invest Prepared for iadvisory Seminar 2015 Singapore, 29 April 2015 INVESTING IN INDONESIA INDONESIA INVESTMENT PROMOTION CENTRE SINGAPORE Ricky Kusmayadi Director INDONESIA INVESTMENT COORDINATING BOARD 2014 by Indonesian Investment Coordinating Board. All rights reserved
The New Indonesia A New Government Vision 2015-2019 Indonesia: Sovereign in Politics, Independent in Economy, Distinct in Cultural Character.
NAWA CITA / 9 Priorities Agenda 1 2 Returning the state to its task of protecting all citizens and providing a safe environment Developing clean, effective, trusted and democratic governance 3 Developing Indonesia s rural areas 4 Reforming law enforcement agencies 5 Improve quality of life 6 Increasing productivity and competitiveness 7 Promoting economic independence by developing domestic strategic sectors 8 Overhauling the character of the nation Key Programs: Boosting infrastructure development and improving investment and business climate 9 Strengthening the spirit of unity in diversity and social reform 3
Transport Infrastructure Development (2015-2019) Infrastructure Development 2015-2019 Project Plan Transportation 15 airports and 24 sea ports location Singkawang Maratua Pohuwato Miangas Enggano Muara Teweh Tojo Una-Una Taria Namniwel Kenyam Aboy Source: Indonesia Development Planning Agency, 2015. Kertajati Moa Koroway Batu Road: 2,650 Km Toll road: 1,000 Km Road maintenance: 46,770 Km Airport: 15 Air plane for pioneer service: 20 units Airport development for cargo: 6 locations Sea port: 24 Ship for pioneer good transportation: 26 ships Ship for cattle transportation: 2 ships Ship for pioneer services: 500 units IndonesiaInvestment Coordinating Board Railway track (Java, Sumatera, Sulawesi and Kalimantan): 3,258 km Intercity railway track: 2,159 km City railway track: 1,099 km Port for crossing line: 60 locations Ship for pioneer crossing line: 50 units BRT development: 29 cities Urban mass rapid transit development: 6 in metropolitan areas and 17 in big cities 4
Infrastructure Development 2015-2019 Project Plan Source: Indonesia Development Planning Agency, 2015. Dam: 49 dams and 33 PLTA Building/improving irrigation network: 1 million Ha Rehabilitation of irrigation network: 3 million Ha Oil refinary: 2 units (2x300,000 barrel) Floating storage regasification unit (FSRU): 5 locations (West Java, Jakarta, Central Java, East Java, North and Lampung) Urban household gas network: 90 thousand houshehold network Natural gas fueling station: 75 units Electrification ratio: 96.6% Electricity generation: 35,000 MW Natural gas: 600,000 of fishermen Broadband coverage: 100% urban/rural E-government index: 3.4 (scale 4,0) E-procurement, e-health, e-education and e-logistics cs development IndonesiaInvestment Coordinating Board Social rented housing: 5,257 twin blocks (515,711 households) Subsidy of social housing: 5.5 million households Alleviation of slum areas: 37,407 Ha Credit facility for low income household: 2.5 million households Development of urban clean water coverage: 21.4 million households (268,680 litre/second) Development of rural clean water coverage: 11.1 million household (22,647 rurals) Development community-based waste water treatment: 227 urban/rural Development centered-based waste water treatment: 430 urban/rural Development sanitary landfill for solid waste disposal facilities: 341 urban/rural Development 3R facilities: 294 urban/rural Reduction of watershed in urban areas: 22,500 Ha 5
Investment Strategic Plan 2015-2019 Investment Priority Sectors Power Generation Labor-intensive industry Import-substitution industry Export-oriented industry Downstream industry of natural resources 35 GW new projects Textile Chemical & Pharmaceutical Electronics Machinery 7 GW projects in the pipeline Food & Beverages Iron & Steel CPO & derivative products Rubber products Furniture Wood products, pulp & paper Fish & derivative products Cacao Sugar Smelter Toys Automotive Shrimp Maritime Shipping Ship building Sea port Cold storage Tourism Strategic tourism areas MICE ICT for maritime 6
National Development Plan 2015-2019 Power Generation Target USD36.3 billion of investment is offered to private sectors. Development Target 2015-2019: 35 GW 9% 6% Private Sectors Power Generator: 18.2 GW Transmission: 360 kms National Electricity Company (PLN) Power Generator: 16.8GW Transmission: 50,000 kms Distribution channel: 150,000 kms Investment IDR 435 trillion (USD 36.3 B) Investment IDR 545 trillion (USD 45.4 B) Energy Source to be Developed 2015-2019 26% Steam Geothermal 3% Natural Gas and Steam Natural Gas/Natural Gas Machine Hydro/Minihydro 56% Source: Indonesia Development Planning Agency, 2014. STRATEGIC PROJECTS to overcome the (potential) scarcity of electricity Complete 2,191 MW powerplant projects (18 steam powerplants) Develop 2,000 MW steam and natural gas powerplants (Muara Karang, Muara Tawar, Tanjung Priok, and PLTGU Grati Pasuruan) Develop big-scale steam powerplants in West Java (Bojonegoro), Central Java, and East Java (including Cilacap) Develop steam powerplants in Mulut Tambang 8, 9, 10 (including Java-Sumatera transmition 500kV), Indramayu 1,000 MW, and Batang Jateng 2x1,000 MW Develop steam powerplant extention in Cirebon 1,000 MW and Suralaya 1,000 MW Develop other planned powerplant (hydroelectric powerplant, steam powerplant, etc) 7
National Development Plan 2015-2019 Power Generation Project Distribution 508 projects across the archipelago Kalimantan 56 projects Sulawesi 88 projects Sumatra 85 projects Jakarta Java & Bali 149 projects Papua, Maluku & Nusa Tenggara 130 projects 8
National Development Plan 2015-2019 Sea Toll Development Plan Indonesia s Logistic Route Tol Laut Source: Bappenas, 2015 3aspects of Maritime Industry 5 Hub Ports 19 Feeder Ports Service: Shipping, Ship Building Infrastructure/Logistics: Seaports, Cold Storage, Storage Tank ICT & Human Capital: ICT for Maritime, Capacity Building IndonesiaInvestment Coordinating Board 9
National Development Plan 2015-2019 24 Seaports Capacity Development Cargo Flow in Indonesia: 8.8 million TEU in 2009 30 million TEU in 2020 (est.) 48 million TEU in 2030 (est.) TEU: Twenty-feet Equifalent Unit, an inexact unit of cargo capacity often used to describe the capacity of container ships and container terminals. Source: Ministry of Transportation, 2015. Jurnal Prakarsa Infrastruktur, 2012. IndonesiaInvestment Coordinating Board 10
National Development Plan 2015-2019 15 New Airports & Development of 9 Air Cargo Service New airport Development of air cargo service Source: Bappenas, 2015 IndonesiaInvestment Coordinating Board 11
National Development Planning 2015-2019 Growth Centers (Industrial Parks, SEZ & FTZ) SUMATERA Kuala Tanjung Sumut Seimangke Sumut Tanggamus Lampung 4 FTZ 4 existed Free Trade Zones: Sabang, Batam, Bintan & Karimun. 15 Industrial Parks 79 existed industrial parks across Indonesia. 15 industrial parks will be developed in 2015-2019 (13 outside Java). Outside Java for processing industries of natural resources. 11 SEZ 8 existed Special Economic Zones. 11 SEZs will be developed in 2015-2019. Jakarta INDONESIA Java Island for high-technology, laborintensive & consumer goods industries. Source: Indonesia Development Planning Agency & Ministry of Industry, 2015. 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
National Medium-Term Development Plan 2015-2019 4 Existing Free Trade Zone (FTZ) Sabang Area: 153km 2 Supporting Infrastructures: - Airport - 1 ferry terminal Karimun Area: 913 km 2 Supporting Infrastructure: - 1 Ferry terminal Batam Area: 715km 2 Supporting Infrastructures: - Airport - 5 Ferry terminals - Bridge to Bintan Island - Toll - Monorail (plan) - Industrial zone Bintan Area: 2.402 km 2 m Supporting infrastructures: - 1 Airport - 3 Ferry terminals - 2 Cargo Sea Ports - Bridge to Batam Island - Industrial Zone Source: Bappenas, 2015 13
National Medium-Term Development Plan 2015-2019 8 Existing Special Economic Zone (SEZ) Tanjung Api-Api - Rubber Processing Industry - Oil Processing Industry Sei Mangkei - Palm Oil Processing Industry - Rubber Processing Industry - Fertilizer and Miscellaneous Industry - Logistic - Tourism Supporting Infrastructure: - Toll Aceh Lampung (Plan) - Gas and electricity - Port - Petrochemical Industry Supporting Infrastructure: - Road - Electricity - Water and Waste Installation Maloy Batuta Trans Kalimantan - Palm Oil Industry - Logistic Supporting Infrastructure: - Road - Electricity - Water and Waste Installation Tanjung Lesung - Tourism Supporting Infrastructure: - Road - Electricity - Water and Waste Installation - Marina Mandalika Bitung - Fisheries Processing Industry - Coconut Based Industrial and Medicinal Plants - Various Industries - Logistic Palu - Manufacture Industry - Agro Based Industry Cacao, Rubber, Seaweed, Rattan - Manufacturing Nickel, Iron Ore, Gold - Logistic Supporting Infrastructure: - Road - Electricity - Water and Waste Installation - Tourism Supporting Infrastructure: - Road - Electricity - Water and Waste Installation Supporting Infrastructure: - Road - Electricity - Water and Waste Installation Morotai - Tourism - Fisheries Processing Industry - Business and Logistic Supporting Infrastructure: - Road - Electricity - Water and Waste Installation Source: Bappenas, 2015 14
National Medium-Term Development Plan 2015-2019 11 New Special Economic Zone (SEZ) Padang-Pariaman - Agro Based Industry Cacao, Rubber, palm oil Lhokseumawe - Manufacture - Shipyard Tanjung Api-Api Sei Mangkei Tanjung Lesung Maloy Batuta Trans Kalimantan Batu Licin - Refinery - Metal Industry Mandalika Tarakan - Manufacture Industry Bitung Palu Garombong - Refinery - Logistic - Petrochemical Morotai Raja Ampat - Tourism based Maritime Taka Bonerate - Tourism based Maritime Existing SEZs Planned New SEZs Teluk Bituni - Fertilizer and Petrochemical Industry Sorong - Fisheries Processing Industry Merauke - Food and Energy Indusrty Source: Bappenas, 2015 15
Kuala Tanjung - Aluminium Industry - CPO National Medium-Term Development Plan2015-2019 15 New Industrial Parks Sei Mengkei - CPO Processing Industry Ketapang - Aluminium Industry Landak - Rubber Industry - CPO Palu - Rattan Industry - Rubber Industry - Cacao Industry - Smelter Industry Teluk Bitung - Agro Industry - Logistic Buli - Smelter Ferronickel Industry - Stainless Steel Industry - Stainless Steel Downstream Industry Teluk Bintuni - Fertilizer Industry - Petroleum Industry Tanggamus - Maritime Industry - Logistic Sayung - High-technology - Labor-intensive - consumer goods ind JIIPE - High-technology - Labor-intensive - consumer goods ind Batu Licin - Stainless Steel Ind Bantaeng - Smelter Ferronickel Industry - Stainless Steel Industry - Stainless Steel Downstream Industry Morowali - Smelter Ferronickel Industry - Stainless Steel Industry - Stainless Steel Downstream Industry Konawe - Smelter Ferronickel Industry - Stainless Steel Industry - Stainless Steel Downstream Industry Source: Bappenas, 2015 16
Investment Performance Total FDI Realization by Country Based on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors 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 12 China 174 128 141 297 800 1,540 14 Taiwan 47 243 647 403 115 1,455 Total (90 Countries) 16,215 19,475 24,565 28,616 28,530 117,400 Source: BKPM, 2015. 17
Investment Performance Singapore s FDI Realization by Sector Based on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors Total 2010-2014 Plan: USD 56.8 billion Realization: USD 26 billion Workforce: 411,375 people 60.2% 19.8% Group of sectors 20.0% Primary Secondary Tertiary 18,000.0 16,000.0 14,000.0 12,000.0 10,000.0 8,000.0 6,000.0 4,000.0 2,000.0 0.0 2010 2011 2012 2013 2014 Plan Realization Rank Business Field 2010 2011 2012 2013 2014 Total 1 Transportation, Warehouse and Telecommunication 4,053.5 2,733.8 2,114.6 1,102.1 1,936 12,104.1 2 Food Crops and Plantation 287.9 633.2 710.2 659.1 849.1 3,511.6 3 Food Industry 190.3 285.6 388.5 440.2 549.5 2,309.3 4 Mining 303.5 223.8 303.9 604.9 483.9 2,273.2 5 Trade and Service 66 162.8 72.1 120 168.5 1,324.7 6 Electricity, Gas and Water 110.7 481.8 73.4 213.3 294.4 1,255.8 Total 5,011.9 4,521 3,662.7 3,139.6 4,281.4 22,778.7 18
Jakarta Investment Performance Singapore s FDI Realization by Location Based on Capex (USD million) in 2010-2014, not including financial, oil & gas sectors 33.3% Java 66.7% Outside Java Rank Economic Corridor 2010 2011 2012 2013 2014 Total 1 Jakarta 4.442,2 2.972 2.353,2 1.459,1 1.932,2 13.158,8 2 Banten 61,6 231,9 278,3 438,7 667,4 1.678,1 3 Central Kalimantan 175,3 188,7 301,5 179,4 331 1.176 4 East Java 137,7 179,3 131,4 303,8 422,3 1.174,7 5 West Java 41,5 151,8 336,4 392,9 228,6 1.151,4 6 South Sumatera 25,8 69,1 345 292,7 314,1 1.046,9 Total 4.884,1 3.792,8 3.745,8 3.066,6 3.895,6 19.385.9 Source: BKPM, 2015. 19
Why Indonesia? The Most Promising Country for Overseas Business Japan Bank for International Cooperation Survey 2014 Positive Factors Future growth potential of local market Current size of local market Inexpensive source of labor Supply base for assembler Base of export to third country Issues of Concern Rising labor costs Execution of legal system unclear Intents competition with other companies Underdeveloped infrastructures Difficult to secure management-level staff. Source: JBIC, 2014 20
Invest in Indonesia Three BKPM s Priorities As assigned by the President of RI 1 Improvements of Licensing: Faster, Simpler, Transparent & Integrated 2 Debottlenecking of Investment Realization 3 Development of Investment Climate 21
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Invest in Indonesia Integration of Licensing Service: One Stop Service Investors submit and obtain licensing documents only to and from BKPM. FRONT OFFICE BKPM Desk Ministry/ Institution Desk BACK OFFICE BKPM Desk Ministry/ Institution Desk Electronic Investment Information & Licence Service (SPIPISE) Investors Ministry/ Institution Desk Ministry/ Institution Desk Ministry/ Institution Desk Ministry/ Institution Desk Online System Online System Ministry/ Institution Desk Ministry/ Institution Desk 1. Documents admission 2. Consultation Licenses are processed Online Monitoring (Accessible for President and Ministers) 23
22 Ministries/institutions integrated in the investment one-stop service at BKPM Ministry of Energy & Mineral Resources 10 licenses related to power & geothermal Ministry of Environtment & Forestry 35 business licenses Ministry of Industry 6 business licenses Ministry of Agrarian and Spatial/National Land Agency Centralization of issuing land rights licenses for foreign direct investment Ministry of Defense Stationed Liaison Officer for consultation Ministry of Trade 5 licenses Ministry of Agriculture 5 business licenses Ministry of Finance Import duty facility for machineries, goods, materials for production Ministry of Health 9 licenses rrelated pharmaceutical production, medical equipment production Ministry of Tourism 9 licenses related tourism and economy creative sectors Ministry of Communications and Information Technology 5 licenses related post management, telecommunication and broadcasting Ministry of Manpower 3 business licenses and principal licenses Ministry of Public Works & Public Housing 7 business licenses Ministry of Maritime & Fishery 2 business licenses Ministry of Education & Culture 2 business licenses Indonesian National Police 6 business license in safeguarding business Ministry of Transportation 7 business licenses Ministry of Law & Human Rights 1 business licenses Supporting Institutions: Nat l Food & Drugs Control Agency, Nat l Crypto Agency, Nat l Standardization Agency, Electricity Company 24
Doing Business in the New Indonesia Priority 2: Debottlenecking of Troubled Licensing Currently, BKPM is intensively working on almost 100 troubled on-processing licenses in six priority sectors (Power, labor-intensive industry, agriculture, maritime, import substitution and export oriented industries). BKPM as a clearing house - Coordinating with related governmental institution authorized in licensing process. - Mediation between companies and related stakeholders. INVESTMENT OBSTACLES: 9 cases of land issues 6 cases of licensing at ministerial/institutional/regional level 2 cases of forest Land Use permit, 7 cases of tax holiday facilities, 7 cases of overlapping regulation, 1 case of regional government response FACILITATION BASED ON REGIONS: West Java 9 cases; Central Java 5; East Kalimantan 3; Banten 3; East Java 2; North Sumatera 2; South Kalimantan 2; Jambi 1; Jakarta 1; Central Kalimantan 1; South Sumatera 1; Lampung 1; Bali 1; North Sulawesi 1; and West Papua Barat 1. Facilitating the acceleration of investment realization in the pipeline 7 investments of energy sectors (PLTU, Geothermal, Minemouth power plant), 5 investment of railway, 4 investments of seaports, 5 investments of toll road, 2 investments of airports, 5 investments of drinking-water industry, an investment of water purification, three investments of petrochemicals, 8 investments of mining, 2 investments of telecommunications, an investment of textile industry, an investment of fruit extraction, an investment of industrial zone, an investment of cement industry, one investment of sugar industry 25
Invest in Indonesia Frequently Asked Questions on Investment Details of how-to-do, requirements, tariffs, etc. Direct download trough link below; http://dropcanvas.com/iz5ij 26
Thank You Terima Kasih Indonesia Investment Promotion Centre (IIPC) Indonesia Investment Promotion Centre Singapore Indonesia Investment Coordinating Board 8 Temasek Boulevard Suntec Tower 3, #33-03 Singapore 038988 t. +65 6334 4410 f. +65 6334 4891 e. invest@bkpmsingapore.com www.bkpm.go.id