Bahtera Contributes to Indonesia’s Move toward Renewable Energy through Solar Energy Partnership

November 16

10min read

Ideas Insight & News

So Many Skincare Products, So Little Time

November 7

5min read

Ideas Insight & News

Defoaming Wetting Agent and High Performance Defoamer: Solutions to the Sustainable Water-based Coatings

October 29

15min read

Insight & News

Vitamins & Supplements Consumption will Continue to Grow beyond the Pandemic

October 22

10min read

Ideas Insight & News

Pandemic, Beauty Influencers, and Emerging Local Brands: The Forces that Reshape Indonesian Beauty Industry

October 11

15min read

Ideas Insight & News

The Need for Health and Convenience Shape F&B Trends in Indonesia

October 6

15min read

Ideas Insight & News

Indonesia’s Agriculture Industry Slowly Embraces More Sustainable Options

September 22

15min read

Ideas Insight & News

The Rise of the Indonesian Healthcare Industry

September 15

15min read

Ideas Insight & News

Sustainable Packaging: The Paper Industry’s Future

September 10

15min read

Ideas Insight & News

Water-based Coating: The Rise of Sustainability in the Coating & Construction Industry

September 2

15min read

Ideas Insight & News
Bahtera Contributes to Indonesia’s Move toward Renewable Energy through Solar Energy Partnership

As the world moves towards decarbonization, renewable energy has gained significant traction over the years. In the last decade, renewable energy consumption has seen a 13.7% average annual growth, way ahead of other energy categories. The world indeed has been awaken to the many opportunities offered by renewable energy beyond environmental sustainability, from higher economic return to job creation. Amid this development, Bahtera made our first foray into renewable energy. This journey starts with solar energy, a renewable energy option with much untapped potential. 

As of 2021, a total of 165 governments have made the pledge to shift toward renewable energy, including the Indonesian government. President Joko Widodo’s administration has set the target of 23% NRE in the national energy mix by 2025 and 31% by 2050.

Indonesia has an enormous renewable energy potential. The country holds 40% of the world’s geothermal energy reserve, a maritime area that potentially generates 75,760 MW of power, and a total potential of 788,000 MW from renewable energy sources. Meanwhile, renewable energy currently makes up only 11.5% of Indonesia’s national energy mix. 

In line with our sustainability commitment, Bahtera seeks to contribute to government’s effort to closing the gap through our new renewable energy unit. Solar energy, which has been heralded as the quickest and easiest renewable energy option to set up, has been our focus at this stage. Bahtera has recently partnered up with a local renewable energy startup, working with industrial clients to help them make the move to solar energy. 

Solar energy remains one of the biggest yet most untapped renewable energy potential for Indonesia. Indonesia’s impressive solar irradiation intensity is enough to cover its power output of up to 1,530 kWh/kWp annually. According to the MEMR, only 153.5 MW of solar power plant has been installed, while the total potential reaches 207.8 GW. As of 2019 however, solar energy only makes up 1.7% of the total electricity production.

Enthusiasm has been high among industrial clients, especially with the government’s continued push towards renewable energy. Recently, the President put a halt on the construction of any new coal-powered steam power plants. In 2018, the Indonesian government also issued MEMR Regulation 49/2018 governing PV system installation in the country. In 2021, this law was further amended through MEMR Regulation 26/2021, effectively easing licensing requirements and lowering monthly charge to the state-owned electricity company PLN.

This is a necessary move considering Indonesia’s pollution and resources crises. Indonesia ranks 9th as the world’s most polluted countries, facing deadly pollution problems. While known for its bountiful natural resources from vast tropical forest to an abundance of energy and mineral resources, Indonesia’s natural resources have been depleting at an alarming rate. In 10 years, Indonesia could run out of oil. Despite being one of the top 20 crude oil and gas exporting countries in the world, Indonesia is already a net oil importer and is predicted to become a net natural gas importer by 2030. 

Meanwhile, the country’s energy consumption continues to increase. Between 2008 and 2015, Indonesia recorded an average electricity demand growth of around 6% annually, and peak demand is projected to triple by 2030.

However, progress has been slow. Massive investment from the government and the business segment is needed to meet these targets. Financial incentive in particular is necessary considering that one of the biggest barriers in switching to solar energy is the steep investment. The investment needed for every kilowatt energy adds up to a significant amount for factories, which average 5 MW in terms of energy need. This is where Bahtera sees an opportunity to contribute. We can work with renewable energy companies that offer financial incentives, which are key to pushing the industry sector to adopt solar energy. 

Another area where Bahtera is focusing our effort is battery for energy storage. Currently, batteries are mostly used for solar microgrids in remote areas across the country. As we increase the national capacity for solar energy however, additional storage would be needed to cover the energy demand. Over time, batteries will be key to mass adoption of solar energy. Beyond supply balancing, batteries have many potential applications in the future.

As solutions to these issues are being discovered, the Indonesian government is moving ahead with its shift towards solar energy. The Ministry of Energy and Mineral Resources (MEMR) is planning to develop a massive solar park in eastern Indonesia. Bahtera will also focus our initial effort in this region, considering its high potential due to higher solar irradiation capacity and cheaper land with suitable slope and contour, which ultimately reduce cost. 

Indonesia’s renewable energy potential—especially solar energy—is clear. The time to invest in solar energy, and ultimately in a brighter energy future for Indonesia, is now.

So Many Skincare Products, So Little Time

So many skincare products in the market to choose for. As the Indonesian market gets more sophisticated, specialized beauty products are gaining popularity driven by the pandemic, the rise of beauty influencers, and emerging local brands. More customers are looking for high efficacy to solve their specific skincare concerns through single-ingredient products and products with active ingredients.

New active ingredients are popping up every day and it’s getting more complicated to choose one that fits you best. We go through some of the latest beauty trends to give you an idea of what to look for. 

UV Filter 

For a long time, UV Filter has been used in sunscreens to protect your skin from UV light. More and more serums, night creams, and sleeping masks today use UV light to add that extra protection for your skin. Most skincare products available today only cover UVA or UVB, which differ in energy strength and wavelength. UVB is stronger but only reaches your outer skin layer.

As we use gadget more and more, more people are looking for protection from blue light. The blue light emitted by your gadgets can cause wrinkles and reduce skin barrier. Today, many skincare products offer blue light protection from special UV Filter. Most of these choices though focus on repairing your skin from the protection of blue light instead of protecting. 

New ingredients are being developed to provide full protection. One such ingredient is Tinosorb® A2B by BASF. Unlike other UV Filters, this one provides full protection from UVA, UVB, and blue light. When looking for skincare products with UV Filter, make sure you’re getting what you’re looking for. 

Anti-aging

Anti-aging skincare has always been popular. Many anti-aging products use retinol, which protects from the loss of collagen and thus promotes skin elasticity. Too much retinol however has the side effect of irritation.  

As the technology advances, new ingredients enter the market to offer higher efficacy and reduce the side effect. BASF introduced the coated retinol Cylasphere™Retinol, which boasts low irritant potential and higher efficacy due to targeted penetration into the skin. This retinol also offers the added benefit of higher stability, which means your skincare product lasts longer after opening. 

Base Cleansing

With so many treatment options in the market, many forget that basic cleansing is still important. Before applying your favorite serums or night creams, first you need to make sure that your skin is clean. This is where your regular facial and body wash comes in. The basic ingredient for foam-based personal care products from shampoo to facial wash is surfactant—to put it simply, this is the thing that makes your soap foamy. 

The best facial wash is the mild one that does not cause dryness but cleanses thoroughly. Today, more people are looking for milder, more natural products. New ingredients available in the market have made this possible. Plantapon® LGC SORB, for example, is a natural surfactant from BASF that is mild with excellent cleansing performance.

As you try out these new products for your specific skin needs, don’t forget to first cleanse your skin for optimal result.

Defoaming Wetting Agent and High Performance Defoamer: Solutions to the Sustainable Water-based Coatings

As governments all over the world double down on Volatile Organic Compound (VOC) restriction in coating, the world is shifting towards green coating options. This has driven growth of global green coatings market, which is projected to see an annual growth of 5.8% to $118,990 million in 2023. 

Asia Pacific, which holds the second biggest market share, will see the highest annual growth at 6.7%. Among the green alternatives that contain low or zero VOC, water-based coatings will take the lead. Having seen impressive growth in the last few years globally, water-based coatings is projected to grow as new technologies emerge to improve its performance. 

Water-based coatings offer certain advantages such as low toxicity and flammability. Considering that it is still in the nascent stage of development however, a few performance problems remain, including foam stabilization and substrate wetting.

Emerging new technologies are helping to address this issue. BASF formulation additive FoamStar ED 2528 is extremely effective in doing so. Our evaluation of Foamstar ED 2528 on clear coat resulted in similar density and much lower foaming height, signifying similar defoaming performance on microfoam and much higher defoaming performance on macrofoam compared to benchmark. 

This high-performance emulsion defoamer is highly effective on microfoam and macrofoam, provides high transparency on clear coat high-gloss topcoat, and has excellent storage stability. Mostly used for industrial coating, the low-odor, VOC-free water-based emulsion with no mineral oils or cyclic silicone is highly sustainable to boot. 

Foamstar ED 2528 shows high defoaming performance on white topcoat compared to benchmarks. 

Another solution to air bubbles and substrate wetting in water-based coating is defoaming wetting agents, such as BASF’s Hydropalat WE 3229. Not only does it offer strong substrate wetting, it also comes with the best-in-class defoamer that prevents air bubbles. Our testing results in significantly lower foam level compared to other similar products in the market, while maintaining low VOC level and odor. 

Hydropalat WE 3229 shows excellent defoaming performance compared to similar products in the market.

Hydropalat WE 3229 shows high leveling performance in wetting test on release paper.

As the technology continues to improve, water-based coatings will continue to grow in popularity. By 2027, the global water-based coatings market is expected to reach EUR73 billion, of which EUR15.5 billion will be coming from China. Today, we are already seeing industry giants such as BASF and Valspar pouring in significant investment into water-based coatings as demands continue to rise.

 

Vitamins & Supplements Consumption will Continue to Grow beyond the Pandemic

The already growing vitamin, mineral, and supplement (VMS) category has enjoyed significant boost from changing health priority amid the Covid-19 pandemic. During the pandemic, monthly VMS spending has increased by 10-15%, while 20% of non-consumers have said that they would start consuming VMS. Such increase was concentrated on immune boosters such as vitamin C and vitamin D on the onset of the pandemic, which saw a growth of up to 16 times in March 2020. In the US, vitamin C makes up only 12% of the VMS market, but contributed to 26% of the market growth.  

The same growth was seen in Indonesia. According to a survey in July 2020, 84% of consumers in the 25-34 age group and 83% of consumers in the 35-44 age group said that their VMS consumption has increased amid the pandemic. Indonesian VMS start-up You reported that their multivitamin sales almost tripled.

Such growth in VMS consumption began well before COVID-19, pushed by growing interest in health and wellness. Between 2014 and 2018, the VMS global market saw a consistent annual growth of around 6.3%. This trend is further boosted by the pandemic and particularly prevalent among young people. While 11% of Americans claim higher VMS purchase, this number jumped to around 15% among GenZ and millennials. 

The increasing interest in VMS along with supply chain problems due to pandemic-related lockdowns resulted in an interesting few months for the VMS sector. Following an oversupply in 2019, rising demand and production halt sent prices skyrocketing. Entering 2021, supply and demand have begun to stabilize. 

However, VMS popularity is here to stay, even as we get out of the pandemic. The global immune health supplements market was projected at $19 billion in 2020. Further annual growth is expected at 7.7% toward an estimated market value of $43.5 billion by 2031. While the largest growth will continue to be seen in North America, East Asia, and Europe, developing nations such as India, Brazil, and Indonesia will see significant growth as well.

In Indonesia, growing health awareness will be a major driver. Even before the pandemic, health expenditure in Indonesia has been steadily increasing from $27 per capita in 2004 to $112 per capita in 2018. Covid-19 has further increased this awareness. A 2020 survey shows that 54% of consumers are planning to continue to consume vitamins and supplements after the pandemic. The Indonesian Vitamin D market in particular is expected to grow by 7% from $1.1 billion in 2020 to $1.6 billion in 2025 following a growing awareness on Vitamin D deficiency and osteoporosis prevalence. 

This trend means ample opportunity for pharmaceutical industry players. The pandemic however, also highlighted the unpreparedness of Indonesia’s pharmaceutical sector. Early on in the pandemic in May 2020, operational capacity of Indonesian pharmaceutical firms was cut to 55-60% due to supply chain disruption. This came as no surprise as Indonesia imports around 90% of raw ingredients with a majority coming from China. 

Learning from this experience, the Indonesian government is seeking to cut the country’s reliance on imported raw materials by cutting import by 35% by 2022. The Indonesian Coordinating Board (BKPM) is also trying to make it easier to set up pharmaceutical business in the country through streamlined licensing and fiscal incentives. 

All of these are good news for the national pharmaceutical industry. The Indonesian pharmaceutical market is valued at US$6 billion and expected to reach $10.11 billion in 2021. Moving forward, the national pharmaceutical industry is projected to grow by 12-13% per year.

Pandemic, Beauty Influencers, and Emerging Local Brands: The Forces that Reshape Indonesian Beauty Industry

Throughout the years, the $500-billion beauty industry has shown extreme resilience, recording an average of 4.6% growth annually in the last decade. The Covid-19 pandemic however proved to be a harder hit to the industry, as the lockdown forced store closures around the world. This led to the shutdown of approximately 30% of the beauty market, which doesn’t come as a surprise considering that a majority of customers still prefers to purchase beauty products online, even those in the tech-savvy Gen Z and Millennials groups.

In this disruption, skincare, haircare, and bath and body products rose to become the new heroes of the beauty industry. Europe’s Zalando reported 300% increase of skin, nail, and haircare products, while Amazon reported 65% increase of bath and body products. 

In Indonesia, users of outdoor care such as sunscreen dropped by more than 13% during the pandemic. For skincare products such as serum, day and night cream, and eye cream, the decline is maintained below 10%. As the industry began to recover in 2021, it is further boosted by online sales, which is dominated by local brands. Local skincare products saw sales doubled in Q1 2021 and Tokopedia reported 60% sales increase in the skincare category, comprising face wash, serum, face mask, and moisturizer.  

One of the products that we have seen gaining popularity is serum. In June 2021, serum sales on the e-commerce platform Shopee reached IDR148.02 billion, driven by local brands. Local brands have become so popular as they offer cheaper options, which allow the Indonesian market to embrace these products that were previously considered premium. This is further boosted by beauty influencers, who have successfully made local brands go viral.

Bahtera as a specialty chemical distributor saw a 100% increase in active ingredient sales during the pandemic as a result of this growing interest in serum. Based on our observation, acne and brightening remain the most popular product segments, followed by moisturizing and anti-aging. 

As Indonesians look for the next big thing in the beauty industry, new trends will continue to emerge. Boosters, which offer more potency, will take the reign. Blue light protection will also dominate the market as Indonesians spend more time indoor and on their gadgets.

One thing is for certain: influencers and growing local brands will continue to drive trend in the Indonesian beauty industry moving forward. In recent years, local brands have played a key role in providing customers with more diverge options. And the number of local beauty brands in the country continues to grow rapidly. In 2018 alone, 760 local cosmetics brands emerged. The number is staggering compared to 153 new brands in 2017. 

Studies also show that 80% of global consumers make beauty-related purchases based on influencers’ recommendation. In Indonesia, beauty influencers contribute to the boom of Korean beauty products, influencing 39% of purchases. The combination of the two will encourage Indonesian customers to be bolder in exploring new beauty trends and trying on unique, innovative products.

 

The Need for Health and Convenience Shape F&B Trends in Indonesia

While the impact of the COVID-19 pandemic has been felt across all industries, nowhere is such impact more apparent than in the Food & Beverage (F&B) sector. The pandemic has certainly changed the way people consume. This will unsurprisingly have long-lasting impact on an industry that has always been driven by consumer behavior. Here are three trends to look out for in the Indonesian F&B industry.

The Rise of Online Consumption 

Despite an initial loss of around 30% amid lockdown and dine-in restrictions early on, the F&B industry has quickly bounced back as customers all over the world adjusted their consumption pattern. In Indonesia, the availability of online platforms was a big part of this. Grab Food online food delivery saw an increase of 4% in March 2020, amounting to an overall increase of 10% across all online delivery platforms throughout 2020, according to a 2021 report.

This trend is expected to continue. Indonesia already has the largest online food delivery service market in Southeast Asia, accounting for 31% of the market. As more customers adopt digital means to purchase their food, this number will continue to grow. By 2023, the revenue generated through online sales is predicted to reach 99% of the total F&B revenue in the country. 

The effect of online food delivery services was clearly seen by Bahtera. After a slight dip early in the pandemic, the F&B market began to increase. Ultimately, we saw more clients expand their distribution channels and new products as they shifted to online platforms. 

Health is the Name of the Game

The pandemic has also driven customers to look for healthier and natural options. This came as no surprise as the pandemic has made health the top issue in everyone’s mind. However, it appears that there’s a bit more at play here. Studies show that most people experience a loss of control during a big event such as the pandemic, which drives them towards the familiar. When it comes to food, this amounts to two options: junk food and healthy food. 

While the two seem paradoxical, the numbers have confirmed this. In the second week of the pandemic in Indonesia, McDonald’s saw an increase of 170% in average daily transaction value. On the other hand, spending on health products in Indonesia has grown by 77% after the pandemic. In the first quarter of 2021, sales of healthy food on the online platform Tokopedia saw a six-fold increase.  

A 2020 report by Food Industry Asia (FIA) shows that the trend is here to stay. The survey found that 99% of Indonesian consumers are looking to improve their diet. As the Indonesian government ramped up action to address the country’s severe malnutrition problem, food companies in the country show their support by improving nutritional value in their products. A total of 83% of the companies surveyed said that they have started the reformulation process, while 22% said they have completed their plans. 

The bakery segment is another promising segment for the healthy food trend. We have seen an increase in demand for natural coloring and healthier emulsifier options. Moreover, we see growing demands for natural extracts as more clients begin to develop herbal drink products. 

Frozen Food is Gaining Popularity

Another trend to look out for in Indonesia is the rise of ready-to-eat food products. Demands for frozen food had been increasing in Indonesia even before the pandemic. Between 2016 and 2019, Indonesia’s packaged food market increased from $18.59 million to $19.76 million. This was driven by growing urban dwellers, convenience store boom, and improved freezing technologies in the country. 

As people were forced to stay at home during the pandemic, demand for frozen food further increased by 19%. In 2020, the value of the Indonesian frozen food market reached $995.79 and is projected to grow by 8.49% annually between 2021 and 2026.

Indonesia’s Agriculture Industry Slowly Embraces More Sustainable Options

Over the years, the world has continued to ramp up regulations on the use of hazardous chemicals in pesticides. Since the Stockholm Convention on Persistent Organic Pollutants (POP), which aims to limit the use of chemical pollutants including in pesticides, entered into effect in 2004, its list of substances to be eliminated or prohibited has grown. Since then, many countries in the world have taken a harsher stance against the use of hazardous chemicals across industries. Last year, the European Union (EU) made a commitment to review its export regulation for hazardous chemicals that are banned in EU, potentially further limiting the availability of these chemicals elsewhere.

While the agriculture sector is somewhat slower in moving toward more sustainable approach compared to its chemicals-reliant counterparts such as the packaging and coating sectors, progress has started to be seen. Over the years, EU has put numerous regulations and programs in place on the use of chemicals in pesticides. While the United States is considered to lag behind on this front, its Environmental Protection Agency (EPA) recently ruled for the banning of chlorpyrifos due to health concerns.  

It is clear that it is time for the agriculture sector to catch up with the sustainability movement that has been gaining traction all over the world. For agriculture, this means eliminating harmful chemicals and shifting to green solvent. While the developed world has embraced this through more rigorous regulations and a growing ban list, adoption has been slower in developing countries. They account for 25% of global pesticide use and demand continues to rise in that part of the world even as it declines in the EU. 

A similar trend is seen in Indonesia, but it is predicted to shift in near future. The Indonesian government has begun a more aggressive push for nation-wide adoption of safer and more environmentally friendly pesticide through a crackdown on illegal pesticides. In 2019, the Ministry of Agriculture issued a stricter regulation on pesticide registration, which is hoped to improve its distribution to help minimize the negative health and environmental  ramifications.

As a specialty chemicals distributor in the agriculture industry, Bahtera has also seen this shift. While the high price tag of green solvent and lack of awareness have been the biggest barrier for its adoption, technological advancement and growing sustainability consciousness in the industry will drive the transformation moving forward. 

In recent years, we have seen more multinational companies switching to green solvent and adopting international standard for pesticide ingredients. As local players begin to adopt this trend, water-based Suspension Concentrate (SC) and oil-based Oil Dispersion (OD) will slowly grow in popularity replacing Emulsifiable Concentrate (EC).  

At this rate, moving toward sustainable pesticide is not only inevitable, but also necessary. The products are available in the country. Leading chemical providers such as BASF have made available various green solvent alternatives, such as its label-free Agnique ME and Agnique AMD series. Meanwhile, more research is being done by local universities and corporations for better green chemistry technology and options. 

While the adoption of green solvent and safer pesticides in Indonesia’s agriculture sector is still in its nascent stage, all of these developments certainly signal for a shift in the trend moving forward. For industry players, this is the time to prepare and build the infrastructure for such shift. That way, not only we can leverage on the market shift when time comes, but we can also help push the transformation for a safer and more sustainable agriculture industry in the country.

The Rise of the Indonesian Healthcare Industry

Indonesia’s healthcare industry has seen unprecedented growth in recent years. By 2020, the country’s pharmaceutical industry has seen an annual growth between 10 and 13%. Meanwhile, the national medical equipment industry grew by 25% in 2018. 

The growth was boosted by government’s plan to develop the national medical equipment industry through Presidential Instruction 6/2016 on the acceleration of pharmaceutical and medical equipment industry development and Health Ministry Regulation 17/2017 that outlines the implementation plan thereof. This was a key move for a country that, as of 2020, still imports 94% of its medical equipment. Another driving factor was improved access to healthcare under the government’s health insurance through BPJS Health. As of March 2021, BPJS Health has covered 83.6% of the Indonesian population. 

The COVID-19 pandemic further added to this push. The pandemic shone light on the massive gap in Indonesia’s healthcare facility, pushing the government to make medical equipment and pharmaceutical sectors a priority in the efforts towards Making Indonesia 4.0

The surge in demand for medical equipment and devices during the pandemic was clearly seen in the market. As a specialty chemical distributor that supports the healthcare industry, Bahtera saw rising demands for chemicals and nonwoven for applications that directly contribute to the pandemic handling, including syringes for vaccination, alcohol swab, protective gown, and antiseptic disinfectant. Need for personal protective equipment in particular saw a significant growth during the pandemic.  

Although several segments, such as wound care and hemodialysis consumable, experienced a slight decline as people put off going to the hospital for non-emergencies, they are expected to recover quickly. Supply chain disruption also played a role in the slowdown as the import of raw materials were halted, forcing pharmaceutical firms to operate at 50-60% capacity.

This has pushed the government to further minimize the country’s reliance on export in medical equipment and devices. This includes setting the target to reduce raw materials import by 35% by the end of 2022. Between 2016 and 2019, domestic raw material supply has shown growth. Drug raw material companies grew to 14 companies from 8, traditional medicine companies grew to 120 from 88, natural herb extract grew to 17 from 8, and medical equipment and devices companies grew to 313 from 215.

Digitalization is also a big part of this initiative. In early 2021, the trade ministry conducted an Indonesia Industry 4.0 Readiness Index assessment on several industries, including the pharmaceutical and medical device sectors. 

The continued push for domestic medical equipment production in the last few years has resulted in significant growth in the number of medical equipment industry players. Medical equipment manufacturers in the country have grown by 361.66% from only 193 companies in 2015 to 891 companies in 2021. Still, there is a lot to be done. Rising prices and export halt early on in the pandemic created a medical equipment crisis in Indonesia, which only had two face mask manufacturers. This highlighted the urgent need for a more robust medical equipment industry in the country. 

With this awareness, along with the government’s continued push, growingly health-conscious people, and increased access to health insurance, the upward trend of the healthcare industry will continue. There is so much potential to be explored, considering the massive unaddressed demand in the market representing a US$68-billion opportunity.

Sustainable Packaging: The Paper Industry’s Future

As the world embraced digitalization, many were concerned for the future of the paper industry. In the last few years, the industry has regained its footing and maintained an average growth of 1% per annum from 2010 to 2018. This growth is estimated to reach 5.8% in 2021. In this new era of the paper industry, the packaging segment is the hero. While global graphic-paper demand has been in decline since 2015 – even longer in developed markets, demands in the packaging segment have maintained a positive growth between 2010 and 2018

Global movement towards sustainability is in full gear, creating disruptions and shifts across all industries. Regulatory breakthroughs to phase out the use of single-use plastics have been enacted by governments across the world, including Australia, the United States, Europe, China, and Indonesia

Fast Moving Consumer Goods (FMCG) companies are moving fast to adjust, with an emphasis on recyclability. This has led to the rise of paper as the preferred material for packaging due to its biodegradability and recyclability, which makes it a more environmentally conscious choice with proper management. Big brands such as McDonald’s, Apple, and Amazon have switched to paper packaging in recent years. Between 2021 and 2024, the paper packaging market is forecasted to reach a growth of 4.1%

Another industry that has spearheaded the move towards paper packaging is the food and beverages sector. In 2019, paper and paper-based materials make up 31.9% of food packaging. In addition to biodegradability, paper packaging also offers more possibilities for design and printing compared to plastic and metal packaging. 

In Indonesia, the growth of the paper packaging market, which is estimated to be 4.6% from 2020 to 2025, is driven by the rapid growth of e-commerce and the food and beverage industry. Indonesia’s overall packaging market is estimated to grow by 2.4% between 2019 and 2024 to reach 159.2 billion units. Paper and board packaging sits at second place after flexible packaging at 36.4% market share.

Such paper packaging market transformation is also the driver for the specialty pulp and paper chemicals industry, which is forecasted to grow by 3.1% annually from 2020 to 2027. Packaging and labeling make up a significant chunk of this growth, with a total consumption of USD8.9 billion in 2019. The biggest growth will be seen in functional chemicals, which cover pigment, latex, and coating agents. This trend is also prevalent in Asia Pacific, which makes up over 46.9% of the pulp and paper chemicals in 2019. The paper packaging market in Asia Pacific is estimated to record a growth of 4.5% between 2021 and 2026. 

This shift has been felt by Bahtera. Amid this boom in paper packaging, demands for water and oil repellent coating from the food industry are increasing. Growth in demands will continue to increase in Indonesia, which is among the 10 largest pulp and paper producers globally with a capacity of around 16 million tons per year in 2018. The country’s key industry players are looking to significantly increase production capacity with the arrival of new manufacturing equipment, which is expected to boost capacity to around 3.6 million tons annually. 

The move to sustainability will continue as countries are gearing up towards stricter, more restrictive regulations. The European Union is looking to enact an even more ambitious plan for the reduction of packaging waste through a review of its Packaging Waste Directive. India is enacting plans to phase out single-use plastic by 2022, while Australia has set an ambitious target of 100% reusable, recyclable, or compostable packaging by 2025. While this shift poses a challenge for the paper industry and the chemicals industry, it also provides an opportunity for a transformation towards a better industry and a better planet. 

 

Water-based Coating: The Rise of Sustainability in the Coating & Construction Industry

As sustainability concerns grow around the globe, more environmentally friendly, less toxic options in the coating and construction industry grow in popularity. Between 2018 and 2019 alone, sales of water-based coating grew by 12% globally, making up 25% of the interior trim trade market

 

Water-based coating provides a more environmentally and health friendly option. With 80% water content, this coating meets the less than 3.5 pounds per gallon of Volatile Organic Compounds (VOC) content requirement set by U.S. and European regulations. Compared to solvent-based coating, it also offers easy cleanup and low odor, making it a great choice for home use. Today, 80% of household paints sold are water-based paints. 

 

This is also pushed by regulatory changes on the use of VOC. The United States’ Environmental Protection Agency (EPA) over the years has set rigorous regulations on VOC use in relation to indoor and outdoor environmental impact. Meanwhile, since the enactment of VOC Solvent Directive in 1999, the European Commission has continued to update the directive and push for tighter VOC limits over the years.

 

While water-based coating continues to rise in popularity as the more sustainable option, its full adoption requires further innovation to match solvent-based coating in some areas of performance. Innovations in recent years have started to answer these issues of lower durability, longer drying, and higher vulnerability to rusting. The availability of special additives for waterborne solutions, advancements in resin chemistry, and other advancements have significantly improved the performance of water-based coating. Further innovations are in the works, including non-isocyanate development to address aesthetics issues, specific copolymers for better performance, and new additive technologies for easier application.  

 

While building and construction industry remains the biggest market for water-based coating at 35%, other industries have begun to catch up. Driven by regulatory requirements and consumer demands, the automotive industry has risen to the second place in terms of water-based coating adoption globally. In Indonesia however, the wood industry has taken the second place. 

 

This and such rise in the building and construction industry has been felt by Bahtera as a specialty chemical distributor. Demands in architectural coating have slowly shifted to water-based coating, especially for indoor application. The local automotive industry however, remains slow in adopting the more environmentally friendly water-based coating. Demands remain concentrated in big players that are bound to more rigorous environmental and safety expectations. 

 

The rise of water-based coating marks the overall rise of label-free products – products that essentially contain zero harmful chemicals. Starting with the growing movement to eliminate alkylphenol ethoxylates (APEO) followed by tougher VOC restrictions, the chemicals industry is on a journey to identify and eliminate harmful substances from everyday products. 

Along with our partners such as BASF, one of the global market leaders for raw materials coating, Bahtera continues to push for the adoption of safer, healthier, and more environmentally friendly specialty chemicals, especially in Indonesia. We continue to make new sustainable products available in the country, as limited availability has been a significant factor in the delayed adoption.

Bahtera Contributes to Indonesia’s Move toward Renewable Energy through Solar Energy Partnership

As the world moves towards decarbonization, renewable energy has gained significant traction over the years. In the last decade, renewable energy consumption has seen a 13.7% average annual growth, way ahead of other energy categories. The world indeed has been awaken to the many opportunities offered by renewable energy beyond environmental sustainability, from higher economic return to job creation. Amid this development, Bahtera made our first foray into renewable energy. This journey starts with solar energy, a renewable energy option with much untapped potential. 

As of 2021, a total of 165 governments have made the pledge to shift toward renewable energy, including the Indonesian government. President Joko Widodo’s administration has set the target of 23% NRE in the national energy mix by 2025 and 31% by 2050.

Indonesia has an enormous renewable energy potential. The country holds 40% of the world’s geothermal energy reserve, a maritime area that potentially generates 75,760 MW of power, and a total potential of 788,000 MW from renewable energy sources. Meanwhile, renewable energy currently makes up only 11.5% of Indonesia’s national energy mix. 

In line with our sustainability commitment, Bahtera seeks to contribute to government’s effort to closing the gap through our new renewable energy unit. Solar energy, which has been heralded as the quickest and easiest renewable energy option to set up, has been our focus at this stage. Bahtera has recently partnered up with a local renewable energy startup, working with industrial clients to help them make the move to solar energy. 

Solar energy remains one of the biggest yet most untapped renewable energy potential for Indonesia. Indonesia’s impressive solar irradiation intensity is enough to cover its power output of up to 1,530 kWh/kWp annually. According to the MEMR, only 153.5 MW of solar power plant has been installed, while the total potential reaches 207.8 GW. As of 2019 however, solar energy only makes up 1.7% of the total electricity production.

Enthusiasm has been high among industrial clients, especially with the government’s continued push towards renewable energy. Recently, the President put a halt on the construction of any new coal-powered steam power plants. In 2018, the Indonesian government also issued MEMR Regulation 49/2018 governing PV system installation in the country. In 2021, this law was further amended through MEMR Regulation 26/2021, effectively easing licensing requirements and lowering monthly charge to the state-owned electricity company PLN.

This is a necessary move considering Indonesia’s pollution and resources crises. Indonesia ranks 9th as the world’s most polluted countries, facing deadly pollution problems. While known for its bountiful natural resources from vast tropical forest to an abundance of energy and mineral resources, Indonesia’s natural resources have been depleting at an alarming rate. In 10 years, Indonesia could run out of oil. Despite being one of the top 20 crude oil and gas exporting countries in the world, Indonesia is already a net oil importer and is predicted to become a net natural gas importer by 2030. 

Meanwhile, the country’s energy consumption continues to increase. Between 2008 and 2015, Indonesia recorded an average electricity demand growth of around 6% annually, and peak demand is projected to triple by 2030.

However, progress has been slow. Massive investment from the government and the business segment is needed to meet these targets. Financial incentive in particular is necessary considering that one of the biggest barriers in switching to solar energy is the steep investment. The investment needed for every kilowatt energy adds up to a significant amount for factories, which average 5 MW in terms of energy need. This is where Bahtera sees an opportunity to contribute. We can work with renewable energy companies that offer financial incentives, which are key to pushing the industry sector to adopt solar energy. 

Another area where Bahtera is focusing our effort is battery for energy storage. Currently, batteries are mostly used for solar microgrids in remote areas across the country. As we increase the national capacity for solar energy however, additional storage would be needed to cover the energy demand. Over time, batteries will be key to mass adoption of solar energy. Beyond supply balancing, batteries have many potential applications in the future.

As solutions to these issues are being discovered, the Indonesian government is moving ahead with its shift towards solar energy. The Ministry of Energy and Mineral Resources (MEMR) is planning to develop a massive solar park in eastern Indonesia. Bahtera will also focus our initial effort in this region, considering its high potential due to higher solar irradiation capacity and cheaper land with suitable slope and contour, which ultimately reduce cost. 

Indonesia’s renewable energy potential—especially solar energy—is clear. The time to invest in solar energy, and ultimately in a brighter energy future for Indonesia, is now.

So Many Skincare Products, So Little Time

So many skincare products in the market to choose for. As the Indonesian market gets more sophisticated, specialized beauty products are gaining popularity driven by the pandemic, the rise of beauty influencers, and emerging local brands. More customers are looking for high efficacy to solve their specific skincare concerns through single-ingredient products and products with active ingredients.

New active ingredients are popping up every day and it’s getting more complicated to choose one that fits you best. We go through some of the latest beauty trends to give you an idea of what to look for. 

UV Filter 

For a long time, UV Filter has been used in sunscreens to protect your skin from UV light. More and more serums, night creams, and sleeping masks today use UV light to add that extra protection for your skin. Most skincare products available today only cover UVA or UVB, which differ in energy strength and wavelength. UVB is stronger but only reaches your outer skin layer.

As we use gadget more and more, more people are looking for protection from blue light. The blue light emitted by your gadgets can cause wrinkles and reduce skin barrier. Today, many skincare products offer blue light protection from special UV Filter. Most of these choices though focus on repairing your skin from the protection of blue light instead of protecting. 

New ingredients are being developed to provide full protection. One such ingredient is Tinosorb® A2B by BASF. Unlike other UV Filters, this one provides full protection from UVA, UVB, and blue light. When looking for skincare products with UV Filter, make sure you’re getting what you’re looking for. 

Anti-aging

Anti-aging skincare has always been popular. Many anti-aging products use retinol, which protects from the loss of collagen and thus promotes skin elasticity. Too much retinol however has the side effect of irritation.  

As the technology advances, new ingredients enter the market to offer higher efficacy and reduce the side effect. BASF introduced the coated retinol Cylasphere™Retinol, which boasts low irritant potential and higher efficacy due to targeted penetration into the skin. This retinol also offers the added benefit of higher stability, which means your skincare product lasts longer after opening. 

Base Cleansing

With so many treatment options in the market, many forget that basic cleansing is still important. Before applying your favorite serums or night creams, first you need to make sure that your skin is clean. This is where your regular facial and body wash comes in. The basic ingredient for foam-based personal care products from shampoo to facial wash is surfactant—to put it simply, this is the thing that makes your soap foamy. 

The best facial wash is the mild one that does not cause dryness but cleanses thoroughly. Today, more people are looking for milder, more natural products. New ingredients available in the market have made this possible. Plantapon® LGC SORB, for example, is a natural surfactant from BASF that is mild with excellent cleansing performance.

As you try out these new products for your specific skin needs, don’t forget to first cleanse your skin for optimal result.

Defoaming Wetting Agent and High Performance Defoamer: Solutions to the Sustainable Water-based Coatings

As governments all over the world double down on Volatile Organic Compound (VOC) restriction in coating, the world is shifting towards green coating options. This has driven growth of global green coatings market, which is projected to see an annual growth of 5.8% to $118,990 million in 2023. 

Asia Pacific, which holds the second biggest market share, will see the highest annual growth at 6.7%. Among the green alternatives that contain low or zero VOC, water-based coatings will take the lead. Having seen impressive growth in the last few years globally, water-based coatings is projected to grow as new technologies emerge to improve its performance. 

Water-based coatings offer certain advantages such as low toxicity and flammability. Considering that it is still in the nascent stage of development however, a few performance problems remain, including foam stabilization and substrate wetting.

Emerging new technologies are helping to address this issue. BASF formulation additive FoamStar ED 2528 is extremely effective in doing so. Our evaluation of Foamstar ED 2528 on clear coat resulted in similar density and much lower foaming height, signifying similar defoaming performance on microfoam and much higher defoaming performance on macrofoam compared to benchmark. 

This high-performance emulsion defoamer is highly effective on microfoam and macrofoam, provides high transparency on clear coat high-gloss topcoat, and has excellent storage stability. Mostly used for industrial coating, the low-odor, VOC-free water-based emulsion with no mineral oils or cyclic silicone is highly sustainable to boot. 

Foamstar ED 2528 shows high defoaming performance on white topcoat compared to benchmarks. 

Another solution to air bubbles and substrate wetting in water-based coating is defoaming wetting agents, such as BASF’s Hydropalat WE 3229. Not only does it offer strong substrate wetting, it also comes with the best-in-class defoamer that prevents air bubbles. Our testing results in significantly lower foam level compared to other similar products in the market, while maintaining low VOC level and odor. 

Hydropalat WE 3229 shows excellent defoaming performance compared to similar products in the market.

Hydropalat WE 3229 shows high leveling performance in wetting test on release paper.

As the technology continues to improve, water-based coatings will continue to grow in popularity. By 2027, the global water-based coatings market is expected to reach EUR73 billion, of which EUR15.5 billion will be coming from China. Today, we are already seeing industry giants such as BASF and Valspar pouring in significant investment into water-based coatings as demands continue to rise.

 

Vitamins & Supplements Consumption will Continue to Grow beyond the Pandemic

The already growing vitamin, mineral, and supplement (VMS) category has enjoyed significant boost from changing health priority amid the Covid-19 pandemic. During the pandemic, monthly VMS spending has increased by 10-15%, while 20% of non-consumers have said that they would start consuming VMS. Such increase was concentrated on immune boosters such as vitamin C and vitamin D on the onset of the pandemic, which saw a growth of up to 16 times in March 2020. In the US, vitamin C makes up only 12% of the VMS market, but contributed to 26% of the market growth.  

The same growth was seen in Indonesia. According to a survey in July 2020, 84% of consumers in the 25-34 age group and 83% of consumers in the 35-44 age group said that their VMS consumption has increased amid the pandemic. Indonesian VMS start-up You reported that their multivitamin sales almost tripled.

Such growth in VMS consumption began well before COVID-19, pushed by growing interest in health and wellness. Between 2014 and 2018, the VMS global market saw a consistent annual growth of around 6.3%. This trend is further boosted by the pandemic and particularly prevalent among young people. While 11% of Americans claim higher VMS purchase, this number jumped to around 15% among GenZ and millennials. 

The increasing interest in VMS along with supply chain problems due to pandemic-related lockdowns resulted in an interesting few months for the VMS sector. Following an oversupply in 2019, rising demand and production halt sent prices skyrocketing. Entering 2021, supply and demand have begun to stabilize. 

However, VMS popularity is here to stay, even as we get out of the pandemic. The global immune health supplements market was projected at $19 billion in 2020. Further annual growth is expected at 7.7% toward an estimated market value of $43.5 billion by 2031. While the largest growth will continue to be seen in North America, East Asia, and Europe, developing nations such as India, Brazil, and Indonesia will see significant growth as well.

In Indonesia, growing health awareness will be a major driver. Even before the pandemic, health expenditure in Indonesia has been steadily increasing from $27 per capita in 2004 to $112 per capita in 2018. Covid-19 has further increased this awareness. A 2020 survey shows that 54% of consumers are planning to continue to consume vitamins and supplements after the pandemic. The Indonesian Vitamin D market in particular is expected to grow by 7% from $1.1 billion in 2020 to $1.6 billion in 2025 following a growing awareness on Vitamin D deficiency and osteoporosis prevalence. 

This trend means ample opportunity for pharmaceutical industry players. The pandemic however, also highlighted the unpreparedness of Indonesia’s pharmaceutical sector. Early on in the pandemic in May 2020, operational capacity of Indonesian pharmaceutical firms was cut to 55-60% due to supply chain disruption. This came as no surprise as Indonesia imports around 90% of raw ingredients with a majority coming from China. 

Learning from this experience, the Indonesian government is seeking to cut the country’s reliance on imported raw materials by cutting import by 35% by 2022. The Indonesian Coordinating Board (BKPM) is also trying to make it easier to set up pharmaceutical business in the country through streamlined licensing and fiscal incentives. 

All of these are good news for the national pharmaceutical industry. The Indonesian pharmaceutical market is valued at US$6 billion and expected to reach $10.11 billion in 2021. Moving forward, the national pharmaceutical industry is projected to grow by 12-13% per year.

Pandemic, Beauty Influencers, and Emerging Local Brands: The Forces that Reshape Indonesian Beauty Industry

Throughout the years, the $500-billion beauty industry has shown extreme resilience, recording an average of 4.6% growth annually in the last decade. The Covid-19 pandemic however proved to be a harder hit to the industry, as the lockdown forced store closures around the world. This led to the shutdown of approximately 30% of the beauty market, which doesn’t come as a surprise considering that a majority of customers still prefers to purchase beauty products online, even those in the tech-savvy Gen Z and Millennials groups.

In this disruption, skincare, haircare, and bath and body products rose to become the new heroes of the beauty industry. Europe’s Zalando reported 300% increase of skin, nail, and haircare products, while Amazon reported 65% increase of bath and body products. 

In Indonesia, users of outdoor care such as sunscreen dropped by more than 13% during the pandemic. For skincare products such as serum, day and night cream, and eye cream, the decline is maintained below 10%. As the industry began to recover in 2021, it is further boosted by online sales, which is dominated by local brands. Local skincare products saw sales doubled in Q1 2021 and Tokopedia reported 60% sales increase in the skincare category, comprising face wash, serum, face mask, and moisturizer.  

One of the products that we have seen gaining popularity is serum. In June 2021, serum sales on the e-commerce platform Shopee reached IDR148.02 billion, driven by local brands. Local brands have become so popular as they offer cheaper options, which allow the Indonesian market to embrace these products that were previously considered premium. This is further boosted by beauty influencers, who have successfully made local brands go viral.

Bahtera as a specialty chemical distributor saw a 100% increase in active ingredient sales during the pandemic as a result of this growing interest in serum. Based on our observation, acne and brightening remain the most popular product segments, followed by moisturizing and anti-aging. 

As Indonesians look for the next big thing in the beauty industry, new trends will continue to emerge. Boosters, which offer more potency, will take the reign. Blue light protection will also dominate the market as Indonesians spend more time indoor and on their gadgets.

One thing is for certain: influencers and growing local brands will continue to drive trend in the Indonesian beauty industry moving forward. In recent years, local brands have played a key role in providing customers with more diverge options. And the number of local beauty brands in the country continues to grow rapidly. In 2018 alone, 760 local cosmetics brands emerged. The number is staggering compared to 153 new brands in 2017. 

Studies also show that 80% of global consumers make beauty-related purchases based on influencers’ recommendation. In Indonesia, beauty influencers contribute to the boom of Korean beauty products, influencing 39% of purchases. The combination of the two will encourage Indonesian customers to be bolder in exploring new beauty trends and trying on unique, innovative products.

 

The Need for Health and Convenience Shape F&B Trends in Indonesia

While the impact of the COVID-19 pandemic has been felt across all industries, nowhere is such impact more apparent than in the Food & Beverage (F&B) sector. The pandemic has certainly changed the way people consume. This will unsurprisingly have long-lasting impact on an industry that has always been driven by consumer behavior. Here are three trends to look out for in the Indonesian F&B industry.

The Rise of Online Consumption 

Despite an initial loss of around 30% amid lockdown and dine-in restrictions early on, the F&B industry has quickly bounced back as customers all over the world adjusted their consumption pattern. In Indonesia, the availability of online platforms was a big part of this. Grab Food online food delivery saw an increase of 4% in March 2020, amounting to an overall increase of 10% across all online delivery platforms throughout 2020, according to a 2021 report.

This trend is expected to continue. Indonesia already has the largest online food delivery service market in Southeast Asia, accounting for 31% of the market. As more customers adopt digital means to purchase their food, this number will continue to grow. By 2023, the revenue generated through online sales is predicted to reach 99% of the total F&B revenue in the country. 

The effect of online food delivery services was clearly seen by Bahtera. After a slight dip early in the pandemic, the F&B market began to increase. Ultimately, we saw more clients expand their distribution channels and new products as they shifted to online platforms. 

Health is the Name of the Game

The pandemic has also driven customers to look for healthier and natural options. This came as no surprise as the pandemic has made health the top issue in everyone’s mind. However, it appears that there’s a bit more at play here. Studies show that most people experience a loss of control during a big event such as the pandemic, which drives them towards the familiar. When it comes to food, this amounts to two options: junk food and healthy food. 

While the two seem paradoxical, the numbers have confirmed this. In the second week of the pandemic in Indonesia, McDonald’s saw an increase of 170% in average daily transaction value. On the other hand, spending on health products in Indonesia has grown by 77% after the pandemic. In the first quarter of 2021, sales of healthy food on the online platform Tokopedia saw a six-fold increase.  

A 2020 report by Food Industry Asia (FIA) shows that the trend is here to stay. The survey found that 99% of Indonesian consumers are looking to improve their diet. As the Indonesian government ramped up action to address the country’s severe malnutrition problem, food companies in the country show their support by improving nutritional value in their products. A total of 83% of the companies surveyed said that they have started the reformulation process, while 22% said they have completed their plans. 

The bakery segment is another promising segment for the healthy food trend. We have seen an increase in demand for natural coloring and healthier emulsifier options. Moreover, we see growing demands for natural extracts as more clients begin to develop herbal drink products. 

Frozen Food is Gaining Popularity

Another trend to look out for in Indonesia is the rise of ready-to-eat food products. Demands for frozen food had been increasing in Indonesia even before the pandemic. Between 2016 and 2019, Indonesia’s packaged food market increased from $18.59 million to $19.76 million. This was driven by growing urban dwellers, convenience store boom, and improved freezing technologies in the country. 

As people were forced to stay at home during the pandemic, demand for frozen food further increased by 19%. In 2020, the value of the Indonesian frozen food market reached $995.79 and is projected to grow by 8.49% annually between 2021 and 2026.

Indonesia’s Agriculture Industry Slowly Embraces More Sustainable Options

Over the years, the world has continued to ramp up regulations on the use of hazardous chemicals in pesticides. Since the Stockholm Convention on Persistent Organic Pollutants (POP), which aims to limit the use of chemical pollutants including in pesticides, entered into effect in 2004, its list of substances to be eliminated or prohibited has grown. Since then, many countries in the world have taken a harsher stance against the use of hazardous chemicals across industries. Last year, the European Union (EU) made a commitment to review its export regulation for hazardous chemicals that are banned in EU, potentially further limiting the availability of these chemicals elsewhere.

While the agriculture sector is somewhat slower in moving toward more sustainable approach compared to its chemicals-reliant counterparts such as the packaging and coating sectors, progress has started to be seen. Over the years, EU has put numerous regulations and programs in place on the use of chemicals in pesticides. While the United States is considered to lag behind on this front, its Environmental Protection Agency (EPA) recently ruled for the banning of chlorpyrifos due to health concerns.  

It is clear that it is time for the agriculture sector to catch up with the sustainability movement that has been gaining traction all over the world. For agriculture, this means eliminating harmful chemicals and shifting to green solvent. While the developed world has embraced this through more rigorous regulations and a growing ban list, adoption has been slower in developing countries. They account for 25% of global pesticide use and demand continues to rise in that part of the world even as it declines in the EU. 

A similar trend is seen in Indonesia, but it is predicted to shift in near future. The Indonesian government has begun a more aggressive push for nation-wide adoption of safer and more environmentally friendly pesticide through a crackdown on illegal pesticides. In 2019, the Ministry of Agriculture issued a stricter regulation on pesticide registration, which is hoped to improve its distribution to help minimize the negative health and environmental  ramifications.

As a specialty chemicals distributor in the agriculture industry, Bahtera has also seen this shift. While the high price tag of green solvent and lack of awareness have been the biggest barrier for its adoption, technological advancement and growing sustainability consciousness in the industry will drive the transformation moving forward. 

In recent years, we have seen more multinational companies switching to green solvent and adopting international standard for pesticide ingredients. As local players begin to adopt this trend, water-based Suspension Concentrate (SC) and oil-based Oil Dispersion (OD) will slowly grow in popularity replacing Emulsifiable Concentrate (EC).  

At this rate, moving toward sustainable pesticide is not only inevitable, but also necessary. The products are available in the country. Leading chemical providers such as BASF have made available various green solvent alternatives, such as its label-free Agnique ME and Agnique AMD series. Meanwhile, more research is being done by local universities and corporations for better green chemistry technology and options. 

While the adoption of green solvent and safer pesticides in Indonesia’s agriculture sector is still in its nascent stage, all of these developments certainly signal for a shift in the trend moving forward. For industry players, this is the time to prepare and build the infrastructure for such shift. That way, not only we can leverage on the market shift when time comes, but we can also help push the transformation for a safer and more sustainable agriculture industry in the country.

The Rise of the Indonesian Healthcare Industry

Indonesia’s healthcare industry has seen unprecedented growth in recent years. By 2020, the country’s pharmaceutical industry has seen an annual growth between 10 and 13%. Meanwhile, the national medical equipment industry grew by 25% in 2018. 

The growth was boosted by government’s plan to develop the national medical equipment industry through Presidential Instruction 6/2016 on the acceleration of pharmaceutical and medical equipment industry development and Health Ministry Regulation 17/2017 that outlines the implementation plan thereof. This was a key move for a country that, as of 2020, still imports 94% of its medical equipment. Another driving factor was improved access to healthcare under the government’s health insurance through BPJS Health. As of March 2021, BPJS Health has covered 83.6% of the Indonesian population. 

The COVID-19 pandemic further added to this push. The pandemic shone light on the massive gap in Indonesia’s healthcare facility, pushing the government to make medical equipment and pharmaceutical sectors a priority in the efforts towards Making Indonesia 4.0

The surge in demand for medical equipment and devices during the pandemic was clearly seen in the market. As a specialty chemical distributor that supports the healthcare industry, Bahtera saw rising demands for chemicals and nonwoven for applications that directly contribute to the pandemic handling, including syringes for vaccination, alcohol swab, protective gown, and antiseptic disinfectant. Need for personal protective equipment in particular saw a significant growth during the pandemic.  

Although several segments, such as wound care and hemodialysis consumable, experienced a slight decline as people put off going to the hospital for non-emergencies, they are expected to recover quickly. Supply chain disruption also played a role in the slowdown as the import of raw materials were halted, forcing pharmaceutical firms to operate at 50-60% capacity.

This has pushed the government to further minimize the country’s reliance on export in medical equipment and devices. This includes setting the target to reduce raw materials import by 35% by the end of 2022. Between 2016 and 2019, domestic raw material supply has shown growth. Drug raw material companies grew to 14 companies from 8, traditional medicine companies grew to 120 from 88, natural herb extract grew to 17 from 8, and medical equipment and devices companies grew to 313 from 215.

Digitalization is also a big part of this initiative. In early 2021, the trade ministry conducted an Indonesia Industry 4.0 Readiness Index assessment on several industries, including the pharmaceutical and medical device sectors. 

The continued push for domestic medical equipment production in the last few years has resulted in significant growth in the number of medical equipment industry players. Medical equipment manufacturers in the country have grown by 361.66% from only 193 companies in 2015 to 891 companies in 2021. Still, there is a lot to be done. Rising prices and export halt early on in the pandemic created a medical equipment crisis in Indonesia, which only had two face mask manufacturers. This highlighted the urgent need for a more robust medical equipment industry in the country. 

With this awareness, along with the government’s continued push, growingly health-conscious people, and increased access to health insurance, the upward trend of the healthcare industry will continue. There is so much potential to be explored, considering the massive unaddressed demand in the market representing a US$68-billion opportunity.

Sustainable Packaging: The Paper Industry’s Future

As the world embraced digitalization, many were concerned for the future of the paper industry. In the last few years, the industry has regained its footing and maintained an average growth of 1% per annum from 2010 to 2018. This growth is estimated to reach 5.8% in 2021. In this new era of the paper industry, the packaging segment is the hero. While global graphic-paper demand has been in decline since 2015 – even longer in developed markets, demands in the packaging segment have maintained a positive growth between 2010 and 2018

Global movement towards sustainability is in full gear, creating disruptions and shifts across all industries. Regulatory breakthroughs to phase out the use of single-use plastics have been enacted by governments across the world, including Australia, the United States, Europe, China, and Indonesia

Fast Moving Consumer Goods (FMCG) companies are moving fast to adjust, with an emphasis on recyclability. This has led to the rise of paper as the preferred material for packaging due to its biodegradability and recyclability, which makes it a more environmentally conscious choice with proper management. Big brands such as McDonald’s, Apple, and Amazon have switched to paper packaging in recent years. Between 2021 and 2024, the paper packaging market is forecasted to reach a growth of 4.1%

Another industry that has spearheaded the move towards paper packaging is the food and beverages sector. In 2019, paper and paper-based materials make up 31.9% of food packaging. In addition to biodegradability, paper packaging also offers more possibilities for design and printing compared to plastic and metal packaging. 

In Indonesia, the growth of the paper packaging market, which is estimated to be 4.6% from 2020 to 2025, is driven by the rapid growth of e-commerce and the food and beverage industry. Indonesia’s overall packaging market is estimated to grow by 2.4% between 2019 and 2024 to reach 159.2 billion units. Paper and board packaging sits at second place after flexible packaging at 36.4% market share.

Such paper packaging market transformation is also the driver for the specialty pulp and paper chemicals industry, which is forecasted to grow by 3.1% annually from 2020 to 2027. Packaging and labeling make up a significant chunk of this growth, with a total consumption of USD8.9 billion in 2019. The biggest growth will be seen in functional chemicals, which cover pigment, latex, and coating agents. This trend is also prevalent in Asia Pacific, which makes up over 46.9% of the pulp and paper chemicals in 2019. The paper packaging market in Asia Pacific is estimated to record a growth of 4.5% between 2021 and 2026. 

This shift has been felt by Bahtera. Amid this boom in paper packaging, demands for water and oil repellent coating from the food industry are increasing. Growth in demands will continue to increase in Indonesia, which is among the 10 largest pulp and paper producers globally with a capacity of around 16 million tons per year in 2018. The country’s key industry players are looking to significantly increase production capacity with the arrival of new manufacturing equipment, which is expected to boost capacity to around 3.6 million tons annually. 

The move to sustainability will continue as countries are gearing up towards stricter, more restrictive regulations. The European Union is looking to enact an even more ambitious plan for the reduction of packaging waste through a review of its Packaging Waste Directive. India is enacting plans to phase out single-use plastic by 2022, while Australia has set an ambitious target of 100% reusable, recyclable, or compostable packaging by 2025. While this shift poses a challenge for the paper industry and the chemicals industry, it also provides an opportunity for a transformation towards a better industry and a better planet. 

 

Water-based Coating: The Rise of Sustainability in the Coating & Construction Industry

As sustainability concerns grow around the globe, more environmentally friendly, less toxic options in the coating and construction industry grow in popularity. Between 2018 and 2019 alone, sales of water-based coating grew by 12% globally, making up 25% of the interior trim trade market

 

Water-based coating provides a more environmentally and health friendly option. With 80% water content, this coating meets the less than 3.5 pounds per gallon of Volatile Organic Compounds (VOC) content requirement set by U.S. and European regulations. Compared to solvent-based coating, it also offers easy cleanup and low odor, making it a great choice for home use. Today, 80% of household paints sold are water-based paints. 

 

This is also pushed by regulatory changes on the use of VOC. The United States’ Environmental Protection Agency (EPA) over the years has set rigorous regulations on VOC use in relation to indoor and outdoor environmental impact. Meanwhile, since the enactment of VOC Solvent Directive in 1999, the European Commission has continued to update the directive and push for tighter VOC limits over the years.

 

While water-based coating continues to rise in popularity as the more sustainable option, its full adoption requires further innovation to match solvent-based coating in some areas of performance. Innovations in recent years have started to answer these issues of lower durability, longer drying, and higher vulnerability to rusting. The availability of special additives for waterborne solutions, advancements in resin chemistry, and other advancements have significantly improved the performance of water-based coating. Further innovations are in the works, including non-isocyanate development to address aesthetics issues, specific copolymers for better performance, and new additive technologies for easier application.  

 

While building and construction industry remains the biggest market for water-based coating at 35%, other industries have begun to catch up. Driven by regulatory requirements and consumer demands, the automotive industry has risen to the second place in terms of water-based coating adoption globally. In Indonesia however, the wood industry has taken the second place. 

 

This and such rise in the building and construction industry has been felt by Bahtera as a specialty chemical distributor. Demands in architectural coating have slowly shifted to water-based coating, especially for indoor application. The local automotive industry however, remains slow in adopting the more environmentally friendly water-based coating. Demands remain concentrated in big players that are bound to more rigorous environmental and safety expectations. 

 

The rise of water-based coating marks the overall rise of label-free products – products that essentially contain zero harmful chemicals. Starting with the growing movement to eliminate alkylphenol ethoxylates (APEO) followed by tougher VOC restrictions, the chemicals industry is on a journey to identify and eliminate harmful substances from everyday products. 

Along with our partners such as BASF, one of the global market leaders for raw materials coating, Bahtera continues to push for the adoption of safer, healthier, and more environmentally friendly specialty chemicals, especially in Indonesia. We continue to make new sustainable products available in the country, as limited availability has been a significant factor in the delayed adoption.