In July 2012, Intrepid lost control of its 80% stake in Indonesia’s Tujuh Bukit deposit.  The deposit may contain 25 million ounces of gold and 15 billion pounds of copper, in July.

Australia’s Intrepid Mines Ltd. entered into an agreement with Indonesia’s Indo Multi Niaga in 2008 for stake in the Tujuh Bukit deposit in East Java.  Indo Multi was sold to a new owner and the new holder of the project license,  Bumi Sukses Indo controlled by Indonesian businessman Edwin Soeryadjaya, in 2012.  The mining license was transferred to a separate entity, dishonoring the agreement between Indo Multi Niaga and Intrepid.  Intrepid claims it had already spent A$95 million to develop the project.  

Hong Kong-based private equity investor Quantum Pacific Investment Ltd., which represents a group holding 5.4% of Australia’s Intrepid Mines Ltd., thinks it can negotiate a new deal with Bumi Sukses Indo better than Intrepid itself.  Unlikely  to happen without any leverage on the operations.

Quantum Pacific claims the current Intrepid board has pursued a strategy that has not gone over well with the new title holders.   Instead of going in as a bull in a china shop, Quantum Pacific has gone in and tried to sit down with the new local title holders and that has gone over well, and we have gotten confidence that there is a negotiated deal to be done.  

Quantum Pacific is seeking to remove five Intrepid directors, including Gordon, at a shareholder meeting on June 20 and thinks a new leadership could recover a stake in the Indonesian asset in six to nine months.

This is exactly what Edwin Soeryadjaya wants - the foreign investors fighting each other while he moves forward with his own plans without them.

Like China before it, Indonesia plays by its own rules.  If you are a foreigner expect to get fleeced unless they have continuous control and leverage over the operations.  This means controlling the money and the licenses.  Anything less is amateur hour at the comedy club.

Source: 
"Quantum Says Can Recover Intrepid Indonesia Stake With New Team", The Jakarta Globe, May 20, 2013
http://www.thejakartaglobe.com/business/quantum-says-can-recover-intrepid-indonesia-stake-with-new-team/

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.

Indonesia is getting a lot of attention lately from bankers, consultants, and MNCs because of its large population and growing consumer class.  But it  not an easy place to do business in terms of distribution and infrastructure.

Tupperware, the American seller of plastic items, has a business model perfectly tailored to meet the challenges here.  It uses a sales force mostly of homemakers to store and deliver products.  Tupperware avoids the poor roads and scarce shelf space which hinders many retailers here.

Tupperware's sales force has exploded to >170,000 people here from only 2,000 a decade ago.  It uses its direct-sales network avoid a complicated supply chain and store infrastructure.  "Many foreign retailers blame overburdened roads and a lack of retail space on the country's 17,000 islands for slowing expansion here. But Tupperware's representatives sell to friends and family in their homes and pick up Cake Takers and ravioli makers themselves at the company's warehouses."

Tupperware points out, "There is a limited retail infrastructure once you get away from major metropolitan areas,but our salespeople take our products to the villages in scooters and on buses."

Tupperware's network is also an asset it can leverage and charge other marketers which complement Tupperware for access to.  Think products which will drive the use and need for Tupperware's products.  Food and beverage companies are a strong complement.  Banking and insurance products, while not a complement, are not a competitor to Tupperware and could leverage Tupperware's network.

When planning on entering any market, emerging or not, it is important you align your distribution with the realities of that market's limitations.

Source:
"Indonesia Provides a Tasty Dish for Tupperware", Wall Street Journal, April 24, 2013.
http://online.wsj.com/article/SB10001424127887323551004578440513921118512.html?mod=%253C%2525mst.param%2528LINKMODPREFIX%2529

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.