chemicals investment proposition · key growth segments in fertilizer production fertilizer...
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Badan Koordinasi Penanaman Modal
Chemicals Investment Proposition
29th August 2016
Indonesia Investment Coordinating Board
Why Canadian firms are investing in Indonesia
Indonesia’s GDP will increase by over 150% to $2.2 trillion by 2025
Indonesia has the 4th
largest population in the world (261 million as of August 2016)
Indonesia is very cost effective - the average monthly wage is $161
Indonesia is one of the fastest growing economies in the world in the world (>5% p.a. 2012-16)
Access to the $2.5 trillion ASEAN market with a population of 620 million
Indonesia Investment Coordinating Board
What Canadian investors say about Indonesia
invested by Canadian firms
in Indonesia
of Canadian investors in Indonesia are
planning to re-invest in Indonesia
(WAVTEQ, June 2016 survey)
of Canadian investors in Indonesia would recommend other
Canadian companies to invest in Indonesia
(WAVTEQ, June 2016 survey)
Indonesia Investment Coordinating Board
Why invest in Indonesia’s manufacturing sector?
Growth in chemicals
7.6%average annual growth of the chemicals sector
Indonesia’s competitive strengths for manufacturing investment World’s fourth largest population of 260 million The chemicals & related sector has averaged 7.61% annual growth from 2011-14 Labour costs nearly half of China and lower than India for skilled positions Better availability of scientists & engineers than China or India Effective corporate tax less than half China and India
Size of workforce
15+ million employment in the
manufacturing sector in 2015
#1 in Asia for industry
41.3%Indonesia’ proportion of GDP in industry is higher than rest of
ASEAN and overtook China in 2015
Track record
$12 billionChemicals related foreign direct investment in Indonesia 2011-15
$
Agricultural chemicals
has been the 3rd
largest sector for chemicals FDI into
Indonesia (2011-15)
Indonesia Investment Coordinating Board
Key opportunities for Canadian investment –Agricultural fertilisers and chemicals
Market demand• In 2016, total market demand for food & beverages in Indonesia is expected to reach nearly
US$230 billion and is projected to reach around US$330 billion by 2020. • According to the Economist Intelligence Unit, the value of the food demand is expected to
grow at a compound average growth rate of 10% per annum between 2016 and 2020.
Agricultural area• Indonesia’s total agricultural area is 54 million hectares. The area is still steadily expanding,
with an annual average growth rate of nearly 12% between 2001 and 2011.
The expansion of agricultural land and production is directly increasing the demand for agricultural fertilisers and chemicals.
Indonesia Investment Coordinating Board
Growth of fertilizer production in Indonesia
• From 2011 to 2015, production increased by 10.34%, reaching over 11.5 million tonnes of nutrients in 2015.
Fertilizer production, by million tonnes of nutrients, Indonesia, 2011-2015
Source: Indonesian Association of Fertilizer Producers (APPI) http://www.appi.or.id/?statistic
10559
11905
11368 11263
11651
9500
10000
10500
11000
11500
12000
12500
2011 2012 2013 2014 2015
Indonesia Investment Coordinating Board
Key subsectors for chemicals FDI in Indonesia
Source: WAVTEQ, based on fDi Markets
Greenfield FDI in chemicals sector by subsector, (% of projects), 2011-15
Paints, coatings, additives & adhesives
34%
Basic chemicals26%Agricultural
chemicals8%
Pharmaceutical preparations
7%
Hospitals & healthcare offices
10%
Other chemical products & preparation
5%
Other10%
1. Agricultural chemicals has been the 3rd largest sector for chemicals FDI into Indonesia
Indonesia Investment Coordinating Board
Key growth segments in fertilizer production
Fertilizer production by type as a proportion of total production, Indonesia, 2011-2015
1. Urea is the major segment, accounting for just under 60% of production in 2015
2. The share of organic has doubled to 6.3% of total production in 2015 vs. 2011
3. The share of NPK has also increased from 21% to 25.8% in 2015
Source: Indonesian Association of Fertilizer Producers (APPI) http://www.appi.or.id/?statistic
NPK25.8%
Organic6.4%
ZK (K2SO4)
0.1%Fosfat/SP-36
2.4%ZA/AS6.0%
Urea59.4%
2015
NPK21.0%
Organic3.2%
ZK (K2SO4)0.0%
Fosfat/SP-36
4.2%ZA/AS7.7%
Urea63.9%
2011
Indonesia Investment Coordinating Board
Track record in attracting FDI
FDI flows into Indonesia in the chemicals sector (2010-15), US$ million
Source: Based on BKPM data
1. Indonesia had attracted $11.7 billion of FDI in the chemicals sector since 2011 with almost $2 billion of FDI in 2015 (Source: BKPM)
1467
2770
3142
2323
1956
00
500
1,000
1,500
2,000
2,500
3,000
3,500
2011 2012 2013 2014 2015
Indonesia Investment Coordinating Board
FDI Track Record – case studies
Elevance Renewable Sciences, a US-based chemical company has opened a bio-feedstocks plant in Gresik, Indonesia. The investment is a joint venture project with Wilmar International, an agribusiness group based in Indonesia. The plant initially will operate using palm oil, but also can run on soybean, mustard or other bio-feeds.
Sorini Agro Asia Corporindo, a chemicals company and a subsidiary of US-based Cargill, an agribusiness, plans to invest Rp600bn to establish a new starch sweetener plant in Cikande, Indonesia. The 100,000 tonnes per year facility is expected to launch operations in September 2015.
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Size of market
0
500
1000
1500
2000
2500
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Indonesia
Philippines
Thailand
Malaysia
Vietnam
Singapore
Indonesia’s GDP 2025 forecast:• Increase >150% to $2.2 trillion• Larger than India’s in 2015• Nearly same size as Canada’s ($2.6 tn)• GDP/capita: $3370 (2015) to $7840
GDP 2011-2025, US$ billion (EIU forecasts)
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Size of population
6
31
69
92
101
255
7
36
70
103
128
308
0 50 100 150 200 250 300 350
Singapore
Malaysia
Thailand
Vietnam
Philippines
Indonesia
Population projection (mid-2030, Millions) Population (2015, Millions)
Source: fDi Benchmark (IMF and Population Reference Bureau World Population Data Sheet)
Population by country, 2015-2030
Indonesia’s population is the 4th largest in the world and will increase to over
300 million people
Indonesia Investment Coordinating Board
Competitive strengths for chemicals- Skilled workforce
Source: fDi Benchmark (Global Competitiveness Report, World Economic Forum, Switzerland, 2015-16 )
Availability of Scientists and Engineers – out of 7 (2015)
3.9
4.0
4.2
4.3
4.5
4.6
3.4 3.6 3.8 4 4.2 4.4 4.6
Vietnam
Philippines
India
Thailand
China
Indonesia
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Available workforce
Unemployment rate, 2015-2020
3.6%
6.0%
4.1%
3.2%
2.4%
2.0%
0.8%
5.9%
8.4%
6.0%
4.0%
2.9%
2.9%
1.9%
0.8%
6.3%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
India
Philippines
China
Malaysia
Vietnam
Singapore
Thailand
Indonesia
Forecast Unemployment Rate in 2020 (%) Unemployment Rate in 2015 (%)
Source: fDi Benchmark (Economist Intelligence Unit March 2016 & International Monetary Fund 2016)
Indonesia has the least tight labour market in ASEAN
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Low taxes
Total Tax Rate (% profit) in 2015
61%
68%
43%
40%
39%
28%
30%
0% 10% 20% 30% 40% 50% 60% 70% 80%
India
China
Philippines
Malaysia
Vietnam
Thailand
Indonesia
Source: fDi Benchmark (World Bank Doing Business 2016)
Indonesia has low effective tax rates
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Lowest wages in ASEAN
Average monthly wages, USD, 2011-2020
Source: EIU
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
2011 2012 2013 2014 2015 2016 2017 2018 2019
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Low labour costs for engineering positions
Labour costs by country for an engineer, USD, 2015
Source: fDi Benchmark
57537
24030
15893
15840
15552
13801
12000
11029
0 10000 20000 30000 40000 50000 60000 70000
Singapore
China
India
Malaysia
Thailand
Indonesia
Philippines
Vietnam
Indonesia has highly competitive labour
costs
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Innovation
Total of Patent applications, non-residents (foreign investors) (2014)
3255
3960
6267
6924
9009
7321
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
Philippines
Vietnam
Malaysia
Thailand
Singapore
Indonesia
Source: fDi Benchmark (World Bank World Development Indicators)
Indonesia Investment Coordinating Board
Competitive strengths for chemicals– Low cost of living
Cost of Living Index, 2015*
Source: fDi Benchmark *Rating 0-10 (0=lowest cost of living; 10=highest cost of living) (2014)
5.7
3.28
2.22
2.14
1.86
1.82
1.4
1.79
0 1 2 3 4 5 6
Singapore
China
Malaysia
Thailand
Philippines
Vietnam
India
Indonesia
The Investment Coordinating Board of the Republic of Indonesia
20
Badan Koordinasi Penanaman Modal (BKPM)
Indonesia Investment Coordinating Board
Jln. Jend. Gatot Subroto No. 44Jakarta 12190 - Indonesia
t . +62 21 525 2008
f . +62 21 525 4945
Contact Centre :0807 – 100 – 2576 (BKPM)
www.bkpm.go.id
Thank You
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