INDONESIA: Investment Climate, Policies, Opportunities & Partnership Deputy Chairman For Investment Climate Development Indonesia Investment Coordinating Board
Jakarta, January 23, 2013 © 2013 by Indonesian Investment Coordinating Board. All rights reserved
Contents
1
Why Indonesia?
2
Indonesia’s Investment Performance
3
Investment Updates (Regulations & Incentives)
4
Investment Opportunities
54
Partnership
Indonesia Investment Coordinating Board
Why Indonesia?
Indonesia Investment Coordinating Board
Indonesia In Brief
South China Sea
West Papua South Sumatera
Indian Ocean
6,435 km
Largest archipelagic country in the world (Land area: 2 million km2, Sea: ± 7.9 million km2 (4 times grea ter than the land) , Islands : > 17,508 island) Population: 238 million people (2010); 4th biggest population (after China, India, and US) 3rd largest democratic country (after India and US)
Indonesia Investment Coordinating Board
Why Indonesia Strategic Location: Gateaway to ASEAN Market
The Investment Coordinating Board of the Republic of Indonesia
5
Why Indonesia Population Structure: Competitive Advantage in Terms of Worker and Consumer
4th most populous country in the world (2010)
Higher buying power and quality of human resources
Dependency index will reach the lowest point in 20202030 Sources: Ma sterplan Acceleration a nd Expa nsion of Indonesia Economic Devel opment 2011-2025 The Investment Coordinating Board of the Republic of Indonesia
6
Why Indonesia Growing Middle Class: Higher Demands for Better Services and Products
Number of population in middle income (per capita expenditure per day $2-20) Sources: Bank Indonesia & BPS-Statistics Indonesia, 2012 (projection)
Proportion of the population based on per capita expenditure per day
5.5%
18.0% = 40 million people = more than the total population of Malaysia and Singapore combined.
Note: Per ca pita expenditure per day i s adjusted to the 2005 purchasing power parity terms. Source: SUSENAS and World Bank s taff calculations. The Investment Coordinating Board of the Republic of Indonesia
7
Why Indonesia Some Leading Indicators: High Demands on Products and Services CAR SALES on 2012 total to 1.116.230 units, or increase 25% from the previous year. Analysts and industry players noted that low borrowing costs coupled with rising purchasing power influenced customers to buy cars.
The national CEMENT CONSUMPTION reached 54,9 million tons in 2012, grew 14,3% from 48 million tons in 2011. It is expected that in 2013, the national cement consumption to grow by 10-12% to 61 million tons.
The number of VISITOR COME TO INDONESIA (TOURISM) rose to 8,002,035 visitors in 2012, an increase of 5% from previous year. For 2013, the growth is expected 4%.
The realization of the CREDIT (LOAN) on 2012 reached Rp 507,8 trillion (approximately USD 50,7 billion) , increase 23% from the previous year. The Investment Coordinating Board of the Republic of Indonesia
Source: Many sources (compiled), 2012 8
Why Indonesia Better Economic Growth than IMF’s Projection in 2012
China
Indonesia’s 2012 growth hits 6.2%
Indonesia 6.2 %
7.8 %
The Financial Times, 5 February 2013
India 5.5 %
Nominal GDP Growth Projection China India
Indonesia
The IMF projects Indonesia will be at
Saudi Arabia
Argentina
2017
Russia
2013
Turkey
2012
Mexico Korea
the top 3 fastest economic growths among G20 countries. International Monetary Fund; World Economic Outlook Database, April 2012.
Brazil 0.0
2.0
4.0
6.0
8.0
10.0
The Investment Coordinating Board of the Republic of Indonesia
9
Why Indonesia Indonesia Today… ...and Indonesia in 2030
McKinsey Global Institute September 2012 The Investment Coordinating Board of the Republic of Indonesia
10
Why Indonesia International Credit Ratings: Indonesia Snares Investment Grade
Nov 2012
Nov 2012
Jan 2012
May 2013
BBB / STABLE
BBB- / STABLE
Baa3/ STABLE
BB+ / STABLE
Investment Grades
Investment Grades
Investment Grades
1 Notch closer to Investment Grades
“JCR stated that key factors supporting the decision of affirmation the sovereign credit rating of Indonesia (1) The country’s sustainable economic growth outlook underpinned by solid domestic demand, (2) low level of public debt burden brought by prudent fiscal management, (3) reinforced resilience to external shocks by its accumulated foreign exchange reserves”
“The key factors supporting the decision of affirming Indonesia’s sovereign credit rating are the relatively high economic growth that is resilient to the declining global condition, high investment rate, low and declining public debt ratios and the strong overall macroeconomic policy framework.
“Moody's stated the key factors supporting this action were (1) Moody’s anticipation that government financial metrics will remain in line with Baa peers (2) The demonstrated resilience of Indonesia’s economic growth to large external shocks (3) The presence of policy buffers and tools that address financial vulnerabilities and (4) A healthier banking system capable of withstanding stress.
The Investment Coordinating Board of the Republic of Indonesia
“The rating upgrade reflects continuing iimprovements in the government's balance sheet and external liquidity, against a backdrop of a resilient economic pperformance and cautious fiscal management .”
Sources: Bank Indonesia & BPS-Statistics Indonesia, 2013
11
Why Indonesia Prospective host economies..
Top 4 most prospective
host economies for 2013-2015
The Investment Coordinating Board of the Republic of Indonesia
Source:World Investment Report 2013 12
Why Indonesia International Perception: Significant Raise in Perception Indices
IFC AND WORLD BANK – DOING BUSINESS 2014 (OCTOBER 2013): Reported that in the year from June 2012 to June 2013 Indonesia improved its regulatory environment through a reform making it easier for doing business on getting credits and getting electricity indicator. Indonesia ranks 120th of 189 economies globally.
WORLD ECONOMIC FORUM (WEF) – THE GLOBAL COMPETITIVENESS REPORT (SEPTEMBER 2013): Reported that Indonesia ranks 38th of 148 countries surveyed and remains one of the best performing countries within the developing Asia region, behind Malaysia, China and Thailand yet ahead of Philippines, Vietnam and all South Asian nations.
OECD – CREDIT RISK CLASSIFICATION (OCTOBER 18, 2013): Indonesia’s Credit Risk Classification (CRC) steady to category 3. In level 3 of CRC, Indonesia is within the same group with countries such as Brazil, Russia, India, Thailand, Uruguay, South Africa, and Peru.
THE LOGISTICS PERFORMANCE INDEX (LPI): With 2.94 points of LPI, Indonesia is now in Consistent Performers category, which means Indonesia logistic performance is better than many other income group peer countries (lower middle income economy). From 155 countries surveyed, Indonesia is in rank 59, much better than previous rank ing 2010 (75).
THE FOREIGN DIRECT INVESTMENT CONFIDENCE INDEX BY A. T. KEARNEY: This index gives unique picture of prospects for international investment flows. The 2012 FDI Confidence Index based on a survey of more than 200 executives from 27 countries and 17 industry sectors. Indonesia made significant gains as a destination for foreign direct investment (FDI), moving from 20th place in 2010 to 9th place in its recent survey.
The Investment Coordinating Board of the Republic of Indonesia
13
Indonesia’s Investment Performace
Indonesia Investment Coordinating Board
Indonesia’s Investment Performance Distribution of GDP and GDP Growth at 2000 Constant Market Prices by Expenditure 2004-2012 (Percent)
70
10.0 9.0
60 50
5.0
5.7
5.5
6.3
6.1
4.5
6.1
6.5
6.2
8.0
7.0 6.0
40
5.0 30
21.4
22.5
21.9
22.5
23.7
23.4
23.9
24.4
25.2
4.0 3.0
20
2.0 10
1.0
0
-
2004
2005
2006
2007
2008
2009
Private Consumption Expenditure Government Expenditure Investment Export
2010
2011*
2012**
*) Preliminary figure **) Very preliminary figure
Import GDP Growth The Investment Coordinating Board of the Republic of Indonesia
Source:Indonesia Statistics Agency, 2013
15
Indonesia’s Investment Performance
Investment Realization in Indonesia 2006-2013(Sept) (USD Billion) Excl. oil, gas, and financial sectors 34.8
31,2
27.9 DDI
FDI
23.4
14.2
17.1
21,2
24.6
15.0
19.5 16.6
8.3
10.3
14.9
21,2
10.8
6 2.3
3.9
2.3
4.2
2006
2007
2008
2009
6.8
8.4
10.2
2010
2011
2012
10,0 10
2013 2013 (S1) (Jan-Sept)
2013 (Jan-Sept) Compared to 2012 (Jan-Sept)
2012 Compared to 2011 Total investment realization in 2012 was USD 34.8
billion or 10.5% above the 2012 target (USD 31.5 billion), a 24.6% increase from 2011.
Total investment realization in Jan-Sept 2013 was USD 31.2 billion or 75.1% of 2013 target (USD 42.0 billion). It is a 27.6% same period in 2012.
increase from the
The Investment Coordinating Board of the Republic of Indonesia
Source:BKPM
16
Indonesia Investment Performance
Foreign Direct Investment to Indonesia by Origin Country 2010-2013 (Sept) (Based on Investment Value, USD million) Excl. oil, gas and financial sectors Singapore
FDI to Indonesia by Origin Country January-Sept 2013
18,670
Japan
8,322
USA
(Based on Investment Value, USD million) Excl. oil, gas and financial sectors
5,650
South Korea
5,132
Japan
The Netherlands
3,649
Singapore
British Virgin Islands
3,378
US
UK
2,138
Mauritius
1,929
Taiwan
3,126 1,993
South Korea
2,612
Malaysia
3,637
1,635
UK Mauritius
775
The Netherlands
720
Malaysia
1,310
Total (77 countries) USD 81.45 billion
983
519
British Virgin Islands
390
Taiwan
373
Total (53 countries) USD 21.2 billion The Investment Coordinating Board of the Republic of Indonesia
Source: BKPM
17
FDI Realization in Indonesia by Sector Top-5 Sectors Based on Capital Expenditure (USD million) in 2010–2013 (S1)
Rank
Sector
1
Mining (excl. oil and gas)
2
Transport, storage and telecommunication
3
2010 Project
2011
Capex
Project
2012
Capex
Project
Capex
2013 (Jan-Sept)
2010-2013(Sept)
Project
Project
Capex
Capex
228
2,201
320
3,619
412
4,255
470
4,061
1,430
14,136
87
5,072
70
3,799
93
2,808
112
887
362
12,567
Chemical and pharmaceutical
159
793
179
1,467
230
2,770
245
2,561
813
7,592
4
Metal, machinery and electronic
269
590
301
1,773
364
2,453
391
2,633
1,325
7,448
5
Transportation Means Industry
97
393
118
770
163
1,840
199
2,791
577
5,795
3,077
16,215
3,661
19,475
4,579
24,565
5,655
21,201
16,976
81,455
Total (All sectors)
From All Countries, 2010-2013(Sept) Based on Investment Value, USD million
Excl. oil, gas and financial sectors
14,136
Mining
12,567
Transport, Storage and Telecommunication
7,592
Chemical and Pharmaceutical Industry
7,448
Metal, Machinery and Electronic
5,795
Transportation Means Industry
33,917
17% 42% 16% 9%
Others
Total USD 81.45 million
9% 7%
The Investment Coordinating Board of the Republic of Indonesia
Source: BKPM
18
FDI Realization in Indonesia by Location 5-Top Locations Based on Capital Expenditure (USD million) in 2010–2013 (S1)
No.
Location
2010
2011
2012
2013(Jan-Sept)
Project Capex
Project Capex
Project Capex
Project Capex
2010-2013(Sept) Project
Capex
1
Jakarta
885
6,429
998
4,824
1,148
4,108
1,886
1,844
4,917
17,205
2
West Java
595
1,692
669
3,839
682
4,211
852
5,198
2,798
14,940
3
Banten
280
1,544
300
2,172
405
2,716
368
2,928
1,353
9,360
4
East Java
110
1,769
176
1,312
403
2,299
387
2,027
1,075
7,407
5
Papua
19
329
29
1,312
21
1,202
53
1,939
121
4,783
3,077
16,215
3,661
19,475
4,579
24,565
5,655
21,201
16,970
81,455
Total (33 Locations)
From All Countries, 2010-2013 (S1) Based on Investment Value, USD million
17.205,8
Jakarta
14.940,2
West Java
Excl. oil, gas and financial sectors
9.360,8
Banten
7.407,6
East Java
4.783,5
Papua
27.757,0
Others
21%
34% 18% 6%
9% 12%
Total USD 81,455 million The Investment Coordinating Board of the Republic of Indonesia
Source: BKPM
19
Investment Updates (Regulations & Incentives)
Indonesia Investment Coordinating Board
Policies Supporting Investment Competitiveness INVESTMENT LAW Law of the Republic of Indonesia Number 25 Year 2007 concerning Investments NEGATIVE INVESTMENT LIST (NIL) List of Limited Business Fields FISCAL INCENTIVES 1. Tax Holiday : government provide tax exemption 2. Tax Allowance (Income tax reduction for investment in certain business and fields and/or certain region)
3. Import Duties Facilities : tax exemption for import machinery, goods and material for business activities with some condition 4. Incentives by Regional Government INVESTMENT GUIDELINES 1. Investment License Procedures 2. Standard Operating Procedures (SOP) for Investment License OTHERS 1. One Stop Services (OSS) for Investment
2. Industrial Estates Indonesia Investment Coordinating Board
INVESTMENT LAW LAW OF THE REPUBLIC OF INDONESIA NUMBER 25 OF 2007 CONCERNING INVESTMENTS EQUAL TREATMENT Accord equitable treatment to domestic investors and foreign investors with due regard to the national interest FREE TO REPATRIATE INVESTMENT & PROFIT Investors shall be granted the following rights to transfer and repatriate in foreign currencies Investment Law No. 25 of 2007
BUSINESS SECTOR All business sectors or business types shall be open to investment activities, except for business sectors or business types that are declared to be closed and open with requirements.
INVESTMENT FACILITIES The Government shall grant facilities to investors who make investments Fiscal Facilities and Non Fiscal Facilities INVESTMENT SERVICES In order to coordinate the implementation of policies and investment services, the Investment Coordinating Board has the duty and function, among others, coordinate and implement the integrated one-stop service Indonesia Investment Coordinating Board
NEGATIVE LIST OF INVESTMENT PRESIDENTIAL REGULATION NUMBER 36 YEAR 2010 List of Limited Business Fields I.
Absolutely Closed Business Fields
II.
Business Fields Open with conditions: a.
Reserved for Micro, Small and Medium Enterprises and Cooperatives
b.
Partnership (Joint Venture)
c.
Foreign Ownership
d.
Certain Location
e.
Special Permit
f.
100% Domestic Ownership
g.
Foreign Ownership as well as Location
h.
Special Permit and Foreign Ownership
i.
Special Permit and 100% Domestic Ownership
j.
Foreign Ownership Requirements and/or location for ASEAN Investors
Indonesia Investment Coordinating Board
Fiscal Incentives: Tax Holiday (Minister of Finance Regulation No. 130 Year 2011)
There is now a legal umbrella for Tax Holiday in Government Regulation No.94/2010 on Taxable Income Calculation and Payment of Income Tax in Current Year (Tax Holiday that is mentioned in Chapter VIII: Facilities Exemption or Reduction of Income Tax in the Framework of Investment).
Tax Holiday incentive mechanism was regulated by Minister of Finance Regulation No. 130/PMK.011/2011.
1. Tax exemption for a period 5 to 10 years after a company or project begins commercial production (100% realization and have the permanent lisence/IUT). 2. Tax holiday may be granted for a maximum period of 10 (ten) of the Fiscal Year and at least 5 (five) Fiscal Year, commencing from the commencement of commercial production of the Fiscal Year. Following this period, 3. Investors could be offered an additional 50% corporate income tax reduction for 2 years after the tax holiday period (12.5 % of income tax for 2 years). 4. Tax holiday is offered for following pioneer industries TAX HOLIDAY
5. The requirements are: minimum investment of Rp. 1 trillion (112 Million USD); have existed as a legal entity of Indonesia maximum of 12 months prior to the Regulation on Tax Holiday been issued (Maximum or less than 12 months); and must deposit at least 10% of the proposed investment in an Indonesian Bank. Indonesia Investment Coordinating Board
Tax Allowance: Government Regulation No. 52 of 2011
TAX ALLOWANCE
REQUIREMENT
BUSINESS FIELDS
Based on Government Regulation No. 1 of 2007 jo. No. 62 of 2008 jo No. 52 of 2011: 1. Reduction of net income for 30% from total amount of investment, charged in 6 year with each 5% per year. 2. Depreciation and amortization accelerated to fixed intangible assets (building and non-building) 3. Income Tax on dividends paid to foreign tax subject to 10% or a lower rate according to double taxation avoidance agreement 4. Compensation for losses of more than 5 years but not more than 10 years. 5. Tariff reduction on Income Tax Based on Second Revision of Government Regulation No. 1 of 2007 Concerning Income Tax Facility For Investment In Certain Business Fields and/or Certain Regions, additional terms for the provision of tax allowance: 1. This facility can be provided after the realization of investment tax payers at least 80% of capital investment plans. 2. tax facilities can also be used by a taxpayer who has received an investment license prior to the enactment of these changes, provided: minimum investment value of 1 trillion rupiah, and not yet commercial production (IUT)
Based on revised edition of Government Regulation No. 62/2008 (Government Regulation No 52 of 2011) concerning Tax Allowance for Investment in Certain Businesses and/or Areas, the tax allowance will be eligible for 129 business segments, including INFRASTRUCTURE
FACILITIES
DEVELOPMENT OF CERTAIN BUSINESS FIELDS AND AREAS THAT RECEIVING FACILITIES
PP No 1 2007
PP No 62 2008
PP No 52 2011
Appendix 1 (Certain Business Field)
53
67
52
Appendix 2 (Certain Business Field and Region)
19
34
77
TOTAL
72
101
129
Indonesia Investment Coordinating Board
Other Fiscal Incentives
Ministry of Finance Regulation No. 176/PMK.011/2009. Jo 76/PMK. 011/2012 concerning Exemption of Import Duties on Machines as well as Goods and Substances for Industrial Construction or Development in the Scope of Investments, provide: 1. Exemption of import duty on machinery, goods and materials for business activities in the field of: Industries that produce goods and/or
IMPORT DUTIES FACILITY
2. Industries that produce services (Tourism and Culture, Transportation / Communications for Public Transport Services, Public Health Services, Mining, Construction, Telecommunications Industry, automotive assembly, and Port).
Import duty exemption is given as long as: 1. Not yet produced domestically 2. Produced in the country but do not meet the required specifications, or
3. Have been produced within the country but not yet sufficient for industry needs.
INCENTIVES BY REGIONAL GOVERNMENT
Government Regulation No. 45 Year 2008 concerning Guidelines For Incentives Provision and Ease For Investment In The Region, as a guideline for local governments to: Provide incentives : Reduction or exemption on local tax ; Reduction or exemption on local retributions; Providing stimulus funds and/or Providing capital aid. Provide ease for investment: Providing data and information on investment opportunities; Providing facilities and infrastructure; Providing land or the location, technical assistance; and/or Expedite the licensing process. Indonesia Investment Coordinating Board
Investment License Procedures PREPARATION STAGE
INVESTORS Principle license application
CONSTRUCTION STAGE
Principle License
Establishment of Legal Entity
Regional license (Regional Government) 1. 2. 3. 4.
Location permit Building Construction Permit(IMB) Nuisance Act Permit (UUG/HO) Registration certificate (TDP), etc
1. 2. 3.
Import Identity Foreign worker permit VISA recomendation
Non Fiscal Facilities (BKPM)
Fiscal Facilities (BKPM) 1. 2. 3.
Approval of Capital Goods Importation facilities Approval of Raw / Auxiliary materials importation facilities Corporate Income Tax (PPh) Recommendation
COMMERCIAL STAGE
Business license
Business License application
Business License application
Indonesia Investment Coordinating Board
Standard Operating Procedure (SOP) for Investment License
SOP (Days)
License Procedures 1
2
3
4
5
6
7
15
Investment Principle License Permit of Investment Expansion
Investment Principle amandement Foreign Company Representative Office Permit (KPPA) Business License Business License for Expansion Business License for Company Merger Business License amandement Producer Importer Identification Number (API-P) Approval for Facilities Exemption of Import Duty Corporate Income Tax (PPh) Recommendation Tax Holiday Recomendation
Indonesia Investment Coordinating Board
One Stop Services (OSS) for Investment
To create efficiency, to ease the investment services and to build competitiveness of the investment, Government of Indonesia held One Stop Integrated Services for Investment (OSSI) at national, provincial and regency/city levels through Presidential Regulation Number 27 Year 2009 concerning OSSI and also its implementation regulations through 4 (four) BKPM Chairman’s Regulations No. 11, 12, 13 Year 2009 and No. 7 Year 2010 Concerning Amendment to No. 14 Year 2009.
All OSSI throughout Indonesia will be equipped with integrated computer online system (the so-called National Single Window for Investment/NSWi) in order to make easier investment services needed by investors/business entities. This online system is centered at Investment Coordinating Board (BKPM) in Jakarta. This OSSI also will be integrated with another computer online system the so-called Indonesia National Single Window (INSW) for customs clearance and release of cargoes.
OSS For Investment Investment Services
Process
Licensing / Non-Licensing
Indonesia Investment Coordinating Board
Map of Large Indonesian Industrial Estates (61 Locations)
Indonesia Investment Coordinating Board
Investment Opportunities 1
In Value Added
2
In Import Substitution
3
In Export Oriented Industry
4
In Consumer Sector: Domestic Market Based Industry
5
PPP Infrastructure Projects
6
Tourism and Creative Industry
Indonesia Investment Coordinating Board
1. Investment Opportunities in Value Added: Mining Based Industry 1. PURIFICATION AND PETROLEUM REFINING INDUSTRY (petrochemical industry); 2. CHEMICAL INDUSTRY (including the fertilizer industry, cement, and ceramic); 3. PRIMARY METAL INDUSTRIES (steel, nickel processing industry, aluminum industry and copper processing industry);
Sources: London Metal Exchange/LME, 2011 (Processed) Indonesia Investment Coordinating Board
Smelter Industry location comparing to Electricity availability data SOUTH KALIMANTAN number of smelter project: 2 rated capacity : 225 MW peak load: 285 MW
WEST KALIMANTAN number of smelter project: 4 rated capacity : 174 MW peak load: 283 MW
SOUTH SULAWESI number of smelter project: 1 rated capacity : 267 MW peak load: 601 MW
EAST KALIMANTAN number of smelter project: 1 rated capacity : 200 MW peak load: 264 MW
SOUTHEAST SULAWESI number of smelter project: 1 rated capacity : 70 MW peak load: 57 MW
CENTRAL SULAWESI number of smelter project: 3 rated capacity : 84 MW peak load: 51 MW
NORTH MALUKU number of smelter project: 3 rated capacity : 29 MW peak load: 21 MW
NORTH SUMATERA number of smelter project: 2 rated capacity : 8 MW peak load: 20 MW BANGKA BELITUNG number of smelter project: 1 rated capacity : 56 MW peak load:109 MW
MALUKU number of smelter project: 1 rated capacity : 61 MW peak load: 57 MW
JAVA ISLAND number of smelter project: 1 rated capacity : 20.610 MW peak load: 19.746 MW
EAST NUSA TENGGARA number of smelter project: 1 rated capacity : 93 MW peak load: 115 MW
PAPUA number of smelter project: 2 rated capacity : 59 MW peak load: 95 MW
Notes: 1. Availability of electricity in outside java is insufficient (rated capacity of 4.840 MW vs peak load of 6.918 MW) 2. Availability of electricity in Java is 20.601 MW with peak load 19.746 MW Indonesia Investment Coordinating Board
Electricity development Plan: Estimation of Electricity System Condition For The Next 10 Years
Based on PLN’s Electricity Business Plan (RUPTL PLN) 2011-2020, stated that the electricity demand growth is projected about 8.46% per year.
In order to fulfill the demand growth and to support the MP3EI program, the additional capacity of power generation that will be developed up to year 2020 is about 55,345 MW or 5,535 MW per year in average. Indonesia Investment Coordinating Board
Electricity development Plan: Development of Transmission and Distribution Line
Up to year 2020, the total transmission line that will be developed about 49,299 kms, consists of 500 kV dan 150 kV line for Java-Bali system and 500 kV, 275 kV, 150 kV, dan 70 kV line for outside JavaBali system. Up to year 2020, the total distribution line that will be developed about 416,906 kms. Development of distribution line is aimed to maintain the realibility of the system and accomodate the additional of new customers. Indonesia Investment Coordinating Board
Investment Requirement for Electricity Infrastructure Development
Up to year 2020, the total investment requirement for electricity infrastructure development is about USD 96,205 Million (USD 9,621 Million per year in average) which is consist of USD 67,815 Million for power generation, USD 14,928 Million for transmission and substation and USD 13,461 Million for distribution. The largest investment requirement is for power generation, afterward for transmission and substation and then for distribution development. Indonesia Investment Coordinating Board
Investment Opportunities: Mineral Sector Mining Investment Climate in Indonesia Survey Result
Source: Fraser Institute and Metal Economics Group
Timeline Of Mineral Processing And Refining
MARKET OUTLOOK: CAUTIOUS INVESTMENT OPPORTUNITIES: Smelter Industry (Processing and Refining) Recapitulation of Processing & Refining Plan Document (Update December 2012) No
Status
Company
1
Processing & Refining Existing
7
2
Processing & Refining Proposal Before Ministry of Energy and Mineral Resources (MEMR) Regulation No 7 Year 2012
3
Processing & Refining Proposal After MEMR Regulation No 7 Year 2012
186
Total
217
24
Indonesia Investment Coordinating Board
Investment Opportunities: Coal Industry 2011 MARKET LEADERS (MIO TONS)
DEMAND VS SUPPLY
REALIZATION
PLANNING
MARKET OUTLOOK: CAUTIOUS Indonesian coal production will be flat in 2013 as the downturn in the market continued. The slowdown in China's economic growth is cutting deeper into Indonesia's coal sector, forcing producers to reduce output and slash costs. INVESTMENT OPPORTUNITIES: 1. Coal Infrastructure: Coal Hauling network , railways , stockpile & Seaport, Coal Blending facility 2. Mine mouth power plant development 3. Coal processing plant development: coal upgrading and conversion Source: Ministry of Energy and Mineral Resources , 2012
Indonesia Investment Coordinating Board
Investment Opportunities in Value Added: Agro Based Industry 1. PALM OIL INDUSTRY; 2. COCOA PROCESSING INDUSTRY AND CHOCOLATE MAKING;
3. RUBBER GOODS INDUSTRY; 4. PULP/PAPER INDUSTRY; 5. WOOD WORKING, FURNITURE INDUSTRY, AND RATTAN 6. SEAWEED PROCESSING INDUSTRY
Sources: London Metal Exchange/LME, 2011 (Processed) Indonesia Investment Coordinating Board
2. Investment Opportunities in Import Substitution 12 MAIN IMPORTED INDUSTRY PRODUCT (USD MILLION) NO
URAIAN
2009
2010
2011
2012
GROWTH 2012
SHARE 2012
2 3 4
Iron and Steel, Machinery, and Automotive Electronics Base Chemical Textile
5
Food and Baverages
2,811
4,514
6,852
6,159
-10.1%
4%
6 7
Electricity tools Pulp and paper
2,106 1,883
3,143 2,732
3,769 3,263
4,190 3,020
11.2% -7.4%
3% 2%
8
Other chemical products
1,662
2,199
2,592
2,757
6.3%
2%
9
Feed stock
1,679
1,872
2,221
2,800
26.1%
2%
10
Copper processing, Tins, dll.
1,027
1,822
2,195
2,377
8.3%
2%
11
Fertilizer
929
1,509
2,707
2,918
7.8%
2%
12
Aluminum processing
1,398
1,937
1,973
1.9%
1%
1
31,684
43,219
52,472
62,605
19.3%
45%
10,497 8,095 3,397
14,176 11,432 5,031
16,117 15,413 6,735
16,701 16,076 6,805
3.6% 4.3% 1.0%
12% 12% 5%
Total of 12 Main Industry Other Industry
66,804 5,734
93,047 8,069
116,272 9,828
128,381 11,333
10.4% 15.3%
92% 8%
Total of Manufacture Industry
72,398
101,115
126,100
139,714
10.8%
100%
Iron and steel industry, Automotive Components Industry, Chemical Industry (Petrochemicals) and Industrial Electronics and Machinery Indonesia Investment Coordinating Board
Investment Opportunities: Steel Industry STEEL CONSUMPTION Country INDONESIA
INVESTMENT OPPORTUNITIES: INDONESIA STEEL INDUSTRY STRUCTURE
Kg/Capita/Year 37.3
Malaysia
315.8
Thailand
211
Vietnam
139.8
Singapore
570.1
Japan
500.9
Korea
1,077.2
China
427.4
India
54.9
United States
267.3
Asia
255.8
European Union
299.1
World
206.2
Potential Locations
MARKET OUTLOOK: STABLE
Until now, the domestic steel market is still in deficit. There is over demand both in the upstream, intermediate and downstream. National steel demand to reach 10 million tons per year. While the national steel products reached 5.5 million tons. The rest, amounting to 4.5 million tonnes, supported by imports. Electricity and gas supply constraints are an obstacle for the production of the national steel industry.
West Sumatera
Banten
South Kalimantan
East Java
Indonesia Investment Coordinating Board
Investment Opportunities: Heavy Equipment Industry
In Indonesia, the major demand of HE is on three sectors such as Mining, Agriculture and Construction. Despite there are many players in HE Industry, the market only focuses in four big companies that are PT Komatsu Indonesia, PT Caterpillar Indonesia, PT Hitachi Construction Machinery of Indonesia and PT Kobelco. Major production of HE are Eskavator (80%), Buldozer (18%), and Mining truck (2%)
DEMAND OF HE IN INDONESIA (%)
MARKET OUTLOOK: CAUTIOUS CONSTRUCTION & MINING EQUIPMENT PRODUCTION AND DEMAND (UNIT) MARKET SHARE OF HE SALES BY BRAND (%)
Sumber: HINABI & United Tractor 2012, diolah
Indonesia Investment Coordinating Board
Investment Opportunities: Petrochemical Industry INDONESIA PETROCHEMICAL INDUSTRY (EXISTING CONDITION)
MARKET OUTLOOK: PROSPECTIVE INVESTMENT OPPORTUNITIES: Indonesia still suffering an insufficient supply of petrochemical products (net importers) PETROCHEMICAL CLUSTER
1. Anyer, Merak, Cilegon, Serang And Bojanegara – Banten Province (Olefin Center)
SUPPLY VS DEMAND (YEAR 2011)
2. Gresik, Lamongan, Tuban Dan Cepu – East Java (Aromatic Center) 3. Bontang Dan Balikpapan, East Kalimantan (Methane Center) 4. Balongan – West Java 5. Cilacap – Central Java
Indonesia Investment Coordinating Board
3. Investment Opportinities in Export Oriented Industry: 10 Main Commodity
“Indonesia as Production Hub For International Market” DESTINATION COUNTRY
DEPENDENCY OF IMPORTED RAW MATERALS
1
TEXTILE AND TEXTILE PRODUCT
United States, Japan, Germany, Turkey, Korea,
MEDIUM
2
ELECTRONIC
Singapore, United States, Japan, Hong Kong, China,
HIGH
3
RUBBER
United States, Japan, China, Korea, Singapore,
LOW
4
PALM OIL
India, China, Malaysia, Bangladesh, Netherlands,
LOW
5
FOREST PRODUCTS
Japan, China, United States, Korea, Australia,
LOW
6
FOOTWEAR
United States, Belgium, Germany, United Kingdom, Netherlands,
MEDIUM
7
AUTOMOTIVE
Thailand, Japan, Saudi Arabia, Philippines, Malaysia,
HIGH
8
SHRIMPS
United States, Japan, China, United Kingdom, Belgium,
LOW
9
COCOA
Malaysia, United States, Singapore, China, Spain,
LOW
10
COFFEE
United States, Japan, Germany, Italy, Malaysia,
LOW
NO
10 MAIN COMMODITY
Indonesia Investment Coordinating Board
Investment Opportunities: Textile and Clothing Industry
Potential Location: Focus on Java Island
MARKET OUTLOOK: PROSPECTIVE INVESTMENT OPPORTUNITIES
Indonesia has great potential in developing products garments, yarn, textile products as well as other man-made fibers. a.
Garment products: male and female clothes, jackets, underwear and wedding dress.
b.
For yarn products: sewing thread, yarn for knitting fabric and yarn.
c.
other textile products: rugs, tablecloths, net curtains, towels, socks, embroidery, and curtains.
Indonesia position in World Main Markets are (US: 5th); (UK: 13th); (Germany: 12th); (Japan: 5th); (Korea: 4th)
Indonesia Investment Coordinating Board
Investment Opportunities: Rubber Industry Indonesia Rubber Production And Consumption (Source: IRSG 2011)
INDONESIA RUBBER CONDITION
Indonesia is the largest area of rubber in the world. From the production side, Indonesia is the No. 2 as a major producer of rubber in the world 24% of market share) under Thailand (33%) Sumatra is the largest producer of raw rubber in Indonesia: 65% share of the national rubber production. Based on BPS data (2011) the largest plantation area (top 3) are: 1. South Sumatra: 665 thousand ha 2. North Sumatra: 463 thousand ha 3. Jambi: 443 thousand ha. Potential areas for rubber plantation: Sumatra dan Kalimantan.
MARKET OUTLOOK: PROSPECTIVE INVESTMENT OPPORTUNITIES: DOWNSTREAM INDUSTRY 1. 2. 3. 4.
Manufacture of motor vehicle tires Latex industry Rubber goods industry Engineering goods for industrial and automotive
WORLD RUBBER CONDITION
Consumption is higher than production
The world market is dominated by 6 countries are: Thailand, Indonesia, Malaysia, India, China, and Vietnam.
The largest rubber consumer in the world are: China, United States, and Europe. Indonesia Investment Coordinating Board
Investment Opportunities: Palm Oil Production and Consumption of Palm Oil World
Production
Consumption
Price World of Crude Oil, Crude Palm Oil, and Palm Kernel Oil
Indonesia is the largest producer and exporter of palm oil / CPO in the world previously dominated by Malaysia.
2000.00 1500.00
INVESTMENT OPPORTUNITIES: PALM OIL INDUSTRY
1000.00
1. Primary Industries: Crude Palm Oil (CPO), Palm Nucleus Oil (PKO), shell, fiber, empty fruit bunches, and sludge
500.00
2. Upstream Industry: carotene, tocoperol, oil cake, soap stock
0.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Price ($)
MARKET OUTLOOK: PROSPECTIVE
Tahun Crude oil ($/bbl)
CPO ($/MT)
3. Manufacture of: pro-vitamin A, pro-vitamin E, cocoa butter 4. Downstream Industry: bio diesel oil.
POTENTIAL LOCATION FOR PALM OIL INDUSTRY: PKO ($/MT)
Sei Mangkei in North Sumatera, Dumai in Riau Province , and Maloy in East Kalimantan. Indonesia Investment Coordinating Board
Investment Opportunities: Cocoa Industry
MARKET OUTLOOK: STABLE Total area of Indonesia cocoa increased sharply to reach 1,677,254 ha in 2011. This condition is expected to continue to increase to 1,805,986 ha in 2014. In 2011, Indonesian cocoa production amounted to 712,231 tons. Potential Locations : 1. Sulawesi (South Sulawesi, Southeast Sulawesi, Central Sulawesi and West Sulawesi) 2. Other provinces (North Sumatra, West Sumatra, Aceh and East Java)
INVESTMENT OPPORTUNITIES: PROCESSING INDUSTRY Indonesia's cacao agribusiness development geared to increase valueadded cocoa with integrated agribusiness development from upstream to downstream.
Indonesia Investment Coordinating Board
4. Investment Opportunities in Consumer Sector: Domestic Market Based Industry
1. CEMENT INDUSTRY 2. BUILDING MATERIALS INDUSTRY 3. AGRICULTURE SECTORS
4. FOOD AND BEVERAGE INDUSTRY 5. HOUSEHOLDS PRODUCT INDUSTRY
6. OIL REFINERY INDUSTRY 7. MACHINE TOOLS / EQUIPMENT MANUFACTURING INDUSTRY
Indonesia Investment Coordinating Board
5. Investment Opportunities in PPP Infrastructure Projects: 24 Proposed Projects KORIDOR JAWA NO.
PROJECTS
INVESTMENT (US$ MILLION)
1. 2.
Cisumdawu Toll Road Pandaan – Malang Toll Road
3.
Kertajati International Airport
130
4.
KulonProgo International Airport
500
5.
Expansion of Pelabuhan Tanjung PriokCilamaya, Karawang Barat
1.032
6.
Soekarno Hatta – Manggarai International Railway Development
2.000
7.
8.
Integrated Terminal Gedebage Railway, Bandung Revatilation of Yogyakarta Rail Station dan Pedestrianisasi Malioboro
1.015,8 420
133 870
9.
Lamongan Regency Water Supply
10.
West Semarang Water Supply
78
11.
Solid Waste Treatment & Final Disposal Putri Cempo, Solo
30
12.
Solid Waste Treatment & Final Disposal Bandung Raya
80
13.
Solid Waste Treatment & Final Disposal Bogor - Depok
40
16,67
PROJECT STATUS
FS finished, Land procurement progress of 23% Land procurement progress of 10% Pre FS, Masterplan dan Business plan finished, Coordinate permit has been approved, Land procurement 2012 : 715 Ha, target until 2014 : 1800 ha Pre FS (location) finished, but the project status has not decided by Ministry of Transportation Pre FS finished FS, Environmental Impact Assessment, and other permits are on progress FS finished
FS finished -
OBC finished in 2012 FBC in 2013 VGF is on discussion by Ministry of Finance Interested investors from Singapore, Spain, China, Malaysia, South Korea, and Japan. - Project launching on July - August 2013
- FS by JICA is finished - JICA willing to fund for construction and waste management technology - FS by JICA is finished - Procurement document already finished
Indonesia Investment Coordinating Board
5. Investment Opportunities in PPP Infrastructure Projects: 24 Proposed Projects NO.
PROYEK
1.
Kuala Tanjung Port , North Sumatera
2. 3.
Jambi Coal Fired Power Plant Geothermal Bengkulu
INVESTASI (US$ JUTA)
Pre FS finished
1.040 -
Waiting the permit from Ministry of Energy
60 – 120
- Pre FS sudah finished - Outline Business Case finished - Environmental Impact Assessment on progress (finished in 6-8 mounth) - Government guartantee is on evaluation by PT. PII - Interested investor from France, United States, and Japan.
KORIDOR SUMATERA 4.
KORIDOR SULAWESI
KORIDOR KALIMANTAN
Batam Municipal Solid Waste
1.
Balikpapan – Samarinda Toll Road
1.20
2. 3.
Development Maloy International Port Greater Pontianak Water Supply
2.130 143
1.
Manado – Bitung Toll Road
2.
New Makasar Port
3. 4.
Karama Hydro Power Plant Palu Municipal Water Supply
STATUS PROYEK
353 -
1.336 30
- FS finished the construction permit for roads that through the Preservation Forest is still on process at the Ministry of Forestry - NGOs problem Pre FS finished FS finished
Land procurement progress of 25% Pre FS finished
FS finished
Indonesia Investment Coordinating Board
Investment Opportunities: Port Development
MARKET OUTLOOK: PROSPECTIVE
Indonesia Investment Coordinating Board
Investment Opportunities: Shipping Industry
MARKET OUTLOOK: PRESPECTIVE Indonesia is a good place for investment particularly for shipping and related business considering of potential cargo movement, large population base and abundance of natural resources Indonesia Investment Coordinating Board
Investment Opportunities: Geothermal Industry MARKET OUTLOOK: PROSPECTIVE
Target Of National Energy Mix
Geothermal power in Indonesia is an increasingly significant source of renewable energy. Indonesia has 40% of the world's potential geothermal resources, estimated at 29,000 GWe. Currently Indonesia is the world's third largest geothermal electricity producer after the United States and the Philippines. Installed production capacity (2011) is almost 1,226 MW from seven geother mal fields in Java, North Sumatra and North Sulawesi. In 2007, geothermal energy r epresented 1 .9% of the country's total energy supply and 3.7% of its electric power. Indonesia plan to build 44 new geothermal plants by 2014, more than tripling capacity to 4,000 MW. By 2025, Indonesia aims to produce more than 9,000 MW of geothermal power, becoming the world's leading geothermal energy producer. This would account for 5% of Indonesia's total energy needs.
Geothermal Project in Indonesia ( Installed Capacity) 2011
Indonesia Investment Coordinating Board
6. Tourism and Creative Industry International Visitor Year Total
Average Length Of Stay (Day)
Growth (%)
Average Expenditure Per Person (USD)
Per Day
Per Visit
Revenue Total (Million USD)
Growth (%)
2007 5,505,759
13.02
9.02
107.7
970.98
5345.98
20.19
2008 6,234,497
13.24
8.58
137.38
1178.54
7347.6
37.44
2009 6,323,730
1.43
7.69
129.57
995.93
6297.99
-14.29
2010 7,002,944
10.74
8.04
135.1
1085.75
7603.45
20.73
2011 7,649,731
9.24
7.84
142.69
1118.26
8554.39
12.51
2012 7,277,496
INVESTMENT OPPORTUNITIES:
NUMBER OF PASSENGER CRUISE TOURISM
Seven Special Interest Tourism Areas TARGET OF TOURISM VISITOR 2013 Foreign: 9 million Domestic: 250 million 2014 Foreign: 10 million Domestic: 255 million
Sources: Tourism Ministry, 2012
1.
Cruise tourism
2.
Meetings, Incentive, Convention, Exhibition/ Event
3.
Nature based and ecotourism
4.
Culture and historical based tourism
5.
Shopping and culinary
6.
Wellness and medical tourism
7.
Recreational sports: golf, diving, etc Indonesia Investment Coordinating Board
Tourism and Creative Industry ECONOMIC VALUE (USD BILLION)
MARKET OUTLOOK: PROSPECTIVE
In Indonesia, the creative industries are defined as industry derived from the utilization of creativity, skills and individual talents of individual to make create wealth and generate employment by producing and exploiting individual creativity.
Creative industry accounted for 7.29 percent of Indonesia’s GDP. In 2012, Indonesia’s creative industries have employed 11. 57 million people, accounting for 10.63 percent to the nation's overall employment ( rank 3 on employment absorption).
the creative industries have a bright export prospects in the future. In 2011, exports of creative industries to reach of USD 800 million. Targeted in 2015 to exceed UUD 1.5 billion.
Majority export comes from fashion (60% of market share) and crafts (36.5% market share)
FILM PRODUCTION IN INDONESIA 1992 – 2012
*)Data until Aug 12
Indonesia Investment Coordinating Board
BUSINESS PARTNERSHIP PROGRAM IN ORDER FOREIGN INVESTMENT AND DOMESTIC INVESTMENTS
Indonesia Investment Coordinating Board
BUSINESS PARTNERSHIP PROGRAM IN ORDER FOREIGN INVESTMENT AND DOMESTIC INVESTMENTS One of the basic policy of capital investment in the Public Investment Plan (RUPM) directed at the empowerment of Micro, Small and Medium Enterprises and Cooperatives (MSME). MSME empowerment policy directions as stated in Presidential Regulation No.16 The year 2012 is done through two (2) strategies, namely: a. Strategy to the next grade, which is a strategy to encourage businesses that are at a certain scale to be a business with a larger scale, micro business developed into a small business, medium business and then became, and eventually become a largescale effort. b. Strategic alliance strategy, ie a strategy partnership relationship (cooperation) between the two parties or more business operators, based on equality, openness and mutual benefit (benefit), so as to strengthen the linkages between entrepreneurs in various business scale. The Alliance is built so that entrepreneurs who have a smaller business scale is able to penetrate the market and production cooperation network on a larger scale. The alliance is built based on business considerations and mutually beneficial cooperation.
Indonesia Investment Coordinating Board
RESERVATION LINE OF BUSINESS & PARTNERSHIP
1. Determination of business areas that are reserved for MSME 2. Determination of an open field with the requirements of business partnerships
(Presidential Regulation No.16 The year 2012)
Indonesia Investment Coordinating Board
Presidential Regulation No. 36 Year 2010 Determination of business sectors reserved for MSME ( 39 line of business ) , among others : • Cultivation of staple crops ( corn , soybeans , peanuts , green beans , rice , cassava, sweet potato ) , with an area of less than or equal to 25 ha , • Primary Industries rattan processing , • Cultivation of Swallow's Nest in Nature , • Fishery Products Processing Business conducted with the Integrated Water Fishing in Public waters • Electric Power Generation ( < 1 MW ) • Industry salting / drying fish and other aquatic biota and fish industry pemindangan Determination of the business with the terms of partnership ( 36 line of business ) , among others : • Cultivation of rattan , • Cultivation of pine sap , • Magnification Marine Fish , • Industry - salting and sweet fruits and vegetables , • Cultivation of beekeeping , • Small Scale Power Generation ( 1-10 MW ) , • Industrial processing of milk powder and condensed milk . Indonesia Investment Coordinating Board
Indonesia Investment Promotion Center (IIPC)
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