indonesia investment climate policy - apbo...
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INDONESIA INVESTMENT COORDINATING BOARD
invest in
© 2013 by Indonesia Investment Coordinating Board. All rights reserved
APBO Business Forum| LOS ANGELES, April 13, 2015
Yos Harmen
Director of IIPC New York
INDONESIA INVESTMENT CLIMATE & POLICYA New Government, A New Hope
The Investment Coordinating Board of the Republic of Indonesia
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The New Face of Indonesian Democracy
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Source: McKinsey Global Institute, September 2012.
McKinsey: Indonesia today and in 2030
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The Economist : • Indonesia has taken over India in investment destination in Asia in 2014
• China, India and Indonesia have around 2.8bn people between them and are too big to ignore, no matter how weak the investment environment might be
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Investment Performance
Total Direct Investment RealizationBased on Capex (IDR trillion) in 2010-2014, not including financial, oil & gas sectors
2010 2011 2012 2013 2014
FDI DDI Target
Source: BKPM, Jan 2015
Average2010-2014Share of FDI: 69%Share of DDI: 31%Growth: 22.4%
2010 2011 2012 2013 2014 Total
Foreign DI 145.9 175.3 221.0 270.4 307.0 1,119.6
Domestic DI 60.6 76.0 92.2 128.2 156.1 513.1
FDI & DDI 206.6 251.3 313.2 398.6 463.1 1,632.8
Target 155.0 240.0 283.5 390.3 456.6 1,525.4
% Achieved 133.3% 104.7% 110.5% 102.1% 101.4% 107.0%
Growth 21.6% 24.6% 27.2% 16.2%
70.7% 67.3%69.8% 70.6% 67.8%
29.3%
32.7%
30.2%
29.4%
32.2%
• 2005-2012, Exchange Rate USD1 = Rp 9,000• 2013 (Q I and Q II), Exchange Rate USD1 = Rp 9,300 (based on National Budget/APBN 2013)• 2013 (Q III and Q IV), Exchange Rate USD1 = Rp 9,600 (based on National Budget/APBN 2013)• 2014 (QI-QIII) Exchange Rate USD1 = Rp 10,500 (based on National Budget/APBN 2014)• 2014 (QIV) Exchange Rate USD1 = Rp 11,600 (based on National Budget/APBN-P 2014)
The Investment Coordinating Board of the Republic of Indonesia
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Investment Performance
Total FDI Realization by SectorBased on Capex(USD million) in 2010-2014, excluding financial, oil & gas sectors
Rank Sector 2009 2010 2011 2012 2013
1 Mining 333 2,201 3,619 4,255 4,816
2 Transport Equipment Industry 583 394 770 1,840 3,732
3 Metal, Machinery & Electronic Ind. 655 590 1,773 2,453 3,327
4 Chemical & Pharmaceutical Ind. 1,183 793 1,467 2,770 3,142
5 Electricity, Gas & Water Supply 349 1,429 1,865 1,515 2,222
6 Food Industry 534 1,026 1,105 1,783 2,118
7 Food Crops & Plantation 143 751 1,222 1,602 1,605
8 Transport., Storage & Telecom. 4,152 5,072 3,799 2,808 1,450
9 Paper & Printing Industry 68 46 258 1,307 1,169
10 Non Metalic Mineral Industry 20 28 137 146 874
Total (All Sectors) 10,817 16,215 19,475 24,565 28,616
The Investment Coordinating Board of the Republic of Indonesia
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Rank Country 2010 2011 2012 2013 2014 Total
1 Singapore 5,565 5,123 4,856 4,671 5,832 26,047
2 Japan 713 1,516 2,457 4,713 2,705 12,104
3 United States 931 1,488 1,238 2,436 1,299 7,392
4 South Korea 329 1,219 1,950 2,205 1,127 6,829
5 Netherlands 608 1,354 967 928 1,726 5,583
6British Virgin Islands
1,616 517 856 786 624 4,399
7 United Kingdom 276 419 934 1,076 1,588 4,293
8 Malaysia 472 618 530 711 1,776 4,108
9 Mauritius 23 73 1,059 780 541 2,475
10 Hong Kong 566 135 310 376 657 2,044
Investment Performance
Total FDI Realization by CountryBased on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors
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Investment Performance
US Company in Indonesia
IndonesiaInvestment Coordinating Board
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Investment Strategic Plan 2015-2019
Investment Target
Source: BKPM, 2015
0
100
200
300
400
500
600
700
800
900
1000
2015 2016 2017 2018 2019
Inve
stm
ent
Targ
et (
IDR
tri
llio
n)
Axis Title
FDI DDI
2015 2016 2017 2018 2019
FDI 343.7 386.4 429.0 494.7 570.0
DDI 175.8 208.4 249.8 297.8 363.0
TOTAL 519.5 594.8 678.8 792.5 933.0
12.2%
14.5%
15%
15.9%
17.7%
33.8%
35.0%
36.3%
37.6%
38.9%
66.2% 65.0%63.7%
62.4%
61.1%
Indonesia’s investment Target, 2015-2019Excl. Financial Sectors and Upstream Oil and Gas, in IDR Trillion
total investment targetedin 2015-2019
115% increasefrom 2010-2014 period(IDR 1,632.8 trillion)
63.6 % average shareof total investment target in 2015-2019
FDI2015-2019
DDI2015-2019
IDR 3,519 trillion
36.4 % average shareof total investment targetIn 2015-2019
15.1%targeted in 2015-2019 period
average growth
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Primary15%
Secondary54%
Tertiary31%
Group of Sector
Source: BKPM, 2015
Investment Strategic Plan 2015-2019
Investment TargetBased on Capex (IDR trillion) in 2010-2014, not including financial, oil & gas sectors
Jakarta
Java45%Outside
Java55%
Location
INDONESIA
total investment targetedin 2015-2019
USD294billion
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National Development Planning 2015-2019
Roles of Manufacturing Industry
Indicator 2014 2015 2016 2017 2018 2019Average
2015-19
GDP Growth (%) 5.02 5.8 6.6 7.1 7.5 8.0 7.0
Manufacturing Industry*
Growth (%) 4.7 6.0 6.9 7.5 8.1 8.6 7.4
Share to GDP (%) 20.7 20.8 21.0 21.1 21.3 21.6 21.2
Development Target 2015-2019
new middle/large-scale industries have to be built in 2015-2019.
9,000 20,000small-scale industries have to be established in 2015-2019.
2millionnew job opportunities per annum have to be created in Indonesia.
*) Oil & gas and non-oil & gas manufacturing industries.
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Power Generation35 GW new
projects
7 GW projects in
the pipeline
Labor-intensiveindustry
TextileFood &
BeveragesFurniture Toys
Import-substitution industry
Chemical & Pharmaceutical
Iron & Steel
Export-oriented industry
ElectronicsCPO &
derivative products
Woodproducts, pulp
& paperAutomotive
MachineryRubber
products
Fish & derivative products
Shrimp
Downstream industry of natural resources
Cacao Sugar Smelter
Maritime Shipping Ship building Sea port Cold storageICT for
maritime
TourismStrategic
tourism areasMICE
Investment Strategic Plan 2015-2019
Investment Priority Sectors
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National Development Planning 2015-2019
Power Genaration TargetUSD36.3 billion of investment is offered toprivate sectors.
Development Target 2015-2019:
35 GW
Private SectorsPower Generator: 18.2 GW
Transmission: 360 kms
InvestmentIDR 435 trillion
(USD 36.3 B)
National Electricity Company (PLN)
Power Generator: 16.8GWTransmission: 50,000 kms
Distribution channel: 150,000 kms
InvestmentIDR 545 trillion
(USD 45.4 B)
56%
3%
26%
9%6%
Steam
Geothermal
Natural Gas and Steam
Natural Gas/Natural Gas Machine
Hydro/Minihydro
Energy Sourceto be Developed2015-2019
STRATEGIC PROJECTS to overcome the (potential) scarcity of electricity
• Complete 2,191 MW powerplant projects (18 steam powerplants)
• Develop 2,000 MW steam and natural gas powerplants (Muara Karang, Muara Tawar, Tanjung Priok, and PLTGU Grati Pasuruan)
• Develop big-scale steam powerplants in West Java (Bojonegoro), Central Java, and East Java (including Cilacap)
• Develop steam powerplants in Mulut Tambang 8, 9, 10 (including Java-Sumatera transmition 500kV), Indramayu 1,000 MW, and Batang Jateng 2x1,000 MW
• Develop steam powerplant extention in Cirebon 1,000 MW and Suralaya 1,000 MW
• Develop other planned powerplant (hydroelectric powerplant, steam powerplant, etc)
Source: Indonesia Development Planning Agency, 2014.
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Enggano
Kertajati
Singkawang
Muara Teweh
Miangas
Maratua
Tojo Una-Una
Pohuwato
Moa
Namniwel
Taria
Kenyam
Aboy
KorowayBatu
Development Sector in
Connectivity
Baseline Target
2014 2019
Logistic cost to GDP (%) 24.2 19.2
New road
(km, total in 5 years)1,202 2,650
New toll road
(km, total in 5 years)807 1,000
Railway (km) 5,434 8,692
Seaport (unit) 278 450
Airport (unit) 237 252
Broadband coverage
(% of district)82 100
Crossing dock (location) 210 275
Market share of urban
public transport (%)23 32
National Development Planning 2015-2019
Connectivityto Lower Logistic Cost
Source: National Medium Term Development Planning, 2015-2019, Bappenas, Dec 2014 & MoF, Feb 2015.
15 airports and 24 major seaports
63% increaseNational budget for infrastructure, from IDR 178 T in 2014 to IDR 290 T (USD 24.2 B) in 2015.
USD
141billionInvestment opportunities in infrastructure offered to private sectors, 31% of total investment required in 2015-2019.
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TolLaut
National Development Planning 2015-2019
“Sea Toll” Development Plan
Service: Shipping, Ship BuildingInfrastructure/Logistics: Seaports, Cold Storage, Storage TankICT & Human Capital: ICT for Maritime, Capacity Building
3 aspectsof Maritime Industry
5 Hub Ports19 Feeder Ports
National Development Planning 2015-2019
Growth Centers (Industrial Parks, SEZ & FTZ)SUMATERAKuala Tanjung – SumutSeimangke – SumutTanggamus – Lampung
KALIMANTANBatulicin – KalselKetapang – KalbarLandak – Kalbar
SULAWESIPalu – SultengMorowali – SultengBantaeng – SulselBitung – SulutKonawe – Sultra
MALUKUBuli - Malut
PAPUATeluk Bintuni – Papua Barat
JAWASayung – JatengJIIPE – Jatim
15Industrial ParksDevelopment Target
2015-2019Source: Indonesia Development
Planning Agency & Ministry of Industry, 2015.
8SEZ8 existed Special Economic Zones.7 SEZs will be developed in 2015-2019.
79 Industrial Parks79 existed industrial parks across Indonesia. 15 industrial parks will be developed in 2015-2019 (13 outside Java).
4FTZ4 existed Free Trade Zones: Sabang, Batam, Bintan & Karimun.
Java Islandfor high-technology, labor-intensive & consumer goods industries.
Jakarta
INDONESIA
Outside Java for processing industries
of natural resources.
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No. Industrial Parks Outside Java Industrial sector Anchor Company
1 Tanggamus, Lampung Maritime Repindo Jagat Raya
2 Sei Mangkei, Sumatera Utara CPO Unilever Oleochemical Indonesia
3 Kuala Tanjung, Sumatera Utara Alumina Inalum
4 Ketapang, Kalimantan Barat Alumina Well Harvest Winning
5 Batulicin, Kalimantan Selatan Iron & steel Meratus Jaya
6 Landak, Kalimantan Barat Rubber n/a
7 Morowali, Sulawesi Tengah Ferronickel Sulawesi Mining Investment
8 Konawe, Sulawesi Tenggara Ferronickel Jiangsu Delong
9 Bantaeng, Sulawesi Selatan Ferronickel Hwadi & Bantaeng Sigma Energi
10 Palu, Sulawesi Tengah Rattan & agro Bangun Pulau Sulteng
11 Bitung, Sulawesi Utara Agro & logistics Pelindo
12 Teluk Bintuni, Papua Barat Fertilizer & petrochemical Pupuk Indonesia
13 Buli, Maluku Utara Ferronickel Feni Haltim
National Development Planning 2015-2019
13 Industrial Parks Outside Java
Source: Bappenas, Ministry of Industry, 2015.
USD16billion
Investment opportunities offered to develop 13 industrial parks outside Java (IDR 192 trillion).
Strategic Supporting Infrastructure Projects8 Ports: Kualatanjung,
Tj.Perak, Pontianak, Bitung, Makassar, Banjarmasin, Kupang, Halmahera
Toll Road: Manado-Bitung
4 sections Road
4 sections Railway
16 Power Plants
5 Airports: Palu, Kupang, Kendari, Manado, Banjarmasin
Dam: Raknamo, Kupang
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Ministry of Agrarian and Spatial/National Land Agency
Centralization of issuing land rights licenses for foreign direct investment
Ministry of Energy & Mineral Resources10 licenses related to power & geothermal
Ministry of Environtment & Forestry35 business licenses
Ministry of Industry6 business licenses
Ministry of Health9 licenses rrelated pharmaceutical production, medical
equipment production
Ministry of Tourism9 licenses related tourism and economy creative sectors
Ministry of Communications and Information Technology5 licenses related post management, telecommunication and
broadcasting
Ministry of Manpower3 business licenses and principal licenses
Ministry of Agriculture5 business licenses
Ministry of Public Works & Public Housing7 business licenses
Ministry of Trade5 licenses
Ministry of FinanceImport duty facility for machineries, goods,
materials for production
Ministry of Transportation7 business licenses
Indonesian National Police6 business license in safeguarding business
Ministry of Maritime & Fishery2 business licenses
Ministry of Education & Culture2 business licenses
Ministry of Law & Human Rights1 business licenses
Supporting Institutions: Nat’l Food & Drugs Control Agency, Nat’l Crypto
Agency, Nat’l Standardization Agency, Electricity Company
22 Ministries/institutions integrated in the investment one-stop service at BKPM
Ministry of DefenseStationed Liaison Officer for consultation
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TAX HOLIDAYTAX ALLOWANCE
IMPORT DUTY FACILITY
(Government Regulation No.52/2011) (MoF Regulation No.176/PMK.011/2009)(MoF Regulation No.130/PMK.011/2011)
129business segmentsEligible for tax allowance, expanded from 38 segments in the previous regulation.
30% of investment valueReduction of corporate net income tax for 6 years, 5% each year.
Under certain requirements among others: minimum amount of investment value and workforce, and certain project location (especially outside Java island).
5-10yearsTax relief facility, starting from the commencement of commercial production.
Pioneer industry1. Basic metal industries;2. Oil refinery industries and/or basic
organic chemicals;3. Machinery industries;4. Industries of renewable resources;5. Communication devices industries.
50% for a further 2 yearsReduction of income tax after the expiration of the tax holiday and can be extended by MoF.
IDR1trillionMinimum investment plan.
2 years import duty exemption or 4 years for companies using locally-produced machines (min.30%).
Machines, goods, materials for production
Which produces goods and/or services, including:
1. Tourism and culture 2. Public transportation 3. Public health services 4. Mining 5. Construction 6. Telecommunication 7. Port
Industries
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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
www.bkpm.go.id
Thank You
Terima Kasih
Indonesia Investment Promotion Centre (IIPC)
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Rank Country 2014 2013 2012
1 Singapore 5,832 4,671 4,856
2 Japan 2,705 4,713 2,457
3 Malaysia 1,776 711 530
4 Netherlands 1,726 928 967
5 UK 1,588 1,076 934
6 USA 1,299 2,436 1,238
US investment in 2014 ranked in 6th position, compare to 2013 which was on the 3th position.
Rank Sector 2014 in Mio USD
1 Mining 1,173.8
2 Food Industry 46.3
3Basic metal, machinery, and electronic industry
35.7
4 Trade and reparation 9.6
5 Rubber and plastics industry 6.6
6 Other Services 5.6
7Basic Chemical, and pharmaceutical Industry
5.2
8Real estate, Industrial estate and offices
5.2
9 Electricity, gas and water 4.8
10 Transportation industry 3.9
Lainnya 2.8
Total (all sectors) 1,299.5
Investment Performance 2014 : US Investment in Indonesia
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5.7%
5.5%
6.3%6.0%
4.6%
6.2%
6.5%6.3%
5.8%
5.9%
5.3% 5.2%
4.0%
2.6%
5.1%
6.7% 6.4%6.1%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013
GDP Non-Oil & Gas Manufacturing Industry
Growth 2005-2013
Source: BPS, 2014
Economy Performance
Indonesia’s GDP 2014Manufacturing industry contributed 21% to total GDP.Since 2011, non-oil & gas manufacturing industry has been growing above total GDP.
21%
13%
13%10%
10%
33%
Composition of 2014 GDP
Manufacturing Industry
Agriculture, Forestry & Fishery
Trade, Hotel & Restaurant
Mining & Quarrying
Construction
Others
5.02%Indonesia’s 2014Economic Growth