The Jamu Industry Lacks Support
As the ASEAN Free Trade era approaches, the Indonesian jamu (herbal medicine) industry faces greater challenges both domestically and internationally. The Indonedian manufactureres would face tough competitors from other countries with lower production costs such as China and Malaysian. In addition, the Indonesian medical society has yet to fully accept the potency of jamu and other herbal medications.
The national jamu industry is estimated to azquire a turnover of Rp.2.5 trillion, an amount accumulated by 650 industry players. The turnover is relatively low compared to the Rp.16 to Rp.18 trillion turnover from the 250-player pharmacy business. To maximize their company’s turnover by creating greater brand awareness, major jamu industry players, like PT Air Mancur for example, chose to promote through massive advertisments in mass media.
Jamu is not only meant as a remedy. It can also be used as health supplements to prevent diaeases and beauty treatments. In Indonesia, there are 709 companies that produce jamu, most of them small-scale operators. This sector has experienced phenomenal growth over the past few years. In 2000, Indonesians spent a total of Rp.1 trillion on natural medicines and supplements, two and a half times the Rp.400 billion figure recorded only two years earlier, in 1998. When the economic crisis started to take effect in 1998, a general trend towards home-grown brands and products ensued. This happened to coincide with an international surge in interest in the 'back-to-nature' lifestyle, especially in Europe, Japan, Korea, and America. Nevertheless, the domestic market for natural remedies is still only one tenth of the size of the market for modern medicines. Official data shows that there are only around 30 sizeable players in the jamu industry, which indicates that close to 700 small, family-style businesses operate in this sector as well. It is therefore reasonable to assume that most of these small-scale producers use raw materials that are readily available, but are unregulated in terms of quality and purity. This, coupled with the fact that much of the processing equipment used is out of date, means that few producers are able to offer standardized and consistent formulations. As one of the few producers that are able to provide such service, PT Air Mancur has also introduced improvements in its internal management to maintain its credibility.