Kuala Lumpur, 19 April 2018
Remarks by Chairman of BKPM 3rd Indonesia Investment Forum 2018
Indonesia has a large and diverse economy
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The largest economy in SE Asia &
member of G20
WHERE ON EARTH
Indonesia’s GDP growth is projected to be ranked 4th in 2050
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PPP
Rank
2016 2030 2050
Country GDP at PPP
(US$bn) Country
Projected GDP
at PPP (US$bn) Country
Projected GDP at
PPP (US$bn)
1 China 21,269 China 38,008 China 58,499
2 United States 18,562 United States 23,475 India 44,128
3 India 8,721 India 19,511 United States 34,102
4 Japan 4,932 Japan 5,606 Indonesia 10,502
5 Germany 3,979 Indonesia 5,424 Brazil 7.540
6 Russia 3,745 Russia 4,736 Russia 7,131
7 Brazil 3,135 Germany 4,707 Mexico 6,863
8 Indonesia 3,028 Brazil 4,439 Japan 6,779
9 United Kingdom 2,788 Mexico 3,661 Germany 6,138
10 France 2,737 United Kingdom 3,638 United Kingdom 5,369
GDP at PPP Rankings (Projection for 2030 and 2050)
World Bank’s Economic Growth Projection Country 2017 2018 2019 2020
China 6.8 6.4 6.3 6.2
Cambodia 6.8 6.9 6.7 6.7
Philippines 6.7 6.7 6.7 6.5
Vietnam 6.7 6.5 6.5 6.5
Laos 6.7 6.6 6.9 6.9
Myanmar 6.4 6.7 6.9 6.9
Malaysia 5.8 5.2 5.0 4.7
Indonesia 5.1 5.3 5.3 5.3
Thailand 3.5 3.6 3.5 3.4
Source: How will the global economic order change by 2050, PwC, 2017
Indonesia in 2045:
Population: 309 million
Working age population: 52%
Urban population: 75%
Middle class population: 80%
Income per capita: USD 29,300
Share economu from service: 73%
Source: WorldBank, 2018
Rise of Indonesian Middle Class
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Additional people in
The consuming class
45
85
135 170
195
180
145 110
Bellow
Consuming class
Consuming
class
2010 20203 2030 in 5-6%
GDP scenario
2030 in 7%
GDP scenario
240
265 280 280
Mckinsey research shows Indonesian consuming
class will grow almost double in 10 years since 2010
40 90 125 4
6
8
11
13
14
22
26
73
85
Health care
Beauty and
cosmetics
Telecommunication
s
Housing and utilities
Transportation
Education
Apparel
Leisure
Food and beverage
Financial services
13
16
19
26
30
42
57
105
194
565
2011 2030
Source: Canback Global Income Distribution Database; Indonesia’s Central Bureau of
Statistics, Mckinsey Consumer and Shopper Insight Indonesia Study, 2011, Mckinsey
Global Growth Model; Mckinsey Global Institute analysis
INDONESIAN MIDDLE CLASS SPENDING (US$ BILLION)
Achievement of International Recognition (1/2)
Investment Grade from International Credit Rating Agencies
BB+/ Stable
Baa2 / Stable
BBB/
Stable
BBB/
Stable
BBB-/ Positive
BBB+/ Stable
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Achievement of International Recognition (2/2)
Country
India
DB 2018 DB 2017
130
78
35 40
123 125
100
China
Russia
Brazil
Country
Singapore
Malaysia
Thailand
Brunei
Vietnam
Indonesia
Lao PDR
DB 2018 DB 2017
2
23
46
72
82
91
139
99 113
78
91
2
24
26
56
68
72
141
72
Philippines
Indonesia
120 114
91
106
2014 2015
Ease of Doing Business Indonesia, 2013-2017
19
72
2016 2017 2018 2013
129
ASEAN Country BRIC
BKPM started to enganged in EODB reform since 2014 by assignment from Coordinating Minister of Economic Affairs.
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Invest in Indonesia NOW
7 Source: WorldBank Report, 2017
Most aggressive infrastructure development in Indonesia’s history
Extra incentive for investments in industrial, tourism and special economic zones
Fiscal reform for long term sustainable growth
Law reform to ease business and investment
Concrete policy for eradication of corruption
Citizens’ trust on the Indonesian Government is at all time high
Strong investors’ confidence to invest further in Indonesia
Policies reform in ICT Sectors
The Year of 2017: Investment Continues to Grow Beyond the Target
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growth
+7.9
%
growth
+23.1%
2013 2014 2015 2016 2017 2018
(Target)
FDI DDI
399.2
463.1
545.4
612.8
692.8
765.0
↑ . % ↑ . %
↑ . %
↑ . %
2017 ↑ Y-o-y
DDI 21.3%
FDI 8.5%
Total 13.1%
Realization in 2017 compared to its target:
102.1% *DDI and FDI accumulation, 2018
Investment Realization (IDR Trillion)
[CATEGORY
NAME] 61%
Europe 11%
America 9%
Africa [PERCEN
TAGE]
Australia & Pacific
1%
DDI 35% (Rp 942T)
FDI 65% (Rp 1.770T)
FDI & DDI Shares, 2013-2017 (in %, IDR)
Source: BKPM, 2018
Investment Still Centralized in Java, but Bali & NT Records Highest Growth
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Investment Distribution, 2013-2017 (Rp Trillion)
Kalimantan (223)
Bali & NT (63) Jawa (949)
Sumatera (271)
Sulawesi (140)
Papua & Maluku (123)
15%
54%
13%
4%
7% 8%
Investment Growth, 2017 (y/y)
2%
19%
0%
10%
43%
14%
Sumatera Jawa Kalimantan Sulawesi Bali & NT Papua &Maluku
*Note: based on internal BKPM calculation method
Source: BKPM, 2018
In the last 5 years, Investment has Created more than 7 million jobs, with FDI Contributes to 61%, mostly from Asia.
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Top-10 Investment per Sector
Singapore Japan Malaysia United States China
IDR 2,713.3 T. 7,260,995 100,414
Investment Additional jobs Projects
USD 34.03B
15,422 projects
USD 7.75B
5,075 projects
USD 20.69B
9,673 projects
USD 7.89B
4,461 projects
USD 7.78B
1,637 projects
No. Sector Inv.
(IDR T.) Proj.
1. Mining 241.4 3,781
2. Metal, Machinary and
Electronics 200.8 6,448
3. Electricity, Gas and Water 158.5 1,627
4. Chemical and
Pharmaceutical 152.9 3,436
5. Transportation Equipment
& Others 128.8 2,878
6. Food Industry 127.9 5,500
7. Transportation, Warehouse
& Telco 122.2 1,969
8. Real Estate, Industrial
Estates 119.6 3,047
9. Crops & Plantation 105.7 2,494
10. Paper and Printing 73.8 858
Source: BKPM, 2018
Investment from Malaysia is Rising
Source: BKPM, 2018
1,11
5.6
1,21
3.6
2016 2017
USD 1.2 B Total Malaysia’s
investment realization in 2017
+8.8% Malaysia’s investment
realization in 2017 compared to in 2016
Rank Sectors Investment
Value ∆ Y-o-y
% of
total
1 Transport, warehouse and Telco 341.7 ↑ 1,005.8% 28.2%
2 Chemical and Pharmaceutical 159.4 ↑ 45.5% 13.1%
3 Food crops and plantation 125.1 ↓ 55.7% 10.3%
4 Food industry 122.7 ↓ 67.4% 10.1%
5 Trade and repair 111.9 ↑ 456.6% 9.2%
Other Sectors 352.8 29.1%
Total 1,213.6 ↑ 8.8% 100.0%
Top-5 Investment Sectors Malaysia’s Investment Realization in 2017 (USD million)
15.3
%
32.6
%
52.1
%
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Indonesia’s priority sectors for investment
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Tourism New Bali
Lifestyle Industry e.g: creative economy, digital
industry
Maritime Including fisheries and cold storage
Agriculture Labor Intensive Industry e.g: textile, garment, furniture, etc
Export Orientation Industry e.g: automotive, electronic, machinery, etc
Import Substitution Industry e.g: pharmaceutical raw material, petrochemical
Infrastructure Energy, transportation, industrial estates, SEZs
Manufacturing Industry
Value added Industry e.g: agro-industry, smelters, etc
The new big deal
Int’l tourists arrival grew at +25%, investment in tourism up +45%
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Annual investment growth in tourism in SE Asia surpasses Asia, 2016-2026 (estimation)
Source: WTTC, 2016
11.5m
14.0m IDR15 T
IDR22 T
2016 2017 2016 2017
Int’l Tourist Arrival +22%
Investment realization* in Tourism +47%
Indonesia
Source: Ministry of Tourism & BKPM, 2018 * KBLI 5511, 5512, 5513, 5519, 5590, 5610, 5621, 5629, 5630, 6812, 7911, 7912, 7991, 7999, 9321, 9322, 9323, 9324, 9329 * Exchange rate 2016: IDR 13,900; 2017: IDR 13,400
Tourism is “the next big thing”: 10 New Bali
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10 National Strategic Tourism Areas
Tourism: The industry of 21st
century SEZ Kelayang Cape
Toba Lake SEZ Lesung Cape
SEZ Morotai
SEZ Mandalika
Borobudur
Seribu Islands
Bromo Tengger Semeru
Wakatobi
Komodo
15% 29% 34% 39% 43% 46% 50% 53%
38.2
72.7 88.1
102.8 112.6
123.0 133.5
144.9
2013 2014 2015 2016 2017 2018 2019 2020
Internet Users
(No. of people, millions)
Internet Penetration
(% of population)
2013-2015 are actual figures, 2016-2020 are forecast. Source: McKinsey&Company, Statista, population data from World Bank
Indonesia is home for >100 million internet users
32.3mn new users between 2017 & 2020
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Indonesia aims to be the center of digital economy in SE Asia in 2020
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E-Commerce
Potential of Transaction in Indonesia:
2013
US$8bn
Players
On Demand Services
Internet users in 2017
Mobile social users in 2017
112.6mn
92.0mn
Players
2016
US$20bn
2020
US$130bn
Financial Technology (Fintech)
Transaction in Indonesia 2016 (projection)
Nominal of transaction per population 2014
US$14.5bn
US$56.98
Players
Internet of Things (IOT)
Market opportunity in Asia Pacific
2015
US$250bn
Players
2020
US$583bn
Source: Ministry of Communication and Informatics RI, Tech in Asia, IDC, Daily Social, Bank Indonesia, Statista, Idea, World Bank
Investment in Indonesian start ups reached US$4.93 billion in 2017
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US$2billion Investment from Softbank & Didi Chuxing
US$1.2billion Tencent is the largest investor
US$1.1billion Alibaba is the largest investor
US$0.5billion JD.com is one of the largest investors
US$0.1billion Acquired by Grab
US$22million
Indonesian 4th unicorn, after Gojek, Tokopedia and Traveloka
US$3.2million Indonesian 1st start up registered in the stock market
- Acquired by Blibli.com (Djarum Group)
Source: Bisnis Indonesia, Jan 2018
Most of Manufacturing Industries are Open 100% for FDI
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100% FDI
Textile Industry
100% FDI
Waste Recycling Industry
100% FDI
Smelter & Steel Industry
100% FDI
Automotive Industry
Source: Negative List of Investment (Presidential Regulation No. 44 Year 2016)
To Support Manufacturing Industry Development, 47 Industrial Estates with Direct Constructions (KLIK) Facility Have Been Developed
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Central Java KI Kendal KI Bukit Semarang Baru KI Wijayakusuma KI Demak Tanjung Emas Export Processing Zone
East Java Java Integrated Industrial & Port Estate
KI Maspion
KI Tuban
Safe N Lock Industrial Estate
South Sulawesi KI Bantaeng KI Makassar
Banten Modern Cikande Industrial
Estate KI Wilmar Krakatau Industrial Estate
Cilegon Millenium Industrial Estate
West Java
Bekasi Fajar Industrial Estate
KI Delta Silicon 8
Karawang Internasional Industrial City
Suryacipta City of Industry
GT Tech Park
Artha Industrial Hill
KI Marunda Center
KI Greenland International Industrial
Center (GIIC)/Deltamas
KI Jababeka Tahap III
North Sumatra KI Medan
Riau Islands
Batamindo Industrial Park
Bintang Industriall Park II
Kabil Integrated Industrial Park
West Point Maritime Industrial Park
Bintan Inti Industrial Estate
DKI Jakarta
Kawasan Berikat Nusantara/KBN
KI Jakarta Industrial Estate
Pulagadung/JIEP
KI Kota Bukit Indah Ind. City
KI Indotaisei Kota Bukit Indah
East Jakarta Industrial Park
Bekasi International Industrial Estate
MM 2100 Industrial Town
KI Terpadu Indonesia - China
KI Kujang Cikampek
KI Lion
Cibinong Center Industrial Estate
KI Rancaekek
East Kalimantan
KI Kariangau
Riau
KI Dumai
KI Tanjung Buton
West Sumatera
KI Padang
Yogyakarta
KI Piyungan
Blue font: Phase 1
Green font: Phase 2
Red font: Phase 3
To boost investment, BKPM keeps innovating
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DOCUMENT DIGITALIZATION
From 3 days to
1 DAY
±40%
KBLI can
DIRECTLY apply for Business License
BKPM has eliminate Principle License (Izin Prinsip/IP), now becomes Investment Registration (Pendaftaran Investasi/PI)
BKPM has simplified and strengthened its one-stop service
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Licensing process for Foreign, Across Provinces, and Strategic investments:
Source: BKPM
Operating Permits 3
At line Ministries & Local Governments
CONSTRUCTION PHASE
Business License 4
BKPM
Business kickstart
Business Incentives 2
BKPM
Tax & other incentives application
30%discount
Investment Registration
1
BKPM
Formerly In-Principle License
Government develops Online Single Submission (OSS) for investment: From “Service” to “Monitor & Facilitate”
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Licenses
Leading Sector Task Force
Licenses
Investors
Supporting Task Force
Licenses
National Task Force
Monitoring
Monitoring
Monitoring
Integrated online system
with data sharing
One-Stop Service
Application
New Tax Holiday Scheme
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Provisions Existing (MoF Regulation No. 159 of 2015)
Changes (MoF Regulation No. 35 of 2018)
Subject New Taxpayer New Investment
Reduction rate 10-100% 100%
(single rate)
Time Period
5-15 years
extended up to 20 years
subject to approval from
Minister of Finance
Transition time Not regulated
50% for 2 years
Industry
coverage
8 Pioneer Industries 17 Pioneer Industries
No. Time Period Investment Value
1. 5 years IDR 500 billion up to less than IDR 1 trillion
2. 7 years IDR 1 trillionup to less than IDR 5 trillion
3. 10 years IDR 5 trillion up to less than IDR 15 trillion
4. 15 years IDR 15 trillion up to less than IDR 30 trillion
5. 20 years Minimum IDR 30 trillion
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