Indonesia News EMBASSY OF THE REPUBLIC OF INDONESIA IN ANKARA, TURKEY

Volume XV – September 2008

Manufacturing

Indonesia Series 2008 The 19th International Manufacturing Machinery, Equipment, Materials and Services Exhibitions

Jakarta International Expo, Kemayoran, Jakarta, Indonesia, 2 – 6 December 2008

Products/Services Exhibited: Machine Tool, Metalworking and Allied Industries, Automation Technology and Materials Handling, Chemical & Process Engineering, Instrumentation and Laboratory Equipment, Equipment and Systems for Pollution Control and Environmental Improvement, Plastics and Rubber Machinery, Processing and Materials, Processing & Packaging Industries, Printing Machinery, Equipment & Supplies.

For further information, please contact the Organizer: PT. Pamerindo Buana Abadi Address: Deutsche Bank Building Lt. 13, Jl. Imam Bonjol No. 80, Jakarta 10310, INDONESIA

Phone: (62-21) 316 2001 Fax: (62-21) 316 1981 / 4 Email: info@pamerindo.com Web: www.pamerindo.com

Government upbeat 2009 economic growth target to be achieved

Mulyani said to spur the performance of the real sector, the government had adopted various policies as laid down in Presidential Instruction (Inpres) No 5/2008, and continue to issue more such policies. The main points of the presidential instruction included the improvement of the investment climate by among other things amending the law on income tax (PPh) and value-added tax (PPN), and acceleration of infrastructure development through, for instance, the building of thermal power pants with a combined capacity of 10,000 KW and implementing the Economic Partnership Agreement (EPA). "Although we are making various efforts, we are aware that we are also facing uncertainties," the minister said. She said the main constraints in the implementation of the state budget were uncertainties, instability and economic fluctuations on national as well as global scale. The minister said the government had also carefully assessed, from the domestic and global viewpoints, various indications and changes which could significantly affect the national economy and the state budget. In order to anticipate uncertainties, instability and economic fluctuations, the government had set aside reserves to ensure that the programs provided for in the 2009 state budget would be carried out, she said. "The government has prepared funds and anticipatory steps," the minister said.

Jakarta (ANTARA News) - The government is optimistic the country’s economic growth will reach the target figure of 6.2 percent in 2009, Finance Minister Sri Mulyani Indrawati said. The minister made the statement when giving the government’s answers to general comments made by political party factions in the House of Representatives (DPR) on the Draft 2009 State Budget at a House plenary session. The government’s optimism was based on the economic growth rate figures achieved in the past eight quarters which averaged more than six percent. The non-oil/non-gas gross domestic products (GDP) which constituted the economic pulse of most of the people had last year even risen to almost seven percent.

The 23rd Trade Expo Indonesia

Hosted by :

Ministry of Trade

Republic of Indonesia www.depdag.go.id

http://tradexpoindonesia.com The 23

rd Trade Expo Indonesia 2008, Trade Expo Indonesia 2008, is set to open on 21-25 October 2008. Like

in the previous shows, Trade Expo Indonesia 2008 will showcase all Indonesian export products ranging from industrial, mining, agricultural to Craft sectors. You and your associates are cordially invited to pay a visit to The 23

rd TRADE EXPO INDONESIA 2008, from 21-25 October 2008 at Jakarta Fairground, Kemayoran, Jakarta,

Indonesia.

Products Exhibit Extensive Choice of Quality Products with added Value With a new spirit for offering Indonesia's best in the world, Trade Expo Indonesia is designed to accommodate multiplicity of products with highest craftsmanship, advanced technology and competitive price. Producers can take this opportunity to introduce their latest range of export quality products while buyers can take a closer look at what Indonesia has to offer and explore its potentials. Both parties can take advantage of the occasion to pursue future business prospects and investment opportunities. Accessories & Jewelry : Fashion Accessories, Variety of beautiful and precious Pearls, Jewelry and Gemstones. Agriculture, Horticulture, Forestry and Fishery Products : CPO, Cotton, Areca, Tea, Coffee, Pepper, Cocoa, Spices, Natural Fiber, Prawn, Lobster, Shrimps, Fish, Frog legs, Seaweed, Shellfish, Crabs, Eels, Cinnamon, Rubber, Palm Oil, Palm Sugar, Edible Oils, Tobacco, Coconut & Derivative Products, Resins, Palm Fibre, Gambier, Charcoal, Fruits, Vegetables, Tapioca, Spices, etc. Automotive & Automotive Components : Tires, Batteries, V – Belts, Engines, Radiators, Clutches, Piston, Leaf Springs, Oil Filters, Air Filters, Cables, Racing Steering Wheel, Blade & Casing, Tubes, Safety Glass, Wheel rims, Float Glass, Single valve Springs, Brake Fluid, Motorcycles Parts, Storage, Gears, Carburettor, Auto Care. Building Material : Decking, Solid Wooden Door, Flooring (Parquets), Sandpaper, Stones Claddings, Stones Claddings Bricks, Tile, Stones, Carpet and Rugs, Bathroom Accessories, Marble Sinks, Saw, Stone Pavers, Stone Tierra Tiles, Stone Tiles, Super Dry Pole, Knock Down Houses, Door Frame, Moulding, Fire Extinguishers, Kitchenware, Building Materials, Marble Tile, Building Components. Cosmetics : Perfumed, Lipstick, Cleansing, Nail Polish, Foundation, Pedicure, Eyelashes, Deodorant, Tooth Paste, Fragrance, Body Spray, Toothbrush Nail Tips, Hair Brushes, Soap, Toilet Soap, Shampoo, Body Lotion, Face Powder, Talcum Powder, Air Freshener, Skin Care Products, etc. Chemicals : Fertilizer, Detergent Powder, Ammonia, Aluminium Fluoride, Ammonium Soleplate,

Glycerin, Triple Super Phosphate, Satiric Acid, Industrial Fats, etc. Toys : Plush / Stuffed Toys, Plastic Toys, Wooden Toys, Inflammable toys, Balls, Dolls, Toys, Fancy Toys, Children Tricycles, etc.

Agenda

Opening Ceremony – Tuesday, October 21, 2008

Tourism, Trade and Investment (TTI) Forum – Wednesday and Thursday, October 22, 2008

Gathering Night – Thursday, October 23, 2008

Product Presentation – Tuesday-Saturday, October 21-25, 2008

Buyer and Investor Benefits

Free expo catalogues

Complimentary use of dealing room

Free use of local phone calls and fax

Free pick-up service for a group of 10 buyer/investors

The expo is complimented with modern facilities for business transaction and telecommunication.

Shuttle Bus For your safety and convenience, luxury shuttle bus will run from official hotels between 09.00 am to 11.00 am and 17.00 pm every day.

Electronics & Electrical Equipment : Audio & TV, Video CD's, Gas Cooker, Rice Cooker, Rice Warmer, Electric Wire, Home Appliances, CD / Video / Audio Cabinets, Quartz Wall Clocks, Table Clocks, Clocks Dry Batteries, Fans Cooking Stoves, Lamp Ballast, Speakers, Digital Public Exchange PABX Telephone, Air Conditioners, Water Heaters, Other Electronic Equipments. Food & Beverages : Traditional Beverages, Crackers, Traditional Foods, Nata Decoco, Instant Coffee, Chocolate, Ginger Tea, Milk, Baby Foods, Bubble Gum, Oxygenated Water, Jelly, Chicken Nugget, Wafer, Peanuts, Corn Snack, Health Drink, Fruit Juices, Jams, Canned Fruit & Vegetables, Sauces, Cakes, Chips, Fish Condiment, Pickles, Fruit Chips, Instant Noodles, Candies, Biscuits, Roasted Peanuts, Honey, Frozen Products, Aloe Vera, Health

Food, Bakery, Virgin Coconut Oil (VCO), etc. Footwear : Varieties of Shoes, Sandals and Boots with different style and materials. Furniture: Rattan Furniture, Bamboo Furniture, Coconut Shell, Miniature, Wicker Furniture, Wooden Furniture, Metal / Steel Furniture, Leather Furniture, Plastic Furniture, Lightings, Palm Leaf, Fibreglass Furniture, etc. Gifts and Crafts : Giftware, Plaited Crafts, Textile Crafts, Pottery, Metal Crafts, Floral, Wooden Crafts, Paintings, Egg Shell Crafts, Stone Crafts, Rattan Crafts, Calligraphy, Glass Crafts, Onyx, Bamboo Crafts, Shell Crafts, Patchwork Crafts, Leather Crafts, etc. Leather Products : Belt, Wallet, Bags, Jacket, Soccer Ball, Volley Ball, Basket Balls, Hand-stitched Soccer Ball, Suitcase, Gloves, Shoes, etc. Glassware & Plastic Products : Table, Candle Holder, Bottles, Tea Pot, Mug, Bathroom Accessories, Vase, Baby Equipment, Strapping Bags, Plastic Strings, Melamine, Glass Containers, Kitchen Utensils, Containers, Porcelain Dinnerware, Ceramics, Plate Bowl, Gardening, Hand Made Glass & Lighting Fixture, Hanger, Tray, Thermos, Candy Set, Glass, Plastic Bags, Sprayer, Plastic Box, Plastic Cupboard, Plastic Sheet. Healthcare and Medicine : Medical Equipments, Traditional Herbal Products, Rubbing Oil, Hair Treatment Products, Aromatic Balm, Spa, Essential Oil, Aromatherapy Oil, Pure Oxygen, etc. Machinery / Heavy Equipment : Plant Maintenance Equipment, Spare Parts for Textiles Machine, Agriculture Machineries, Diesel Condenser, Penstock, Passenger Coaches, Vacuum Circuit Breaker, Machine Tools, etc. Paper Products & Stationery : Envelopes, Magazines, Computer Continuous Form, Fax / telex rolls, Fancy Papers, Writing Books, Photo Albums, Machine glaze papers, Coated duplex board, Ivory board, Coated Paper, Carbonless Paper, Letter pad, Hard Cover Books, Spiral books, Craft Papers, Pencils, Pens, Paper clips, Plastic maps, Photo frames, Color Pencils, Ballpoint highlighters, Markers, Printed Goods, Tissue Paper, etc. Textile and Garments : Fibre, Shawl, Tablecloth, Yarn, Fabrics (Silk, Cotton, Polyester, etc), Sarong, Towels Embroidery, Batik, Praying Accessories, Woven Clothing, Sweatshirt, T-shirt, Pants, Menswear, lingerie, Pillow, Babies Top Wear, Babies Bottom Wear, Babies Jumper Babies Pajamas Set, Children 2 Piece Set, Kids Wear, Moslem Wear, Silk Ribbon Embroidery.

Total Attendance 20.000 Professionals, Overseas, CEO's Indonesia Business Executives, Representative Buyers of domestic and foreign companies, Government Official and publics.

Date & Venue October 21 - 25, 2008 Jakarta International Expo, Jakarta Fairground, Kemayoran, Jakarta – Indonesia. The main open exhibition area is surrounded by purposedly built exhibition with total space of 43.000 sq.m.

Visiting Hours Tuesday - Friday, October 21 - 24, 2008 10:00 am - 04:00 pm for Bussiness Visitors 04:00 pm - 08:00 pm for Public Visitors Saturday, October 25, 2008 10:00 am - 07:00 pm for Public Visitors

Access for Overseas Buyers By Plane: The Jakarta International Expo (JI Expo) is located near from Soekarno-Hatta International Airport in approximate 35 minutes by Taxi. We also provide transportation services for all buyer Tradexpo 2008 1 bus, 2 Minibuses and 2 family cars. Most business visitors will be welcomed at the airport by NAFED staff. Tradexpo Indonesia 2008 will have a special welcoming services and information desk at Soekarno Hatta airport to guide all official delegates to their hotels.

Business Center Business Center is located in the multistory Trade Mart building (NAVED Pavillion) with secretarial service, computers, fax and internet connections. So, it will be much easier for you to make contacts with your head office or colleagues.

Organizer (Buyers Service Division) NAFED (National Agency For Export Development) Address: BPEN Building, Ministry of Trade Republic of Indonesia, Jl. Kramat Raya 172, Jakarta 10430, INDONESIA. Phone : (62-21) 3100 569 (hunting) / 31902546 / 31907664 Fax : (62-21) 3104914 / 31901627 / 31907664 Email : visit@tradexpoindonesia.com | nafed@nafed.go.id | tei2008@depdag.go.id

Contact Person Mr. Sentot Nadeak : sentot@nafed.go.id | sentotn@yahoo.com

Mr. Pieter Sumbung : pieter@nafed.go.id | Mr. Tb. Machrodja : machrodja@nafed.go.id Ms. Yuli : yulianthi_lie@yahoo.com

INDONESIAN HOUSE PASSES BUSINESS-FRIENDLY TAX BILL

The Indonesian House of Representatives on Tuesday endorsed an amendment to the income tax law aimed at boosting economic activities by providing lower rates and more incentives to businesses, a paper said here Wednesday. The new law stipulates that the income tax for corporations will be set at 28 percent flat next year, replacing the current progressive system, and will be further reduced to 25 percent at the start of 2010. The law, which will take effect next year, will benefit firms with high earnings. "We pledge the tax amendment will be very supportive and friendly to all levels of business, but at the same time very stiff on any violations," said Dradjad Wibowo, a member of the House was quoted by the Jakarta Post as saying. The law provides incentives to encourage firms to go public. Companies that list at least 40 percent of their shares on the Indonesia Stock Exchange will see their tax rate cut by five percent compared to those of ordinary corporations.

INVESTMENT OPPORTUNITY A Preliminary Feasibility Study of Indonesian Steel Industry (Part I)

Steel industry is one of those 10 superior industries which will be developed in orientation to complete mission of improving Investment Attraction and national competitiveness. Iron ore is one of Indonesian natural resources which is extremely huge in number, but so far never been exploited. Based on research done by Ministry of Mineral and Energy Resources, potencies of iron ore in Indonesia are spread in Kalimantan, Papua, Sulawesi, Sumatra, and Java island. Meanwhile, abundant amount of supporting materials such as coal and limestone, are available in Sumatra and Kalimantan. A quite high world steel demand growth was beginning in 1960s, initiated by Japan industrialization which was rapidly growing. Nowadays, Japan is dominating market in Asia, and even expanding to European and American market. Steel production growth of the world, is entering a new phase called New Golden Age, with China and India as the pioneers of movement. It is estimated that market will grow faster by growth number of more than 4% p.a. Comparison of steel consumption in several countries of Asia, Europe, and America, is shown by the figure in the left side. Considering the condition shown, actually portion of market share in Asia (China not included) is quite big, about 247 million ton. Most of that market share portion is dominated by Japan and South Korea. If Japan and South Korea are dropped out from the list, then the total number of demand in Asia out of China, Japan, and South Korea, is about 100 million ton/year. From that number, 30 million ton is ASEAN market demand. Market of India is estimated to reach 41 million ton.

Import Tariff Incentive for New Investment Sector

Steel Products Import tariff Decree issued by Minister of Finance no 135 / KMK.05 / 2000 dated May 1st 2000 and no 28/KMK/2001 and no 456/KMK.04/2002 and Minister of Finance regulation no 47/PMK.04/2005 related to import tax reduction facilities. Those regulations are examples of helpful rules for new industries to grow, they give an opportunity for national steel industry to increase export contribution.

Government Regulation no. 01 year of 2007 related to income tax and investment facilities in certain business area or certain region.

30% nett income reduction of total investment, it will be given for 6 years by 5% per year, in the form of fixed activa; land is one example in this point. Investment can be in form of new investment or business expansion.

Income tax for corporations will be set at 28 percent flat next year, and will be further reduced to 25 percent at the start of 2010.

Amortization acceleration and fixed asset depreciation for fixed activa which is obtained and used for investment.

Dividend income tax must be paid to the foreign tax subject for 10% or less, based on tax treaty to avoid double taxes.

Loss compensation which is longer than 5 years, but no more than 10 years.

Billet 0%

Bar 15%

Section 20%

Wire Rod 15%

Slab 0%

HRC/P 7.5%

HRC/S 12.5%

GI Sheets 15%

Above are import tariff for billet and slab which are 0%. Positive impact of those policies gives opportunity for lower course industry to develop. And the negative impact is high dependent upon import.

INVESTMENT NEWS

Indonesia’s Iron and Steel balance 2005 2008 2010 Description of domestic steel supply demand is faraway from balance point, means that there are numbers of steel needs are met by import. High import number is indicator of domestic producer incapability to meet domestic demand.

End Product Consumption 6.960 9.000 10.440

Total Products of Domestic Industries 5.430 7.020 8.140

Import Volume 2.530 2.980 3.290

There are shortages (of supply) of installed production capacity for several commodities. Steel bars, HRC, thick plate, and tin plate are several commodities estimated to have surplus of domestic supply needed. Meanwhile, there will be shortages of billet and slab for about 1.7 million in 2008 and 2.7 million in 2010.

Raw Material

Import (Kg)

Domestic Production

(Kg)

Total Domestic Need (Kg)

To Produce:

Wire Rod Steel

148.000 937.000 1.085.000

Nail, Bold & Nut, Shafting Bar for automotive Spring Steel (High Carbon), Spoke for Bicycle/motor cycle brake, Wire rope, Wire for Tire Core, PC Wire Wire Mesh and application, other low carbon materials, Welding Electrode

Hot Rolled Coil (HRC)

854.000 1.994.000 2.848.000

Welded High Grade Steel (General Structure, heavy equipment construction, Profiled L and C, Pipe & Pole, etc) Welded Pipe (Spiral and straight pipe, Container) Structure, Body and chassis for automotive, ship, pressure vessels, LPG storage (Deep Drawing Quality, Boiler and Pressure Vesssel, Casing : electric panel, ducting, etc Rust-proof steel, CRC

Cold Rolled Coil (CRC)

498 679.000 1.177.000

General Purpose (coil Center), House Office Appliance (Deep drawing Quality): Zincalume for Deck, Body and part automotive (Deep Drawing Quality), Tin Plate (for canned food), Pipe or tube Furniture and general purpose GI Sheet for Deck, Drum

Total 1.002.498 3.610.000 5.110.000

Actual condition shows that domestic production is not capable to meet all the needs over area of Indonesia. Most of its market is providing lower course industries in Java. Business competition among domestic steel industries does not show negative fluctuation. Tight competition occurs in imported products from several countries of ex-Soviet Union members, China, Japan, and South Korea.

Projection of National Steel Consumption

2004 2005 2006 2007 2008 2009 According to need projection explained beside, from 2004 to 2009

• Consumption growth will reach 34 kg per capita per year. • Import demand of crude steel (slab and billet) is 2,2 million

tons. It is estimated to grow by 10 % per year • HRC Demand is 4,6 million tons, 1.1 million tons are imported. • Demand of wire rod steel is 5,9 million tons, 700 thousand

tons are imported

Crude Steel

4.10 4.72 5.42 6.24 7.17 8.61

Hot Rolled Coil (HRC)

2.70 3.00 3.33 3.69 4.10 4.55

Cold Rolled Coil (CRC)

1.22 1.32 1.44 1.56 1.69 1.84

Needs of HRC and CRC Based On Industry Type

Based on figure above, needs of raw material (HRC and CRC) for superior commodities are: Rerolling: producing CRC for commodities of automotive structure and body, Home Office Appliances, Pipe &

Tube. General Construction : High grade and HRC Automotive : HRC and CRC (Automotive Structure and Body) Home and Office Appliance. The needs of HRC in 2007 shows that domestic industry cannot meet domestic demand thus Indonesia must import 1.398.000 tons of HRC and 675.000 tons of CRC.

For more collections, find us at

The 23rd

TRADE EXPO INDONESIA 2008 from 21-25 October 2008 at Jakarta Fairground,

Kemayoran, Jakarta, Indonesia

Mutumanikam Nusatara www.indonesianjewels.com

Another Unique Indonesian Eco Experience

volcanoes to beautiful coral reefs, misty jungle to winding rivers, the Indonesian archipelago is home to some of the most diverse environments on earth and full of natural treasures……so come to Indonesia discover the most diverse flora and fauna imaginable.

From birds of paradise to prehistoric looking lizards, delicate orchids to multi-coloured insects, dazzling schools of tropical fish to majestic sea turtles, dramatic

INDONESIA NEWS IS COMPILED, PRINTED AND PUBLISHED BY THE EMBASSY OF THE REPUBLIC OF INDONESIA IN ANKARA, TURKEY

Abdullah Cevdet Sokak No. 10 (P.O. Box 42) Cankaya 06680, Ankara, Turkey

Phone: (90-312) 4382190 Fax: (90-312) 4382193 www.indo-ank.org