Value Builder

1 month ago . 9 min read
AW
Ardian Wibisono
Author of forbes indonesia
Value Builder

Located in the ring of fire, Indonesia is blessed with vast and abundant fertile soil. The country is a major producer of a wide variety of agricultural products like palm oil, cocoa, coffee, nutmeg and much more, all of which attracted western colonialists to come here hundreds of years ago. There’s a saying anything you throw, will grow. The agriculture sector has historically served as a pillar of the Indonesian economy, with a contribution of over 13% to national GDP. However, the sector has yet to achieve its full potential. One factor hindering the sector in reaching its full potential is the lack of investment and activity in agriculture’s middle and downstream sectors. Most of the country’s commodities, including agricultural commodities, are exported as raw materials. Alisjahbana Haliman, 54, founder and CEO PT Haldin Pacific Semesta, saw this opportunity and potential when he established his company.

Started over 30 years ago, the company has transformed from being just an exporter of vanilla from Indonesia to the US into arguably the most integrated company processing various natural resources. The company processes over 30 natural raw materials into more than 200 derivative products such as extracts, essence, essential oils and many more. Haldin now operates five facilities, four on Java and one in Sumatra, with over 20,000 tonnes of capacity (depending on the type of product output), employs around 500 employees, and works with farmers from across the country. The products are purchased by companies in 54 countries around the world, and are on the first list of industrial material supplies. The company has assets of around $100 million and has been tripling its revenue over the past five years – in price and capacity terms. Forbes Indonesia estimates the company’s revenue to be well above $100 million. For his achievements Ali, which is how Alisjahbana prefers to be known, has been named EY Indonesia Entrepreneur of the Year 2019 and he was also the first to receive the Bacharuddin Jusuf Habibie Technology Award back in 2012.

“We are a rich nation with a very big consumer market, young people, potential resources, and commodities. But there’s a gap, there’s no middle industry. This means we import a lot of things, we can make cellphones, but all the components are imported. We only do assembling. Sometimes we get offended, but that’s the reality,” Ali says. “What makes it difficult is that we tend to wait and see. No one wants to invest because they don’t see the demand in the future. But when the demand comes, it’s all too late, we prefer to import because it is cheaper.”

Although his business seems simple, Ali points out that what it does requires a lot of capital-intensive technology, research and attention to detail. For example, the company produces powdered honey, which is often found in honey milk products on the market, he claims Haldin has the biggest market share for the product. Ali explains the company has to produce honey powder with a particle size and weight similar to the milk powder or else the milk and honey powder will not mix perfectly. With a different size and weight, the honey powder will go to the bottom of the packaging if the weight is heavier than the milk powder, and vice versa.

“We have such a high compliance; our client can just buy our product and dry-blend it with theirs. If you think it’s easy, try it,” he says.

Another challenging factor in the business is raw material sourcing. Nearly 100% of the raw material is sourced locally - with only a few items like strawberries that have to be imported to maintain product quality. Harvests are seasonal and nature poses a big challenge but the business cannot wait. To deal with this, Haldin has a team called the quality squad, which works closely with farmers and monitors risks and the potential for crop failure. The team also decides whether to buy a buffer stock. The company manages 36 raw materials but Ali says more or less the company has to secure at least 20. Another thing that the company does is creating innovation and drive demand, for example the company could offer mango tea instead of just strawberry tea.

“I’ve done it over and over, the risks are getting lower and lower and the success percentage is getting higher. That’s the difference between having experience and not. We can predict demand when we set the budget, focusing on the top raw material to source and then focusing on the rest. Yes, maybe we lose 5% of sales, but if the main ones are not solved we lose much more,” Ali says.

Born in Pontianak, Ali is the youngest of six siblings. His family moved to Jakarta when he started junior high school. Ali was passionate about business at an early age. At the age of 12 he began selling watches and at the age of 15 sold shoes to friends and stores in Jakarta, his brother brought the watches and shoes from abroad. Ali recalls back then he was selling quartz watches, which were a novelty at the time since most people still used mechanical watches. When other kids his age went to play after school, Ali enjoyed doing things that generated cash including helping his brother who was in the oil and gas business, he typed letters and did other admin tasks. The industry was booming back then and Ali remembers he got well paid. Ali was also bright at school, always coming top of his class. After graduating high school, he decided to continue his education in the US.

“I don’t pretend I knew what I was doing. Computer science appealed to me because back then the industry was growing, Apple had just started. But I decided to take a bachelor’s degree in physics [at California State University in Long Beach],” he says. “I was there for four semesters, I was restless, I was used to working and making money. For me, the class was boring.”

He traveled in the US looking for business opportunities and people who would sponsor a green card. His brother then came and asked Ali to join his new venture in the vanilla business, his brother sourced the vanilla from Indonesia and Ali would sell it in New York. The business started in 1987, his brother only lasted six months but Ali decided to pursue it further. Ali’s luck in the business started when he came home to his apartment one day and noticed a letter from the Department of State, informing that he had won the green card lottery. With a permanent resident’s card, he could legally start a business and get loans from banks, which he had been unable to do with a student visa.

Ali founded Haldin International Inc. in 1988 and the business grew rapidly. From the business Ali man-aged to buy property in New York and even build a vanilla-processing plant. In 1993, Ali decided to set up another company PT Haldin Pacific Semesta and open a factory in Indonesia and started technology transfers so that the business became more efcient - allowing the company to export processed products to the US. Haldin Semesta’s sole client at the time was Haldin International. To reduce costs further, Ali also gradually closed down his factory and company in the US and in 1996, just before the Asian Monetary Crisis, Ali decided to move back to Indonesia. Then the crisis struck.

“We exported all of our products, so we made a lot of money. In 1999, when many didn’t have any money, we built a spray-dry facility, we were the first to have the technology in Indonesia. The timing was perfect, instant sachet drinks were popular at the time, so everyone needed our product,” Ali says.

Ali is not bothered about competition, although there are not actually many competitors, and prefers to focus on investing and being a pioneer in many ways. Besides being the first in the country with a spray-dry facility, Haldin was the first in Indonesia to obtain ISO 22000 certification in Food Safety Management. Haldin was also among the first to adopt SAP in 2007 and three years ago start putting the system on cloud computing. Haldin also sets aside up to 5% of its revenue for research. The company lab employs 50 microbiology experts and the lab itself is certified to issue certificates of analysis.

“Success will come if we do the process right. Invest in the right machines, envision the products, do it patiently, get it all done correctly, conduct business ethically, and then things will just come out good. If we are good, people will know and they will want to do business with us,” Ali says.

For the past few years Ali has adopted a hands-of approach to his business. He mostly works from his cozy home in Menteng, Jakarta, and occasionally goes to his plant for meetings. He has a working room on the second floor of his house with a garden-pool view. At the plant, he does not have an office, preferring to sit next to employees. He has a way of building trust in his employees and letting them take business decisions.

“I don’t like formalities. If I come to the office I like to sit anywhere next to the people I need to talk too. I also don’t like to discuss reports in meetings because that’s all about the past. I can simply read them and I prefer to discuss what to do next,” he says.

But despite the laidback style, Ali is still expanding his business. Haldin is now preparing to set up a new factory in Kendal, Central Java, as the existing facility is close to maximum capacity. The groundbreaking has started and it will probably take another two years before the factory commences operations. Ali says he plans to add another 10,000 tonnes of production capacity to anticipate growing demand. The new factory will be mostly financed by equity, Ali says a financial partner will come on board for the project. As for his spare time, aside from his passion for art, wine and watches, Ali is currently developing a new business outside Haldin, which also aims to empower people living in remote areas.

“If Haldin is a B2B business, my new business is B2C, one value chain. We have started in Sumba and Nusa Tenggara. We will build the plant at its origins, like cashews in Sumba. So, there will be a story of the product and it will also be a nice place to stay. People can then come and experience it, and when they go back home, they can bring the product and the story,” Ali says adding that he has plans to expand the business to several locations across Indonesia

AW
Written By
Ardian Wibisono
Author of forbes indonesia
Topics
Entrepreneurs