trade, investment & tourism opportunities with indonesia

M I N I S T R Y O F T R A D E

KEMENTERIANREPUBLIK INDONESIA

PERDAGANGAN

TRADE, INVESTMENT & TOURISMOPPORTUNITIES WITH INDONESIA

Embassy of the Republic of Indonesia Praha, Czech Republic

www.kemlu.go.id/pragueTel: +420257 214388

http://www.kemlu.go.id/prague

• In 2010: 6.1% • in 2011: 6.5%

2

Economic Growth...

Total GDP: US$ 928 Billion (in 2011) Per-Capita: US$ 3,495 (in 2011) GDP Composition by Sector:

Industry (46.4%) Services (37.1%) Agriculture (16.5%)

Unemployment 6.6 % (in 2011) Inflation 4.5 % (present) Interest rate 5.75% (present) Debt-to-GDP ratio 24.5% (in 2011) Balance of Payment surplus of US$ 11.9 Billion (in 2011) International Reserves reached US$ 108,990 thousand, equivalent to minimum 7.1

months of import and the repayment of short-term government debts due. Foreign Direct Investment (FDI) inflows of US$ 19,28 Billion (in 2011) Rating by S&P BB+

3

Economic Outlook

• Fourth most populous in the world, 245 mio.• Size of Middle Class Economy = Market

– Population share of the middle class increased from about 25% in 1999 to 43% in 2009. In absolute size, the Indonesian middle class roughly doubled over the ten years, from 45 million to 93 million.” (ADB Report 2010 ”The Rise of Asia’s Middle Class”;

– 56.5% share of middle class to total population (2010), shows an increasing number of wealthy middle class;

– 60% productive age, average 40 years.

4

5

Fiscal Policy In 2011...

Rich Natural Resourcesmost of them are still intact to be processed

into higher VA products

Natural Gas Coal Geotherm

al Palm Oil Cocoa Tin Nickel Bauxite

Key Metrics

About 165 TCF of reserves at production rate ± 3 TCF pa

World second largest exporter

Home of 40% of world’s resources (the largest in the world)

World’s largest exporter; >19 mil tons per year

At 770 thou tons/year, world’s 2nd largest producer

At 65 thou tons/year, world’s 2nd largest producer

Own ± 12% of world’s reserves (4th largest)

World’s 7th largest reserves; world’s 4th largest production

About 40% is assumed

feasible. Up to now, 1.200 MW

has been developed.

Will be at least partially

processed domestically by 2013 (new mining law:

4/2009)

• Abundant resources for gas-based energy and petrochemical industries

• Not including Non- Conventional Gases, from Coal Bed Methane and Coal Gassification

6

NO. DESCRIPTION 2010 2011 Change %1 EXPORT 157.779.103 203.496.620 22,472 IMPORT 135.663.280 177.435.556 23,54

TOTAL 293.442.383 380.932.176 22,97

1. Export (to 218 Countries)

Value : US$ 000

Source : Trade Map

Indonesia – World Trade Balance

2. Import (from 222 Countries)

Indonesia – Czech Trade Balance

2006 2007 2008 2009 2010 2011Changes in Percentage 2010/2011

Total Trade 260,37 318,46 327,51 313,89 384,74 474,67 23.36%

Import from Czech 41,28 70,39 62,25 51,66 61,35 88,85 44.77%

Export to Czech 219,1 248,06 265,26 262,23 323,39 385,82 19.30%

Balance 177,37 177,67 203,02 210,56 262,04 296,97 13.33%

Indonesia – Czech, Export & Import 2011Top Commoditties Traded

Export to CzechHS

Code Commodity USD (ths)0 Food and live animals 16,147

1 Beverages and tobacco 186

2 Crude materials, inedible, except fuels 54,741

4 Animal and vegetable oils, fats and waxes 7

5 Chemicals and related products, n.e.s. 6,743

6 Manufactured goods classified chiefly by material 27,873

7 Machinery and transport equipment 185,164

8 Miscellaneous manufactured articles 94,954

TOTAL 385,815

Import to CzechHS

Code Commodity USD (ths)

0 Food and live animals 692

2 Crude materials, inedible, except fuels 9,675

5 Chemicals and related products, n.e.s. 15,005

6 Manufactured goods classified chiefly by material 12,666

7 Machinery and transport equipment 45,617

8 Miscellaneous manufactured articles 5,197

TOTAL 88,852

4. List of Products Exported by Indonesia to Worldwide(30 of 1119 products)

HS : 4 DIGITNO. Code Product label 2007 2008 2009 2010 2011 Share 2011

TOTAL All products 114.100.873 137.020.424 116.509.992 157.779.103 203.496.620 (%)1 '2701 Coal; briquettes, ovoids & similar solid fuels manufactured from coal 6.691.348 10.488.911 13.799.108 18.169.654 25.523.153 16,182 '2711 Petroleum gases 9.983.780 13.160.530 8.935.713 13.669.455 22.871.503 14,503 '1511 Palm oil & its fraction 7.868.639 12.375.570 10.367.621 13.468.966 17.261.247 10,944 '2709 Crude petroleum oils 9.226.036 12.418.744 7.820.257 10.402.868 13.828.678 8,765 '4001 Natural rubber,balata,gutta-percha etc 4.870.513 6.058.244 3.243.980 7.329.060 11.766.242 7,466 '2603 Copper ores and concentrates 4.212.653 3.344.574 5.101.280 6.882.171 4.700.354 2,987 '1513 Coconut (copra),palm kernel/babassu oil & their fractions 1.568.215 2.193.091 1.479.158 2.293.761 3.051.634 1,938 '2710 Petroleum oils, not crude 1.894.798 1.162.393 866.233 2.190.933 2.901.742 1,849 '7403 Refined copper and copper alloys, unwrought 1.720.570 1.258.431 1.730.989 2.262.100 2.544.364 1,61

10 '8001 Unwrought tin 1.011.405 1.961.352 1.245.493 1.709.199 2.403.892 1,5211 '7108 Gold unwrought or in semi-manuf forms 694.724 839.261 930.600 1.176.583 2.224.206 1,4112 '6403 Footwear, upper of leather 1.150.492 1.321.829 1.167.412 1.685.142 2.198.646 1,3913 '4802 Uncoated paper for writing, printing etc. 1.754.450 1.924.962 1.708.609 2.070.522 2.106.142 1,3314 '4412 Plywood, veneered panels and similar laminated wood 1.524.599 1.527.253 1.189.511 1.635.372 1.953.470 1,2415 '2713 Petroleum coke, petroleum bitumen & other residues of petroleum oils 972.866 2.360.828 1.382.808 1.765.894 1.858.392 1,1816 '4011 New pneumatic tires, of rubber 895.630 1.053.964 1.091.349 1.422.428 1.849.724 1,1717 '2702 Lignite w/n agglomerated, excl jet 51 3.112 25.823 339.168 1.710.676 1,0818 '3823 Binders for foundry molds or cores; chemical products and residuals ne 496.380 734.408 545.330 904.212 1.637.623 1,0419 '4703 Chemical wood pulp, soda or sulphate, other than dissolving grades 972.965 1.422.446 843.809 1.449.104 1.554.181 0,9920 '3824 Chemical industry products and residuals nes 38.658 329.572 226.147 520.422 1.483.262 0,9421 '2902 Cyclic hydrocarbons 1.008.759 276.859 340.851 739.705 1.433.384 0,9122 '2604 Nickel ores and concentrates 608.404 524.260 277.569 532.446 1.428.040 0,9123 '8443 Printing machinery; machines for uses ancillary to printing 744.439 927.158 939.061 971.515 1.377.460 0,8724 '8703 Cars (incl. station wagon) 839.201 1.234.371 628.864 1.026.907 1.337.494 0,8525 '8528 Television receivers (incl video monitors & video projectors) 171.714 293.104 318.719 547.323 1.320.996 0,8426 '7501 Nickel matte,nickel oxide sinters 2.346.862 1.380.069 580.913 1.429.629 1.209.937 0,7727 '9403 Other furniture and parts thereof 1.348.395 1.410.487 1.242.555 1.427.881 1.165.114 0,7428 '0306 Crustaceans 992.860 1.070.921 845.223 939.852 1.161.657 0,7429 '8708 Parts & access of motor vehicles 922.530 1.088.430 844.475 1.175.100 1.115.385 0,7130 '0901 Coffee 636.417 991.458 824.015 814.311 1.036.671 0,6631 Other Products 46.932.531 51.883.835 45.966.518 56.827.426 65.481.353 32,18

Source : Trade Map (processed by ITPC Hamburg)

Value : $ 000

5. List of products imported by Indonesia from worldwide(30 of 97 HS : 2 digit)

V : US$ 1000

Source : Trade Map

Code Product label 2007 2008 2009 2010 2011 Share'11TOTAL All products 74.473.429 129.244.050 96.829.163 135.663.280 177.435.556 (%)

1 '27 Mineral fuels, oils, distillation products, etc 22.017.829 30.682.347 19.090.373 27.530.708 40.840.210 23,022 '84 Machinery, nuclear reactors, boilers, etc 9.518.652 18.304.996 14.723.974 20.506.114 24.728.825 13,943 '85 Electrical, electronic equipment 4.641.981 14.188.434 11.087.755 15.089.479 18.245.203 10,284 '72 Iron and steel 4.174.953 8.281.878 4.356.621 6.371.546 8.580.546 4,845 '87 Vehicles other than railway, tramway 2.778.700 6.655.646 3.886.567 7.377.234 7.602.790 4,286 '39 Plastics and articles thereof 2.195.233 3.949.743 3.216.112 4.827.037 6.687.479 3,777 '29 Organic chemicals 3.881.237 5.132.453 3.940.410 5.325.777 6.634.815 3,748 '10 Cereals 1.804.497 2.199.782 1.506.215 2.159.218 4.753.078 2,689 '73 Articles of iron or steel 1.370.108 3.335.075 2.784.067 3.451.024 3.573.279 2,01

10 '88 Aircraft, spacecraft, and parts thereof 1.607.340 2.036.914 3.241.462 3.528.060 3.420.855 1,9311 '52 Cotton 953.024 1.991.663 1.476.115 2.232.085 3.169.086 1,7912 '31 Fertilizers 729.515 2.464.849 844.790 1.403.414 2.587.533 1,4613 '40 Rubber and articles thereof 790.698 1.415.481 1.125.261 1.670.747 2.346.728 1,3214 '23 Residues, wastes of food industry, animal fodder 1.147.492 1.744.993 1.678.829 1.870.754 2.219.244 1,2515 '89 Ships, boats and other floating structures 539.991 1.395.816 2.701.999 1.959.545 1.945.717 1,1016 '17 Sugars and sugar confectionery 1.116.417 457.971 704.561 1.252.841 1.900.287 1,0717 '76 Aluminium and articles thereof 815.055 1.242.958 862.281 1.359.697 1.895.959 1,0718 '28

Inorganic chemicals, precious metal compound, isotopes 908.183 1.451.077 1.028.005 1.349.353 1.820.540 1,03

19 '90 Optical, photo, technical, medical, etc apparatus 643.697 1.458.563 1.313.430 1.794.581 1.812.302 1,0220 '47 Pulp of wood, fibrous cellulosic material, waste etc 1.022.506 1.474.812 950.856 1.596.431 1.800.657 1,0121 Other Products 11.816.316 19.378.598 16.309.481 23.007.639 30.870.425 17,40

INDONESIA AS A GREAT PLACE TO INVEST

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able indonesia Invest

The Investment Coordinating Board of the Republic of Indonesia13

Singapore (5,123)

Japan (1,516)USA (1,4870)

Netherland (1,354)

South Korea (1,218)

Malaysia (618)

British Virgin Islands (517)

United Kingdom (419)

Taiwan (243)

Germany (158)

Top 10 FDI to Indonesia by Countries – 2011 (in US$. million)

Source: BKPM

Czech Republic investment realization was nil in 2011


Czech Republic Investment Realisation in Indonesia

Source: BKPM

Year Czech Investment (US$. million)

World FDI Investment (US$.

million)

Contribution to

World FDI (%)

2005 0.28 8,911.00 0.00

2008 3.25 14,871.40 0.02

2010 33.39 16,214.00 0.20

2005 2008 2010

0.283.25

33.39

Realisation (US$. Million)

0.00%0.02%

0.20%

2005 2008 2010

Contribution


Czech Republic Investment Realisation in Indonesia by Sector

Source: BKPM, 2012

Year Sector Realisation (US$. million)

Number of Projects

2005 Other services 0.28 2

2008 Trade services 2.50 1

Basic metal, machineries and

electronic industry0.75 1

2010 Hotel and restaurant 33.39 2

1. Proven resilient economy: Macroeconomic condition remains strong with robust growth:– Market-based macro-economic policy.– Free foreign currency exchange regime.

2. Stable political transition towards democracy, respecting human rights and upholding supremacy of law.

3. Improved business climate: improving international perception and positive economic forecast.

4. Strategic geographic location and strong global presence.5. Abundance of diversified natural resources.6. Increasingly skilled labor.7. Closer EU – Asian relations in the future.

16

Why In Indonesia?


Incentives• Exemption of import duty on machinery, goods and materials for

business activities in the field of Industries that produce goods and/or Industries that produce services. It is granted as long as they are:

Not produced domestically; Produced in the country but do not meet the required

specifications, or Produced in the country but not sufficient for industry needs .

Import Duty

VAT Exemption

• VAT Exemption on import and/or delivery of certain taxable goods that are strategic, including capital goods, animal feed and/or raw materials; seeds/seedlings of agricultural goods, plantation, forestry, animal husbandry, animal husbandry, fishery.


Incentives

Tax Allowance

• Tax Allowance for an investment up to Rp 1 Trillion (approx. US$ 111.1 million) in certain business activities and/or certain locations: A reduction of up to 30% of total investment value on annual net taxable

income, spread over 6 year period. Depreciation and amortization accelerated to fixed intangible assets

(building and non-building) Income Tax on dividends paid to foreign tax subject to a 10% or a lower rate

according to double taxation avoidance agreement Compensation for losses of more than 5 years but not more than 10 years. Examples of high priority business activities and investment locations in the

national scale include: 1) Cocoa industry, food and confectionary industry containing cocoa 2) Development of the eastern part of Indonesia:- Salt industry in the East of Nusa Tenggara - Manufacturing industry of brass ingot, aluminium ingot, copper

ingot, and other basic non-iron metals in Kalimantan, Papua, Maluku, and Sulawesi Provinces.


Incentives

Tax Holiday

• Tax Holiday for an investment up to Rp 1 Trillion (approx. US$ 111.1 million) in certain business activities:5 Priority Sectors: Basic metals, Oil Refinery and/or Organic

Basic Chemical which use oil & gas, machinery industry, industrial in the field of renewable resources, and communications equipment industry.

The facility : - Tax exemption over 5-10 years period effective from the

commercial production of the investment project (100% investment realisation).

- On top of the above exemption, a 50% reduction of Corporate Income Tax for 2 years period which brings it down to 12.5%.


Doing Business

Source: BKPM, 2012

• FDI in Indonesia has to set up an Indonesian legal entity.• FDI has to be initially registered with the Indonesia Investment Coordinating Board (BKPM) and subsequent permits by the central and regional governments where the investments take place.• Indonesia strives to improve the investment climate by simplifying the regulatory system for business Time in starting new investment has been reduced from 105 days to 30 days since 2007.• Use of services from local lawyers or consultants to set up your business is recommended.

21

Source: Tax Board, Ministry of Finance

• Primary types of Taxation:1. Corporation Income Tax: 26,6%2. Individual Income Tax: 10,6%3. Value Added Tax (VAT): 10%4. Sales Tax on Luxury Goods: 10% – 75%5. Tax on Land and Buildings: 0,5%6. Stamp Duties: IDR. 6000,00 (eqv 50 cents Euro)7. Transfer Tax8. Excise Duties

TAXATION

Nine Core Areas for Investment First: Infrastructure Building (seaports, toll-roads, railways,

power plants, drinking water) Second: Transportation Third: IT and Telecommunications Fourth: Food Industry and its R&D Fifth: Energy Industry, including renewable industry Sixth: Mining Industry Seventh: Manufacturing Industry Eighth: Creative Industry Ninth: Training and Education, Research, Development and

Innovation.

22

TOURISM INVESTMENT

OPPORTUNITYINCOMING CZECH TOURISTS TO

INDONESIA2009 2010 2011

2,000 4,600 7,300

POPU

LAR

DES

TIN

ATIO

NS

EMER

GIN

G

DES

TIN

ATIO

NS

Batam & Bintan

Toba Lake (North

Sumatra)

Jakarta

Bromo (East Java)

Yogyakarta & Borobudur

Bali

Lombok & Gili Islands

(West Nusa Tenggara)

Toraja, Makassar

(South Sulawesi)

Bunaken (North

Sulawesi)

ADVE

NT

URE

Cultu

re

Spa

Golf

Divi

ngM

ICE

Bohorok National Park(Orang Utan)

Mentawai (Surfing)

Way Kambas (Elephant)

Bali Barat National Park(Bird Watching)

Ujung Kulon N.P. (Rhinoceros)

Merapi & Merbabu(Hiking)

Komodo Island

Jayawijaya

Bandaneira

Rinjani

Tanjung Putting NP(Orang Utan)

Adve

ntur

eCU

LTU

RE

Spa

Golf

Divi

ngM

ICE

Toraja

Yogyakarta &

BorobudurPapua

West Sumatera

Banten

Tengger in Bromo

Bali

Sumba

Adve

ntur

eCu

lture

SP

AGo

lfDi

ving

MIC

E

Bintan, Riau Islands

Bali

Yogyakarta

West Java

East Java

Lombok

Central Java

Jakarta

Adve

ntur

eCu

lture

Sp

aG

OLF

Divi

ngM

ICE

Jakara

Bandung

Bali

Batam & Bintan

Medan

Surabaya

Papua

Adve

ntur

eCu

lture

Sp

aGo

lfD

IVIN G

MIC

E Raja Ampat

Karimunjawa

Bali

Komodo Island

Wakatobi

Flores

Morotai

Nias

Pulau Weh, Aceh

Bunaken

JAKARTASURABAYA

YOGYAKARTA

BATAM

BALI LOMBOK

BALIKPAPAN

PALEMBANG

MEDAN

PADANG

BANDUNG

MAKASSAR

MANADO

SOLO

INDONESIAN MICE DESTINATIONS

DEKUJI / THANK YOU / TERIMA KASIH

• Usefull links: ww.bkpm.go.id, www.kemendag.go.id

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

http://www.kemendag.go.id/

trade, investment & tourism opportunities with indonesia

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