Toward

ASEAN Economic Community Opportunity and Challenge

ASEAN Cooperation & Studies International Department

Outline 1. AEC is nearer 2. Arriving in the promising era for us 3. Its opportunities 4. Its challenges 5. Be competitive or otherwise... 6. Bank Indonesia’s role 7. Epilogue

2

1. AEC is nearer

1. AEC is a strategic response of ASEAN to a. Sluggish ASEAN countries’ recovery post-1997 crisis b. Rising China and India’s economic power 2. ASEAN leaders have affirmed the AEC being effective as of 31 December 2015 (ASEAN Summit, Phnom Penh, November 2012)

3

1. AEC is nearer The Four Pillars of the ASEAN Economic Community

4

1. AEC is nearer ASEAN Vision • “a stable, prosperous and highly competitive region functioning as a single market and production base, in which there is free flow of goods, services and skilled labor and a freer flow of capital, along with equitable economic development and reduced poverty and socioeconomic disparities…” •

Corner stone for the Regional Comprehensive Economic Partnership (RCEP) an ASEAN initiative promoted by Indonesia as a response to EAFTA (China), CEPEA (Japan), TPP (US) initiatives

5

2. Arriving in the promising era for us Resilient Indonesia amid global crisis...

6

2. Arriving in the promising era for us

Source: McKinsey Global Institute, 2012

3. Its opportunities Robust ASEAN economic performance supported by a combination of solid economic fundamentals, sound macroeconomic and financial policies, and the integration of ASEAN economies to the global economy ....

8

3. Its opportunities Increasing intra-ASEAN Trade….. 1998

ASEAN Total Trade

Intra ASEAN Trade Extra ASEAN Trade Major Trading Partners (% of Total Trade)

2000

2003

2008

2009

2010

• Value (US$ billion) • Growth (%, yoy) • Trade to GDP (%) • Export to GDP (%) • Import to GDP (%)

576.1 -17.8 119.3 65.6 53.7

759.1 21.8 126.5 68.3 58.1

824.5 15.5 114.2 62.7 51.5

1,897,1 17.8 125.4 64.6 60.8

1,536.9 -19.0 102.2 53.9 48.3

2,045.7 33.1 110.1 57.8 52.4

• Value (US$ billion) • Growth (%, yoy) • Share to Total Trade (%)

120.9 -19.4 21.0

166.8 25.8 22.0

206.7 29.3 25.1

470.1 17.0 24.8

376.2 -20.0 24.5

519.8 38.2 25.4

• Value (US$ billion) • Growth (%, yoy) • Share to Total Trade (%)

455.2 -17.0 79.0

592.3 20.7 78.0

617.8 18.0 75.2

1,427.0 18.0 75.2

1,160.7 -18.7 75.5

1,525.9 31.5 74.6

3.5 14.5 14.1 20.1 3.0 1.2 2.2

4.3 13.5 15.3 16.1 3.9 1.3 2.3

7.2 12.3 13.8 14.3 4.1 1.5 2.3

10.4 11.0 11.3 9.8 4.1 2.6 2.8

11.6 11.2 10.5 9.7 4.9 2.5 2.9

11.3 10.2 10.1 9.1 4.8 2.7 2.7

• China • Euro Area • Japan • USA • South Korea • India • Australia

9

Sumber: ASEAN Economic Community in Figures (ACIF) 2011 (ASEAN Secretariat, February 2012)

4. Its challenges: Tighter competition! Especially in our domestic markets... Push Factor: (i) limited economy of scale;

(ii) sluggish global

economy; (iii) superior competitiveness; (iv) international firms in neighboring countries as part of the global production-supply chain. Pull Factor: (i) Indonesia's biggest market; (ii) solid economy based on consumption; (iii) growing middle class; (iv) low tariff barriers and reduced non-tariff barrrier; (v) relatively more open economic and financial regulatory regime.

12 integration-priority sectors

10

4. Its challenges: We need more competitive Indonesia’s competitiveness index is lower than Singapore, Malaysia, and Thailand Source: World Economic Forum Report 2012

1.SIN 2.THAI 3.MAL 4.BRN 5.VIET 6.INA

129

7.PHIL 8.CAM 9.LAOS

Ease of doing business index 0

50

100

150

Source: IFC- World Bank Report

11

4. Its challenges: We need more competitive Ease of doing business index, a breakdown Source: IFC- World Bank Report

Doing Business 2012 –IFC/World Bank-Report

Country

Total

Dealing with Starting a Getting Registering Getting Protecting Resolving Construction Credit Investors Insolvency Business Electricity Property Permits

1. SIN

1

4

3

5

14

8

2

2

2.THAI

17

78

14

9

28

67

13

51

3.MAL

18

50

113

59

59

1

4

47

4.BRN

83

136

83

28

107

126

122

44

5.VIET

98

103

67

135

47

24

166

142

6.INA

129

155

71

161

99

126

46

146

7.PHIL

136

158

102

54

117

126

133

163

8.CAM

138

171

149

130

110

98

79

149

9.LAOS

165

17

62

181

17

8

13

150

12

4. Its challenges: We need more competitive Indonesian labor on education level (2010) Education Level

Labor share based on education level (2010)

% Working Workforce

No Education Backgrounds

5.3%

Elementary School (unfinished)

17.0%

Elementary School

29.2%

Junior High School

18.9%

80 70

• High School and above • Academy and above

60 50 40

General High School

14.5%

Vocational High School

7.8%

Diploma

2.7%

10

University

4.6%

0

30 20

Thailand

Malaysia

Indonesia

Filipina

13

Source: BPS

4. Its challenges: We need more competitive Value (USD miliar)

• Indonesian bank’s asset is smaller than those of Singapore, Malaysia and Thailand banks. • Only 5 Indonesian banks listed as ‘Top Banks’.

ASEAN Banks in Global Top 500 Brand Names

Banks Commercial banks Other banks Non-bank financial institutions Insurance companies Other institutions Total Share (%) Banks Commercial banks Other banks Non-bank financial institutions Insurance companies Other institutions Total

INA 288.7 269.6 19.1

MAL 435.2 331.8 103.3

PHI SIN 135.4 1182.3 118.3 1181.1 17.1 1.2

37.2

41.3

18.6 18.6 325.9

39.8 1.5 476.5

11.4 83.3 1.1 62.7 147.9 1328.3

39.0 197.1 1.0 87.7 440.0 2919.4

INA 88.6 82.7 5.9

MAL 91.3 69.6 21.7

PHI 91.5 80.0 11.6

SIN 89.0 88.9 0.1

THA ASEAN 90.9 90.2 70.7 82.0 20.2 8.2

11.4

8.7

8.5

11.0

9.1

9.8

5.7 5.7 100.0

8.4 0.3 100.0

7.7 0.8 100.0

6.3 4.7 100.0

8.9 0.2 100.0

6.8 3.0 100.0

12.5

Indonesia

Number of Banks 5

Malaysia

8

Philippines

3

Bank of the Philippine Islands, Banco De Oro Unibank, Metrobank

Singapore Thailand

3 5

DBS, United Overseas Bank, OCBC Bank Bangkok Bank, SCB, Kasikorn, Bank of Ayudhya, Krung Thai Bank

Country

146.0

THA ASEAN 400.0 2634.6 311.3 2393.7 88.7 240.8 40.0

284.8

Banks with top 500 brand names Mandiri, BRI, BCA, Bank Danamon, CIMB Niaga Maybank, CIMB, Public Bank, RHB, Am Bank, Hong Leong Bank, Hong Leong Group, EON Bank

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4. Its challenges: We need more competitive Market

Area of Competition

Competitiveness

Local product in global market (export)

Low: Indonesian exports below other ASEAN-5 export performance. Indonesian flagship products also limited and in a high competition with other ASEAN products.

Local product in domestic market

Goods and Services

Health service sector competitiveness

????: Low productivity will cause Indonesian products unable to compete. Indonesian market also has big preference for imported products. Low: Number of medical and health facilities in Indonesia is relatively less.

Tourism competitiveness

Low: Number of tourists to Indonesia is lower compared to other ASEAN5 countries. Indonesia has many tourist spots, but has not been well managed and less intense promotion.

Air transport competitiveness

Low: Number of fleet, routes, and total assets of Indonesia flag carrier is lower than the other ASEAN5. Indonesian airport is also under class refer to other countries.

Others: Firms competitiveness

Low: Number of Indonesian companies with big assets are less substantial than other ASEAN countries. 15

4. Its challenges: We need more competitive Market

Investment

Area of Competition

Competitiveness High: High economic growth and stable Economic Performance inflation rate as a result of sound and stability monetary and fiscal policy. High: large population, strong middle class income strong domestic Potential Market demand. High: Rich and vary natural resources. Natural Resources Low: Infrastructure supports in Indonesia is relatively limited, including Infrastructure soft infrastructure (clear investment procedures, legal and security certainty). Low: Indonesia 'Doing Business‘ rank is Business Climate lower than other ASEAN-5 countries. 16

4. Its challenges: We need more competitive Market

Area of Competition

Labor Market

Education Level Productivity

Investment Return

Capital Market Risks Factor

Competitiveness Low: share of labor with higher education are relatively small. Low: Indonesian labor productivity are relatively low. High: Portfolio return of investment in Indonesia was relatively higher than other ASEAN-5. Moderate: Indonesia country risk tends to improve, including Indonesia's rating had reached investment grade. However, shallow financial market exposed with high liquidity risk resulting in volatile financial asset prices.

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5. Be competitive or otherwise 1. Indonesian producers, including professionals (e.g. Architects, doctors, teachers, financial specialists), must be competitive... a.Benefit for Indonesian economy Employment and unemployment reduction. Higher corporate profits creates consumption and investment. More export revenue if producer targeting regional market. b.Competitive producers will contribute postively to the current account. Example: Balance of personal services, cultural and recreational will improve when Indonesian artist performing in neighboring countries or ASEAN tourist extending their stay in Indonesia 2. Strong competitiveness will strengthen Indonesia’s leadership in ASEAN and Asia Pacific (geo-economics).

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5. Be competitive or otherwise 3. Our capital to be more competitive... a. Solid economic growth amid global crisis b. Sound financial sector balance, strong fiscal condition, and stable financial and monetary condition. c. Large pool of productive and middle-income population d. Large economy of scale as a basis for business efficiency. 4. Indonesia has regional or even global champions a. Garuda Indonesia named as the Best Regional Airline by Skytrax. b. Thousands of Indonesian architects and IT specialists currently working in Singaporean markets c. Semen Gresik finalizing plans to operate factories in Myanmar and Vietnam. d. Property developer Ciputra expanding its business in Vietnam and Cambodia. 19

6. Bank Indonesia’s role 1. Coordinating with the Government Coordination with the office of Coordinating Ministry for the Economy as mandated in Presidential Act No. 11/2011 on the AEC Blueprint Implementation Commitment. 2. Guarding the process of liberalization in the area of banking, payment system, and financial access for the SMEs in ASEAN Example: BI co-chairing Taskforce on ASEAN Banking Integration Framework (ABIF) and Working Committee on Payment and Settlement System (WC-PSS). 3. Strengthening sectoral policy Example: BI banking policies aimed at improving banking system efficiency; multi-license policy that will be issued also intended to strengthen the operating cost structure and improve the efficiency of banks improved competitiveness 4. Disseminating information on the AEC to domestic stakeholders 5. Conducting strategic studies on the AEC 20

6. Bank Indonesia’s role Objective

Identify and propose policy recommendations to Bank Indonesia toward the AEC

1. Studies: 27 strategic studies on the AEC in 2009-2011 MACROECONOMY Impact of AEC 2015 to Indonesia's economic competitiveness. BANKING Boosting Indonesian banking competitiveness and integration strategy. PAYMENT SYSTEM Formulizing the national payment system blue print toward the AEC SMEs Improving SME’s financial access. Improving Indonesia’s Competitiveness is a key toward the AEC

2. Disseminating information on AEC studies to banking, business sector, academician, and general public

Epilogue Change our mindset! • With the opportunities and challenges of the AEC lie before us, it is time to unify our vision and steps while implements all discourse into real actions. This is a moment of truth. Throw away any pessimism and replace it with the optimism toward the AEC. • If we are not ready toward the AEC, it is more difficult for us facing the global competition. We must do our homework to improve our competitiveness.

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Thank You 23

ATTACHMENT

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A. Kajian BI Menuju MEA (2009-2011) PK INI SIATIF BI ME NUJU “MASYARAKAT EKO NOM I ASEAN 2 015 ” Pasa r Tunggal da n Basis Produksi Interna siona l

M akroekonomi

P embangunan Ekonomi yang Seim ba ng

Perbankan

Penl itian 2009: Im plik asi Terhadap Sink roni sas i B usines s Cy cle dan Konv ergens i H arga antar Negara NegaraAS EA N. A ses men dan I denti fik asi Ket entuan Lalu Lintas Modal Li beral isas iP ortof olio dan FDI. S tatis tik A SE AN dan Indones ia M enuj uM EA

P enelitian 2009: P emetaan P erat uran & Indust ri P erbank an Negara AS EAN P emetaan K ekuat an Indus tri P erbank an S yariah di AS EAN. P eningkat an Daya Saing B PR M elalui P enguatan K elembagaan dan Operasi onal B PR.

2015 Penel itian 2010: Perilak u dan I mplik as iCurrency I nvoic ing dalam Perdagangan Indones ia dengan A SEA N Safeguard M eas ures Pas ar Keuangan Indonesi a Menghadapi Implem entasi ME A2015 Kons ep S is tem S tati st ik ASE AN s ebagai Sal ah Infras truk tur P encapaian Target ME A 2015 Identi fik asi dan As esm en At as K etentuan Berkai tan D engan A liran Longterm B orrowing Cros s Cut ting Iss ues D alam Rangka I ntegrasi Keuangan A SEA N Pengaruh ME A 2015 Terhadap P asar V alas Domest ik dan St abilit as Ni lai Tuk ar Rupiah.

Penel itian 2011 Pot ensi Dam pak P asar Tunggal terhadap Ek onomi Indonesi a Sem inar S is tem S tati sti k A SE AN dan I ndonesia Laporan Komprehens if P K I nisi atif Bank Indones ia dan A rah Kedepan

P enelitian 2010: Persi apan Kompet isi Perbankan Indonesei a Menghadapi MEA2015 Dam pak M EA 2015 Terhadap Indust ri Perbankan Indonesi a Hum an Capital Strategi c P lan Perbankan S yariah 2011 – 2015 Komparasi Si stem Hukum dan Ketentuan Terk ait Lalu Lint as Modal, K elmbagaan dan I nsolv ans i di N egara-Negara A SEA N.

Sis te m Pembay aran & Setelem en

P engem ba ngan UKM

Penel itian 2009: Pengembangan Arsi tekt ur Sis tem Pem bayaran Nasi onal dan s ettl emen Nasi onal Sebagai Persi apan Menjel ang ME A2015

P enel itian 2009: R umus an S tandar Minim um Laporan K euangan danB usines s P lan untuk U MK M. P ers yaratan Pembentuk an C redit R ati ng Sy st em untuk UMK M di I ndones ia.

Penel itian 2010 Kaj ian S item Pembay aran dan Set elmen A SE AN Menuju M EA 2015 Kaj ian S item Pembay aran dan Set elmen Nas ional M enjelang Impl ementas i ME A 2015

P enel itian 2010 Kel ayak an Pendi ri an Lembaga Rati ng untuk UMK M di Indonesi a

Penel itian 2011 Kaj ian Cetak biru AS EA N dalam rangka Work ing C omm ittee on Pay ment and Sett lement Sy st em s Peny usunan Cet akbi ru Sis tem Pem bayaran Nasi onal dalam rangk a Menghadapi MEA 2015

P enelitian 2011 P erum usan Roadmap Liberalis asi P erbank an Menuj u ME A 2015 K ajian Counter Meas ures dan S afe Guard Meas ures Perbankan Sy ari ah I ndonesia dalam K erangk a P ers iapan M enghadapi ME A A spek Hukum Ins olv ensi dan K epaili tan Bank di Negara-negara A SE AN

25 2009 – 2011 : S o si al i sasi Un tu k M end uku ng P eni ng katan A wareness M asyarakat , P el aku Bi sni s, P em da , Akadem i si d an P erban kan

AEC Pilar I: Single market and Production Base Significant progress has been made towards ASEAN single market and production bases … ELEMENTS

MILESTONES AND ACCOMPLISHMENTS

1. Free flow of goods

• By end-2011, the average intra-tariff rate for ASEAN-6 countries (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand) under the ASEAN Trade in Goods Agreement (ATIGA)is reduced to 0.05% from 3.64% in 2000. • Since the full establishment of ASEAN Free Trade Area (AFTA) in January 2010, greater focus was made on trade facilitation for the elimination of Non-Tariff Barriers (NTBs) • Customs facilitation continued with 7 countries (Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam) participate in the ASEAN Single Window (ASW).

2. Free flow of services and skilled labor

• ASEAN has committed to at least 65 services sub-sectors in air transport, e-ASEAN, healthcare and tourism for liberalisation. • The Mutual Recognition Agreements (MRAs) for engineers and architects have been implemented, while work is underway for other professional MRAs (nursing, medical, dental, accountancy, and surveying).

3. Free flow of investment

• The ASEAN Comprehensive Investment Agreement (ACIA) has been ratified, whereby all industries (in the manufacturing, agriculture, fishery, forestry and mining and quarrying sectors) will be open with some exceptions as listed in member’ Temporary Exclusion Lists (TEL) and Sensitive Lists (SL).

4. Free flow of capital • Efforts to liberalise and integrate the financial markets through such initiatives as financial

services liberalisation, capital market development, and capital account liberalisation have been further strengthened. • On capital market development, efforts to deepen the equities markets were strengthened, including ASEAN Bond market , Credit Guarantee and Investment Facility (CGIF), and the US$485.2 million ASEAN Infrastructure Fund (AIF).

5. Priority integration sectors (PIS)

• New initiatives for the integration of 12 PIS (agro-based goods, air transport, automotive products, e-ASEAN, electronics and electrical goods, fisheries, health care services, rubber-based goods, textiles and clothing, tourism, logistics services and wood-based products), including the development of ASEAN Tourism Strategic Plan (2011-2015), ASEAN Automotive Industry Strategy, and MRAs for telecommunications equipment.

6. Food, agriculture, and forestry

• Establishment of the ASEAN Integrated Food Security (AIFS) Framework and its medium-term Strategic Plan of Action on ASEAN Food Security, including for the importation of rice-milled and new cooperation under the ASEAN +3 Emergency Rice Reserve (APTERR) Agreement.

Source: ASEAN Economic Community Scorecard (2012)

AEC Pilar II: Competitive Economic Region Enhancing the competitiveness of the ASEAN region through competition policy, consumer protection, intellectual property rights, and infrastructure development … ELEMENTS MILESTONES AND ACCOMPLISHMENTS 1. Competition Policy

• To enhance the competitiveness of the ASEAN region, several initiatives for competition policy were set up, including the formation of ASEAN Experts Group on Competition. The ASEAN Regional Guidelines on Competition Policy and the Handbook on Competition Policy and Laws in ASEAN for Business

2. Consumer Protection

• In line with the mandate of the newly established ASEAN Committee on Consumer Protection (ACCP), ASEAN endorsed the Guidelines for Notification and Information Exchange on Recalled/Banned Products in October 2011.

3. Intellectual Property Rights (IPRs) 4. Infrastructure Development

• In August 2011, the ASEAN IPR Action Plan 2011-2015 was endorsed. ASEAN also collaborated with Dialogues Partners and international organizations to enhance capacity building in IP area. • Enhance transport facilitation and liberalization with the adoption of 2011-2015 Master Plan on ASEAN Connectivity, the signing of ASEAN Multilateral Agreement on for the ASEAN Open Skies, the Integration of ASEAN Single Shipping Market (ASSM), and the completion of road inventory of all national route components of the ASEAN Highway Network (AHN). • On Information and Communication Technology (ICT), the ASEAN ICT Master Plan 2015 was adopted in January 2011, including the development I for ASEAN Broadband Corridor and ASEAN Internet Exchange. • Driven by the ASEAN Plan of Action on Energy Cooperation (APAEC) 2010-2015 to address energy security while playing a visible role in the global efforts to address climate change, the current third cycle consists of seven key programme areas of cooperation namely: (i) ASEAN Power Grid; (ii) Trans-ASEAN Gas Pipeline; (iii) Coal and Clean Technology; (iv) Renewable Energy; (v) Energy Efficiency and Conservation; (vi) Regional Energy Policy and Planning; and (vii) Civilian Nuclear Energy.

Source: ASEAN Economic Community Scorecard (2012)

AEC Pilar III: Equitable Economic Development A number of initiatives have been advanced to further enhance the competitiveness and resilience of SMEs toward a single market and to ensure that the benefits of the AEC trickle down to the smaller ASEAN economies and sub-regions … ELEMENTS MILESTONES AND ACCOMPLISHMENTS 1. Development of the Small and Medium Enterprises (SMEs)

• To further enhance the competitiveness and resilience of SMEs toward a single market and production base, ASEAN implemented the Strategic Action Plan for the ASEAN SME Development (2010-2015) endorsed in August 2010. The initiatives include the establishment of the ASEAN SME Advisory Board and SME Working Group (SMEWG), work on the development of the Regional SME Development Fund, completion of two projects namely the ASEAN Multi-media Self-reliant System Toolkit Package and the Feasibility Study of the SME Service Center. • In line with the promotion initiatives under the Strategic Action Plan, the “Directory of Outstanding ASEAN SMEs 2011”, which lists more than 800 top SMEs from all AMSs, was launched on the sidelines of the ASEAN Business and Investment Summit (ASEAN BIS). The Directory seeks to promote linkages of SMEs to the regional and global supply chains and production networks.

2. Initiative for ASEAN Integration (IAI)

• Toward the narrowing of development gaps, new modalities and approaches have been explored to ensure that the benefits of the AEC trickle down to the smaller ASEAN economies (Cambodia, Lao PDR, Myanmar and Viet Nam or CLMV) and sub-regions (such as the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area and Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). Built-in agenda for CLMV countries were gradually being included in the sector work programs, and sub-regional initiatives aligned with the AEC Blueprint. • The new IAI Strategic Framework and Work Plan I and II were endorsed to facilitate the implementation of CLMV projects. In ensuring a sustainable ASEAN Economic Community beyond 2015, as well as in narrowing the development gaps between and within ASEAN Member States, Leaders at the 19th ASEAN Summit have endorsed the ASEAN Framework on Equitable Economic Development (EED) as a new initiative.

Source: ASEAN Economic Community Scorecard (2012)

AEC Pilar IV: Integration into the Global Economy To make ASEAN a more dynamic and stronger segment of the global supply chain and to ensure that the internal market remains attractive for foreign investment, it is crucial for ASEAN to look beyond the borders of AEC. ASEAN works towards maintaining “ASEAN Centrality” in its external economic relations, including, but not limited to, its negotiations for free trade (FTAs) and comprehensive economic partnership (CEPs) agreements. ELEMENTS 1. External Economic Relations

2. Enhanced participation in global supply networks

MILESTONES AND ACCOMPLISHMENTS • ASEAN continued to support the creation of ASEAN Plus One Free Trade Agreement (FTAs). ASEAN has concluded and completed the ratification of five free trade agreements with Australia and New Zealand, China, India, Japan, and Republic of Korea. • ASEAN Plus FTAs with China and Korea covers the agreements on the three areas of trade in goods, trade in services and investment agreements. • ASEAN-India and ASEAN-Japan Services and Investment Agreements are currently still under negotiations. • Continuing the adoption of international best practices and standards in production and distribution, where possible; • Developing a comprehensive package of technical assistance for the less developed ASEAN Member Countries to upgrade their industrial capability and productivity to enhance their participation in regional and global integration initiatives.

Source: ASEAN Economic Community Scorecard (2012)

The Expanding Middle Class Market Survey Year Malaysia Thailand Filipina Vietnam Indonesia

2009 2009 2009 2008 2010

Middle Class (% of Population) Lower MC Core MC Upper MC $2-$4 $4-$10 $10-$20 15.6 37.2 27.5 31.3 46.2 13.6 33.7 20.3 3.6 39.8 15.1 1.7 37.3 15.0 1.6

Source: PovcalNet - The World Bank

Total 80.4 91.0 57.7 56.5 53.9

As the most populous nation and the largest economy in Southeast Asia, the rise of Indonesia’s middle class contributes significantly to the expansion of domestic and the region’s consumer markets.

The Expanding Middle Class Market The rise of Indonesian middle class is happening both in rural and urban areas. Fueled by young (productive age) consumers, the expanding middle class market has dominated the market for consumer goods and services.

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Indonesia Condition Towards AEC 2015 ASEAN5 Intratrade Matrix (2009) Ke Dari Indonesia Malaysia Filipina Singapore Thailand Total • •

Indonesia 3.1 0.2 16.3 2.9 22.5

Malaysia 4.2 0.8 19.3 4.8 29.1

Filipina Singapura Thailand 1.5 1.2 3.1 1.9 7.8

6.4 13.7 1.5 4.7 26.3

2.0 5.3 0.8 6.3 14.3

Total 14.1 23.2 3.4 44.9 14.3 100.0

Indonesia exports share to ASEAN still underperformed (14,1%) refer to Singapore, Malaysia, and Thailand exports performance. Indonesia has big dependency on imports from ASEAN countries (22,5%).

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Indonesia Condition Towards AEC 2015 RCA ASEAN5 : Indonesia Flagship Export Product Commodity

% X INA

Indonesia

Malaysia

Filipina

Singapura

Thailand

Coal

12.2

16.7

0.0

0.3

-

-

Natural Oil

10.5

42.2

26.6

6.4

0.3

0.5

Natural Gas

7.8

4.9

3.8

Petroleum

6.9

1.0

0.7

0.1

-

0.1

Copper

4.5

17.4

0.0

1.5

-

-

Rubber

2.9

27.3

8.1

0.6

0.7

30.1

Paper

2.6

3.0

0.2

0.2

0.3

0.6

-

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Indonesia Condition Towards AEC 2015 List of ASEAN5 Biggest Public Company (2010) Rank

Name

Country

355

Singapore Telecom

Singapore

372

PTT Public Company

Thailand

477

Industry Telecommunicatio ns services Oil & gas operations

Sales ($bil)

Profits ($bil)

Assets ($bil)

Market Value ($bil)

7.64

1.98

20.66

26.88

16.58

1.61

12.49

17.86

1330

Thai Oil

1338

Advanced Info Service

1357

Philippine Long Dist Tele Thai Petrochemical Ind Maxis Communications

Singapore

Banking

3.79

1.03

87.24

14.41

Singapore

Banking

4.35

0.51

108.33

15.16

1418

11.15

1473

850

United Overseas Bank DBS Group Singapore Airlines Oversea-Chinese Banking Malayan Banking Tenaga Nasional Siam Cement Telekom Malaysia

875

Telekom Indonesia

528 578 687 696 772 833

Singapore

Transportation

7.28

0.84

13.23

0.24

1.78

1.59

2.01

0.24

2.69

5.49

0.6

0.29

1.56

4.36

Indonesia

Materials

1.38

0.38

5.3

0.6

Thailand

Banking

0.57

0.02

17.24

1.61

Malaysia

1.18

0.05

16.03

1.39

0.83

0.1

16.02

1.17

Thailand

Diversified financials Diversified financials Banking

0.54

0.16

12.15

Thailand

Transportation

3.96

0.17

5.54

1.84

Thailand

Banking

0.66

0.12

14.8

1.31

Indonesia

Banking

0.83

0.26

6.33

2.28

Malaysia

Oil & gas operations Food, drink & tobacco

0.61

0.22

2.5

4.79

1.6

0.24

2.73

4.27

10.93

6.23

1738

1.25

6.69

9.56

1751

Singapore Technologies

1846

Singapore Press Indah Kiat Pulp & Paper TMB Bank AMMB Holdings

1847

Hong Leong Credit

Malaysia

1905

Siam City Bank Thai Airways Intl Bank of Ayudhya Bank Danamon Petronas Gas

1941

IOI Corp

Malaysia

0.34

7.57

6.78

16.08

4.78

Siam Commercial Bank Krung-Thai Bank Bank Rakyat Indonesia Bumiputra-Commerce Hldgs

1249

4.53

0.17

2.8

0.35

1240

Singapore Oil & gas operations Singapore Aerospace & defense Singapore Media

15.58

3.42

1211

0.14

Rashid Hussain Singapore Petroleum

1.43

1215

21.73

13.61

Conglomerates

1162

0

9.03

6.08

Banking

1153

5.21

0.98

9.86

0.66

Indonesia

1147

3.35

7.83

0.69

3.67

Singapore

1085 1136

4.9

0.12

3.49

Telecommunicatio ns services

Keppel Bank Central Asia Neptune Orient Lines Kasikornbank Astra International

1079

0.24

Telecommunicatio ns services

Indonesia

Banking

1.72

0.45

36.2

5.7

Malaysia

Banking

1.56

0.38

29.37

6.05

1775

Indonesia

Banking

2.33

0.57

26.56

3.58

1788

Singapore

Diversified financials

2.31

0.45

10.93

7.13

1818

Singapore

Transportation

6.76

0.97

4.33

2.26

1861

Thailand

Banking

1.19

0.34

20.38

4.07

1865

Indonesia

Consumer durables

4.79

0.58

4.16

4.32

1889

Thailand

Banking

1.24

0.48

19.67

3.12

Thailand

Banking

1.39

0.29

29.55

3.51

Indonesia

Banking

1.83

0.39

11.46

4.24

Malaysia

Banking

1.76

0.2

29.39

4.28

1897

4.36

1.46

Malaysia

Thailand

3.77

3.64

7.42

Transportation

0.32

4.54

9.27

6.63

Business services & supplies

6.25

3.97

4.88

16.83

0.94

Malaysia

4.5

0.33

0.34

4.95

Singapore

0.5

1.44

5.03

MISC Bangkok Bank Public Bank Bank Mandiri CapitaLand

7.12

2.25

5.87

Construction

1737

3.12

4.05

Utilities

SembCorp Industries City Developments

0.52

2.62

Thailand

1638

3.15

2.48

4.18

Malaysia

1726

Market Value ($bil)

3.03

0.44

13.07 11.32

1584

Assets ($bil)

0.46

0.21

73.43 50.26

Malaysia

Telecommunicatio ns services Conglomerates

Profits ($bil)

6.06

1.68

0.71 0.66

Sime Darby Genting

Sales ($bil)

4.91

2.26 2.71

Flextronics Intl

1063

Malaysia

Banking Banking

1526

Industry

Oil & gas operations Thailand Telecommunicatio ns services Philippines Telecommunicatio ns services Thailand Chemicals

Malaysia

925 983

Country Thailand

Singapore

917

946

Name

Rank

Malaysia

Hotels, restaurants & leisure Singapore Capital goods Singapore Diversified financials Malaysia Banking

1.39

Source: Forbes Global Top 2000 Companies, 2010

• Indonesia has limited big scale firms compare to Singapore, Malaysia, and Thailand. • In Forbes Global 2000, only 7 Indonesian firms are listed. Singapore and Malaysia has 14 firms, while Thailand has 13 firms listed.

35

Indonesia Condition Towards AEC 2015 ASEAN5 Healthcare Indicator (2010) Source: WHO

Health Workforce Country

Physicians

Indonesia Malaysia Philippines Singapore Thailand

2.9 9.4 11.5 18.3 3

Nursing and midwifery personnel 20.4 27.3 60 59 15.2

Infrastructure

Dentistry Pharmaceutical Hospital Radiotheraphy personnel personnel beds units 0.6 1.4 5.6 3.2 0.7

1.4 1.7 6.1 3.7 1.2

6 18 5 31 22

0.1 1.7 0.2 2.5 0.9

36

Indonesia Condition Towards AEC 2015 ASEAN5 Tourist Stat source: ASEAN Secretariat

ASEAN5 Flag Carrier Performances Airlines Garuda Indonesia Airways Malaysia Airlines

Fleets 89

Philippines Airlines Singapore Airlines

36 106

Thai Airways

96

117

Destinations International: 19 Domestic: 31 International: 55 Domestic: 16 International: 31 Domestic: 29 International: 62 International: 62 Domestic: 11

ASEAN5 Airport Performances Airport Changi, Singapore Kuala Lumpur Int’l Airport, Malaysia Bangkok Suvarnabhumi, Thailand Soekarno-Hatta, Indonesia Philippines

SKYTRAX Classification 5-Star 4-Star 3-Star Not classified Not classified

Asset, 2010 Rp13.666 miliar USD1,5 miliar 12,4 miliar MYR USD4,0 miliar 81,4 miliar PHP USD1,9 miliar (2009) 24,5 miliar SGD USD18,7 miliar 295 miliar THB USD9,8 miliar