investment in halal industry · the investment coordinating board of the republic of indonesia. 13...

INVESTMENT In Halal Industry

INDONESIA INVESTMENT COORDINATING BOARD

© 2013 by Indonesia Investment Coordinating Board. All rights reserved

Lestari Indah Deputy Chairman for Investment Services

invest in

| Tokyo, 31 March 2015

IndonesiaInvestment Coordinating Board 2

Outline

1. Investment Performance

Indonesia Halal Industry – Food and Beverages, Pharmaceutical & Health Care, Cosmetics, Tourism

2. Investment Target

3. Investment Policy


Investment Performance

1

The Investment Coordinating Board of the Republic of Indonesia 4

5.7%

5.5%

6.3% 6.0%

4.6%

6.2%

6.5% 6.3% 5.8%

5.9%

5.3% 5.2%

4.0%

2.6%

5.1%

6.7% 6.4% 6.1%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013

GDP Non-Oil & Gas Manufacturing Industry

Growth 2005-2013

Source: BPS, 2014

Economy Performance Indonesia’s GDP 2014 Manufacturing industry contributed 21% to total GDP. Since 2011, non-oil & gas manufacturing industry has been growing above total GDP.

21%

13%

13% 10%

10%

33%

Composition of 2014 GDP

Manufacturing Industry

Agriculture, Forestry & Fishery

Trade, Hotel & Restaurant

Mining & Quarrying

Construction

Others

5.02% Indonesia’s 2014 Economic Growth


Investment Performance Total Direct Investment Realization Based on Capex (IDR trillion) in 2010-2014, not including financial, oil & gas sectors

2010 2011 2012 2013 2014

FDI DDI Target

Source: BKPM, Jan 2015

Average 2010-2014 Share of FDI: 69% Share of DDI: 31% Growth: 22.4%

2010 2011 2012 2013 2014 Total

Foreign DI 145.9 175.3 221.0 270.4 307.0 1,119.6

Domestic DI 60.6 76.0 92.2 128.2 156.1 513.1

FDI & DDI 206.6 251.3 313.2 398.6 463.1 1,632.8 Target 155.0 240.0 283.5 390.3 456.6 1,525.4

% Achieved 133.3% 104.7% 110.5% 102.1% 101.4% 107.0%

Growth 21.6% 24.6% 27.2% 16.2%

70.7% 67.3% 69.8% 70.6% 67.8%

29.3%

32.7%

30.2% 29.4%

32.2%

• 2005-2012, Exchange Rate USD1 = Rp 9,000 • 2013 (Q I and Q II), Exchange Rate USD1 = Rp 9,300 (based on National Budget/APBN 2013) • 2013 (Q III and Q IV), Exchange Rate USD1 = Rp 9,600 (based on National Budget/APBN 2013) • 2014 (QI-QIII) Exchange Rate USD1 = Rp 10,500 (based on National Budget/APBN 2014) • 2014 (QIV) Exchange Rate USD1 = Rp 11,600 (based on National Budget/APBN-P 2014)


Investment Performance Total Direct Investment Realization by Sector Based on Capex in 2010-2014, not including financial, oil & gas sectors

Source: BKPM, Jan 2015

Rank Business Field Total (USD million)

1 Mining 19,557

2 Transport, warehouse, telecom 16,130

3 Metal, machinery, electronic ind. 10,614

4 Chemical & pharmaceutical ind. 10,496

5 Food industry 9,171

Others 51,432

Total FDI 117,400

Rank Business Field Total (IDR trillion)

1 Electricity, gas, water supply 80,159

2 Food industry 69,010

3 Transport, warehouse, telecom 51,086

4 Food crops and plantation 47,200

5 Mining 42,358

Others 223,285

Total DDI 513,098

23%

43%

33% 18%

43%

38%

Group of Sectors

Primary

Secondary

Tertiary

The Investment Coordinating Board of the Republic of Indonesia 7 Source: BKPM, 2015.

Rank Country 2010 2011 2012 2013 2014 Total

1 Singapore 5,565 5,123 4,856 4,671 5,832 26,047

2 Japan 713 1,516 2,457 4,713 2,705 12,104 3 United States 931 1,488 1,238 2,436 1,299 7,392

4 South Korea 329 1,219 1,950 2,205 1,127 6,829

5 Netherlands 608 1,354 967 928 1,726 5,583

6 British Virgin Islands 1,616 517 856 786 624 4,399

7 United Kingdom 276 419 934 1,076 1,588 4,293

8 Malaysia 472 618 530 711 1,776 4,108

9 Mauritius 23 73 1,059 780 541 2,475

10 Hong Kong, PRC 566 135 310 376 657 2,044

Total (Top-10 Countries) 11,099 12,462 15,156 18,682 17,876 75,275

Total (90 Countries) 16,215 19,475 24,565 28,616 28,530 117,400

Investment Performance Total FDI Realization by Country Based on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors


Rank Business Field 2010 2011 2012 2013 2014 Total

1 Transportation industry 133 465 1,510 3,001 1,261 6,370

2 Metal, machinery & electronic ind. 158 306 459 580 513 2,016

3 Chemical & pharmaceutical ind. 5 430 65 172 126 798

4 Textile industry 74 70 56 216 65 481

5 Food industry 85 39 46 136 138 444

Others 258 206 320 609 603 1,995

Total 713 1,516 2,457 4,713 2,705 12,104

Total 2010-2014 Plan: USD 23.7 billion Realization: USD 12.1 billion Workforce: 424,694 people

Investment Performance Japan’s FDI Realization by Sector Based on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors

Group of sectors

1,625

3,414

9,778

4,717 4,124

713 1,516

2,457

4,713

2,705

-

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014

Plan Realization

Primary 1%

Secondary 90%

Tertiary 9%


Rank Economic Corridor 2010 2011 2012 2013 2014 Total

1 Java 689 1,450 2,205 4,643 2,638 11,623

2 Kalimantan 2 0 153 45 50 250

3 Sumatra 14 17 95 11 5 141

4 Bali & Nusa Tenggara 8 45 4 8 11 76

5 Sulawesi - 1 1 5 2 10

6 Maluku & Papua - 3 - - - 3

Total 713 1,516 2,457 4,713 2,705 12,104

Source: BKPM, 2015.

Jakarta

Investment Performance Japan’s FDI Realization by Location

Based on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors

Java 96%

Outside Java 4%


Indonesia Halal Industry


Halal Industry There are around 1.7 billion Muslims globally in 2014, comprising 23% of the world population, and almost two-thirds live in Asia. The region is home to the world’s four biggest Muslim population countries: Indonesia (12.9% of the world’s Muslims), Pakistan (11.1%), India (10.3%), and Bangladesh (9.3%).

Largest Muslim Population Indonesia China Pakistan Ethiopia India Algeria Bangladesh Morocco Turkey Sudan Egypt Afghanistan

Source: The Economist Intelligence Unit Limited 2014


Halal Industry

Food & Beverages

Pharmaceutical & Health Products

Cosmetics

Tourism


Halal Industry LAW No. 33 of 2014 on Guaranty for Halal Products • Law 33 of 2014 requires that all products imported, distributed, or traded in Indonesia bear a halal

certificate. • Products that are considered not halal are exempted from obtaining the halal certificate provided

that such products provide sufficient statement informing the non-halal nature of the products. • Products covered under Law 33 of 2014 are very wide, including products or services relating to

food, beverages, medicines, cosmetics, chemical products, biological products, genetically engineered products, or any other goods that can be used by humans.

• Halal certificates will be issued by the Halal Product Guaranty Agency (BPJPH – Badan Penyelenggara Jaminan Produk Halal), a governmental agency which must be established by the government at the latest 3 years after the enactment of Law 33 of 2014 and which will be under the supervision of the Minister of Religious Affairs.

• The process of verifying whether or not a product is halal will be carried out by the Halal Inspection Institution (LPH – Lembaga Pemeriksa Halal), which will be established by the government or the public, and must be accredited by BPJPH.

• In conducting the verification process, the LPH can perform the verification and checking of the products within or outside the manufacturing facility.

• By 2019, halal labeling will be mandatory for all products circulated in Indonesia. • The law also will acknowledge products from overseas that have halal certificates, but it is not

automatically granted as there must be cooperation in place between Indonesia and the foreign government from where the product originates.

• Under the new law, a halal certificate, once secured, is valid for four years, and subject to extensions.


Halal Industry – Food and Beverages

The demand for halal food is growing more rapidly than overall global food demand. Growth rates of Muslim populations are higher than the global average, but equally because incomes in countries like Indonesia are also growing more swiftly than the global average.

Highest Purchasing Power Saudi Arabia UAE Turkey US Iran Algeria Malaysia Singapore Qatar Indonesia Russia Egypt

Markets with High Potential for Halal Food

Source: The Economist Intelligence Unit Limited 2014


• Indonesia has the largest Muslim population in the world with 88% of its 235 million inhabitants following Islam.

• As the world’s most populous Muslim country, Indonesia is a halal market goldmine with the potential to become not only a major market but also a major producer of halal products.

• Global Muslim spending on Food and Beverages (F&B) has increased 10.8% to reach $1,292 billion in 2013.

• Top countries with Muslim consumer food consumption are Indonesia ($190 billion), Turkey ($168 billion), Pakistan ($108 billion) and Iran ($97 billion)


1 Singapore 190.3 285.6 385.0 440.3 541.3 1,842.5

2 United Kingdom 97.8 182.4 5.8 16.5 422.7 725.2

3 British Virgin Islands 144.2 70.4 148.0 72.5 120.8 555.9 4 Malaysia 22.6 44.5 93.5 162.0 208.5 531.1 5 Japan 84.7 39.3 45.8 136.3 137.5 443.6

Total (Top 5) 539.6 622.2 678.1 827.6 1,430.8 4098.3 Total 1,014.7 1,104.5 1,753.5 2,103.5 3,123.6 9,099.6

FDI Realization in Food & Beverages Sectors in Indonesia by Origin Country Top-10 Countries Based on Capital Expenditure (USD million) in 2014 Excl. oil, gas, and financial sectors


Source: BKPM, 2015.


FDI Realization in Indonesia by Subsector Top-10 Subsectors Based on Capital Expenditure (USD million) in 2014

FDI realization in food and beverages sectors in Indonesia

Source: BKPM, 2015.

Plan

Realization

Rank Sectors (Top 10) 2010 2011 2012 2013 2014 Total

1 Edible oil and vegetable and fat oil Industry (Not palm oil) 437.1 356.7 224.2 439.5 431.2 1,888.6

2 Crude Palm Oil and cooking palm oil Industry 9.2 29.5 81.8 270.1 675.2 1,065.8

3 Sugar Industry 20.3 54.4 270.7 119.6 570.0 1,034.9

4 Soft Drink Industry 144.5 51.2 175.2 204.7 220.4 795.9

5 Other edible oil and vegetable and fat oil Industry 0 0 349.8 216.1 142.2 708.0

6 Cocoa, chocolate and confectionary Industry 0 131.8 132.1 152.1 242.2 658.2

7 Mill, Stripping, and cleaning rice grains and grains (not rice and corn) industry 7.1 55.2 212.9 79.3 122.2 476.7

8 Fresh milk and cream processing industry 130.3 83.0 41.9 19.5 36.9 311.7

9 Food and refined food industry 0 4.6 77.6 74.3 118.7 275.1

10 Starch and starch product industry (Not rice and corn) 133.6 61.5 5.1 52.9 12.9 266.0

Total (Top 10) 882.0 827.8 1,571.2 1,628.1 2,572.0 7,481.1

Total 1,014.7 1,104.5 1,753.5 2,103.5 3,123.6 9,099.6

353.9 329

783 470 530.95

485.4

3489.2

1201.7 1483

1678

0

500

1000

1500

2000

2500

3000

3500

4000

2010 2011 2012 2013 2014




1 Java 689.6 652.8 1,148.20 1,040.50 1,653.10 5,184.2

2 Sumatera 141.1 157.4 411.5 729.5 845 2,284.5

3 Kalimantan 134.4 183.1 115.9 183.8 540.7 1,157.9

4 Sulawesi 42.4 42.3 54.3 121.4 73.5 333.9

5 Bali and Nusa Tenggara 0.1 61.6 14 2.2 3.4 81.3

6 Papua & Maluku 7.1 7.2 9.6 26.1 7.8 57.8

Total 1,014.7 1,104.5 1,753.5 2,103.5 3,123.6 9,099.6

Source: BKPM, 2015.

FDI Realization per location Economic corridor rank based on investment realization (USD million) 2014

FDI realization in Food & Beverages sectors in Indonesia



• Global Muslim consumer spending on pharmaceuticals has increased 2.1% to reach $72 billion in 2013.

• The main concern among Muslims is the use of non-compliant substances such as animal derivatives and animal-based gelatines in these products.

• Top countries with Muslim pharmaceutical consumers are Turkey ($8.9 billion), Saudi Arabia ($5.9 billion), Indonesia ($4.9 billion), Iran ($2.5 billion), Russia ($2.9 billion) and France ($2.4 billion) based on 2013 data.

Halal Industry – Pharmaceutical

FDI Realization in Pharmaceutical Sectors in Indonesia by Origin Country Top-10 Countries Based on Capital Expenditure (USD million) in 2014 Excl. oil, gas, and financial sectors


1 Japan 1.5 2.8 11.6 56.4 54.1 126.4

2 Germany 0 0.2 3 4.9 21.9 30

3 USA 0 0 19.8 3.6 23.4

4 Hong Kong 2 10.1 3.8 0.1 0 16

5 Singapore 0 5.6 0.4 0 6.4 12.4

Total (Top 5) 3.5 18.7 18.8 81.2 86.00 208.2

Total 13.3 44.4 56.8 124.9 117.3 356.7 Source: BKPM, 2015.



1 Java 13.1 44.3 56.8 124.9 117.3 356.4

2 Bali and Nusa Tenggara 0.2 0.1 0.3

Total 13.3 44.4 56.8 124.9 117.3 356.7

Source: BKPM, 2015.


FDI realization in Pharmaceutical sectors in Indonesia

Halal Industry – Pharmaceutical


• The global halal cosmetic industry is estimated at USD 13 billion with an annual growth rate of 12%. At present the halal cosmetic market constitutes 11% of the total global halal industry.

• Top countries with Muslim cosmetics consumers are United Arab Emirates ($4.9 billion), Turkey ($4.4 billion), India ($3.5 billion), Russia ($3.4 billion) and Indonesia ($3.4 billion) based on 2013 estimates.

Halal Industry – Cosmetics

FDI Realization in Cosmetics Sectors in Indonesia by Origin Country Top-10 Countries Based on Capital Expenditure (USD million) in 2014 Excl. oil, gas, and financial sectors


1 Netherlands 1.1 27.8 0 0 0 28.9

2 Japan 0 11.8 0 0.2 10.1 22.1

3 United Kingdom 0 3.1 1.5 0.1 7.6 12.3

4 Germany 0 0.1 0.2 6.6 6.9

5 British Virgin Islands 0 4.9 0 0 0 4.9

Total (Top 5) 1.1 47.6 1.6 0.5 24.3 75.1

Total 4.8 75.4 2.7 19.1 36.1 138.1 Source: BKPM, 2015.


No Sectors 2010 2011 2012 2013 2014 Total

1 Soaps And Detergents, Cleaning And polish, Perfumes and Cosmetics Industry 4.8 75.4 2.7 19.1 36.1 138.1

Total 4.8 75.4 2.7 19.1 36.1 138.1

Halal Industry – Cosmetics

FDI realization in cosmetics sectors in Indonesia FDI Realization in Indonesia by Subsector Subsectors Based on Capital Expenditure (USD million) in 2014



1 Java 1.3 52.9 1.9 16.8 33.2 106.1 2 Sumatera 3.5 22.5 0.6 1.9 2.8 31.3 3 Bali and Nusa Tenggara 0 0 0 0.4 0.1 0.5 4 Sulawesi 0 0 0.2 0 0 0.2

Total 4.8 75.4 2.7 19 36.1 138.1

Source: BKPM, 2015.


• Global Muslim spending on travel (outbound) has increased 7.7% to reach $140 billion in 2013. • Top source countries of Muslim tourists based on 2013 expenditure were: Saudi Arabia ($17.8

billion), Iran ($14.3 billion), United Arab Emirates ($11.2 billion), Qatar ($ 7.8 billion), Kuwait ($7.7 billion), and Indonesia ($7.5 billion).


1 Singapore 133.7 38.3 190.3 196.7 280.7 839.7

2 British Virgin I. 11.1 4.8 336.8 147.8 23.8 524.3

3 Hong Kong, RRT 1.2 2.2 11.5 15 72.8 102.7

4 Seychelles - 31.1 54.4 10.2 5.6 101.3

5 Republic of Korea 4.2 0.8 34.0 4.3 4.6 47.9

6 United Kingdom 34.3 1.9 0.8 3.0 1.2 41.2

7 Netherlands 14.1 2.6 16.5 1.7 0.7 35.6

8 Czech Republic 33.4 - - - - 33.4

9 Australia 2.4 3.8 12.1 7.7 6.4 32.5

10 Japan 8.2 0.6 1.4 7.2 13.4 30.8 Total (Top 10) 242.7 86.1 657.9 393.4 409.4 1,789.4

Total 354.6 330.1 785.6 479.5 538.1 2,488.0

FDI Realization in Food & Beverages Sectors in Indonesia by Origin Country Top-10 Countries Based on Capital Expenditure (USD million) in 2014 Excl. oil, gas, and financial sectors

Halal Industry – Tourism

Source: BKPM 2015.


485

3,489

1,202 1,483 1,678

355 330 786

480 538 -

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2010 2011 2012 2013 2014

Rank Bidang Usaha (10 Besar) 2010 2011 2012 2013 2014 Total

1 Star Hotel 309.1 197.5 729.7 383.3 403.3 2,022.9

2 Other Short Stay Accommodation Activities 26.7 33.8 28.7 60.2 78 227.4

3 Travel Agency Activities 5.0 67.1 5.4 1.1 5.4 84.1

4 Restaurants 10.1 43.7 8.6 13.6 24.5 61.1

5 Operation of Sport Facilities 0.3 15.9 6.0 1.5 1.7 25.5

6 Water Recreation 0.8 1.6 2.4 6.0 9.3 20.1

7 Budget Hotel 0.7 1.6 0.8 2.3 3.2 8.6

8 Other recreation activities 1.1 1.9 1.1 0 2.1 6.2

9 Convention and exhibition service - 0.5 0.3 1.3 3.5 5.6

10 Other Accommodation Activities 0 4.6 0 0.6 - 5.2

Total 355 330 786 480 538 2,488

Plan

Realization

FDI realization in tourism sectors in Indonesia (USD million) 2010-2014

“Rising 12% between 2013 and 2014.”

Source: BKPM 2015.

FDI Realization in Indonesia by Subsector Top-10 Subsectors Based on Capital Expenditure (USD million) in 2014




1 Bali & Nusa Tenggara 259.8 176.2 398.9 270. 1 141.7 1,246.6

2 Java 76.2 145.9 206.1 195.1 340.5 963.8

3 Sumatera 14 6.2 153.7 7.2 49.0 230.1

4 Sulawesi 1.7 0.2 18.3 4.7 4.0 28.9

5 Kalimantan 1.6 0.3 6.9 0.6 0.3 9.7

6 Papua 0.5 0.7 1.6 1.3 2.7 6.8

7 Maluku 0.7 0.7 0 0.5 0 1.9

Total 355 330 786 480 538 2,488

Jakarta

FDI realization in tourism sectors in Indonesia

(USD million) 2010-2014

Source: BKPM, 2015.

“50% FDI realization located in Bali & Nusa Tenggara.”



Investment Target

2


Strategic Plan of Investment 2015-2019

Investment Target

Source: BKPM, 2015

0

100

200

300

400

500

600

700

800

900

1000

2015 2016 2017 2018 2019

Inve

stm

ent T

arge

t (ID

R tr

illio

n)

軸ラベル

FDI DDI

2015 2016 2017 2018 2019

FDI 343.7 386.4 429.0 494.7 570.0

DDI 175.8 208.4 249.8 297.8 363.0

TOTAL 519.5 594.8 678.8 792.5 933.0

12.2%

14.5%

15%

15.9%

17.7%

33.8% 35.0%

36.3% 37.6%

38.9%

66.2% 65.0% 63.7%

62.4% 61.1%

Indonesia’s investment Target, 2015-2019 Excl. Financial Sectors and Upstream Oil and Gas, in IDR Trillion

total investment targeted in 2015-2019

115% increase from 2010-2014 period (IDR 1,632.8 trillion)

63.6 % average share of total investment target in 2015-2019

FDI 2015-2019

DDI 2015-2019

IDR 3,519 trillion

36.4 % average share of total investment target In 2015-2019

15.1% targeted in 2015-2019 period average growth


0

100

200

300

400

500

600

700

800

900

1000

2015 2016 2017 2018 2019

Inve

stm

ent T

arge

t (ID

R Tr

illio

n)

軸ラベル

Tertiary Secondary Primary

2015 2016 2017 2018 2019

Primary 88.4 97.6 107.9 119.3 131.8

Secondary 267.5 313.5 363.2 431.9 517.8

Tertiary 163.6 183.7 207.7 241.3 283.4

TOTAL 519.5 594.8 678.8 792.5 933

Indonesia’s investment Target 2015-2019 Based on Group of Sectors, in IDR Trillion

Excl. Financial Sectors and Upstream Oil and Gas

TOTAL SHARE OF: Primary Sector: 15% Secondary Sector: 54% Tertiary Sector: 31%

51.5% 52.7%

53.5%

54.5%

55.5%

17.0% 16.4%

15.9%

15.1%

14.1%

31.5% 30.9% 30.6% 30.4% 30.4%

0

100

200

300

400

500

600

700

800

900

1000

2015 2016 2017 2018 2019 In

vest

men

t Tar

get (

IDR

Trill

ion)

Outside Java Java

2015 2016 2017 2018 2019

Java 282.6 302.6 317.4 337.6 354.5

Outside Java 236.9 292.2 361.4 454.9 578.5

TOTAL 519.5 594.8 678.8 792.5 933.0

Indonesia’s investment Target 2015-2019 Based on Location, in IDR Trillion

Excl. Financial Sectors and Upstream Oil and Gas

TOTAL SHARE OF: Java: 45% Outside Java: 55%

Source: BKPM, 2015

45.6% 49.1%

52.8% 57.4%

62.0% 54.4% 50.9%

47.2%

42.6%

38.0%

Strategic Plan of Investment 2015-2019

Investment Target


Power Generation 35 GW new projects

7 GW projects in

the pipeline

Labor-intensive industry Textile Food &

Beverages Furniture Toys

Import-substitution industry

Chemical & Pharmaceutical Iron & Steel

Export-oriented industry

Electronics CPO &

derivative products

Wood products, pulp

& paper Automotive

Machinery Rubber products

Fish & derivative products

Shrimp

Downstream industry of natural resources Cacao Sugar Smelter

Maritime Shipping Ship building Sea port Cold storage ICT for maritime

Tourism Strategic tourism areas MICE

Investment Strategic Plan 2015-2019

Investment Priority Sectors


National Medium-Term Development Planning 2015-2019

Manufacturing Industry: Roles

Indicator 2014 2015 2016 2017 2018 2019 Average 2015-19

GDP Growth (%) 5.02 5.8 6.6 7.1 7.5 8.0 7.0

Manufacturing Industry* Growth (%)

4.7 6.0 6.9 7.5 8.1 8.6 7.4

Share to GDP (%) 20.7 20.8 21.0 21.1 21.3 21.6 21.2

Development Target 2015-2019

new middle/large-scale industries have to be built in 2015-2019.

9,000 20,000 small-scale industries have to be established in 2015-2019.

2 million new job opportunities per annum have to be created in Indonesia.

*) Oil & gas and non-oil & gas manufacturing industries.


Enggano

Kertajati

Singkawang

Muara Teweh

Miangas

Maratua

Tojo Una-Una

Pohuwato

Moa

Namniwel

Taria

Kenyam Aboy

Koroway Batu

Development Sector in Connectivity

Baseline Target

2014 2019

New road (km, total in 5 years)

1,202 2,650

New toll road (km, total in 5 years)

807 1,000

Railway (km) 5,434 8,692

Seaport (location) 278 450

Port dwelling time (day) 6-7 3-4

Airport (location) 237 252

Flight on-time performance (%)

75 95

Broadband coverage (% of district)

82 100

Crossing dock (location) 210 275

Market share of urban public transport (%)

23 32

Logistic cost to GDP (%) 24.2 19.2

National Development Planning 2015-2019 Development Targets

Connectivity to be accelerated

Source: National Medium Term Development Planning, 2015-2019, Bappenas, Dec 2014 & MoF, Feb 2015.

15 airports and 24 major seaports location

63% increase

National budget for infrastructure, from IDR 178 T in 2014 to IDR 290 T (USD 24.2 B) in 2015.

USD 141billion

Investment opportunities in infrastructure offered to private sectors, 31% of total investment required in 2015-2019.

National Medium-Term Development Planning 2015-2019 Growth Centers (Industrial Parks, SEZ & FTZ)

SUMATERA Kuala Tanjung – Sumut Seimangke – Sumut Tanggamus – Lampung KALIMANTAN Batulicin – Kalsel Ketapang – Kalbar Landak – Kalbar SULAWESI Palu – Sulteng Morowali – Sulteng Bantaeng – Sulsel Bitung – Sulut Konawe – Sultra MALUKU Buli - Malut PAPUA Teluk Bintuni – Papua Barat JAWA Sayung – Jateng JIIPE – Jatim

15 Industrial Parks Development Target

2015-2019

Source: Indonesia Development Planning Agency & Ministry of Industry, 2015.

8 SEZ

8 existed Special Economic Zones. 7 SEZs will be developed in 2015-2019.

79 Industrial Parks

79 existed industrial parks across Indonesia. 15 industrial parks will be developed in 2015-2019 (13 outside Java).

4 FTZ 4 existed Free Trade Zones: Sabang, Batam, Bintan & Karimun.

Outside Java for processing industries of natural resources. Java for high-technology, labor-intensive & consumer goods industries.


2019 Maximum 15 days of investment licenses processing time for each type of licenses, in both central and regional government.

5 steps of starting-a-business procedures in 2019.

12.1% growth of Gross Domestic Fixed Capital Formation.

IDR 933 trillion (USD 77 billion) of direct investment (from IDR 399 trillion in 2013), with DDI contribution increasing to 38.9%.

• Increasing legal certainty in investment and business

• Developing a simpler, more reliable and transparent investment and business licenses procedures at central and regional levels

• Granting fiscal and non-fiscal facilities more selectively and transparently

• Creating investment forum to monitor and to solve problems on investment

• Creating more conducive industrial relations

• Increasing fairness in business competition

How do we get there?

Source: Target and strategy are stated in RPJMN 2015-2019.

National Medium-Term Development Planning 2015-2019

Investment Target & Strategy


Investment Policy

3


Improvements of Licensing – One Stop Service (OSS) Faster, Simpler, Transparent & Integrated

Debottlenecking of Investment Realization

Development of Investment Climate

Integration with Regional OSS

1

2

3

Doing Business in the New Administration Era Four BKPM’s Priorities As assigned by the President of RI

4


Doing Business in the New Administration Era Adhoc Teams at BKPM To accelerate improvement of service for investors

Investment Promotion/ Cooperation

Investment Service Investment

Monitoring & Implementation

Investment Planning

Investment Climate

Adhoc Team 1: Investment Marketing

Adhoc Team 2: One-stop

service Monitoring

Adhoc Team 3: Investment

Climate

Identify investment interest & facilitate investors to

obtain license

Support & monitor the implementation of OSS

Center

Review & propose regulatory improvement, improve investment climate

Plan investment strategy & monitor

implementation

Adhoc Team4: Facilitate

investors to realize

investment

Support & monitor the implementation of (regional)

one-stop service


WORK PLAN AND TIMELINE OF OSS

BKPM’s Online

Licenses

December 2014

January 2015

2016

Grand Launching of OSS Center

(26 Jan)

REGIONAL OSS 24 Provinces – 120 Regencies/Municipalities

( Feb - December)

Regional OSS 34 Province

514 Regencies/ Municipalities, 5 FTZ, & 8 SEZ

The Objective of OSS Center: Fast, simple, transparent and integrated licensing process The Concept of OSS Center: • Investors only come to OSS Center in BKPM to apply and received the

licenses related to investment . Investor did not need to go around to every the Ministries / Agencies.

• Investor can monitor the process of their license by online. • Investor gain certainty on the timeframe of their licenses.

Soft Launching of OSS Center

( 15 Jan)

Socialization OSS Center

( Jan - March)

Accelerate and simplify the

Licenses and Non licenses

( Feb-April)

February- December


ONLINE APLICATION IN OSS CENTER

• SPIPISE : Electronic system of information services and investments licensing.

• The Benefits of SPIPISE :

• Having tracking system with clear SOP • Investors can access anywhere by online • Company data secured and safe

Online Licenses in BKPM since December 15th, 2014

No. Type of License SOP

1 Principal License (New) 3 Working days

2 Principal License (Expansion) 3 Working days

3 Principal License (Changing) 5 Working days

4 Permanent license (Changing) 5 Working days

5 Permit for foreign representative office 5 Working days

6 Permanent License 7 Working days

7 Permenent License (Expansion) 7 Working days

8 Permenent License (merger) 7 Working days

9 Facility of import duties exemption for machinery

7 Working days

10 Facility of import duties exemption for machinery goods and material

7 Working days

11 Principal License (merger) 10 Working days


22 MINISTRIES/AGENCIES INVOLVED IN OSS CENTER

Ministry of Agrarian & Spatial/BPN

Ministry of Energy & Mineral Resources

Ministry of Industry

Ministry of Agriculture

Ministry of Trade

Ministry Finance

Ministry Transportation

Ministry of Law and Human Rights

Ministry of Environment and Forestry

Ministry of Health

Ministry of Tourism

Ministry of Communication & Informatics

Ministry of Manpower

Ministry of Public Works & Public Housing

National Police (POLRI)

Ministry of Marine & Fishery

Ministry of Education & Culture

Ministry of Defense

National Standardization Agency (BSN)

National Encryption Agency (LEMSANEG)

PT. PLN Persero

National Agency of Drug and Food Control (BPOM)


THE READINESS OF OSS CENTER

OSS Center ready to serve all investment licenses of any business field except for oil and gas and finance sector

77 Liaison Officers ( LO) derived from 22 the Ministries/Agencies ready to serve investors

LO placed in front office and back office: 1. The duty of LO front office : receive the application and

consultation 2. The duty of LO back office : processing the application OSS Center has a contact center 0807-100-2576 (BKPM). The information services provide:

1. General information 2. Services, licenses and regulation 3. Service desk of BKPM online system 4. Information on related technical Ministries/Agencies 5. Complaint


Information page on OSS Center OSS Center can be accessed through BKPM’s website : www.bkpm.go.id

INFORMATION SYSTEM OF OSS CENTER

1. Investors can find out the type of license, required documents, and completion period

2. Investors are able to track their documents

http://www.bkpm.go.id/


Doing Business in the New Administration Era Priority 2: Debottlenecking of Investment Realization

5 cases with total value IDR 14 trillion (USD 1.2 billion) are solved. 94 cases with total value IDR 478 trillion (USD 39.8 billion) are under facilitation.

BKPM as a clearing house Coordinating with related governmental institutions authorized in licensing process and mediation between

companies and related stakeholders

Obstacle Location Sector 22 cases of land issues 26 cases of licensing at any levels 2 cases of forests land use permit 3 cases of tax holiday facilities 17 cases of regulation at technical

ministries 9 cases of regional government

response 6 cases of raw materials issues 7 cases of electricity issues 5 cases of PPP scheme 1 case of copyright issue

14 West Java 5 Central Java 4 East Kalimantan 9 Banten 2 East Java 3 North Sumatera 5 South Kalimantan 1 Jambi 10 Jakarta 3 Central Kalimantan 1 South Sumatera 1 Lampung 2 Bali

3 North Sulawesi 7 West Papua 3 North Maluku 3 Papua 2 West Kalimantan 1 West Nusa Tenggara 2 Riau Islands 1 Central Sulawesi 2 Yogyakarta 3 South Sulawesi 3 Riau 1 Southeast Sulawesi 7 unlocated

8 Fishery 4 Plantation 1 Furniture industry 3 Sugar industry 13 Chemical and pharmaceutical 12 Electricity, gas and water supply 11 Infrastructure 7 Transportation & telecommunication 2 Textile industry 2 Metal, machinery & electronic industry 6 Trade and repair 4 Food industry 4 Tourism 17 Mining 2 Real estate, industrial area and offices 2 Other industries

Source: BKPM, Data as of Feb 2015


No. Issues Location Sectors Type of Industry

1 Land acquisition Central Java Electricity, gas and water supply Power plant

2 Green area allocation and deforestation Riau Chemical industry Chemical industry

3 Research on regulations to build SEZ n/a Industrial zone Technopark development

4 Land acquisition Banten (SEZ Tanjung Lesung)

Electricity, gas and water supply

Installation development of water supply system

5 Labor Jakarta Tourism Hotel

6 Government Moratorium Policy West Papua Fisheries Fishing and cold storage

7 Government Moratorium Policy

West Papua and East Java Fisheries Fishing and cold storage

Doing Business in the New Administration Era Debottlenecking Japan’s investment with realization obstacles under BKPM’s facilitation

Source: BKPM, Dec 2014.


Labor issues Wage is no longer a single life support

Wage = Productivity • Minimum wage is also based on productivity, besides the criteria of decent living (KHL) and

economic growth (Presidential Instruction No.9/2013).

• Wage < KHL. Increase is to fulfill the criteria of decent living with clear plan and timeline.

• Wage ≥ KHL. Increase is in line with productivity and approved by employer and employees.

Improving certainty and transparency • BKPM recommends that wage increase refers to multiyear formula although the increase may

be implemented annually. • BKPM urges measurement mechanisms to monitor and evaluate wage policies.

National Social Security Program (Law No.4/2011)

Health Insurance (BPJS Kesehatan) Workforce Insurance (BPJS Tenaga Kerja)

Universal health care Pension, old-age savings, death benefits and worker accidents

Applied in January 2014 Applied in July 2015


Doing Business in the New Administration Era Priority 3: Development of Investment Climate

• Creating more attractive investment incentives.

• Reviewing laws and regulations on investment.

• Establishing an Investment Forum (multi-stakeholder forum) to monitor and address investment issues.

BKPM as

Aspiration House


Indicator 2012 2013 2014 2015

Rank of EoDB 129 128 120 114

- Starting a business 155 166 175 155

- Dealing with construction permit 71 75 88 153

- Getting electricity 161 147 121 78

- Registering property 99 98 101 117

- Getting credit 126 129 86 71

- Protecting minority investor 46 49 52 43

- Paying taxes 131 131 137 160

- Trading across boders 39 37 54 62

- Enforcing contract 156 144 147 172

- Resolving Insolvency -- -- 144 75

Improvement in 2014 evaluated by the IFC, World Bank: 1. Starting a business: Online approval for legal entities. 2. Getting electricity: Simplification in electricity installation. 3. Paying taxes: Reduction of health insurance rate (Implementation of Universal Health Care).

Doing Business in the New Administration Era Improvement of Ease of Doing Business in Indonesia


No. Indicator

Doing Business 2015 Doing Business Target

Procedure Time (days)

Cost (% of income

per capita) Procedure Time

(days)

Cost (% of income

per capita)

1 Starting a business 10 52.5 20.1 5 5 16.6

2 Getting electricity 5 94 360 4 15 311.5

3 Paying taxes 65 253.5 hours/year

31.4 (% of profit) 7 136

hours/year 32.2

(% of profit)

4 Enforcing contract 40 460 118.1 (% of claim) 24 175 1.28**)

(% of claim)

5 Resolving Insolvency - 2 Years

22 (% of estate) - 1 year,

9 months 5.08

(% of estate)

6 Registering property 5 25 10.9 (% of property value) 5 12 10.9

(% of property value)

7 Dealing with construction permit

17 202 4.9 (% of warehouse value) 5 22 36.2

8 Getting credit*) Depth of credit information index: 6 Depth of credit information index: 7

Strength of legal rights index: 4 Strength of legal rights index: 6

Note: *) Depth of credit information index (0 – 8) and Strength of legal rights index (0 – 10) **) 1.28% of claim came from lawsuit downpayment fees (IDR 922,000) divided by 200% of income percapita.

Doing Business in the New Administration Era Ease of Doing Business: Target

Source: BKPM, Feb 2015.

Doing Business in the New Administration Era Priority 4: integration with regional OSS

Source: BKPM, data as of February 23th, 2015 FTZ: Free Trade Zone (Kawasan Perdagangan Bebas dan Pelabuhan Bebas/KPBPB) SEZ: Special Economic Zone (Kawasan Ekonomi Khusus/KEK) Legal basis: Presidential Regulation Number 97 Year 2014.

NO. AREA TOTAL OSS SPIPISE Delegation authority

for OSS Investment Matters and

One Stop Service

Established Not yet Available Not yet Already Not yet Joined Separated

(1) (2) (3) (4) (5) (8) (9) (10) (11) (12) (13)

1 Province 34 34 0 33 1 34 0 27 7

2 Regency 416 364 52 236 180 356 9 227 137

3 City 98 97 1 69 29 96 0 53 44

4 FTZ 5 4 1 4 1 4 0 3 4

5 SEZ 8 2 6 1 7 2 0 1 1

TOTAL 561 501 60 343 218 492 9 311 190

Regional OSS Development: • 60 regions have not yet established OSS • 218 regions not yet implement SPIPISE • 190 regions still separated investment matters from one stop service

48

OSS Regency/

Municipalities

Investor

Regional LIcensing

1. IMB (Kab/Kota) 6. Permit use of genset 2. Environmental Permit 7. Lighting protection permits 3. Location Permit (Kab/Kota) 8. TDP 4. Permit use of boiler 9. Occupational health and safety permit 5. Permit use of lift

Regional LIcensing

* Location permit from OSS Province if the location is across regencies/municipalities

OSS PROVINCE*

OSS CENTER

Integration of Licensing Services in OSS

49

Ministry of Agrarian & Spatial/BPN

Ministry of Energy & Mineral Resources

Ministry of Industry

Ministry of Agriculture

Ministry of Trade

Ministry Finance

Ministry Transportation

Ministry of Law and Human Rights

Ministry of Environment and Forestry

Ministry of Health

Ministry of Tourism

Ministry of Communication & Informatics

Ministry of Manpower

Ministry of Public Works & Public Housing

National Police (POLRI)

Ministry of Marine & Fishery

Ministry of Education & Culture

Ministry of Defense

National Standardization Agency (BSN)

National Encryption Agency (LEMSANEG)

PT. PLN Persero

National Agency of Drug and Food Control (BPOM)

Badan Koordinasi Penanaman Modal (BKPM) Indonesia Investment Coordinating Board Jln. Jend. Gatot Subroto No. 44 Jakarta 12190 - Indonesia t . +62 21 525 2008 f . +62 21 525 4945 e . [email protected]

www.bkpm.go.id

Thank You Terima Kasih

Indonesia Investment Promotion Centre (IIPC)

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