The market in Southeast Asia

Southeast Asia, comprising Singapore, Thailand, Malaysia, Myanmar, Indonesia, Vietnam, Cambodia and Philippines, is one of the fastest growing regions for label and package printing.
A number of suppliers have recently established a direct presence in Southeast Asia, such as MPS with an office in Malaysia

Gravure is one of the dominant printing technologies for label printing in the region, followed by offset due to the cost advantages of reasonably priced plates and availability of CMYK inks. UV flexo is gaining popularity and digital is making inroads into the market too.

The pressure-sensitive label industry is growing as a result of increasing consumption of FMCG products: home and personal care, food and beverage, and liquor. While most multinational brands opt for premium or added-value labels, local companies often go for more cost-effective options. Brands are seen shifting from pressure-sensitive to direct print and shrink sleeves, which are gaining popularity in the food and beverage sector.

The region has growth potential but is not untouched by challenges such as aggressive pricing, shrinking margins, stiff competition, lack of skilled workforce, rising raw material prices and new government regulations, among others.

Strong growth in Indonesia

In the light of the above, Indonesia is one of the fastest-growing labeling markets in the region.

At a one-day seminar organized by Indonesia Packaging Federation (IPF), Henky Wibawa, executive director at IPF, explained the importance of functional and smart packaging in the country.

‘It is important that Indonesian label and packaging printers adapt to modern printing techniques in the face of new government regulations expected to come into force by 2019,’ he said.

New security regulations will mandate pharmaceutical companies in the country to have variable data printed on labels and packaging material to act against counterfeit products. Thus, the association foresees huge growth in digital printing technology in the near future.

According to Danny Lim, sales and marketing director at Theia, digital printing technology fits the needs of the local label and packaging industry: ‘The lifecycle, batch cycle and repeat orders are on a decline, so we need to look at the variance and value we offer customers.’

Turning to the huge potential in the Asian market, Andy Yusuf, country manager at HP Indigo & Pagewide Web Press, Graphic Solutions Business in Indonesia, added: ‘Millennials represent more than 45 percent of the region’s population, with 60 percent of the world’s millennials expected to live in Asia by 2020. Asian millennials will have more spending power than any previous generation, estimated at six trillion USD in disposable income by 2020.’ He further said that the Asia-Pacific region has 725 HP Indigo digital presses installed for commercial, labels and package printing.

According to a 2015 census, Indonesia is the fourth most populated country in the world with some 257.56 million people.

Of this, 58 percent live on the island of Java, the fourth largest island in Indonesia which dominates the country’s political and economic environment. Indonesia’s GDP growth in 2016-17 was 4.9 percent and is expected to reach 5.5 percent this year. ‘Half of this growth is coming from consumer goods, so it’s a very important sector for packaging growth,’ said Wibawa. ‘Our total packaging turnover in the last financial year was 6.2 billion USD. I expect 6-7 percent growth in packaging this year and the figure to touch 6.65 billion USD. The label and packaging market in Indonesia stands at 700 to 800 million USD, of which 40 percent is contributed to by pressure-sensitive labels. There are an estimated 70 to 80 label printers in the country with UV flexo, offset and letterpress machines.’

While Indonesia mainly exports BOPP and other filmic materials to neighboring countries, finished labels and packaging goods form a small percentage of exports. The country is a major importer of plastic resin. ‘We consume about three million tons of plastic resin a year but our production capacity stands at only about 1.5 million tons,’ said Wibawa.

The government is focused on improving infrastructure in the country, which will indirectly increase the consumption of labels and packaging. There is, however, little government support for the label and packaging industry in Indonesia. IPF is trying to take a lead in educating and recruiting a skilled workforce into the industry.