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Indonesia-Australia Business Conference | Yogyakarta, 17 November 2015
I N V E S T I NINDONESIAIndonesia Investment Climate and How to Approach the Indonesian Market
INDONESIA INVESTMENT COORDINATING BOARD
© 201 by Indonesia Investment Coordinating Board. All rights reserved
HIMAWAN HARIYOGA
Deputy Chairman of Investment Promotion
IndonesiaInvestment Coordinating Board
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2015 2016 2017 2018 2019
FDI 343.7 386.4 429.0 494.7 569.9
DDI 175.8 208.4 249.8 297.8 363.0
Total 519.5 594.8 678.8 792.5 933.0
Growth 12.2% 14.5% 14.1% 16.8% 17.7%
(IDR trillion) Excl. Financial Sectors and Upstream Oil and Gas
Strategic Plan of Investment 2015-2019
Investment Target
Summary
2010-2014 Period (Completed)
• Investment realisation: IDR 1,633 trillion
• Investment plan (Principal license stock 2010 - April 2015): IDR 4,125 trillion.
2015-2019 Period (Plan)
• Investment realisation: IDR 3,519 trillion
• By using assumption that 50% of investment plan will be realized, Indonesia investment plan needs is IDR 7,000 trillion, therefore we still need principal license stock for IDR 3,000 trillion.
total investment targetedin 2015-2019
115% increasefrom 2010-2014 period(IDR 1,632.8 trillion)
63.2 % average shareof total investment target in 2015-2019
FDI2015-2019
DDI2015-2019
IDR 3,519 trillion
36.8 % average shareof total investment targetIn 2015-2019
15.1%targeted in 2015-2019 period
average growth
Source: BKPM, 2015
IndonesiaInvestment Coordinating Board
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19,7% 24,1% 23,5% 21,8% 19,8%
26,3%39,7%
49,7%
50,4%
42,9%
54,0%
36,3%
26,7%
27,8%
37,3%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
1000,0
2015 2016 2017 2018 2019
Inve
stm
en
t R
eal
izat
ion
(Tri
llio
n R
up
iah
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67,1% 58,9% 56,1% 57,8% 56,9%
32,9%41,1%
43,9%
42,2%
43,1%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
1000,0
2015 2016 2017 2018 2019
Inve
stm
en
t R
eal
izat
ion
(Tri
llio
n R
up
iah
)
Strategic Plan of Investment 2015-2019
Investment Target
Average SharePrimary : 15,7%Secondary: 53,5%Tertiary : 30,8%
by Sector by RegionAverage ShareJava : 46,5%Outside Java : 53,5%
IndonesiaInvestment Coordinating Board
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Infrastructure35 GW power
generation24 Sea ports
Agriculture Food estate Corn Plantation Cattle
Industry
Labor-intensiveindustry
Textile Food & Beverages Furniture Toys
Import-substitution industry
Chemical & Pharmaceutical
Iron & Steel
Export-oriented industry
ElectronicsCPO & derivative
products
Woodproducts, pulp
& paperAutomotive
Machinery Rubber productsFish &
derivative products
Shrimp
Downstream industry of natural resources
Cacao Sugar Smelter
Maritime Ship building Fishery Industry Cold storage
Tourism,SEZ & Industrial ParkStrategic
tourism areasMICE 8+11 SEZs
15 New Ind. Parks
InvestmentOpportunities in Indonesia 2015-2019
Investment Priority Sectors
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58
91
126
74
20
370
34 60
137
67
12
311
Africa America Asia-Pacific Europe Middle East World Total
2014(S1)
2014(S2)
2015(S1)
Source: fdimarkets.com dari Financial Times, 2015.
Foreign Direct Investment Inflow
Global Investment Trend 2015(Jan-Sep)FDI Inflow (USD billion)
+18%FDI growth (y-o-y) in 2015(Jan-Sep)
in Asia-Pacific
44%Portion of global FDI
flowed into Asia-Pacific, 2015(Jan-Sep)
IndonesiaInvestment Coordinating Board
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Foreign Direct Investment Inflow
Investment in Southeast Asia 2015(Jan-Sep)
Source: fdimarkets.com dari Financial Times, 2015.
CountryPortion
2015(Jan-Sep)
Growth(Y-o-Y)
Indonesia 28% 98%
Vietnam 20% 31%
Myanmar 13% 194%
Malaysia 11% -43%
Singapore 8% -29%
Thailand 8% 51%
Philippines 6% -21%
Cambodia 4% 144%
Laos 2% 104%
Brunei 0% -49%
Total ASEAN
100% 24%
Indonesia28% portion, 98%
Singapore8% portion, 29%
Malaysia11% portion, 43%
Phillippines6% portion,21%
Vietnam20% portion, 31%
Thailand8% portion, 51%
Myanmar13% portion, 194%
36%
Portion of FDI in Asia-Pacific flowed into
Southeast Asia
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FDI Realization in Indonesia by Country
Australia ranked 11th in 2010 – Q3 2015FDI Realization in Indonesia by Origin CountryTop-10 Countries Based on Total Capital Expenditure (USD million) 2010 – Q3 2015 Excl. oil, gas, and financial sectors
Rank Country 2010 2011 2012 2013 2014 Jan- Sep 2015 Total
1 Singapore 5,565 5,123 4,856 4,671 5,832 3,551 29,599
2 Japan 713 1,516 2,457 4,713 2,705 2,495 14,599
3 USA 931 1,488 1,238 2,436 1,300 854 8,246
4 South Korea 329 1,219 1,950 2,205 1,127 1,003 7,832
5 Malaysia 472 618 530 711 1,776 2,917 7,025
6 Netherland 608 1,354 967 928 1,726 908 6,492
7 British Virgin Islands 1,616 517 856 786 624 671 5,069
8 United Kingdom 276 419 934 1,076 1,588 444 4,738
9 Mauritius 23 73 1,059 780 541 34 2,509
10 Hong Kong 566 135 310 376 657 417 2,461
Total 10 Countries 11,099 12,462 15,156 18,682 17,876 13,294 88,569
11 Australia 214 90 744 226 647 105 2,026
12 China 174 128 141 297 800 406 1,946
Total (113 Countries) 16,215 19,475 24,565 28,618 28,530 21,337 138,738
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Rank Business Field 2010 2011 2012 2013 2014 Jan - Sep 2015 Total
1 Mining 19 30 89 59 580 66 843
2Basic Chemical, Chemicals and Pharmacy
181 - 572 81 - - 834
3Basic Metals, Metals, Machinery & Electronics
- 30 25 22 5 9 91
4 Electricity, Gas and Water - - 30 31 24 4 89
5 Other Services 7 2 3 13 11 6 42
6 Other Sectors 5 24 12 18 22 16 97
TOTAL 214 90 744 226 647 105 2,026
Total 2010-Q3 2015Plan: USD 7,651 millionRealization: USD 2,026 millionWorkforce: 51,458 people
Investment Performance
Australia’s FDI Realization by SectorBased on Capex (USD million) in 2010 – Q3 2015, not including financial, oil & gas sectors
Group of sectors
Compared to Jan-Sep 2014, total FDI realization from
Australia is declining from
USD 469.2 million to USD 105 million
Secondary47%
Primary42%
Tertiary11%
476862
321
2.586
3.204
201214 90
744
226
647
1050
500
1000
1500
2000
2500
3000
3500
2010 2011 2012 2013 2014 Q3 2015
Plan Realization
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Rank Economic Corridor 2010 2011 2012 2013 2014 Jan- Sep 2015 Total
1 Kalimantan 193 29 531 36 579 50 1,418
2 Java 8 39 156 109 22 21 355
3 Sulawesi 7 0 30 32 18 4 91
4Bali & Nusa Tenggara
6 11 21 18 16 10 82
5 Maluku 0 8 2 27 5 6 48
6 Sumatera 1 3 3 1 7 7 21
7 Papua 0 0 0 4 0 7 11
TOTAL 214 90 744 226 647 105 2,026
Source: BKPM, 2015.
Jakarta
Investment Performance
Australia’s FDI Realization by LocationBased on Capex (USD million) in 2010 –Q3 2015,
not including financial, oil & gas sectors
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NO. Priority Sector
Serious Interest Prospective Total
#of
companyUSD Mil P USD Mil P USD Mil P USD Mil
1 Infrastructure 3 690 1 500 0 0 4 1.190
2 Agriculture 3 50 2 57 1 0 6 107
3 Labor Intensive Industry 2 60 2 3 0 0 4 63
4Import Substitution
Industry2 35 0 0 0 0 2 35
5 Export Orientation Industry 0 0 0 0 0 0 0 0
6Downstream Mineral
Resources1 0 0 0 0 0 1 0
7 Maritime 2 150 2 0 1 0 5 150
8 Tourism & Economic Zones 0 0 0 0 0 0 0 0
9 Others 9 71 1 0 0 0 10 71
TOTAL 22 1.056 8 560 2 0 32 1.616
Investment Interest Progress: Australia
(Period : October 22, 2014 -November 13, 2015)
IndonesiaInvestment Coordinating Board
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Indonesia’s Economic Performance
Reviews
Indonesia
AmCham & USCC:
75% US companies plan to expand
AmCham & USCC:
84% US companies expect profit
increase in 2016
JBIC:2nd Most
Promising Country for Overseas
Business
Moody’s, Fitch, Japan Credit
Rating:Investment
Grade
UNCTAD:
The Highest FDI
Growth in Southeast Asia,
2014
The Economist: 2nd
Investment Priority
in Asia
ANZ Survey: Attractive
as an Investment Destination
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Establishing OSS at BKPM & Simplification of Licensing:
Providing Faster, Simpler, Transparent & Integrated licensing
Formation of Marketing Team
Adoption of a new marketing and facilitation approach
Improvements of investment regulatory framework & climate
Including provide more attractive incentives & facilities for investors
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Doing Business in the New Administration Era
BKPM’s End to End Services
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Doing Business in the New Administration Era One Stop ServicesInvestors submit and obtain permits exclusively at BKPM with time certainty & online monitoring.
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BKPM Priorities: Improvements of Licensing
Progress of Investment One-Stop Service
*) Period of January – September 2015.
Progress of Licensing Simplification
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Investment Interest
Investment Permit
Investment Realization
Investment Marketing
Team
IIPC Sydney
Investment Debottle-necking
Investment Service
End-to-End Service for Investors
Indonesia Investment Promotion Centre (IIPC)
Investment One Stop Service
Investment Controlling
Sydney
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BKPM Priorities: Debottlenecking of Investment Realization
Progress of Debottlenecking Obstacles faced by 24 out of 88 companies are solved as of 16 Oct 2015, with investment valued at USD 8.4 billion out of USD 35.6 billion.
4816
Main Issues• land acquisitions, • misuse of permits, • supply of raw materials, • cooperation contracts, • tax regulation.
Source: BKPM, 16 Oct 2015
Sector Value Problems
Mining - UndergorundCoal Gasificationregulation is not clear
Basic Chemicals IDR 1.596 Billion Building permit has not released yet.
Debottlenecking Australian Companies
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TAX HOLIDAY TAX ALLOWANCE
IMPORT DUTY FACILITY
(Government Regulation No.18/2015) (MoF Regulation No.176/PMK.011/2009)(MoF Regulation No.159/PMK.010/2015)
143business segmentsEligible for tax allowance, expanded from 129 segments in the previous regulation.
30% of investment valueReduction of corporate net income tax for 6 years, 5% each year.
Under certain requirements among others: investment value or export orientation, manpower absorption, local content, and project location (especially outside Java island).
5-15years tax exemption
With potential 20 years exemption for project that considered strategic for Indonesia economy.
9 eligible pioneer industries : 1. Basic metal industries;2. Oil refinery industries and/or basic
organic chemicals;3. Machinery industries;4. Industries of renewable resources;5. Communication devices industries.6. Agricultural processing7. Marine transportation8. Manufacturing industry in SEZ9. Economic infrastructures
IDR1trillionMinimum investment plan(USD80 million).
2 years import duty exemption or 4 years for companies using locally-produced machines (min.30%).
Machines, goods, materials for production
Which produces goods and/or services, including:
1. Tourism and culture 2. Public transportation 3. Public health services 4. Mining 5. Construction 6. Telecommunication 7. Port
Industries
IndonesiaInvestment Coordinating Board
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Negative Investment List(Presidential Regulation No.39 /2014)
CLOSED
OPEN with
conditions
OPEN
Certain business fields may conduct investment activities
under certain requirements, such as:• Partnership with local partner, • Capital ownership, • Location and • Special permits.
Any investment activities are
closed for certain business fields producing goods/services that: • Prohibited by Indonesian law, • Dangerous, • Polluting, • Strategic for national security
and/or heritage.
7business sectorsOpened for FDI in 2014 revision.
More open business fields• Provision of port facility (pier,
building, container delay terminal, liquid bulk terminal, dry bulk terminal and Ro-Ro terminal).
• Terminals construction.
• Power plant > 10MW, electric power transmission and electricity distribution.
• Pharmaceutical industry.
• Advertising.
58business sectorsMore opened for FDI in 2014 revision.
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WageFormulation
More certain formula for business. Annual increase based on
inflation rate & economic growth.
Investment Climate
Economic Policy Packages
TaxIncentives
Free VAT for shipbuilding, railway & airplane industries. No
double taxation for property &
infrastructure.
CostReduction
Gas and electricity price reduction for
industry.
DeregulationReview on 134
regulation in 16 areas with a spirit of pro-
investment.
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Investment Climate
Economic Stimulus for Special Economic Zones
TaxIncentives
20-100% tax discounts for period up to 25 years. Free VAT for importation of raw
materials.
FacilitiesProperty ownership & residence permit for
foreigners.Ease of investment, land, immigration &
working permits integrated at SEZs.
Sei MangkeiPalm Oil, Rubber, Fertilizer Industries,Logistics, Tourism
Tanjung Api-apiPalm Oil, Rubber,
Petrochemical Industries
Tanjung LesungTourism
MandalikaTourism
Maloy BatutaPalm Oil, Coal,
Mineral Industries
BitungFishery & Agro
Industries, Logistics
PaluSmelters, Agro Industry,Logistics
MorotaiTourism, ManufacturingIndustry, Logistics
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www.bkpm.go.idContact UsContact US
Embassy of the Republic of Indonesia in Canberra
8 Darwin Avenue, Yarralumla. ACT 2600Phone : +61 2 6250 8600
Indonesia Investment Promotion Centre (IIPC) Sydney
Gold Field House 1 Alfred Street Suite 903 Sydney NSW 2000Tel. +61 2 9252 0091Fax. +61 2 9252 0092Director : Ms. Sri MoertiningroemE-mail : [email protected]
Investment Marketing Executive for Australia
BKPMJln. Jend. Gatot Subroto No. 44, Jakarta Selatan 12190Phone : +62-21 526 2008Mr. Ikmal Lukman ([email protected] / [email protected])Mr. Heldy Satrya Putera ([email protected] / [email protected])
Consulate General of the Republic of Indonesia in Sydney
236-238 Maroubra Road, Maroubra, Sydney NSW 2035, AustraliaPhone : (61-2) 934-49933E: [email protected]
Consulate General of the Republic of Indonesia in Melbourne
72 Queens Road, Melbourne, Vic 3004 – Australia(Entrance from 72 Queens Lane)Phone : +61 3 9525 2755E: [email protected]
Consulate General of the Republic of Indonesia in Perth
134 Adelaide TerracePO Box 6683, East Perth, WA, 6892, AustraliaPhone : (61-8) 9221 5858E: [email protected]
Consulate General of the Republic of Indonesia in Darwin20 Harry Chan Avenue - Darwin N.T. 0800, GPO BOX 1953, Darwin N.T. 0801.Phone : +61 (08) 8943 0200E: [email protected]
The Investment Coordinating Board of the Republic of Indonesia
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Badan Koordinasi Penanaman Modal (BKPM)
Indonesia Investment Coordinating Board
Jln. Jend. Gatot Subroto No. 44Jakarta 12190 - Indonesia
t . +62 21 525 2008
f . +62 21 525 4945
www.bkpm.go.id
Thank You
Terima Kasih
IndonesiaInvestment Coordinating Board
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Australia’s Investment to the world2010 – 2015 (Jan-Sep)
Investment RealizationBased on Capital Expenditure (USD Million) Excl. financial sectors
Source: Financial Times, 2015
Rank Destination Capex %
1 United States 6,370 12.1
2 China 5,060 9.6
3 UK 3,783 7.2
4 Malaysia 3,186 6.1
5 Brazil 2,961 5.6
6 Chile 2,564 4.9
7 Papua New Guinea 2,137 4.1
8 South Africa 1,988 3.8
9 Peru 1,792 3.4
10 Singapore 1,661 3.2
Total Top-10 Countries 31,507 59.9
12 Poland 1,534 2.9
13 Indonesia 1,390 2.9
14 Colombia 1,320 2.6
Total (77 countries) 52,587.6 100%
Rank Company Capex %
1 Goodman Group 12,068 22.9
2 BHP Billiton 5,241 10.0
3 Lend Lease 2,508 4.8
4 InterOil 2,095 4.0
5Intra Energy (Atomic Resources)
1,094 2.1
6 Servcorp 882 1.7
7 Incitec Pivot 850 1.6
8 Telstra 758 1.4
9Gold One International
730 1.4
10 Admiralty Resources 725 1.4
Total Top-10 Companies 26,957 51.3
Total (535 Companies) 52,587 100%
10.192
11.618
7.475
8.19610.163
4.944
881 460314
1.026
4.030
407
2010 2011 2012 2013 2014 (Jan - Sep)2015
World ASEAN
Real Estate32%
Metals16%Coal, Oil,
& Natural Gas16%
Business Services
8%
Chemicals5%
Others23%