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INDONESIA @ 70:
A GREAT STORY,
A GREAT FUTURE
UMAR HADI
Consul General of Indonesia
Los Angeles
SECURITY FOR ALL
ENLIGHTENED SOCIETY
PROSPERITY AND WELFARE
A WORLD OF FREEDOM, PEACE,
AND SOCIAL JUSTICE
THE INDONESIAN DREAM
Democratic Transformation
Economic Performance
Demographic Dividend
THREE GREAT STORIES
The Election Capital of the WorldConstitutional Reform: Human
Rights, Check and Balance, Supremacy of Law
Free MediaDynamic Civil SocietyEffective Civilian Control over the
Military
A STRONG DEMOCRACY
Stable and steady growth
Reduced unemployment, reduced poverty
Infrastructure challenges
Sustainability issues
A THRIVING ECONOMY
(4.0)
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Indonesia Philippines Singapore Malaysia Thailand
0.8 0.80.9
1.11.2
1.3
1.6
1.9
2.22.3
2.9
3.53.6 3.5 3.5
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Indonesia GDP/Capita (US$'000)
Source: World Bank and National Statistic BureauSource: World Bank
Source: Badan Nasional StatistikSource: Badan Nasional Statistik
AND A GREAT PEOPLE !
Young population
Rising middle class
IT-friendly folks
∑ Great pool of workers, great pool
of consumers
10
11
12
GREAT WORK IN PROGRESS
Anti-corruption, bureaucratic
reform, and legal certainty
Infrastructure projects
Maritime economy
The ASEAN Community
Recent Policies and Innovations
14
One Stop Service
simplified licensing processfrom 1,125 daysto 221 days
15
US$ 545 billion in the next 5 years to improve infrastructure
Recent Policies and Innovations
• Increasing tax ratio will be one of the top priority for President Jokowi.
• The main target is to increase tax ratio to 14%-15% from current level at ~12%. This will increase tax revenue by ~US$ 25-35 billion per year for the next 5 years.
• One key step to increase tax revenue is to give autonomy in human resources, budget, and organizational structure to the tax office, and reducing corporate income tax to make it competitive with Singapore, hence avoid transfer pricing
54.2%
58.2%
52.7% 53.7% 53.0%
11.1%
11.3%
11.8%
12.5%
11.9%
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
-5%
5%
15%
25%
35%
45%
55%
65%
2009 2010 2011 2012 2013
Compliance Ratio Tax Ratio
Source: Directorate of Tax Annual Report 2009 - 2012
Tax and compliance ratio relatively flat during
2009-2013…
Recent Policies and Innovations
17
45 82
165
212 210 247
50
58
91
95 100
104
-
50
100
150
200
250
300
350
400
2009 2010 2011 2012 2013 2014E
Fuel & LPG Electricity
IDR Trillion
Energy subsidy has increased from IDR 95 Tn (~US$ 10 bn) in 2009 to IDR 351
Tn (~US$ 31 bn) in 2014…
…Recent fuel price hike provide more than Rp 120 Trilion for infrastructure, education
and healthcare development in 2015
Source: GoI Audited Financial Statement 2009-2013, internal calculation
276.4
54.2
92.8
45.8
83.6
0
50
100
150
200
250
300
Fuel & LPGSubsidyAPBN2015
Oil pricedecrease
Increaseon DieselRp 2000
Increaseon
GasolineRp 2000
RevisedSubsidies
2015
IDR Trillion
Recent Policies and Innovations
18
• Development of infrastructure will be focused on improving transportation and logistics to reduce transportation cost
• In addition to transportation, improve electricity capacity also becoming our top priorities to push growth in the economy
Infrastructure
Education and Health
Agriculture
• Increase in the human capital through improving education and health infrastructure, with the main on the outside Java
• Main target is to improve productivities and welfare of the farmers and providing affordable food to the countries.
• Through development of irrigation, dams, research and innovations
Government infrastructure budget in 2015 increase to US$
23 billion or double from 2014’s allocation
Government committed to allocate 20% of total budget
for education, with 2015 budget US$ 32 billion
The budget for Ministry of Agriculture in 2015 is US$ 2.6 billion or double from 2014’s
allocation
Recent Policies and Innovations
19
THE ASEAN COMMUNITY
20
* GDP Nominal 2013 (in billion US$) and GDP Annual Growth Rate (2014 estimation) of ASEAN Member Countries
* Total GDP nominal ASEAN : US$ 2,4 trillion, with more then 600 million people
21
A SUCCESS STORY OF THE 21ST CENTURY
Indonesians are among the most optimistic people in the world about the future of their country
Indonesia is a strong democracy, a thriving economy, and an open and tolerant society
Indonesia is committed to exercise responsible leadership in its immediate region
Indonesia is a strong proponent of peace and stability in Asia-Pacific
Indonesia is an active contributor to the United Nations, the G-20, APEC, ASEAN, and other international organizations
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