Coca-Cola became the latest in a series of FMCG majors to sign a big cheque in Indonesia, when the soft drinks company announced in February that it was spending US$300 million to ramp up production and distribution in the booming Southeast Asian nation.

In October, Procter & Gamble started work on its first factory in Indonesia, a $100 million plant to make its Pampers diapers brand, while L’Oréal also revealed plans last year to build its biggest factory worldwide in Greater Jakarta, its second in the Indonesian capital, to serve the entire Asean region.

Not to be outdone, the country’s biggest advertiser, Unilever, is shifting its own domestic production up a gear, in a three-year $730 million gambit on Indonesian growth.

Media rates are skyrocketing in Indonesia, and it’s not hard to see why. A concerted push by multinational advertisers, consumer-focused FMCGs as well as major retail chains in particular, has supercharged demand for a relatively fixed supply of inventory, pushing media inflation in Indonesia to eye-watering levels that are among the highest in Asia, on a par with China and Vietnam.

Traditionally, most ad categories have been dominated by a large incumbent competing against much smaller rivals, points out Himanshu Shekhar, CEO of media agency Mindshare Indonesia. This has left room for international advertisers to chase after a greater share of increasing household spend, either as new entrants or established players expanding into new categories.

“The FMCG sector is creating one third of the demand happening in the marketplace, and the majority are MNC guys,” Shekhar says.

“The local guys are not fueling so much demand; they have been in the market a long time and there is no need to go ballistic. But the guys launching afresh have to carve out a niche in a very set market, and change the game.”

New growth frontiers

Many of the world’s biggest advertisers already have strong footholds in Asia’s largest growth markets – China and India – which are increasingly run separately to APAC regional operations as clusters of sizable regional markets in their own right.

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Now, opportunities in Southeast Asia’s dynamic economies are rising up the agenda, fostered by economic reforms implemented by Asean, the Association of Southeast Asian Nations, that are lowering trade barriers across the region.

Domestic companies meanwhile, well established in their own markets, are increasingly looking to leverage these advantages through international expansion, in contrast to firms in China and India that remain focused on tapping growth opportunities at home.

“The Southeast Asia companies who are expanding are more focused on international rather than domestic, whereas China and India brands are more domestic than international,” says Jeffrey Seah, CEO of Southeast Asia for media agency Starcom MediaVest Group.

“Media usage is different as well. Media is often controlled at a regional level in China and India, while media in Southeast Asia is more national.”