Recovering from the Asian financial crisis, the Indonesia toy industry has returned to a growing trend since 2004. The toy industry and investors set to pick up the slack. Mr. Sudarman Wijaya, the Deputy Chairman for Marketing of the Indonesian Toy Manufacturers Association talked to <<MegAsia>> bygiving an account of the current market outlook. Mr. Sudarman pointed to a gradual recovery of the country’s toy manufacturing, which is supported by a wealth of natural resources, superior workmanship, the government’s favourable tax policy and labour law for foreign investment, as well as the ambitious infrastructure programs.

Q: When was the Indonesian Toy Manufacturers Association (APMI) formed? Please tell us some background information about the association.

A: The Indonesian Toy Manufacturers Association was established in 1992, during the heydays of the Indonesian toy industry. Attracted by Indonesia’s much improved political condition and infrastructure, abundant natural resources and most importantly, a huge competitively waged population, toy manufacturers across the world shifted much of their production here.

Not only did they set up factories, they also brought in great benefits to many domestic small- scale toy companies. For example, we witnessed a great transfer of “know-how” about toy processing. Meanwhile, many local, small-scale companies were in need of staff training, technical and marketing support to cater for their production facilities and stable raw material supplies. To secure the continuous growth of the industry, we set up the APMI.

Q: How would you describe the role of APMI in the Indonesian toy market?

A: The APMI has two missions. Internally, it provides its members with constant updates on the outlook of the international toy market, their competitiveness, the latest product trends, and new safety standard issues.

Externally, APMI promotes the Indonesian toy industry to the export markets. We are active in liaising with local trade authorities and international buyers. We provide them with updated information about the toy manufacturing in Indonesia. We also co-llaborate with the government to put forward policies that are conducive to further development of the local toy industry.

Q: What are the main channels taken by the Indonesian Toy Manufacturers Association to foster the industry’s growth?

A: Exhibitions provide the best platform to promote the Indonesian toy industry in the international market. APMI has proactively arranged its members to participate in a number of international trade shows in Hong Kong, New Work, Sao Paulo, Birmingham and Nuremberg, etc.

We have also allied with the Indonesian Trade Promotion Center to publicise the Indonesian Toy Manufacturing Association to potential buyers through their offices worldwide.

Q: How many members are there in the association?

A: APMI has experienced a considerable drop in its membership these years since Asian financial crisis. We are now keeping with around 30 active members.

Q: How did that drop happen?

A: It is in line with those changes in the industry. The association has been witnessing the ups and downs of the market. In the early days of its establishment, the Indonesian toy industry recorded an average growth rate of 15 to 20% per annum. However, in 1997 the Asian financial crisis took place, which was followed by some other local and international disastrous events. Many foreign-owned toy companies and buyers retreated from Indonesia, leading to a wave of bankruptcy of local toy manufacturers.

Q: It has now been a decade after the Asian financial crisis. What is the current outlook of the Indonesian toy industry?

A: I am glad to see the industry going through a course of recovery in recent years. Since 2004, the Indonesian toy market has recuperated a rise in export sales year-on-year.

At the beginning of 2007, we also heard from our members that some of their previous buyers started coming back and placed orders and enquiries for the year plan. I see this as signs that the Indonesian toy market is going to pick up in a promising way.

Q: How about the export figures? Did it show the same optimistic trend?

A: Yes, indeed. According to the statistics released by the Indonesian Central Board of Statistic, the export value in 2005 reached US$ 85 million, whopping a big jump of 35% compared to the figure in 2004. Up to June 2006, sales continued to increase from 5 to 10% over the same period in the previous year. Projected by the satisfactory performance, the 2006 exports could manage to yield an increment of at least 5% when compared with 2005.

Q: Do you think the growth will be able to sustain? What do you see the future of the Indonesian toy in the global market?

A: We are optimistic about the future of the country’s toy industry. We could observe that there has been pressure on the Chinese production resulted from the anti-dumping actions taken by major importing countries. International toy suppliers are looking for opportunities to shift some, if not all, their production capacities from China. Indonesia is definitely on the list of their top choices for relocation.

Q: What makes Indonesia stand out as the destination for foreign investment?

A: Among other advantages, Indonesia is particularly strong in its workmanship and provision of natural resources for toy manufacturing. The skilled labour and good supply of raw materials here are rendering the upside as compared with other countries.

With Indonesia being one of the largest exporters of wood and textile products to the world market, our toy makers are able to utilise the best materials in production. It explains why the plush and wooden toys have long been recognised as a specialisation for Indonesia.

Q: In the meantime, are there any threat confronting the Indonesian manufacturers? How will they overcome these challenges?

A: Increasing production costs, especially those in electricity, wages, taxes and freight, are great challenges to the local toy suppliers. The APMI, being the communication channel between the industry and the authorities, has therefore repeatedly urged the government to review its policies regarding these issues. A possible relief has now come to light, because the government is working on new tax and labour laws which are more in favour of foreign investment.

Q: Looking ahead, what will the future hold for the global toy market?

A: There will always be a demand for toys in the human world. Toys have been considered as a necessity for the social and mental development of children. We believe that there are plenty of business opportunities in this field. But manufacturers should better be mindful of the continuous changes and evolution of the market. Suppliers have to be ever-original and adaptive towards the ever-changing needs of children nowadays.