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NEW UPDATES Asean Affairs  30 September 2014  

Gunnebo to maintain Indonesia’s contribution to its business

Sweden-based security services provider Gunnebo Security Group entered the cash-handling business in Indonesia recently by signing an agreement with the country’s second-largest taxi operator, Express Group. During his recent visit to Indonesia, Gunnebo president and CEO Per Borgvall spoke to The Jakarta Post’s Khoirul Amin about his company’s business in Southeast Asia’s largest economy. Below are excerpts of the interview:

Question: How does Gunnebo see the Indonesian market and how significant is the market for Gunnebo’s business?

Answer: […] If we look at our business globally, Indonesia ranks fifth in size in global growth. By being number five around the globe, it is a very important market for us. We also have been in this market for a very long time.

[…] We have been around for a long time, since the 1970s, so we are not a newcomer, and we will be here for a long time as well. On top of that, Indonesia is one of the major growing markets in the world — the share size of the population and the size of the country with all of its islands. So it is extremely important.

Seeing that Indonesia is one of key markets for your company, how do you expect the country will contribute to Gunnebo’s global business in the near future?

Indonesia currently contributes about 20 percent of the group’s total revenue from Asia Pacific. Gunnebo’s Asia Pacific business is growing, so it is a challenge for Indonesia to grow as fast as India, China and others.

But I guess it will be roughly the same, no big difference, because the business in the whole region is growing. So, to maintain 20 percent is a challenge. You have to grow if you want to have 20 percent.

Does Gunnebo have any plans to invest more to expand its business in Indonesia?

For me, I think it is crucial for us to say that we are more than happy to invest to have a bigger business here because we are doing good business; we have been here for a long time […].

There are three kinds [of investment] that we do in Indonesia. The first one is when we invest in equipment and machinery at our factory. That is somewhere between ?1 million to ?3 million on an annual basis.

The other investment is in people — normally it is not on our balance sheet. It is a cost, but it is so important to […] educate people and develop organizations […].

The third is in product development. This equipment, Intelli-Safe, is a very good example of that. It is not developed only for Indonesia; it is a global product. We invest in product development on a global scale and we adapt to local markets […].

We spend money in both India and China; those are two big investment areas in the Asia Pacific. […] The majority of our investment goes to the Asia Pacific region. I would say around 60 to 65 percent.

This year, in India, we have quite a big investment program. So, we probably have double [the amount of investment] compared to Indonesia; we have ?3 million to ?4 million to extend a factory and buy machinery [in India].

Which business divisions or units do you predict will be the largest within the Indonesian market?

We have four legs of business. They are the traditional physical security safe boxes, the cash-handling business, electronic security business and entrance security control business. I expect all countries to work in all four segments, and of course the situation in different markets will be a bit
different […].

When it comes to Indonesia, infrastructure is taking off a lot now […] so now we have high expectations [for Indonesia].

[For the cash-handling business] because the amount of cash circulation is increasing, also in Indonesia and many other countries, for us it is very important to be there for security reasons, productivity and efficiency. […] This year, we have 40 percent growth in the cash-handling business globally.

In entrance control, it is about two things: first, controlling the flow of people entering major buildings […] and the other one is controlling the flow of people entering the mass transit sector, such as airports, the railway system and metros.

Now you can see some extensions of airports in Jakarta. There will be more to come. There was not much infrastructure investment in Jakarta [in the past] compared to a lot of other countries. But now, you can see things are taking off and, of course, it will have impacts on our own opportunities to be more involved in the entrance-control business in Indonesia as well.

In addition, the Indonesian factory is one of the key factories in our group […]. It has been here for a long time and it is important not only for Indonesia but also back in Europe. Of all safe deposit lockers and fire extinguishers manufactured at the factory, around 30 percent are exported to the global market.

Does Gunnebo still see any big hurdles or challenges in cashing in on the country’s growing market?

Indonesia has thousands of islands, which is a complication in doing business, but at the same time it is a benefit for us because we are not a newcomer. However, it is quite a big hurdle for anyone who wants to enter the market to have national coverage in Indonesia. That is a huge challenge for any foreign company […].

Another thing is a famous thing that you see in a lot of countries in the Asia Pacific, Eastern Europe and Southern America regions: corruption. It is always a problem, because we are a republic company, we are extremely clean and we cannot involve ourselves in any dirty business. That is always something that we take into account in doing business

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