INDONESIA INVESTMENT CLIMATE POLICYapboconference.com/2015/presentations2015/BKPM.pdf · •2014 (QIV) Exchange Rate USD1 = Rp 11,600 (based on National Budget/APBN-P 2014) The Investment

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

2

The New Face of Indonesian Democracy


3

Source: McKinsey Global Institute, September 2012.

McKinsey: Indonesia today and in 2030


4

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


5

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)


6Source: BKPM, 2015.


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


7Source: BKPM, 2015.

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


Total FDI Realization by CountryBased on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors


8


US Company in Indonesia

IndonesiaInvestment Coordinating Board

9

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


10

Primary15%

Secondary54%

Tertiary31%

Group of Sector

Source: BKPM, 2015


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.


12

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 Priority Sectors


13


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


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


“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


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.


17

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


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

The Investment Coordinating Board of the Republic of Indonesia 18

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


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

e . [email protected]

www.bkpm.go.id

Thank You

Terima Kasih

Indonesia Investment Promotion Centre (IIPC)


21

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


22

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

Documents

INDONESIA INVESTMENT CLIMATE POLICYapboconference.com/2015/presentations2015/BKPM.pdf · •2014 (QIV) Exchange Rate USD1 = Rp 11,600 (based on National Budget/APBN-P 2014) The Investment