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PepsiCo Returns to Indonesia with $200 Million Investment in Cikarang Factory

PepsiCo Indonesia
PepsiCo Returns to Indonesia with $200 Million Investment in Cikarang Factory

After leaving Indonesia in 2019, PT PepsiCo Indonesia Foods and Beverages (PepsiCo Indonesia) is now back with more serious steps in targeting the Indonesian market.

The American company is investing $200 million or around Rp3.04 trillion for the next few years. One form of investment is the construction of a PepsiCo factory in Cikarang, West Java, which is targeted to start factory operations in 2025.

The Minister of Investment/Head of the Investment Coordinating Board Bahlil Lahadalia, explained that PepsiCo’s decision to build a factory in Indonesia was very strategic. Indonesia’s population covers 48 percent of the whole of Southeast Asia, with a growing middle class and Indonesia’s GDP position which is now in the top 15 in the world. In addition, PepsiCo’s investment also shows that the political year will not have a negative effect on the slowdown in investment activity.

“Even though we are entering the political year, we have entered the wait and see, but thank God, the investment process in Indonesia is getting better and better,” he said while laying the first stone for the PepsiCo factory in Cikarang, West Java, Wednesday, 30th August 2023.

Lahadalia explained, that with the existence of the Job Creation Law, the licensing process has become easier and more efficient. He asked PepsiCo to involve local entrepreneurs or Micro, Small and Medium Enterprises (MSME) in the supply chain and logistics. That way, not only PepsiCo will benefit, but also local businesses.

“I only leave one thing, please involve local entrepreneurs, and MSME to become a supply chain and logistics. Because for us, it’s not how much investment comes in, but how much investment happens for the Indonesian people,” he said.

Lahadalia said that what PepsiCo did by building this factory was a comprehensive downstream form. PepsiCo’s investment will support the Indonesian government in encouraging downstream programs. 

Downstreaming is not only in mining and gas but also in the food sector. “So in my opinion, this is one of PepsiCo’s intelligence in seeing the opportunities that exist in Indonesia,” he said.

Lahadalia said that his party was optimistic that the investment target of Rp1,400 trillion would be achieved in the political year. 

“Based on the achievement of investment realisation in the first semester of 2023, which reached Rp678.7 trillion or 48.5 percent of the target of Rp1,400 trillion, “I believe to all ladies and gentlemen, God willing, our investment target will grow, especially in 2023,” he said.

Lahadalia said that, in the midst of uncertain global economic conditions, Indonesia’s economy still grew by 5.17 percent in the second quarter of 2023 with controlled inflation. This glorious achievement has made Indonesia one of the countries with the best economic growth in the world, beating the US, Europe, Korea, and Japan. 

Indonesia’s economic growth is equivalent to the economic growth of India and China.

“Because of that, in my opinion, what a loss it will be if friends who carry out industrial processes do not build their manufacturing in Indonesia,” he said.

The PepsiCo factory will be built on an area of 60 thousand square metres in Cikarang, West Java. PepsiCo’s factory development is expected to gradually absorb thousands of local workers. PepsiCo Indonesia CEO Asif Mobin said, that for the initial stage, the factory will focus on producing snacks.

 “This is just the beginning, this is the first time we have made a direct investment in Indonesia. In the future, there will be other products,” said Mobin.

In terms of market share, said Mobin, the production from this factory will target local consumers. However, PepsiCo also has the ambition to export factory production in Cikarang to a number of countries that have halal preferences.

“We will focus on the Indonesian market, but we also have the ambition to export. Indonesia is one of the largest halal markets, so we are also interested in exporting to the halal market,” said Mobin.

In its operation, the factory will use 100 percent renewable electricity sources. Regarding water management, PepsiCo will implement 100 percent use of recycled water and adopt a net water-positive approach from the first day of operation, to support ESG initiatives at the regional level.

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