Indonesia. It is a major domestic airline operating scheduled services to more than 25 destinations in Indonesia, as well as scheduled international services to East Timor and Malaysia. , which used it for its new logo. On the domestic market, Seif Chemolux competes with import products, e.g. Sikken.

Distribution and marketing patterns

Large-scale paint producers generally use the services of distributors to market and distribute their products. In the case of Danapaint, for example, some 65% of its sales is handled by PT Sumber Selatan Nusantara and PT Bima Artika Citra, both of which are the former's affiliates. These two companies handle the marketing of Danapaint's products in areas other than Jabotabek (Jakarta-Bogor-Fangerang-Bekasi). The marketing of Danapaint's products in Jabotabek is directly handled by the company's own marketing division. Danapaint enjoys one sure thing in the marketing of its products, and it is the captive captive

said of naturally wild or feral animals kept in captivity for educational and scientific investigation with no attempt being made to domesticate them.
 market which it has, namely the Bimantara Group's automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. .

In the marketing of paint products, general distributors --namely those which handle not only one but several brand names-- play a very important role. They help producers keep the latter's distribution cost low as paint consumers are geographically spread over numerous areas, including remote ones. One of these general distributors is PT Panca Warna, which is domiciled dom·i·cile  
n.
1. A residence; a home.

2. One's legal residence.

v. dom·i·ciled, dom·i·cil·ing, dom·i·ciles

v.tr.
1.
 in North Jakarta North Jakarta (Indonesian: Jakarta Utara) is a city (kota) of Jakarta, Indonesia. It has an area of 154.11 km². The current mayor is Effendi Anas. . This company handles the distribution of Kansai, Mowilex, ICI, Pacific, and Nippon Paint as well as several import brands e.g. Triumph. PT Panca Warna distributes paint products through agents and dealers to individual consumers.

For large-scale projects, e.g. real-estate, commercial building, or superblock projects, pain producers general provide special services. They offer to make paint products with certain technical, quality, and color specifications as desired by customers. One specification required by large building projects is free maintenance.

To be able to win a large-scale painting project, paint producers are required to adopt a proactive attitude in approaching the party responsible for the project, to promote the advantages of their products, and to offer incentives, e.g. a discount. In most cases, the party responsible for the implementation of a largescale painting project is the contractor. A number of paint producers also serve as contractors. One of them is PT Gajah Maju Jaya (Paint Industry & Painting Contractor). Painting contractors usually join in bidding for government projects through tenders.

Price of wall paint up in 1996

Amidst a·midst  
prep.
Variant of amid.



[Middle English amiddes : amidde; see amid + -es, adverbial suffix; see -s3.]
 the increasingly fight competition, the price of paint products --at least in the case of certain brands which Data Consult monitored-- has continued to hike. In the case of wood paint, the price grew the most rapidly in 1995 and, in the case of wall paint, in 1996. The factors leading to the hikes in the price of paint products are as follows: an increase in the price of basic materials, some of which have to be procured from imports; inflation; and an increase in demand. In Indonesia, paint demand usually rises towards the Lebaran (Idul Fitri) holiday season.

In the area of Jakarta, the retail price of Glotex wood paint rose from Rp 4,561/can of 1 kilogram kilogram, abbr. kg, fundamental unit of mass in the metric system, defined as the mass of the International Prototype Kilogram, a platinum-iridium cylinder kept at Sèvres, France, near Paris.  in 1992 to Rp 6,515 in 1996 or by an average 9.1% annually. Over the same period, the retail price of Vinilex wall paint grew from Rp 11,706/can of 5 kilograms to Rp 15,016 or by an average 6.4% annually.

Prospects and conclusions

With its development activities, high population, and rapid economic growth, Indonesia offers good prospects to the paint industry for the marketing of their products to the property, automotive, refinishing, as well as industrial sectors. The Government's latest policy on prohibiting public banks from extending credit to the property sector is not likely to impede im·pede  
tr.v. im·ped·ed, im·ped·ing, im·pedes
To retard or obstruct the progress of. See Synonyms at hinder1.



[Latin imped
 the growth of the market volume of paint products to a significant extent.

As regards the paint market, this latest banking policy is only likely to create a shift through which the simple house market segment for paint products will grow rapidly. Under this policy, banks will discontinue dis·con·tin·ue  
v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues

v.tr.
1. To stop doing or providing (something); end or abandon:
 the provision of credit for luxury property projects only. Even so, the impact of this policy on the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  of luxury houses is not likely to be visible until five years from now. What is certain is that the slowdown in the growth of the procurement of luxury houses will be balanced by an acceleration in the growth of the procurement of simple houses, the demand for which is currently very high.

The automotive sector with its National Car program is also likely to speed up the growth in paint consumption. Even if the implementation of this program --which some observers see as controversial-- does not proceed smoothly for certain reasons, e.g. an internal (management) problem or an external problem (international pressures), the Government's latest policy on the automotive industry --which provides a taxation incentive-- has encouraged automotive assemblers to improve their industrial structure as well as to expand their production capacities. In particular with regard to the automotive sector, the refinishing market segment will continue to grow with increases in the population of motor vehicles in Indonesia.

The other paint-consuming sectors are also expected to grow significantly. The washing machine and refrigerator industries, for example, have continued and will continue to grow with improvements in the people's per capita income Noun 1. per capita income - the total national income divided by the number of people in the nation
income - the financial gain (earned or unearned) accruing over a given period of time
. Paint demand by the shipyard sector will also keep on increasing. Although the shipyard industry itself has found it difficult to grow, the Government's policy on allowing the importation of second-hand vessels will drive up the population of ships operating in Indonesia and, hence, the volume of ship maintenance activity, including ship refinishing.

In Data Consult's calculations, the domestic demand for paint will grow rapidly at least for the next five years. The growth can be projected at 12.5% per annum Per annum

Yearly.
 for the first two years and at 10% per annum for the next three years. With the assumption that the shares of the different sectors in the total market volume of paint remains unchanged, paint demand by the property sector can be projected at 296,000 tons for 1997 and 443,200 tons for 2001.

The high growth potential of the paint market in Indonesia has encouraged new investors, including, small-scale ones, to establish new paint factories. A number of foreign companies are even interested in setting up paint factories in Indonesia to enjoy the existing market opportunities, more so because the Government provide protection for the paint industry by imposing import duties ranging from 20% to 30%.

However, the growth in the market volume will also be accompanied by increases in market competition as a result of the growing number of new and expansion projects in the paint industry, notwitstanding the fact that the unused portion of the existing production capacity is still high. In 1996, this unused portion was 181,000 tons. The total installed capacity of paint production which Indonesia currently has is not likely to be utilized to the fullest until the year 2000.

Penetrating penetrating

breaching the tissues of the body.
 the international market for paint products is not an easy thing for Indonesian paint producers because it is already dominated by, multinational companies with famous brand names and good reputation. Only those paint producers with high efficiency and good financial support will manage to secure adequate shares of the domestic market. This is the more true for a paint producer with a captive market like Danapaint. Medium- and small-scale paint producers, on me other hand, will find themselves compelled to concentrate on local markets to keep their distribution cost low.

Table - 1 Large-scale paint producers and their production capacities, 1996
Name of company            Location    Production     Brand
                           of plant    capacity       name
                                       (tons/annum)

Nipsea Paint Indonesia     Jakarta     40,000         Vinilex,
                                                      Pilox, Nippon
Pacific Paint              Jakarta     30,000         Glotex
                                                      Metrolite
Dayin Prima Paint          Tangerang   16,300         Primex
ICI Paint Indonesia        Bogor       22,000         Dulux
Danapaint Indonesia        Jakarta     12,000         Danapaint/
                                                      Danabrite
Chugoku Paint Indonesia    Tangerang   7,120          Marinepaint
Mowilex                    Jakarta     4,800          Mowilex
Putra Mataram Coating      Surabaya    3,000          Emco

Source:Department of Industry and Trade/Data Consult



Table - 2 Indonesia's paint production, 1991 - 1996
Year           Production     Growth
                 (tons)         (%)

1991            152,510          -
1992            159,360         4.5
1993            168,650         5.8
1994            200,591        18.9
1995            263,327        31.3
1996(*)         329,422        25.1

Average growth                 17.1



(*) Tentative figures

Source: Department of Industry and Trade/Data Consult

Table - 3 Indonesia's titanium oxide imports, 1992 - 1996
Year       Volume        Value
           (tons)    (US$'000)

1992        6,645       13,654
1993        7,315       13,674
1994        8,534       18,879
1995        9,899       21,983
1996       12,581       27,095



Sours: CBS/Data Consult

Table - 4 New investment projects in paint industry approved by Investment Coordinating Board in 1997
Name of                Status              Location
company                                    of project

Ganda Kusuma           PMDN                Serang,
Wisnujaya, PT                              West Java
Tanabe Chemical        PMA                 Serang,
Indonesia, PT                              West Java

Name of                Prod. capacity      Investment
company                (tons/annum)        commitment

Ganda Kusuma           Paint 600 tons      Rp 1 billion
Wisnujaya, PT
Tanabe Chemical        Paint 600 tons      US$ 1.77 mill.
Indonesia, PT          Thinner 600 tons

Note: PMDN = Domestic Investment;    PMA = Foreign Investment

Source: Data Consult



Table - 5 Indonesia's paint imports, 1991 - 1996
Year        Volume        Value
            (tons)      (US$'000)

1991          4,787     14,094.8
1992          6,348     19,536.9
1993          8,685     28,338.7
1994         12,055     35,201.8
1995         12,457     40,201.7
1996         11,332     42,546.1



Source: CBS/Data Consult

Table - 6 Indonesia's 1995 paint imports by type
Import tariff              Product description
item (HS)

3208.                      Dispersed or dissolved in
                           a non aqueous medium
3208.10                    Based on polyesters :
3208.10.110                - Anti fauling/corrosive
                              paint for ship hull
     10.190                - Other paints and enamels
     10.900                - Other paints and varnish

3208.20                    Based on acrylic :
     20.110                - Anti fauling/corrosive
                              paint for ship hull
     20.190                - Other paints and enamels
     20. 900               - Other paints and varnishes

3208.90                    Based on other polymer :
     90. 110               - Anti fauling/corrosive
                             paint for ship hull
     90.199                - Other paints and enamel
                              (other than teflon)
     90.299                Based on synthetic polymer
     90. 900               Based on other polymer
3209.                      Dispersed or dissolved in
                           an aqueous medium

3209.10                    Based on synthetic polymer or che-
                           mically modified natural polymers
3209.10.110                Emulsion and dispersion paints

                           Based on acrylic or vinyl polymer :
     10.120                - Anti fauling/corrosive
                              paint for ship hull
     10.190                - Other paints and enamels
     10. 900               - Other paints and varnish

3209.90                    Based on other polymer :
     90. 110               - Water thinned paint
     90.120                - Anti fauling/corrosive
                             paint for ship hull
     90.190                - Other paints and enamels
     90.900                - Other paints and varnishes

Total

Import tariff                Volume         Value
item (HS)                    (tons)       (US$'000)

3208.                       10,758.1       35,410.6

3208.10
3208.10.110                     16.6           79.3

     10.190                    588.0        3,621.9
     10.900                     67.7          702.0

3208.20
     20.110                     28.1          163.5

     20.190                  1,070.7        3,846.7
     20. 900                   272.1          715.5

3208.90
     90. 110                    29.4          156.0

     90.199                  6,993.4       17,135.8

     90.299                    845.5        4,851.8
     90. 900                   846.6        4,138.1
3209.                        1.699,0        4.791,1

3209.10

3209.10.110                    184.3          316.2

     10.120                      6.9           23.6

     10.190                    426.9         1351.8
     10. 900                   195.8          818.5

3209.90
     90. 110                    31.3           82.7
     90.120                      3.4            7.7

     90.190                    585.0         1908.8
     90.900                    265.4          281.8

                            12.457,1       40.201,7



Source: CBS/Data Consult

Table - 7 Indonesia's paint exports, 1991 - 1996
Year          Volume          Value
              (tons)        (US$'000)

1991            286             102.2
1992          1,047           1,899.5
1993          1,927           2,071.5
1994          1,771           1,656.1
1995          1,706           2,151.4
1996          3,422           5,303.1



Sours:CBS/Data Consult

Table - 8 Estimates of domestic paint consumption, 1991 - 1996 (Tons)
Year    Production    Imports     Exports      Supply/      Growth
                                             consumption     (%)

1991    152,510        4,787         286       157,011       -
1992    159,360        6,348       1,047       164,661       4.9
1993    168,650        8,685       1,927       l75,408       6.5
1994    200,591       12,055       1,771       210,875      20.2
1995    263,327       12,457       1,706       274,078      30.0
1996    329,422       11,332       3,422       337,332      23.1

Average consumption growth                                  16.9



Source: Data Consult

Table - 9 Indonesia's 1996 paint consumption, by consumer
Consumer                      Consumption      Share in
                                (tons)         total (%)

Property/                      263,119            78
Construction
Automotive sector               37,106            11
Industrial sector               23,613             7
Others                          13,494             4
(ship, plane,
 HDC)

Total                          337,332           100



Source: Data Consult

Table - 10 Growth in price of several paint brands in Jakarta(*), 1992 - 1997

(Rp/can)
Brand           Can        1992     1993     1994     1995

Wood paint :
GLOTEX          1 kg      4,597    4,924    5,433    6,206
Growth                     -        7.1%    10.3%    14.2%
PATNA           1 kg      4,561    4,801    5,225    5,983
Growth                     -        5.3%     8.8%    14.5%
Wall paint :
VINILEX         5 kg     11,706   12,142   12,654   13,561
Growth                     -        3.7%     4.2%     7.2%
DECOLITH        5 kg     10,750   11,396   12,571   13,679
Growth                     -         6.0     10.3      8.8
ICI            2,5 kg    18,406   18,917   19,491   20,497
Growth                     -         2.8      3.0      5.2
MATEX           5 kg      9,021    9,021    8,492   10,362
Growth                     -        -        -5.9     22.0

Brand            1996   1997(**)

Wood paint :
GLOTEX          6,515     6,476
Growth           5.0%      -
PATNA           6,082     6,048
Growth           1.7%      -
Wall paint :
VINILEX        15,016    15,385
Growth          10.7%      -
DECOLITH       17,422    18,044
Growth           27.4        -
ICI            24,480    25,174
Growth           19.4      -
MATEX          12,118    12,440
Growth           16.9      -



(*) Average price at retailer;

(**) Early in the year

Source: Data Consult

Table - 11

Projections of domestic paint demand for 1997 - 2001, by consumer

('000 tons)
Consumer                 1997     1997     1999     2000     2001

Property/               296.0    333.0    366.3    402.9    443.2
architectural sector
Automotive sector        41.7     47.0     51.7     56.8     62.5
Industrial sector        26.6     29.9     32.9     36.2     39.8
Others                   15.2     17.0     18.7     20.7     22.7

Total                   379.5    426.9    469.6    516.6    568.2



Source: Data Consult
COPYRIGHT 1997 P.T. Data Consult, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Publication:Indonesian Commercial Newsletter
Date:Jul 28, 1997
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