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Directorate of Investment Planning for Manufacturing Industry
Federation of Hong Kong Industries - Hong Kong, 30 July 2019
Investment Opportunities on Manufacturing Industry in Indonesia
BKPM’s Delegations
2
Mr. Said Ridwan
(Director for Manufacturing Industry Investment Planning)
E: [email protected]; [email protected]
BKPM’s Delegations
Mr. Faisal Rahman
(Section Head for Transportations Industry Investment Planning)
E: [email protected]; [email protected]
Mr. Irawan Budi Satrio
(Section Head for Chemical and Pharmacy Goods Industry Investment Planning)
Why Indonesia ?
3
Source: various, edited
03
trillion
GDP Only ASEAN
Member in the G20
The largest
economy in ASEAN $1 GDP of more
than $1 trillion
(PPP)
Population of
260 million
“Consuming class’
twice the size of the
population of Australia
Young and dynamic
people 44% of
Indonesians are aged
under 25
Indonesia is a global leader in social media. It has:
More Facebook and
Twitter users than the
population of Australia
The world’s third largest
market for Facebook
The most active city for Twitter
in the world: Jakarta
44% 2x
Indonesia’s economy is forecast to be the world’s 10th largest by 2025 01.
Indonesia is the fourth most populous country in the world 02.
Indonesia has successfully built economic virtuous cycle,
bringing Indonesia to one of the global leading economies
4
Source: MoI, edited
Indonesia in the future… 2030… 2050…
5
Source: various, edited
McKinsey&Company
… and in 2030
7th-largest economy
in the world
135 million Members of the
consuming class
71% of the population in cities
producing
86% of GDP
113 million Skilled worker
needed
$1.8 trillion Market opportunity in consumer services, agriculture and
fisheries, resource, and education
Emerging markets will dominates the
world’s top 10 economies in 2050 (GDP
at PPPs)
2016 2050
China 1 1 China
US 2 2 India
India 3 3 US
Japan 4 4 Indonesia
Germany 5 5 Brazil
Russia 6 6 Russia
Brazil 7 7 Mexico
Indonesia 8 8 Japan
UK 9 9 Germany
France 10 10 UK
E7 economies G7 economies
Indonesia Global Competitiveness Index
6
Source: Global Competitiveness Report 2018
50
2012 - 2013
38
2013 - 2014
34
2014 - 2015
37
2015 - 2016
41
2016 - 2017
36
2017 - 2018
Global Competitiveness Index (GCI)
47
2017
45
2018
GCI 4.0
In the latest GCI 4.0 survey method, among ASEAN
countries, Indonesia ranks after Singapore (2nd),
Malaysia (25th), and Thailand (38th) in 2018.
Indonesia is one of the developing countries that is well
connected (50th) and has a growing entrepreneurial culture
(24th).
4th
Industry as a driver of economic growth
Source: Ministry of National Development Planning/National Development Planning Agency, edited
20.8% of GDP Strengthening of Industrial
Growth Pillar
(2020)
21.4% of GDP Diversification and Increasing of Value Added
(2025)
22.3% of GDP Strengthening of Advanced
Industrial Base
(2030)
23.4% of GDP Strengthening of Innovation
and Global Role
(2035)
24.6% of GDP Increasing of
Industrial Adaptation
(2040)
26.0% of GDP Increasing of
Industrial Sustainability
(2045)
Industrial modernization is focused on
regional and industrial centre-based of
natural resource processing industries with
supply chain and value chain integration
from upstream to downstream. Industrial
pushed into a part of the global value chain
(GVC).
INDUSTRY PRIORITY:
• Food and beverages;
• Textile and apparel;
• Automotive;
• Electronic;
• Chemical and
Pharmacy.
Indonesia is the 4th Most Prospective Investment Destination
and its sovereign credit rating continues trending higher
8
Source: UNCTAD, 2017
3 4 4 4
5 6
7 7 7
9 11 11
20 36
40 US China India
Indonesia Thailand
Brazil
UK Germany
Mexico Philippines
Spain Vietnam
Singapore Canada
Australia
BBB- / Stable
Baa2 / Stable
BBB / Stable
BBB / Stable
BBB / Stable
JBIC Report : Indonesia as Promising Countries/Regions for
Overseas Business over the Medium-term (next 3 yrs. or so)
9
Note 1: The countries and regions other than those listed above included North America (15 companies, 3.5% of the total), EU/Europe (12 companies, 2.8%
of the total).
Note 2: In case several countries came in the same ranking, they are listed by the order of the previous year’s ranking.
Note 3: See p.64 for pre-FY2016 results.
Investment Climate is one of the critical points that the
government is actively trying to improve
Source: BKPM, edited
The government today is focused on
regulation and bureaucracy reform, as
well as simplifying the permit and
requirements to invest.
"Improvement of every
indicator must become the
priority of ministries and
state institutions, so that
efforts will be more
focused, while concrete
targets must be set.”
(President Joko Widodo)
No. 10 Indicator Ease of Doing
Business
Total
1 Starting A Business
2 Dealing With Construction
Permit
3 Registering Property
4 Getting Electricity
5 Paying Taxes
6 Getting Credit
7 Protecting Minority Investor
8 Trading Across Boders
9 Enforcing Contract
10 Resolving Insolvency
2018 2019
66,47 67,96
77,93 81,22
66,08 66,57
59,01 61,67
83,87 86,38
68,04 68,03
65,00 70,00
63,33 63,33
66,59 67,27
47,23 47,23
67,61 67,89
2018 2019
72 73
144 134
108 112
106 100
38 33
114 112
55 44
44 51
112 116
145 146
38 36
Distance to Frontier
(DTF) Score Rank
- EODB DTF Score: 6 indicators go up, 3 indicators relatively fixed
- EODB Rank : 6 indicators go up, 4 indicators go down
Fix indicators
Indicators go up
Indicators go down
INDONESIA REFORM IN DOING
BUSINESS 2019
Investment Realization in Indonesia Reaches IDR 721.3 Trillion
in 2018 and rise by 4.1%
11
Source: BKPM
Investment Realization (IDR Trillion)
2013 2014 2015 2016 2017 2018
399.2 463.1
545.4 612.8
692.8 721.3
↑16.0%
↑17.8%
↑12.4%
↑13.1%
↑4.1%
DDI FDI
38%
62%
FDI in Indonesia by country 2013 – 2018 (USD Mn) Exclude upstream oil, gas, and financial sectors
12
Source: BKPM
Rank Country 2013 2014 2015 2016 2017 2018 Total %
Share
1 Singapore 4,672 5,832 5,901 9,179 8,442 9,193 43,219 24%
2 Japan 4,713 2,705 2,877 5,401 4,996 4,953 25,645 14%
3 China 297 800 628 2,665 3,361 2,377 10,128 6%
4 Malaysia 711 1,776 3,077 1,116 1,214 1,775 9,669 5%
5 South Korea 2,205 1,127 1,213 1,066 2,025 1,605 9,241 5%
6 USA 2,436 1,300 893 1,162 1,993 1,218 9,001 5%
7 Hong Kong,
PRC 376 657 937 2,248 2,117 2.011 8,347 5%
8 Netherland 928 1,726 1,308 1,475 1,489 943 7,870 4%
9 British Virgin
Islands 786 624 731 1,157 845 1,043 5,186 3%
10 United Kingdom 1,076 1,588 503 307 775 271 4,520 3%
Total (10 Countries) 18,200 18,135 18,069 25,776 27,256 25,389 132,825 75%
Other Countries 10,418 10,394 11,207 3,188 4,984 3,919 44,110 25%
TOTAL (145 countries) 28,618 28,530 29,276 28,964 32,240 29,308 176,935 100%
• Total investment
realization from Hong
Kong in 2013-2018 is
USD 8,347 million,
making Hong Kong as
an important partner
for Indonesia.
• Nevertheless, more
opportunities are
available for Hong
Kong investors to grow
their investment in
Indonesia.
Hong Kong investment rank has been gradually improving
during the previous years in Indonesia
13
Source: BKPM
Rank Country Realization
US$ Million % Share
1 Singapore 8,441 26%
2 Japan 4,996 15%
3 China, P.R. 3,361 10%
4 Hong Kong 2,116 7%
5 South Korea 2,024 6%
6 USA 1,992 6%
7 Netherland 1,489 5%
8 Malaysia 1,213 4%
9 Mauritius 1,056 3%
10 British Virgin Islands 844 3%
Total 127 Countries 32,239 100%
FDI Rank in 2017
Rank Country Realization
US$ Million % Share
1 Singapore 5,901 29%
2 Malaysia 3,077 15%
3 Japan 2,877 14%
4 Netherland 1,308 6%
5 South Korea 1,213 6%
6 Hong Kong 937 5%
7 United States 893 4%
8 British Virgin Islands 731 4%
9 China, P.R. 628 3%
10 United Kingdom 503 2%
Total 95 Countries 20,665 100%
FDI Rank in 2015
Indonesia Investment Policies (1)
14
1st Phase:
Investment Development that is Relatively Easy and Fast Produces
2nd Phase:
Acceleration of Infrastructure and Energy Development
3rd Phase:
Large Scale Industrial Development
4th Phase:
Knowledge-Based Economic Development
Vision to 2025:
“Sustainable Investment to
Achieve The Independent,
Advanced and Prosperous
Indonesia”
Presidential Regulation No 16 of 2012
on Investment General Planning (RUPM)
Investment Climate Improvement
7 Policy Directions of Indonesia Investment
Investment Distribution
Focus on Food, Infrastructure and Energy Development
Green Investment
Empowerment of Micro, Small, Medium Enterprises and Cooperatives (UMKMK)
Providing of Facilities, Ease and/or Incentives for Investment
Investment Promotion
Investment Roadmap (2010-2025)
Phase can take place in parallel and simultaneously
Indonesia Investment Policy Direction
Indonesia Investment Policies (2)
15
Investment climate be increased become one of the best in the world
Strengthening of Labor Intensive, Export Oriented, and Value Added Sector
Increasing of Investment Climate Policy
Accelerating of Investment on Advanced Technology and High Innovation Sector
Sustainable Investment and Investment Protection in Overseas
Source: Ministry of National Development Planning/National Development Planning Agency, edited
35th Rank of EoDB Investment contribution to GDP
34.1% 2015-2025
20th Rank of EoDB Investment contribution to GDP
36.4% 2015-2025
10th Rank of EoDB Investment contribution to GDP
38.1% 2015-2025
16
Indonesia Investment Policies (3)
1 IINFRASTRUCTURE 35.000 MW
Power Generation
24 Seaports Multimode
Transport
2 AGRICULTURE/FISHERIES Food Estate Corn Cattle Salt
3 INDUSTRIES
Labor-intensive Textile Food and Beverage
Furniture Footwear Lifestyle
Import-substitution
Chemical and Pharmaceutical
Iron and Steel Components Defence and
Security
Export-oriented Electronics CPO and derivative products
Wood, pulp, and paper products
Automotive
Downstream Cocoa Sugar Smelter
Pioneer Base Metal Upstream
Petrochemical Inorganic Basic
Chemical Organic Basic
Chemical Pharmaceuticals
Raw Materials
4 MARITIME Shipbuilding Cold Storage Marine
Technology
5 TOURISM AND ZONES 10 Tourism SEZ 8 Existing SEZ 7 New SEZ
14 Priority Industrial Park
and Other Industrial Park
10 Tourism Priority
Destination
6 DIGITAL ECONOMY E-Commerce Fintech IT based Creative Economy
Indonesia Priority Sectors for Investment
17
Indonesia Investment Policies (4)
General Investment Policies
Equal treatment for both Foreign Direct Investment (FDI) and Domestic Direct Investment (DDI)
FDI must refer to Negative Investment List (DNI)
Minimum investment of IDR 10 billion • Approx. USD 700,000 (USD 1 = IDR 14,000) • Minimum paid-up capital of IDR 2.5 billion or
approx. USD 178,000 (USD 1 = IDR 14,000)
Obtain investment licenses
Must be established in the form of Limited Liability Company (PT)
Allowed to employ expatriate(s)
Guarantee of no expropriation
Guarantee to freely transfer and repatriate • Capital, profit, dividend, interest and
royalty
Must consider Corporate Social Responsibility (CSR), respect local culture and preserve environment
18
Indonesia Investment Policies (5)
Provisions of business fields
Certain business fields that are prohibited as
investment activities
"All business fields or types of business are open to investment activities, except business fields or types of businesses which are declared closed and open with conditions". - Article 12 Paragraph (1) Investment Law Number 25 of 2007
CLOSED
Certain business fields that can be as
investment activities with certain conditions
OPEN with Conditions
Requirements:
• Reserved for micro, small, medium
and cooperative businesses
• Partnership
• Foreign capital ownership
• Specific location
• Special licensing
1
2
Most manufacturing industries in Indonesia are
open 100% for FDI
100% FDI
Textile Industry
100% FDI
Automotive Industry (Manufacture and
Assembly)
100% FDI
Electronics Industry
19
Indonesia Investment Policies (6)
Negative List of Investment Relaxation
Note:
* Total amount of business fields consist of:
• Business fields closed for investment;
• Business fields reserves for partnership and
SME’s and Cooperative;
• Business fields open with requirements.
515*
NUMBER OF BUSINESS FIELDS
(Presidential Regulation No 44/2016)
371*
NEW DRAFT ON NEGATIVE LIST
Business Fields Business Fields
• 20 Business fields closed for investment;
• 116 Business fields reserves for
partnership and SME’s and Cooperative;
• 235 Business fields open with
requirements.
It will create more manufacturing
industries in Indonesia are
open 100% for FDI
Incentives and Easiness for Manufacturing Industry Investment (1)
20
Tax Holiday/Mini Tax Holiday
Tax Allowance
Value Added Tax (VAT)
and Sales Tax on Luxury
Goods
Incentive and Easiness for
Investment by Regional
Government
Import Duty Facility Green Line Facility
Ease of Import for Export
Purposes (KITE)
Special Economic Zones
(SEZ) for Manufacturing
Foreign Worker
Permit Facility
Import Duty Borne by The
Government
Online Single Submission
(OSS) Facility
Super Deductible
Tax
Others Fiscal and Nonfiscal
Incentives
Incentives and Easiness for Manufacturing Industry Investment (2)
21
5-20 years tax
exemption* With another 50% tax exemption for additional 2 years (transitional period).
(Government Regulation No.9/2016)
57
30 % of investment value
Reduction of corporate net income tax for 6 years, 5% each year.
*Under certain requirements among others: investment value or
export orientation, manpower
absorbtion, local content, and project
location (especially outside Java island).
Tax Holiday Tax Allowance (MoF Regulation No.176/PMK.011/2009 juncto.
No. 188/PMK.010/2015)
- 2 years import duty exemption or
- 4 years for companies using locally-produced machines/equipment (min.30%).
a. Machinery/equipment import duty exemption
b. Raw materials for production
*) Based on value of investment threshold.
(Ministry of Finance Regulation
No.150/PMK.010/2018)
USD 38 million
Minimal investment value (IDR 500 billion).
Mini Tax Holiday (Ministry of Finance Regulation
No.150/PMK.010/2018)
5 years
50% tax reduction
USD7.6 million Minimal investment value (IDR 100 billion)
1 USD = IDR14.200
With another 25% tax exemption for additional 2 years (transitional period).
44
certain business fields of manufacturing eligible for tax allowance
certain business fields and location of manufacturing eligible for tax allowance
Import Duty Facility
• Reduction of net income by 60% of the total investment.
• The most gross income reduction high of 200% of the total cost incurred for work practice activities, apprenticeship, and/or learning.
• The highest gross income reduction of 300% of the total costs incurred for research activities and certain developments in Indonesia.
Super Deductible Tax (Government Regulation No.45/2019)
Green Line Facility
• Capital goods do not require screening.
• Cutting the processing time from 3-5 days to only 30 minutes.
Incentives and Easiness for Manufacturing Industry Investment (3)
22
Incentives and Ease for Investment by Regional Government
(Government Regulation No. 24 of 2019)
• Provide incentives
can be:
• Reduction, relief, or
exemption on local
tax;
• Reduction, relief, or
exemption on local
retributions;
• Providing of capital
aid to micro, small,
and/or cooperative
businesses in the
regions;
• Assistance for
research and
development for
micro, small and/or
cooperative
businesses in the
regions;
• Assistance for micro,
small and/or
cooperative
vocational training
facilities in the region;
and/or
• Low interest loans.
• Provide ease can be:
• Providing of data and information on
investment opportunities;
• Providing of facilities and
infrastructure;
• Facilitating of land or location supply;
• Providing of technical assistance;
• Simplification and acceleration of
licensing through one-stop integrated
services;
• Ease of access to marketing products;
• Ease of direct construction on
investment;
• Ease of investment in strategic areas
stipulated in legislation that has the
potential for regional development;
• Providing of investment comfort and
security in the regions;
• The ease of the certification and
standardization process refer to
provisions of legislation;
• Ease of access to ready-to-use and
skilled workers;
• Ease of access to raw material
supplies; and / or
• Promotion facilitation base on regional
authority.
Ease of Import Facilities for Export Purposes (KITE)
(Finance Ministry Regulation
No.176/PMK.04/2013)
• KITE facilities are provided to industrial
entities that have been exported or
have the potential to export.
• This facility provides import duty
exemption for materials used for the
production of export goods.
• The goods that eligible to get this
facility are:
• Goods and/or Materials:
• Raw materials, supporting
materials, etc.
• Must be processed for export or
submission.
• Machinery:
• Development, modernization, and
rehabilitation.
• Used to production at least 2
years.
• Sample Goods:
• Used to support the production
process.
• Production results have been
exported/submitted.
Foreign Worker Facilities
• Ease Foreign Worker Permit.
• Ease for Foreign Worker
Employment Plan.
• Foreign workers can use limited
visa and temporary living permit
for working in Indonesia based on
Presidential Regulation No 20 of
2018.
Incentives and Easiness for Manufacturing Industry Investment (4)
23 Source: various, edited
Fiscal Incentives in Special Economic Zones
Fiscal
Tax Holiday
Tax Allowance
Value Added Tax
Inland FTA
Customs
Import Duty
Entering of Import
Goods:
• Suspension of import
duty;
• Excise Exemption
• Taxes in the Import
Framework (PDRI) are
not collected*
From Custom Areas:
• VAT and Sales Tax on
Luxury Goods are not
collected
Releasing export goods
Export:
• General conditions
apply
To Domestic Market:
• Import Duty = 0 if the
level of domestic
content is greater or
equivalent with 40%
• Repayment of indebted
Value Added Tax
• VAT levies for
submission of taxable
goods
SEZ Manufacture Industry*
*term and condition applied
Indonesia Manufacturing Investment Opportunities (1)
24
: Development Location
West Java
East Java
West
Nusa Tenggara
Central
Java
Jakarta
North Sumatera
Riau
Central Kalimantan Lampung
Banten
: Existing Location
Source: BKPM, edited
Food and Beverage Industry
Opportunities
Largest domestic market in the
region (30% of ASEAN total). 1
Abundant agricultural resources
(Global #5 in total agriculture
production volume of 2014).
2
Consumer shift to modern packaged
food. 3
Existence of globally competitive players
(e.g. Indofood, Mayora). 4
Good marketing network (outlet/stores). 5
Products • Palm Oil.
• Rice.
• Chicken.
• Sugar.
• Processed Seafood.
• Starch.
• Cocoa.
• Processed Fruits and Veggies.
• Bottled Water.
• Noodle.
• RTD Tea.
• Coffee.
• Baby Food.
• Packaged Pre-Prepared Meals.
• Food Supplement.
• Seaweed.
• Carrageenan
Indonesia Manufacturing Investment Opportunities (2)
25
West
Java Central
Java
Gorontalo
Source: BKPM, edited
: Development Location
: Existing Location
Textile and Clothing Industry
Highest consumption growth in
ASEAN (Projected at 9% of 2016-2025
CAGR).
Opportunities
Growing opportunities in functional clothing
(e.g. sports wear, functional underwear).
1
2
Largest domestic market in the region. 3
Products
• Synthetic Fibers.
• High Quality Yarn.
• Specialty and Industrial
Fabrics.
• Technical Multi-Fabric
Textiles.
• Leather Fabrics.
• Apparel with Embedded
Technology.
• Functional Clothing.
Indonesia Manufacturing Investment Opportunities (3)
26
West Java
Riau Islands
East Java
Jakarta
Banten
: Development Location
: Existing Location
Source: BKPM, edited
Automotive Industry
Shift from 2W to 4W
transportation.
Opportunities
2nd largest ASEAN
production capacity.
1
2
Largest domestic
market in the region. 3
Industry shift to EV. 4
Products
• Internal Combustion
Engine/ICE Vehicles (especially
MPV, Van, Low Cost Green
Car/LCGC, and Truck).
• Electric Vehicles.
• Main Component for
Automotive (e.g. machinery,
brake, transmission system).
• Technology and Component for
Electric Vehicle.
Central
Java
Indonesia Manufacturing Investment Opportunities (4)
27
West Java
Banten
East
Java
Jakarta
: Development Location
: Existing Location
Riau Islands
Source: BKPM, edited
Central
Java
Electronics Industry
Largest domestic market in
the region.
Opportunities
Electronics products are key
inputs for multiple sectors
under the 4IR era.
1
2
Products
• Smartphone Components
(Screen, Charger, and Camera).
• IoT Manufacturing.
• Semiconductor Manufacturing
(Foundry).
• Batteries for Industrial Usage
and Homes.
Indonesia Manufacturing Investment Opportunities (5)
28
West Java
Banten
East
Java
East
Kalimantan
Central
Java
South Sumatera
West
Papua
: Development Location
: Existing Location
Source: BKPM, edited
Chemical and Pharmacy Industry
Abundant natural resources.
Opportunities
Large domestic market.
1
2
Products
• Ethylene.
• Propylene.
• Butadiene.
• Synthetic Fiber.
• Synthetic Resin.
• Synthetic Rubber.
• Bioplastic.
• Biofuel.
• Biocomposite.
• Fertilizer.
• Pharmacy and drugs.
Engineering, innovation,
and policy support. 3
Indonesia Manufacturing Investment Opportunities (6)
29
West
Java
Central
Java East
Java
Yogyakarta
Source: BKPM, edited
: Development Location
: Existing Location
Machinery Industry
Potential local partner.
Opportunities
Large domestic market.
1
2
Products
• Electrical equipment (electric
motor/generator, solar cell).
• Textile and apparel machinery
(weaving machine, knitting machine.
Increasing of demand. 3
Availability of skilled worker. 4
Increasing of innovation. 5
Indonesia Manufacturing Investment Opportunities (7)
30
West
Java
Banten
East
Java
Source: BKPM, edited
: Development Location
: Existing Location
Rubber and Plastic Industry
Availability of large rubber plantation.
Opportunities
Export development.
1
2
Large domestic market. 3
Products
• Tyre.
• Rubber Thread.
• Compound.
• Gloves.
• Hose.
Increasing of ocnsumption. 4
Indonesia Manufacturing Investment Opportunities (8)
31
West Java
Jakarta
East Java
East Kalimantan
Riau Islands
: Development Location
: Existing Location
Source: BKPM, edited
Shipbuilding Industry
High consumption growth.
Opportunities
Sea Toll program.
1
2
Large domestic and global market. 3
Products
• Ship.
• Main components for ship.
• Ship repairs activities.
Government procurement. 3
Indonesia Manufacturing Investment Opportunities (9)
32
West
Java Central
Java East
Java
: Development Location
: Existing Location
Source: BKPM, edited
Footwear Industry
Mass/seasonal leather production.
Opportunities
Availability of Craftsmanship.
1
2
Large domestic and global market. 3
Products
• Smart Footwear.
• Synthetic Leather.
• Advanced Leather Material.
• Non-conventional Leather
Material.
Research and technology support. 4
Increasing of consumption. 5
High quality production capability base
on demand. 6
Indonesia Manufacturing Investment Opportunities (10)
33
West Java
Banten East Java
South Kalimantan
Southeast
Sulawesi
North Maluku
Papua
Jakarta
: Development Location
: Existing Location
Source: BKPM, edited
Basic Metal and Metal Goods
Industry
High consumption growth.
Opportunities
Abundant natural resources.
1
2
Large domestic and global market. 3
Products
• Basic Stainless Steel.
• Alumina.
• Aluminum.
• Nickel Matte.
• Copper Cathodes.
• Precious Metal.
• Rare Earth Metal.
• Various of Metal by Smelter
Product.
Increasing of demand. 4
Availability of marketing network. 5
Integrated industry structure and
association. 6
Central
Sulawesi
34
Eligibility of Pioneer Industry for Tax Holiday (1)
Integrated upstream metal industry (iron steel or non-iron steel) without or with its derivatives
28 Types of Production
1. The steel industry from
non-scrap raw materials,
incl. stainless steel.
2. Integrated steel milling
industry with steel industry,
incl. stainless steel.
3. Integrated seamless pipe
industry with steel industry,
incl. stainless steel.
4. Integrated welded pipe
industry with steel milling
industry, incl. stainless
steel.
5. Integrated heavy profile
manufacture with steel
industry.
6. Integrated rail manufacture
with steel industry.
7. Metal manufacture that
produces gold ingots.
8. Metal manufacture that
produces silver ingots.
9. Metal manufacture that
produces platinum.
10. Alumina industry
(bauxite to alumina).
11. Aluminum ingots
industry (alumina to
aluminum ingots).
12. Nickel from ore industry
with pyrometallurgy.
13. Nickel from ore industry
with hydrometallurgy.
14. Copper cathodes
industry.
15. Integrated aluminum
plate industry from non-
scrap, with aluminum
ingots manufacture.
16. Integrated aluminum rod
industry from non-scrap,
with aluminum ingots
manufacture.
17. Integrated aluminum
billet industry from non-
scrap, with aluminum
ingots manufacture.
18. Integrated copper plate
industry, with copper
cathodes manufacture.
19. Integrated copper strip
industry, with copper
cathodes manufacture.
20. Integrated copper sheet
industry, with copper
cathodes manufacture.
21. Integrated aluminum
extrusion industry, with
aluminum ingots
manufacture.
22. Integrated aluminum
tube industry, with
aluminum ingots
manufacture.
23. Integrated seamless
pipe, with aluminum
ingots manufacture.
24. Integrated welded pipe,
with aluminum ingots
manufacture.
25. Integrated copper pipe
industry, with copper
cathodes manufacture.
26. Rare earth metal
industry.
27. Base metal industry
from black tin non
scrap raw materials.
28. Base metal industry
from zinc non scrap
raw materials.
35
Eligibility of Pioneer Industry for Tax Holiday (2)
Integrated petroleum, natural gas, or coal-based petrochemical industry without or with its derivatives
52 Types of Production
1. Ethylene industry.
2. Prophylene industry.
3. Butadiene industry.
4. Benzene industry.
5. Toluene industry.
6. Xylene industry.
7. Methanol industry.
8. Formic acid industry.
9. Dimethyl ether industry.
10. Carbon black industry.
11. Caprolactam industry.
12. Ethylene glycol industry.
13. Integrated polyethylene with
ethylene industry.
14. Integrated ethyl benzene with
ethylene industry.
15. Integrated dichloro etylene
with ethylene industry.
16. Integrated acrylonitrile with
propylene industry.
17. Integrated isopropyl alcohol
with propylene industry.
18. Integrated isopropyl alcohol
with propylene industry.
19. Integrated cyclohexane with
benzene industry.
20. Integrated c-PTA with xylene
industry.
21. Integrated acetic acid with
formide acid industry.
22. Integrated styrene with
ethylbenzene industry.
23. Integrated vinyl chloride
monomer with dichloro
etylene industry.
24. Integrated acetone with
isophropylalcohol industry.
25. Integrated p-PTA with
c-PTA industry.
26. Integrated DMT with c-PTA
industry.
26. Integrated ethyl acetate with
acetic acid industry.
27. Special chemicals industry of
flavour and fragrance.
28. Alkyd resin industry.
29. Polyester resin industry.
30. Aminos resin industry.
31. Polyamide resin industry.
32. Epoxid resin industry.
33. Silicone resin industry.
34. Polyurethane resin industry.
35. Polyethylene resin industry.
36. Polypropylene resin industry.
37. Polystyrene resin industry.
38. Polyvinyl chloride resin
industry.
39. Acetate cellulose resin
industry.
40. Nitrate cellulose resin
industry.
41. Integrated styrene butadiene
rubber with organic base
chemical industry.
42. Integrated polychloroprene
(neoprene) with organic base
chemical industry.
43. Integrated acrylonitrile
butadiene rubber (nitrile rubber)
with organic chemical industry.
44. Integrated ethylene-propylene-
non-conjugated diene rubber
with organic chemical industry.
45. Integrated silicone rubber
(polysiloxane) with organic base
chemical industry.
46. Integrated isoprene rubber with
organic base chemical industry.
47. Integrated poly butadiene rubber
with organic chemical industry.
48. Manufacture of tow, yarn,
polyamide synthetic filament
strip.
49. Manufacture of tow, yarn,
polyacrylate synthetic filament
strip.
50. Manufacture of tow, yarn,
polypropylene synthetic
filament strip.
51. Polyamide staple fiber industry.
52. Polyacrylate staple fiber
industry.
36
Eligibility of Pioneer Industry for Tax Holiday (3)
Integrated natural oil and gas refinery industry without or with its derivatives
5 Types of Production
1. Natural oil and gas refinery industry.
2. Integrated olefin industry with natural oil
and gas refinery industry.
3. Integrated aromatics industry with natural
oil and gas refinery industry.
4. Integrated normal paraffin industry with
natural oil and gas refinery industry.
5. Integrated synthetic gas industry with
natural oil and gas refinery industry.
Integrated organic base chemical industry sourced from agricultural, plantation, or forestry products without or with its derivatives
15 Types of Production
1. Betacarotene industry.
2. Tocopherol industry.
3. Tocotrienol industry.
4. Green diesel industry.
5. Green gasoline industry.
6. Green avtur industry.
7. Biolubricant industry.
8. Biosurfactant industry.
9. Bioetanol (fuel grade ethanol) industry.
10. Bioemulsifier industry.
11. Recovered oil industry.
12. Manufacture of tow, yarn, acetate cellulose
synthetic filament strip.
13. Manufacture of tow, yarn, rayon viscose synthetic
filament strip.
14. Synthetic staple fiber industry of rayon viscose.
15. Synthetic staple fiber industry of cellulose acetate.
37
Eligibility of Pioneer Industry for Tax Holiday (4)
Integrated inorganic base chemical industry without or with its derivatives
13 Types of Production
1. Integrated non-mercury processed caustic soda
industry.
2. Integrated ash soda industry.
3. Integrated sodium chloride industry.
4. Integrated potassium hydroxide industry.
5. Integrated lithium industry.
6. Integrated sodium industry.
7. Integrated potassium industry.
8. Integrated ammonia industry.
9. Integrated pigment industry.
10. Integrated phosphor industry.
11. Integrated sulfur industry.
12. Integrated nitrogen industry.
13. Integrated halogen industry.
Integrated industry of main raw materials for pharmacy without or with its derivatives
6 Types of Production
1. Industry of main raw materials for vaccine.
2. Biotechnology based industry of main raw
materials for pharmacy.
3. Blood based industry of main raw materials for
drugs.
4. Integrated pharmacy products industry with
industry of main raw materials for vaccine.
5. Integrated pharmacy products industry with
biotechnology based industry of main raw
materials for pharmacy.
6. Integrated pharmacy products industry with blood
based industry of main raw materials for drugs.
38
Eligibility of Pioneer Industry for Tax Holiday (5)
Manufacturing industry of irradiation, electromedical, or electrotherapy equipments
3 Types of Production
1. Manufacturing industry of X-ray tube.
2. Manufacturing industry of CT scan.
3. Manufacturing industry of magnetic
resonance imaging (MRI).
Manufacturing industry of main components for electronic or telematic equipments (such as semiconductor wafer, backlight for Liquid Crystal Display/LCD, electrical driver, or display)
5 Types of Production
1. Manufacturing industry of
semiconductor wafer.
2. Manufacturing industry of backlight for
display.
3. Manufacturing industry of electrical
driver.
4. Manufacturing industry of display.
5. Manufacturing industry of battery.
39
Eligibility of Pioneer Industry for Tax Holiday (6)
Manufacturing industry of machinery and main components for machinery
7 Types of Production
1. Manufacturing industry of electric motor for
machine.
2. Manufacturing industry of internal combustion
motor for machine.
3. Manufacturing industry of metal furnace
machinery for industry (non-electric).
4. Manufacturing industry of metal furnace
machinery for industry (electric).
5. Integrated manufacturing industry of 4-
wheeled tractor main components with 4-
wheeled tractor manufacture by capacity of >
40HP.
6. Manufacturing industry of Multifunctional
Mechanical Tool for Rural (AMMDes).
7. Manufacturing industry of textile machinery.
Manufacturing industry of robotic components for production machinery
1 Types of Production
1. Manufacturing industry of robotic
components.
40
Eligibility of Pioneer Industry for Tax Holiday (7)
Manufacturing industry of main components for power plant
2 Types of Production
1. Manufacturing industry of generator for power
plant.
2. Manufacturing industry of turbine for power
plant.
Manufacturing industry of motor vehicle and main components for motor vehicle
9 Types of Production
1. Integrated 4-wheeled or more electric vehicle manufacturing with
battery and electric motor.
2. Manufacturing of battery for 4-wheeled or more electric motor
vehicle.
3. Manufacturing of electric motor for 4-wheeled or more electric
motor vehicle.
4. Manufacturing of 100% biodiesel fitted flexy engine for 4-wheeled
or more motor vehicle.
5. Integrated 2 (two) main components minimum for engine of
4-wheeled or more motor vehicle (i.e. piston, cylinder head,
cylinder block, camshaft, crankshaft, and connecting rod)
manufacturing, with 4-wheeled or more motor vehicle industry.
6. Manufacturing of electric power control unit (PCU) for 4-wheeled
or more electric motor vehicle.
7. Manufacturing of battery for 2-wheeled or 3-wheeled electric
motor vehicle;
8. Manufacturing of electric motor for 4-wheeled or 3-wheeled
electric motor vehicle;
9. Manufacturing of electric power control unit (PCU) for
4-wheeled or 3-wheeled electric motor vehicle.
41
Eligibility of Pioneer Industry for Tax Holiday (8)
Manufacturing industry of main components for ship
1 Types of Production
1. Manufacturing industry of internal
combustion motor for marine used.
Manufacturing industry of main components for train
7 Types of Production
1. Manufacturing industry of internal combustion
motor for train.
2. Manufacturing industry of traction motor for train.
3. Manufacturing industry of transmission for train.
4. Manufacturing industry of locomotive for electric,
diesel, and steam train.
5. Manufacturing industry of wagon for self propelled
or electric train.
6. Development, maintenance and repair activities for
signal building construction of train.
7. Development, maintenance and repair activities for
telecommunication of train.
42
Eligibility of Pioneer Industry for Tax Holiday (9)
Manufacturing industry of main components for aircraft and supporting activities of aerospace industry
7 Types of Production
Processing industry base on agricultural, plantation, or forestry products for pulp without or with its derivatives
3 Types of Production
1. Pulp industry, including dissolving pulp, with raw
materials from Industrial Plant Forest (HTI).
2. Integrated valuable paper industry with pulp
industry.
3. Integrated special paper industry with pulp
industry.
1. Manufacturing industry of aircraft engine.
2. Manufacturing industry of aircraft propeller.
3. Manufacturing industry of rotor.
4. Manufacturing industry of aircraft structure
component.
5. Integrated aircraft manufacturing industry with
aircraft main component industry (engine,
propeller, rotor, and structure).
6. Industry of retread tyre for aircraft.
7. Maintenance, repair and overhaul (MRO) activities
for aircraft.
43
Benefits for Investors (1)
Regulation of Business Fields Closed and Business Fields Open with Conditions to Investment (Presidential Regulation No 44 of 2016)
• From 664 to 515 business fields; • 20 business fields closed; • 145 business fields reserved for micro, small, medium businesses,
and partnership; • 350 business fields open with conditions; • More open to investment; • Investment process is easier; • Provide more protection to investors; • Easier for investors to understand; • Reduce logistics costs for investors who produce goods, or who open
factories; • Reducing production costs; • Support for retail business development; • Support for the creative industry; • Quality improvement of labor; • Attract more investors in the tourism sector; • To support 35 GW electricity and renewable energy programs.
Pro Investment Policies Ease of service for central and regional licensing and non-licensing • By Central One-stop Service/Public Service Mall/Regional
One-stop Service
Facilitate the investment problems (debottlenecking) • The Indonesian government is committed to facilitate the
problems faced by investors through coordination between BKPM and related Ministries / Agencies and Local Governments.
Ease of obtaining incentives for investors/companies
Predictable wage system
Acceleration of business implementation Presidential Regulation No 91 of 2017 • Implementation of Online Single Submission (OSS)
Continuous reforms to improve the investment climate • Ease of starting business, dealing with construction permit,
registering property, paying taxes, trading across border, enforcing contract, getting electricity, getting of protection as minority investor, and resolving insolvency.
Dwelling time optimization
Relaxation of entry visa policy
Acceleration of infrastructure and power development
Lower energy costs for industries
Acceleration of land licensing
Affordable housing for the people
Efficiency on national logistic cost
Sectoral policies support
Availability of skilled labor
• Making Indonesia 4.0; • HR capacity enhancement; • Preparing of competent labor.
Benefits for Investors (2)
44
Source: various, edited
Investors can enjoy several drivers of competitiveness to build robust
industry sectors
Abundant Working Population
Strong Domestic Demand
Stable Economic Growth
Largest Economy in ASEAN
Resource-Rich Country
Benefits for Investors (3)
45
Source: various, edited
Demographic Bonus
The next 15 years will be a "golden age" for Indonesia who will enjoy a demographic bonus
1920 1970 2000 2030 2050
Demographic bonus
During the demographic
bonus
After demographic
bonus
Japan
China
Singapore
Thailand
Indonesia
1930
1970
1970
1970
1975
Demographic Bonus Now
0.9% 5.5%
6.7% 9.2%
2.0% 7.3%
3.2% 5.8%
? 5.4%
Average of GDP growth
Benefits for Investors (4)
46
Urban Households Expenditure in 2011 and 2030 (USD billion, 2010 price)
Estimated annual revenue in 2030 (USD billion, 2010-11 price)
Additional consumers by
2030
90million Consumer spend growth in urban areas
7.7% p.a. USD1.1trillion Market opportunity in consumer services by 2030
71% Population in cities,
producing 86% of GDP in 2030
Abundant Opportunity from Growing Consuming Class
Benefits for Investors (5)
47
Middle class growth
in Southeast Asia
2012-2020
110.5% Middle class
growth in Indonesia
2012-2020
174% Middle Class Growth
in ASEAN 2012-2020
The Highest Middle Class Growth
Source: AC Nielsen
Benefits for Investors (7)
49
More Downstreaming Smelter Development
Commodity
Total
Reserve
2017
(Ton Ore)
Mining Production
(ton per year) Refinery Facility
Refining
Products
Reserve Life
Based on Ore
Production
per Year Amount (ton) Existing Plan
Copper
2.8 billion
120 million
copper ore 2 smelters
(2.4 million
ton per year)
1 smelter
(2 million ton
per year)
Copper
Cathodes 29 years
3 million copper
concentrate
Anode
Slime
Nickel
3.1 billion 17 million
nickel ore
13 smelters
(31 million
ton per year)
18 smelters
(39 million ton
per year)
NPI
47 years FeNi
Nickel
Matte
Iron
2.3 billion
3.9 million
iron ore and iron
sand 2 smelters
(846,000 ton
per year)
3 smelters
(6.6 million
ton
concentrate
per year)
Sponge
Iron 130 years
3.1 million
iron concentrate Pig Iron
Bauxite
1.6 billion 2 million
washed bauxite
2 smelters
(4.4 million
ton per year)
4 smelters
(15 million ton
per year)
CGA
535 years SGA
Lead
11.5
million
8,000
lead ore
not available
3 smelters
(450,000 ton
concentrate)
Lead
Bullion 108 years
5,000
lead concentrate
Zinc
11.4
million
18,000
zinc ore Zinc
Oxide 105 years
9,000
zinc concentrate
Manganese
87 million
73,000
manganese ore 1 smelter
(4,000 ton
per year)
1 smelter
(26,000 ton)
SiMn,
FeMn 21 years 54,000
manganese
concentrate
6%
62%
10%
12%
6% 4%
Smelter (by Number)
Copper Nickel
Iron Bauxite
Lead and zinc Manganese
4%
69%
7%
19%
1% 0%
Smelter (by Capacity)
Copper Nickel
Iron Bauxite
Lead and zinc Manganese
• Until now, refining products have not been fully
absorbed by the domestic downstream industry.
• Downstreaming smelter development program
can provide raw materials for manufacturing
industry needs in Indonesia and global.
No Commodity Processing Products Refining Products Application
1 Copper Copper concentrate Copper cathodes Cable, bronze, and electronics.
2 Nickel -- Nikel Matte For nickel, and nickel chemical raw.
Ferronikel Steel raw.
Nickel Pig Iron (NPI) Steel raw, stainless steel.
Nickel metal Stainless steel, electroplating, electronics, battery, pigment.
3 Iron Iron concentrate Sponge Iron Raw for pig iron
Pig Iron Raw for iron and steel.
4 Bauxite -- Chemical Grade Alumina
Raw for filler (toothpaste), water purifier, refractory, and abrasive material.
Smelter Grade Alumina Source of making for aluminum.
5 Lead and Zinc
Lead concentrate Bullion Timbal Bullet, ship ballast, nuclear reactor liner, and acid resistant coating
Zinc concentrate Bullion Zn Light steel roof, galvanizing, alloy metal, and bronze.
ZnO Dye.
Source: Ministry of Energy and Mineral Resources, May 2018
Total
Capacity
+101.7
million
Benefits for Investors (8)
Source: various, edited
New economic developments in Indonesia will drive the growth of the manufacturing industry in Indonesia.
The New Economy: what are they?
Potency of The New Economy Growth in Indonesia
Advise for Investors
51
• Indonesian economy in next years will continue to experience robust, stable, and increasing growth,
supported by recovery momentums gained during previous years.
• Indonesian government committed to continue structural reforms (institutional reform, regulatory
reform, and fiscal reforms) to achieve high and sustainable growth in the era of knowledge driven
economy.
• Indonesian government will continuously and consistently improve its investment climate in order to
create a good and stable environment for business to thrive and prosper.
• Indonesian government strongly encouraged and will facilitates private sectors to take a part in the
development in Indonesia.
• Finding of the right local partners.
• Indonesia offers a promising future for business, Don’t Wait To Long!!!,
Invest In Indonesia As Soon As Possible.
52
Badan Koordinasi Penanaman Modal
(BKPM)
Indonesia Investment Coordinating Board
Jalan Jenderal Gatot Subroto No. 44
Jakarta 12190 - Indonesia
t +62 21 525 2008 | f +62 21 525 4945 | e [email protected]
bkpm.go.id |
investindonesia.go.id
Indonesia Investment Promotion
Centre (IIPC)