update on investment in indonesia and opportunities for ... · (government regulation no.9/2016)...

© 2018 by Indonesia Investment Coordinating Board. All rights reserved

INDONESIA INVESTMENT COORDINATING BOARD (BKPM)

Update on InvestmentIn Indonesia and Opportunitiesfor Investor from India

Outline

Investment Update

Indonesia’s Investment Climate

Investment Opportunities

Investment Update

The Investment Coordinating Board of the Republic of Indonesia

4

Government is Optimist to achieve target of IDR 765 trillion Investment Realization in 2018

FDI & DDI grew at +13.1% (in IDR value)

Source: BKPM, 2018

*Note: based on internal BKPM calculation method

FDI & DDI inflow*

(in IDR trillion)

+13.1%

+12.7

Investment Realization by Sector

(2012-2017, in %)

Mining (12%)

Industry (47%)

Electricity, Gas,

Water (10%)

Transportation,

Warehouse, Telco

(9%)

Food Crops,

Plantation (7%)

Others (16%)IDR 3,491TTarget 2015-2019

313.2

398.6

463.1

545.4

612.8

692.8

765

2012 2013 2014 2015 2016 2017 2018


5

Investment Distribution, Cumulative 2012-2017

(Rp Trillion)

Kalimantan (334)

Bali & NT (94)Jawa (1,684)

Sumatera (496)

Sulawesi (207)

Papua & Maluku (275)

16%

53%

13%

3%

9%7%

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

Investment Still Centralized in Java, but Eastern Part of Indonesia is Growing

Source : BKPM.2018


6

FDIRealizationinIndonesia(2013-2017)By Country Excl. Upstream oil, gas, and financial sectors

Country 2013 2014 2015 2016 2017 Total

1 Singapore 4,672.02 5,832.13 5,901.18 9,178.69 8,073.16 33,657.18

2 Japan 4,712.89 2,705.13 2,876.99 5,400.91 4,993.82 20,689.74

3 Malaysia 711.26 1,776.32 3,076.97 1,115.56 1,212.21 7,892.33

4 USA 2,435.75 1,299.54 893.16 1,161.94 1,992.84 7,783.24

5 China, P.R 296.88 800.03 628.34 2,665.30 3,361.18 7,751.73

6 South Korea 2,205.48 1,126.62 1,213.47 1,065.80 2,023.53 7,634.90

7 Netherland 927.82 1,726.34 1,307.78 1,475.19 1,487.61 6,924.73

8 Hongkong, RRT 376.24 657.26 937.20 2,248.33 2,116.19 6,335.22

9 UK 1,075.79 1,587.96 503.22 307.26 774.74 4,248.97

10 British Virgin Islands 785.71 624.00 730.52 1,157.27 839.91 4,137.41

- - - - - -

23 India 64.96 37.14 57.18 55.04 285.37 499.69

Total 21,150.13 20,910.31 19,541.93 28,964.07 31,844.46 122,410.90

In Million

Copyright © 2017 Indonesia Investment Coordinating Board. All rights reserved.

7

Rank CountryRealizationUS$ Million

% Share

1 Singapore 8,441 26%

2 Japan 4,996 15%

3 China, P.R. 3,361 10%

4 Hongkong 2,116 7%

5 South Korea 2,024 6%

6 USA 1,992 6%

7 Netherland 1,489 5%

8 Malaysia 1,213 4%

9 Mauritius 1,056 3%

10 British Virgin Islands 844 3%

16 India 285 0.9%

Total 127 Countries 32,239 100%

India investment rank has been gradually improving during 2013-2017

FDI Rank in 2017


% Share


2 Malaysia 3,077 15%

3 Japan 2,877 14%

4 Netherland 1,308 6%


6 Hongkong 937 5%

7 United States 893 4%


9 China, P.R. 628 3%

10 United Kingdom 503 2%

21 India 57.18 0.2%


FDI Rank in 2015


% Shareto

1 Japan 4,713 22%


3 United States 2,436 12%


5 United Kingdom 1,076 5%

6 Netherland 928 4%


8 Mauritius 780 4%

9 Malaysia 711 3%

10 Taiwan 403 2%

22 India 64.97 0.3%


FDI Rank in 2013

Source: BKPM, Feb 2018


8

2013 2014 2015 2016 2017 Total %

1 Wood Industry 0.89 243.1 243.99 48.83

2 Trade and Reparation 8.53 11.61 14.02 26.06 17.28 77.52 15.51

3 Mining 10.46 8.11 10.05 1.24 0.25 30.126.03

4 Electricity, Gas, and Water Supply 0.75 - 14.3 5.84 2.08 22.97 4.60

5Transportation, Warehouse, and Telecommunication

22.32 0.6 - - - 22.924.59

6 Food Industry 2.25 9.12 2.60 1.76 7.12 22.87 4.58

7Transport Equipment and Other Transport Industry

15.84 2.08 1.81 0.18 2.39 22.314.47

8 Other Sevices 3.25 3.65 1.84 4.25 3.0 16.01 3.20

9Metal, Machinery, and Electronic Industry - - 4.92 8.32 0.41 13.66

2.73

10 Textile Industry 1.45 0.88 4.13 0.67 5.43 12.56 2.51

Other Sectors 0.099 1.07 3.48 5.81 4.28 14.74 2.95

Total (all sectors) 64.96 37.14 57.18 55.04 285.37 499.69 100%

Investment Realization Value in USD million

Source: BKPM, Feb 2018

Investment Performance

India’s FDI Realization by SectorBased on Capex (USD million) in 2013–2017 (not including financial. oil & gas sectors)


9

Rank Region 2013 2014 2015 2016 2017 Total %

1 Java 47.56 18.98 29.73 42.49 275.97 414.73 83%

2Bali and Nusa Tenggara

0.384 0.150 15.90 7.45 2.31 26.205.1%

3 Sumatra6.52 12.24 0.35 1.94 1.90 22.96

4.6%

4 Kalimantan 10.38 29.92 7.59 1.3 0.45 22.72 4.5%5 Sulawesi 0.12 2.28 3.30 1.67 5.98 13.36 2.6%

6 Papua - 0.50 0.30 - 0.186 0.98 0.2%

Total 64.96 37.14 57.18 55.04 285.37 499.69 100%

83%

4.6%

Investment Performance

India’s FDI Realization by LocationBased on Capex (USD million) in 2013–2017

(not including financial. oil & gas sectors)

Source: BKPM, November 2017

5.1%

4.5% 2.6%

0.2%


10

Top 5 Indian Investors in IndonesiaInvestment Periode 2012 – 2017 (Excluding financial sectors)

No India Company Capex %

1 Tata Group 103.500 66%

2 Essar Group 26.000 17%

3 Coal India Limited (CIL) 11.547 7%

4 Bharat Heavy Electricals (BHEL)

7.985 5%

5Steel Authority of IndiaLimited (SAIL)

7.336 5%

Indonesia’s Investment Climate


12

120114

91

106

2014 2015

Ease of Doing

Business Indonesia,

2013-2018

19

72

2016 2017 20182013

129

Country

India

DB 2018DB 2017

130

78

3540

123 125

100

China

Russia

Brazil

78

91 72Indonesia

BRIC Country

Indonesia Ease of Doing Business is Improving. The Government is on track for Structural Reform

Source: World Bank, 2017

WHY INVEST IN INDONESIA?


13

Government Target to Ease Investment Services

SERVICE COMMITMENT

One-Stop Service

(PTSP) at BKPM

One place

22 ministries integrated

3-hourService

DirectConstruction

90%Regional PTSP formed. 61% regional PTSP

implement e-licensing.

Industry, power,

oil & gas, tourism

at one place

All sectors

125 permits are delegated

to BKPM One-Stop Integrated Services

Indonesia’s Investment Policy Updates

Improvement of Investment Service


15

BKPM

• Arrive at BKPM directly

from the airport.

• Consult with Director

of Investment Service.

• Submit the required

documents & data.

REQUIREMENTS:

Minimum investment of IDR 100 billion (USD 8

million) and/or employing 1,000 local workers

Exception for investment plan in infrastructuresector (power, transportation, public works andICT) and oil and gas sector Wait at the lounge while

documents are

processed by BKPM, in-

house notary, ministries,

& other government

institutions.

Obtain eight documents

& letter of land availability

within three hours to start

your business.

9 documents obtained

Certainty to work• RPTKA / Employment plan

• IMTA / Working permit

Certainty to start

a business• Investment license

• Certificate of incorporation

• NPWP / Tax registration

• TDP / Company registration

Certainty to import

capital goods

• APIP / Import identification

• NIK / Customs registration

• Letter of land availability

Accurate land

information

Source: BKPM, 2017

3-hour investment licensing service is offered for investors with certain criteria

NO TYPE OF SERVICES REGULAR SERVICE

1. Temporary Business License for Electricity 20 Working Days2. Temporary Business License for Oil / Fuel / LPG Storage 32 Working Days

3.Temporary Business License for Storage of Processed

Products / CNG

32 Working Days for

Processed Products

---------40 Working days

for CNG4. Temporary Business License for LNG Storage 32 Working Days5. Temporary Business License for Oil Refinery 32 Working Days

6.Temporary Business License for Processing Oil Residue

Industry32 Working Days

7. Temporary Business License for Natural Gas Processing 32 Working Days

8.Temporary Business License for General Trade of Oil/Fuel

40 Working Days

9.Temporary Business License for General Trade of

Processed Products40 Working Days

ESDM3J service is given ifthe company has fulfilled thechecklist of administrativeand technical requirementsas regulated on MEMRMinisterial Decree No. 15 of2016 Jo. 13/2017

3 Hours Investment Licensing Service For Energy And Mineral

Resources Sector

From Jan- Dec 2017, 239 companies have obtain 3 hours licensing facility with total investment of Rp. 932 Trillion (USD 70 Billion)

Copyright © 2017 Indonesia Investment Coordinating Board. All rights reserved.

16

TAX HOLIDAYTAX ALLOWANCE IMPORT DUTY FACILITY

(Government Regulation No.9/2016) (MoF Regulation No.176/PMK.011/2009juncto. No. 188/PMK.010/2015)

(MoF Regulation No.103/PMK.010/2016)

145business fieldsEligible for tax allowance, expanded from 143 segments in the previous regulationwith additional segment: clothing industry.

30% from investment value

Reduction 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).

5-15YearsTax Exemption, With potential 20 years exemption for project that considered strategic for Indonesia economy.

8 eligible pioneer industries 1.Basic metal industryy;2.Oil refinery and/or basic organic chemicals;3.Machinery industry;4.Industries of renewable resources;5.Communication devices industry;6.Agro industry;7.Marine transportation;8.Non-PPP infrastructures.

RP1trilionMinimum investment plan(USD 80 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

New Regulation of Fiscal Incentive for Investment is on the Draft

NOTE

• The Government underMinistry of Finance is nowfinalizing the new regulationfor tax allowances, taxholidays, tax deductions forsmall and medium enterprises(SMEs), as well as incentivesfor companies that carried ourresearch and development(R&D) activities.

• The government wouldexpand the number ofbusiness sectors that wouldbe eligible for the incentives.

• There will be simplerprocedures to obtain theincentives.

Green Line Facility

Acceleration and certainty in custom clearance process

Faster & Certain• Capital goods do not require screening.• Cutting the processing time from 3-5 days to

only 30 minutes.

Simple requirements • Projects under construction • Obliged in reporting quarterly investment

activities (LKPM) • Recommendation from BKPM

Facility for Custom Clearance at Ports in Indonesiafor Capital Goods, Machinery or Raw Material

Investors can apply status upgrade on Custom Clearance

From RED to GREEN line for new companies under construction

Investment Opportunities


1919

Increasing the significant role of SOE & Private Sector through PPPSchemes

Private

Participation:

US$131.1Bn

(36.5%)

Total Value of

Investment

Required in

Infrastructure*

2015-2019:

US$359.2Bn(IDR4,796.2Tn)

SOE:

US$79.8Bn

(22.2%)

Government

Budget:

US$148.2Bn

(41.3%)

InvestmentValue

(Sources)

Source: BAPPENAS Internal Analysis

Weighted Average Cost of Capital (WACC)

• Socialsecurity;

• Education

security;

• Health security.

• Drinking water material;

• Mass public

transportation.

• Toll roads;

• Ports.

Investment that does not

possess direct investment

feedbackto the object.

Investment which is

economically viable but less

financially viable hence needing

additional Government support.

Investment which is economically

and financially viable butseen as

less attractive or risky hence

Government intervention is

needed.

Investment which is more

attractive hence the

Government’s role in

regulating and promoting is

minimized.

• Electricity;

• Airports;

• Gaspipe.

Definition

Example

Source of

Funding

Category

Public Investment: Provision of PublicFacilities

IRRlow high

Government funding

(APBN & APBD)

Government funding+

commercial funding

Commercialfunding

promoted by the

Government

Commercialfunding

Non-Government Budget Investment Financing (PINA) For Projects with

IRR > 13%

Social Investment PPPSpecial Commercial

Investment

General Commercial

Investment

*) 1 : Calculationbasedon infrastructure investment (required) to be a middle income country by 2025.

Sources: Bappenas- JICA, 2014: Background Study for RPJMN 2015-2019, Analyst team of Ministry of National Development Planning(BAPPENAS)

RPJMN: National Medium-Term DevelopmentPlanning

Financing Infrastructure Development 2015-2019

BKPM’s Priority Sectors and Programs


20

• 35 GW Electricity Power Plant

• 1,000 Km of Toll Road

• 3,258 Km of Railways

• 15 New Airports

• 24 New Seaports Capacity

• 7 Special Economic Zones and 10 Special Economic Zones for Tourism

• 14 New Industrial Estates Outside Java

20

Infrastructure Projects Based on

National Medium-Term Development Plan

(RPJMN)

2015-2019

Infrastructure project opportunitiesRPJMN 2015-2019


National Priority Projects (PSN): 245 Projects + 2 Programs

Badan Koordinasi Penanaman Modal21

PSN includes 15 sectors at project level and 2 sectors at program level

7IRIGASI

Pro

ject

Pro

gra

m

Electricity 1 PROGRAMSmall-Medium Airplane 1 PROGRAM

74 12647549333081023

61 2427

13

15

ProjectsProyek

93

10

1

12

2

Projects

Programs

US$49.1 B US$43.3 B

US$11.9 B

US$34.2 B

US$101.5 B

US$0.8 B

US$81.9 B

Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects

ROAD RAILWAY SEAPORT AIRPORT INDUSTRI-AL ZONE HOUSING HOUSINGWATER &

SANITA-TIONIRRIGA-TION

DAMTECH-NOLOGY OIL REFINERYSMELTER

National

Projects

Projects

Projects

Projects

Projects

1Project

FISHERY

1Project

SEA DIKE

Exchange rate: US$ 1 = IDR 13,000

Sumatra KalimantanSulawesi

Maluku & Papua

Java

Bali & Nusa Tenggara

PSN Status

Badan Koordinasi Penanaman Modal

2%

59%

4%

35%

3%

44%

38%

9%6%

6 projects are completed

9 projects are in transaction

85 projects + 1 program are in preparation

145 projects + 1 program are in construction*

*) Including one electricity program under construction category

246 + 2PSN

998 MW are operating

15.676 MW are in construction

13.782 MW have signed PPA prior to financial close

2.228 MW are in planning

3.163 MW are in procurement

35 GWElectricity program

*)Per December 2017

Source : KPPIP

Source : KPPIP

PPP Projects (Ready to Offer)

©2018 by Investment Coordinating Board. All rights reserved 23

No. Project Stage Value

1Surabaya – Madura Toll

BridgeFBC US$ 24 million

2Semarang – Demak Toll

RoadFBC US$ 593 million

3LRT Medan (Municipal

Transport)FBC US$ 1.2 billion

4 Pekanbaru Water Supply FBC US$ 35.5 million

5Sam Ratulangi University

Teaching HospitalFBC US$ 32 million

6 Sidoarjo Hospital FBC US$ 22.2 million

7 Pirngadi Hospital FBC US$ 13.3 million

1

3

4 5

6

7

2

No. Project Stage Value

1Correctional Settlement

CiangirOBC US$ 88.8 million

2 Surakarta Street Lighting OBCUS$ 29.3 million

3 Dharmais Cancer Hospital OBCUS$ 48.6 million

4 Multifunctional Satelitte OBCUS$ 628.2 million

5 SKSTN OBCUS$ 88.8 million

6 Yogya-Bawean Toll Road OBC US$ 1018.19 million

7Nusakambangan Industrial

Correctional facilityOBC US$36.6 million


24

1

3

2

4

PT PJB - Electricity(2 Projects) (IDR 14,5 trillion / USD 1.071 million)

BIJB (Pengembangan Fase 2 & Aerocity –2Projects) (IDR 30 trillion

/ USD 2.237 million)

Waskita Toll Road – Jalan tol Trans Jawa dan Non-Trans Jawa

(18Projects) (IDR 135 trillion/ USD 10.000million) 5

7

6Bandara Kulon Progo DIY –PT Angkasa Pura 1 & PT PP (IDR 6,7 trillion /

USD 495 million)

Pesawat R-80 –PTRAI

(IDR 21,6 trillion / USD 1.600 million)

Pengembangan Area Terintegrasi Pulau Flores–

Flores Prosperindo,Ltd.

(IDR 13,5 trillion /USD 1.000 million)

8

PT Indonesia Power – Electricity (6Proyek) (IDR 78,3 trillion / USD 5.798 million)

PT PLN - Electricity

(IDR 27,5 trillion / USD 2.040 million)

4

5 3 8

2

2

1

6 17

4

4

42

24

Total 34 PINA project with total investment value aroundIDR 348,2 trillion / USD 25,8 billionPINA Project Pipeline (status December 2017)

Total PINA projects (December 2017) are 34 projectswhich diversified into 4 sectors with total investmentvalue around IDR 348,2 trillion / USD 25,79 billion


Source : Bappenas

Indonesia’s Special Economic Zones

SEI MANGKEISimalungun Regency, North

Sumatra (2,022.77 Ha)

Industry, Logistic, and Tourism

TANJUNG API-APIBanyuasin Regency, South

Sumatra (2,030 Ha)

Industry, Logistic, Export

Processing and Energy

MBTKKutai Timur Regency, East

Kalimantan (557.34 Ha)

Industry, Logistic and

Export Processing

PALUPalu City, Central Sulawesi

(1,500 Ha)

Industry, Logistic and

Export Processing

BITUNGBitung City, North Sulawesi

(534 Ha)

Industry, Logistic and Export

Processing

TANJUNG LESUNGPandeglang Regency, Banten

(1,500 Ha)

Tourism

TANJUNG KELAYANGBelitung Regency, Bangka

Belitung (324.4 Ha)

Tourism

MANDALIKALombok Tengah Regency,

West Nusa Tenggara

(1,035.67 Ha)

Tourism

MOROTAIPulau Morotai Regency, North Maluku

(1,101.76 Ha)

Tourism, Industry, Export Processing and

Logistic

Existing SEZs Total Area:

13,752 Ha

Ready/Operation

Construction

Remarks:

New SEZ development

plan 2015-2019

SORONGSorong Regency, West Papua (523.7 Ha)

Industry, Export Processing and Logistic

Lhokseumawe,

Aceh

Merauke, Papua

West Kalimantan

East

Kalimantan

South SulawesiEast Nusa Tenggara

Maluku

ARUN LHOKSEUMAWE

Aceh (2,622.48 Ha)

Industry, Logistic, Export

Processing, Energy, and

Tourism

25


10 priority tourism destination to be developed

Toba LakeArea : 500 Ha

Investment : USD 1 Billion

Kelayang CapeArea : 1200 Ha

Investment : USD 1.6 Billion

BorobudurArea : 1000 Ha


WakatobiArea : 500 Ha


MorotaiArea : 300 Ha


Lesung CapeArea : 1500 Ha


Seribu IslandsArea : 1000 Ha


Bromo Tengger SemeruArea : 1000 Ha


MandalikaArea : 1035 Ha


Labuan BajoArea : 1000 Ha


Short-term priority 26


Indonesia Investment Coordinating BoardBadan Koordinasi Penanaman Modal (BKPM)

THANK YOULETS INVEST IN INDONESIA

Jl. Jenderal Gatot Subroto No. 44Jakarta 12190 - Indonesia

Tel: (+6221) 525 2008 Fax : (+6221) 525 4945Contact Center : 0807 100 2576E-mail : [email protected]

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28

Source: BKPM, 2018

Preparation Construction Production

Technical

Licenses

Regional

Licenses

Can be processed SIMULTANEOUSLY

Business

Licenses

Investment

Licenses

7+1products*

More Benefit is Given for Investors who invest inSEZ, FTZ, IE, KSPN (Tourism)

*List of Products:1. Deed of Establishment2. Tax ID (NPWP)3. Expatriate Employment Plan (RPTKA)4. Expatriate Employment Permit (IMTA)5. Company Registration Number (TDP)6. Importer Identification Number (API)7. Custom Registration8. Register (PI)

update on investment in indonesia and opportunities for ... · (government regulation no.9/2016)...

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