Indonesia’s largest herbal medicince producer PT Industri Jamu dan Farmasi Sido Muncul Tbk (SIDO) has allocated IDR 197 billion (US$ 13 million) in its 2023 Capital expenditure (Capex)for market expansion, especially in East Africa.
The company’s history dated back in 1930 as a bakery called Roti Muncul in Ambarawa, Semarang regency, Central Java. Five years later, Siem Thiam Hie and his wife Go Djing Nio started the herbal medicine business in Yogyakarta. Currently, Sido Muncul has 274 products including Tolak Angin, Tolak Linu, Kuku Bima Energi, Alang Sari Plus and Kunyit Asam. By 2013, it had over 103 distributor retail stores in Indonesia. In 2019, the company received its first halal certificate from the Indonesian Ulema Council (MUI) for its products. Sido Muncil has several subsidiaries such as PT Semarang Herbal Indoplant, PT Muncul Mekar, PT Berlico Mulia Farma and PT Muncul Nigeria Ltd.
Capex to help market expansion
Sido Muncul’s IDR 197 billion Capex in 2023 is slightly smaller than in 2022 of IDR 200 billion. The company has yet to reveal the realization of the 2022 Capex. However, in September 2022, it allocated IDR 102.98 billion for investment purposes.
“We have set the Capex to add some production equipment, both at Sido Muncul and the subsidiaries,” President Director David Hidayat said on January 16, 2023.
The company will add new business-to-business methods for their herbal product materials or other products. It will also expand its market towards East Africa, following the export to Kenya.
“After penetrating the market in Kenya, we will continue our expansion to Tanzania and Uganda for Tolak Angin and energy drink products,” said Hidayat.
The Capex allocation is also to complete the greenhouse project, which started in 2021. The project was aimed to help farmers, groomed by the company, to obtain superior seeds of the herbs.
Sido Muncul is eying a 15% sales growth in 2023. “This year’s growth potential will be driven by a number of factors, especially the addition of new products for domestic and export markets,” Hidayat said as quoted by bisnis.com.
The company is strengthening its business with the operation of the Indonesian Spice Research Laboratory in Semarang. The research center is to develop spices and preserve natural resources from Indonesian herbal plants.
Risks in herbal medicine industry
The herbal medicine industry in Indonesia is still facing two major problems: The absence of distribution permit and the presence of illegal or counterfeit medicines.
“Counterfeit herbal medicines usually contains toxic doze of hazardous materials,” Dwi Ranny Pertiwi Zarman, Chairwoman of the Association of Herbal Medicine Companies (GP Jamu) said as quoted by bisnis.com on August 28, 2015.
She emphasized that the presence of illegal medicines have still been rife while the unpopular products have been easily counterfeited.