Number II / November 2016 | Trade & Investment Bulletin 1

Number I | September 2016

FORBES LAUDS INDONESIA’S

EFFORTS IN CUTTING BARRIERS

TO DOING BUSINESS

Global media tycoon Steve Forbes said Indonesia could grow up to 10 percent

each year if the country introduced efforts in removing barriers to doing

business and cutting corporate tax, the mogul said during an address he gave in

Jakarta on September 2, 2016.

EDITOR’S NOTE Dear Readers,

Foreign business has a lot of opportunities

in doing business in Indonesia. A number

of breakthroughs have been launched in

allowing business to be established and

registered in just a few hours by

establishing One-Stop Integrated Services

at the Indonesia Investment Coordinating

Board.

One of the promising businesses for U.S.

companies is a franchise. McDonald’s,

Kentucky, Starbucks and Wendy's are just

among the U.S. franchises that can be

found easily in Indonesian major cities

such as Jakarta, Surabaya, Yogyakarta,

Denpasar, Medan, and in the suburb like

Bekasi, Depok, and Bogor. The franchise

which adopts local culture will be

exceptional.

Forbes lauds Indonesia’s efforts in cutting barriers to doing Business 1 Indonesia presents “Prima Niaga” awards to two U.S. importers 2 Indonesia Trade Surplus Largest in 14 Months 3 Indonesia has 698 franchises, turnover of USD 13.3 billion 4 USA companies received Primaduta awards from Indonesian President 5 Indonesian furniture: creativity in woods 6 Exhibition agenda 2016/2017 8

For more detail information please contact: Economics Affairs Consulate General of the Republic of Indonesia 211 W. Wacker Drive #8 Chicago, Illinois 60606 Phone: 312.920.1880 Fax: 312.920.1881 Email: economy@indonesiachicago.org Website: www.kemlu.go.id/Chicago

The Indonesian economy is yet to return to

the growth pace it enjoyed during the

commodity boom five years ago, with

public and private investment yet to fill the

productivity gap caused by a drop in

exports of commodities like coal, palm oil,

and raw minerals. The economy expanded

5.2 percent in the second quarter of the

year, up from 4.9 percent in the previous

quarter thanks to robust household

consumption.

Investment growth accounted for a third of

the economy although it slowed to 1.6

percent down from 1.8 percent in the

previous quarter. "There is no reason why

this country should not grow real terms at

8 percent to 10 percent a year.

It can be done if Indonesia starts to

remove those barriers following other

countries," Forbes said during a luncheon

organized by AmCham Indonesia in

Jakarta on September 2, 2016.

Indonesia ranked 109 out of 189

countries in World Bank's 2015 Ease of

Doing Business Survey, moving up 11

places from a year earlier after the

government eased procedures for

companies to register their businesses

and pay tax. Still, Indonesia lags far

behind its Southeast Asian counterparts,

such as Malaysia and Singapore.

(continue page 3)

Number I | September 2016

More articles available at: http://kemlu.go.id/chicago

Trade & Investment Bulletin

Number II | November 2016 More articles available at: www.kemlu.go.id/chicago

2 Trade & Investment Bulletin| Number II / November 2016

INDONESIA PRESENTS PRIMA NIAGA AWARD TO TWO

U.S. IMPORTERS

Two American importers were presented with the “Prima Niaga” Awards. The awards were given to Cargill Inc. and

Vision Ease Lens Inc., which are importing companies or distributors of Indonesian products in Minnesota. Both

companies have been committed and loyal to their Indonesian business partners for such a long time.

“The award is an appreciation to the U.S.

importers that have played an important

role in increasing trade relations between

Indonesia and the U.S.,” said the Director

of the Indonesian Trade Promotion

Center (ITPC) Chicago, Wijayanto, earlier

this month.

The presentation of the Prima Niaga

Award was done during the Indonesia-

Minnesota Business Forum ‘Doing

Business in Indonesia: Trade, Tourism,

and Investment’, which was held by the

Consulate General of the Republic of

Indonesia on 2 June 2016 at the Saint

Paul Hotel, Minnesota.

“This is the first time the Prima Niaga

Award has been awarded, and we plan to

present the award to the U.S. companies

which have certified business with

Indonesia,” added Wijayanto.

The event was attended by 50

participants representing various circles,

including the Chamber of Commerce

State of Minnesota, importing companies,

and exporters in Minnesota and the

surrounding areas. Several Indonesian

foods and beverage products were

exhibited during the event.

Cargill Inc. is one of the importers of

Indonesian cocoa and palm oil in the U.S.

The award was received by Don Brown,

the Managing Director of Government

Relations and Corporate Affairs. In his

testimony before the forum, Brown

talked about the Cargill’s history of trade

and investment in Indonesia since 1974 in

agribusiness.

Besides importing Indonesian agricultural

products, Cargill Inc. also invests in

Indonesia in various sectors, including

cattle feed, cocoa processing, and the

palm oil industry.

Meanwhile, Vision Ease Lens Inc. is a

company that produces global scale

optical lenses with a manufacturing and

supply chain network in various countries

throughout the world. The award was

received by Cass Lundgren, the Vice

President of Global Operations. Lundgren

briefly explained to the forum on Vision’s

trade cooperation with Indonesia through

imports of high-quality optical lens

Number II / November 2016 | Trade & Investment Bulletin 3

Number I | September 2016

products produced by his company’s

partners in Indonesia.

According to him, “Vision-Ease” has

enjoyed a very healthy trade relationship

with Indonesia in the past several years,

including owning a factory in Bekasi. He

also explained how his company strives to

treat the employees in Indonesia well by

paying their salaries even during the

difficult time when the company had to

stop operating for several months due to

a fire incident.

(Source: The Indonesian Consulate General)

FORBES LAUDS INDONESIA’S EFFORTS IN CUTTING BARRIERS TO DOING BUSINESS (continue)

Indonesian President, Joko "Jokowi"

Widodo, has targeted the country to rank

at least at 40. Forbes said Indonesia

should continue making a

breakthrough in the area — such as

following New Zealand's steps in allowing

businesses to be established and

registered in just a few hours —and

ensure to follow it through year after

year.

"Indonesia has a lot of opportunities

because others have made so many

mistakes. If Indonesia persists for several

years, keeping the rupiah stable, reduce

those tax rates, reduce the regulation,

make it easier for business leaders,

Indonesia would be an inspiration and a

model for business," he said.

Forbes also highlighted Jokowi's plan to

cut the country's corporate tax to 17

percent to match that in Singapore, from

the current 25 percent, as a step in right

direction to invigorate economic growth.

Ireland keeps its corporate tax rate at

12.5 percent, which is one of the lowest

in Europe, and is slated to be the fastest

growing economy in the region, Forbes

said.

The European Commission estimated

Ireland would grow 4.9 percent this year,

compared to 1.8 percent growth for the

European Union. The media mogul also

noted US stagnation in the 70s occurred

during a period of increasing corporate

taxes, which ended only when then

president Ronald Reagan slashed taxes

during the 80s and heralded in a two

decades of economic boom.

Forbes, the US-based business magazine,

will hold a global conference in Jakarta

Nov. 29 to Dec. 1, 2016, featuring

business leaders, chief executives and

other distinguished local and

international guests including Investment

Coordinating Board chairman Thomas

Lembong and media tycoon Chairul

Tandjung.

(Source: Jakarta Globe)

INDONESIA TRADE SURPLUS LARGEST IN 14 MONTHS

Indonesia posted a trade surplus of 1.21 USD billion in September 2016, compared to a 1.03 billion surplus a year

earlier and beating market consensus of a USD 0.45 billion. It was the largest trade surplus since July 2015 as exports

fell much less than imports.

Year-on-year, sales dropped slightly by

0.59 percent to USD 12.51 billion,

following a 0.74 percent decline in August

and market expectations of a 1.61

percent decrease. While sales of non-oil

and gas products increased by 2.85

percent to USD 11.45 billion, those of oil

and gas dropped by 26.97 percent to USD

1.06 billion.

Imports decreased by 2.26 percent to

USD 11.56 billion, compared to a 0.49

percent fall in a month earlier and market

consensus of a 3.76 percent increased. It

was the 24th consecutive month of

decline. Purchases of non-oil and gas

product decreased 8.8 percent to USD

1.91 billion and those of oil and gas

decreased by 0.95 percent to USD 9.65

billion. Compared to the previous month,

exports were down by 1.84 percent. Oil

exports declined 6.78 percent and sales

of non-oil and gas products dropped 1.35

percent. By categories, outbound

shipments declined for pearls, precious

and semi-precious stones (-25.49

percent) and machine/mechanical

equipment (-9.38 percent).

In contrast, sales rose for: fats/vegetable

animal oils (+4.11 percent); ores, crust,

metal ash (+94.3 percent) and tin

(+68.05). Sales to most of the country's

trading partners declined: the ASEAN

countries (-3.74 percent), the EU

countries (-0.40 percent), China (-0.73

percent), Japan (-5.73 percent) and South

Korea (-7.61 percent). In contrast, sales

rose to the US (+0.09 percent), India

(+9.70 percent) and Taiwan (+15.45

percent). Compared to a month earlier,

imports decreased 8.78 percent.

Purchases of oil and gas fell by 2.97

4 Trade & Investment Bulletin| Number II / November 2016

percent and those of non-oil and gas

declined by 9.77 percent. Imports

declined for all categories: consumption

goods (-15.16 percent to USD 0.99

billion), raw materials (-7.24 percent to

USD 8.48 billion), and capital goods

(-11.98 percent to USD 1.82 billion).

In August 2016, the trade surplus was

upwardly revised to USD 0.38 billion.

(Source: Trading Economics)

INDONESIA HAS 698 FRANCHISES,

TURNOVER OF USD 13.3 BILLION Jakarta-Indonesia will host the World Franchise Summit Indonesia (WFSI) 2016 which will be held on November 22 to

27, 2016 at the Jakarta Convention Center (JCC).

Director General of Domestic Trade

Ministry of Commerce, Oke Nurwan, said

this event should be used to enhance the

role of the franchise industry in Indonesia

since it was proven that franchises played

a pivotal role in the global economy. "The

franchise is used as an alternative to

developing the business. According to the

data from the International Franchise

Association, in 2015 there were around

780 thousand franchises in the world and

helped the opening of the 8.9 million

jobs," he said at a press conference at the

Ministry of Trade, Jakarta, on September

5, 2016.

In Indonesia, the franchise business has

made a positive contribution to the

national economy, keeps the economy

goes on amid in the economic downturn.

"In Indonesia, as many as 698 Franchises

are registered with 24,400 outlets

consisting of 63% local franchises and

37% foreign franchises, the turnover

reached IDR 172 trillion," he said.

According to him, the franchise industry

in Indonesia will continue to grow along

with continued innovations by the players

in that sector.

The franchise which adopts local culture

will be exceptional. Indonesia already has

several brands of local franchises which

have the same quality with the foreign

franchise, namely “Es Teler 77”, “Kebab

Turki Baba Rafi”, “Bumbu Desa”, “Bakmi

Naga” and much more.

Indonesia’s rising disposable income and

large young population make it an

attractive opportunity for U.S.

franchisors. The demand for cafes,

restaurants, and bars continues to

increase in the major Indonesian cities.

Under the regulation issued by the

Ministry of Trade, the franchisor should

obtain STPW (Surat Tanda Pendaftaran

Waralaba or Franchise Registration

Certificate), to use local components for

at least 80 percent of their raw materials,

business equipment, and merchandise.

The regulation also states that franchisors

should select local small and medium-

sized business as franchisees or suppliers

if they fulfill the requirements established

by the franchisors.

(Source: Detik Finance & the Indonesian Consulate General)

Number II / November 2016 | Trade & Investment Bulletin 5

Number I | September 2016

TWO U.S. COMPANIES RECEIVED PRIMADUTA AWARDS

FROM INDONESIAN PRESIDENT

Indonesian President Joko “Jokowi” Widodo inaugurated the 31st Trade Expo Indonesia (TEI) 2016, which opened on

October 12th, 2016 at the Jakarta International Expo Kemayoran. Accompanied by Enggartiasto Lukita, Minister of

Trade, the President awarded the “Primaduta” Award to the best 60 Global Buyers including two U.S. companies:

Kohl’s Corporation and Royal Coffee New York Inc.

“Primaduta” Award is given to the buyer

that had been verified by the

representative of the Indonesian

government, such as Indonesian

Embassy/Consulate and Indonesia Trade

Promotion Center (ITPC).

Kohl’s Corporation and Royal Coffee New

York Inc. were qualified to receive the

awards since their imports from

Indonesia increased continuously in the

last 5 years.

Besides USA, some countries that

received the award are Brazil, Canada,

Chile, China, Denmark, Egypt, Finland,

France, Germany, India, Italy, Japan,

Jordan, Lebanon, Malaysia, Mexico,

Pakistan, Peru, Saudi Arabia, Singapore,

Spain, South Korea, Switzerland, Turkey,

and United Emirate Arab.

In TEI 2016, Trade Minister Enggartiasto

said that there were approximately 1,100

exhibitors, including SMEs, and 15,562

potential buyers from 152 countries. He

added that business commitments

already sealed totaled IDR 2.6 trillion

(USD 201 million) from 14 countries.

(Source: the Indonesian Consulate General)

6 Trade & Investment Bulletin| Number II / November 2016

INDONESIAN FURNITURE: CREATIVITY IN WOODS

Indonesia is one of the top 25 furniture

exporters in the world. Indonesia has ranked

21st of the world furniture exporters.

Indonesian wooden furniture has been widely

exported to many countries worldwide. Most of

these products go to the United States and

European countries. Indonesian wooden

furniture products are made out of wood

products from local Indonesian tropical forest.

The most commonly used wood for high-quality

furniture making is teak wood and mahogany.

Teak wood (Indonesian word: Jati) is a hard, high-

quality wood used for building high end and long

lasting furniture. Teak wood is a genus of tropical

hardwood trees in the family Verbenaceae, native to

the South and Southeast Asia, and is commonly found

as a component of monsoon forest vegetation.

“Mahoganies” may refer to the wider group of all the

timbers yielded by the three related genera

Swietenia, Khaya, and Entandrophragma. Mahogany

has a generally straight grain and is usually free of voids and pockets. It has a reddish-brown color, which darkens over time, and

displays a beautiful reddish sheen when polished. It has excellent workability and is very durable.

The best of Indonesian furniture can be seen in the furniture that has adorned the palaces and residences of the country’s el ite. One

of the most prominent furniture styles in Indonesia is in the form of wooden relief carving furniture. The most prominent furniture

production centers in the country that boast a high furniture making industries are Jepara, Yogyakarta, Jakarta, and Bali. One foreign

entrepreneur who has made Jepara his home and business base claim that Jepara people are “genetically designed” to carve. One

can easily go to any of the countless homes in Jepara that work on furniture products.

The furniture carving industry in Jepara is famous since it emphasizes wooden creative carving design in its products. No furniture

from Jepara that are not adorned with creative carvings. Product designs then available include elephant chair (so called due to its

large size) with Garuda carving motifs, Mojopahit style chair (with floral and leaf carving motifs), wardrobe with Ramayana

mythological story motif carving, and other simple carving furniture product designs.

The furniture industry in Yogyakarta provides a wide range of selection from elegant classical designs to futuristic, creative and

functional ones. Traditional furniture development in Yogyakarta can be seen from the decorative motifs that developed, such as

dragon, floral, geometric, Mataram and Majapahit and European motifs. The dragon motif is a product of Hindu and Chinese

influence. The garuda motif is sometimes used instead of dragon motif. The Garuda is a giant bird or bird-like creature of Hindu

mythology. Floral decorative motif typically takes on the form of lotus as a heavenly flower. The geometric motif is also called the

wajikan (after a traditional cookie with a trapezoidal share, or “wajik” in Javanese). Majapahit and Mataram style takes the form of

decorative motifs usually used on puppet shadows. European styles are influenced by designs of furniture and design diagrams

brought to Java by Europeans. The European influence reached its peak during the Dutch colonial era. This is due to the fact that the

Dutch tried to ship some furniture made in Java to Europe, and thus influenced local furniture designer. Some European designs

were copied while others combined with traditional designs already exist.

Number II / November 2016 | Trade & Investment Bulletin 7

Number I | September 2016

Woodcarving with bird and tree motifs

One of the furniture-making centers in

Jakarta is located in the East Jakarta area,

particularly Klender and Pulogadung.

Since the late 1970s and early 1980s, a

furniture industry has sprung up in the

streets of Klender. Data from Jakarta’s

Agency for Industry and Trade shows that

there are more than 2,000 woodworking

and furniture business in East Jakarta

area.

Klender furniture products are designed,

built by hand and sold locally on-site. The

furniture business in Klender is typically

small family-owned and operated ones.

The types of furniture produced are

everyday household wooden furniture,

such as seats, chairs, and armoires.

Despite its mostly low-cost, low-end

nature furniture products, Klender-made

furniture pieces have found markets

overseas, such as the United States, Italy,

and Russia. Bogor, one hour drive by car

from Jakarta, is the site of one of the

largest furniture companies in Indonesia

that specialize in knock-down particle

board and fibreboard furniture.

Bali furniture merchants showcase a wide

selection of furniture not only made in

Bali, but also from all over Indonesia.

Most of the furniture are transported in

half-completed forms from other parts of

Indonesia, most notably Java (Jepara is a

favorite source since they provide dry

high-quality pieces), and then processed

by local Balinese crafters by adding

Balinese ornaments and decorations to

the furniture pieces and finish them, label

them as Balinese product.

However, Bali also possesses a number of

pure Balinese furniture production

centers which located in Ubud,

Tegalagang, and Sebatu, in the regency of

Gianyar.

(Source: Ministry of Trade)

8 Trade & Investment Bulletin| Number II / November 2016

Exhibition Agenda 2016

Thursday 17 – 20 November 2016

FRUIT INDONESIA 2016

The Richness of Tropical Nusantara Fruit, from Indonesia to the world

Parkir Timur Senayan Jakarta, Indonesia

www.fruit-indonesia.com

Exhibition Agenda 2017

Friday 10 – 12 March 2017 Bandung International Food & Hotel

Expo (BIFHEX Indonesia)

BCC – Bandung Convention Center Bandung, Indonesia www.indorichexpo.com

Thursday 23 – 25 March 2017

MAKASSAR PORT EXPO 2017 &

MAKASSAR PORT GOLF

TOURNAMENT 2017

Sandeq Ballroom, Grand Clarion Hotel & Convention Makassar, Indonesia makassarportexpo@gmail.com

Wednesday 5 – 8 April 2017 FOOD & HOTEL INDONESIA 2017

The 14th International Hotel, Catering

Equipment, Food & Drink Exhibitions

Jakarta International Expo, Kemayoran Jakarta, Indonesia www.foodhotelindonesia.com

Wednesday 26 – 30 April 2017 INACRAFT 2017

The 19th Jakarta International

Handicraft Trade Fair

JCC - Jakarta Convention Center Jakarta, Indonesia www.inacraft.co.id

Thursday 11 – 14 May 2017 Indonesia International Modern

Agriculture Show 2017

JCC - Jakarta Convention Center Jakarta, Indonesia www.agrofood.co.id

Thursday 11 – 14 May 2017 Indonesia Natural Product Herbal &

Naturalistic Treatment Expo

JCC - Jakarta Convention Center Jakarta, Indonesia www.ina-naturalherbalexpo.com

Thursday 11 – 14 May 2017 Indonesia Medical Tourism &

Healthcare Services Expo 2017

JCC - Jakarta Convention Center Jakarta, Indonesia www.ina-medicaltourism.com

Wednesday 19 – 22 July 2017 MANUFACTURING SURABAYA 2017

The 12th International Manufacturing

Machinery, Equipment, Materials and

Services Exhibitions

Grand City Convention & Exhibition Centre Surabaya, Indonesia www.manufacturingSurabaya.com

Wednesday 6 – 9 Sept 2017 ELECTRIC, POWER & RENEWABLE ENERGY INDONESIA Jakarta International Expo, Kemayoran Jakarta, Indonesia www.electricindonesia.com

Wednesday 13 – 16 Sept 2017 CONSTRUCTION INDONESIA Jakarta International Expo, Kemayoran Jakarta, Indonesia www.constructionindo.com

Wednesday 13 – 16 Sept 2017 OIL & GAS INDONESIA Jakarta International Expo, Kemayoran Jakarta, Indonesia www.oilgasindonesia.com

Wednesday 13 – 16 Sept 2017 MINING INDONESIA Jakarta International Expo, Kemayoran Jakarta, Indonesia www.mining-indonesia.com

Wednesday 25 – 27 Oct 2017 BROADCAST INDONESIA Jakarta International Expo, Kemayoran Jakarta, Indonesia www.broadcast-indonesia.com

Wednesday 25 – 27 Oct 2017 COMMUNIC INDONESIA 2017 Jakarta International Expo, Kemayoran Jakarta, Indonesia www.communicindonesia.com

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