invest in IABW: Investment and Business Establishment in Indonesia| Jakarta, 19 November 2015 I N V E S T I N INDONESIA Indonesia Investment Climate and How to Approach the Indonesian Market INDONESIA INVESTMENT COORDINATING BOARD
HIMAWAN HARIYOGA Deputy Chairman of Investment Promo<on © 201 by Indonesia Investment Coordina<ng Board. All rights reserved Agenda
What are we doing and Why? Are We OpCmisCc? Why? How About Our Investment RelaCon? What Need to be Done to Enhance & Strengthen Our Two Way Investment? IndonesiaInvestment Coordina/ng Board 2 What are we doing and Why? IndonesiaInvestment Coordina/ng Board 3 Doing Business in the New Administration Era BKPM’s End to End Services 1 Establishing OSS at BKPM & Simplification of Licensing: Providing Faster, Simpler, Transparent & Integrated licensing 2 3 Formation of Marketing Team Adop<on of a new marke<ng and facilita<on approach Improvements of investment regulatory framework & climate Including provide more aPrac<ve incen<ves & facili<es for investors IndonesiaInvestment Coordina/ng Board 4 Investment Service Stage of Investment in Indonesia Defining Investment Interest Checking NegaCve Investment List Checking IncenCves offered by the Government Looking for Land / LocaCon of Investment Contact BKPM IndonesiaInvestment Coordina/ng Board 5 Doing Business in the New Administration Era One Stop Services Investors submit and obtain permits exclusively at BKPM with time certainty & online monitoring. IndonesiaInvestment Coordina/ng Board 6 BKPM Priorities: Improvements of Licensing Progress of Investment One-­‐Stop Service Progress of Licensing Simplification *) Period of January – September 2015. IndonesiaInvestment Coordina/ng Board 7 IndonesiaInvestment Coordina/ng Board 8 Sydney Indonesia Investment PromoCon Centre (IIPC) Investment Service End-­‐to-­‐End Service for Investors Investment Interest Investment Permit Investment IIPC MarkeCng
Sydney Team Investment One Stop Service Investment RealizaCon Investment DeboSle-­‐
necking Investment Controlling IndonesiaInvestment Coordina/ng Board 9 Indonesia Investment PromoCon Center (IIPC) §  Establishing Marke<ng Officer Team dedicated to one country Improvement of Investment Climate Reinforcement of Marketing Team §  Proac<vely promoCng Indonesia Investment Opportuni<es §  FacilitaCng Investor by providing informa<on, consul<ng and ease of obtaining licensing §  Encouraging Investment Missions to and from Indonesia §  Developing the coordinaCon between Indonesia’s Representa<ve and the Stakeholders §  CoperaCng with foreign bank, in order to promote the investment and facilitate the investor to invest in Indonesia. In Australia, with ANZ Bank. IndonesiaInvestment Coordina/ng Board 10 TAX HOLIDAY years tax exemption
(MoF Regula<on No.159/PMK.010/2015) 5-­‐15
With poten<al 20 years exemp<on 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.  Communica<on devices industries. 6.  Agricultural processing 7.  Marine transporta<on 8.  Manufacturing industry in SEZ 9.  Economic infrastructures IDR
1
TAX ALLOWANCE IMPORT DUTY FACILITY (Government Regula<on No.18/2015) (MoF Regula<on No.176/PMK.011/2009) 30
% of investment value
ReducCon of corporate net income tax for 6 years, 5% each year. 143
business segments
Eligible for tax allowance, expanded from 129 segments in the previous regula<on. Under certain requirements among others: investment value or export orienta<on, manpower absorp<on, local content, and project loca<on (especially outside Java island). Machines, goods, materials for production 2 years import duty exemp<on or 4 years for companies using locally-­‐
produced machines (min.30%). Industries Which produces goods and/or services, including: 1.
2.
3.
4.
5.
6.
7.
Tourism and culture Public transporta<on Public health services Mining Construc<on Telecommunica<on Port trillion
Minimum investment plan (USD80 million). IndonesiaInvestment Coordina/ng Board 11 Investment Climate Economic Policy Packages Wage FormulaCon
More certain formula for business. Annual increase based on infla<on rate & economic growth. Tax IncenCves Free VAT for shipbuilding, railway & airplane industries. No double taxa<on for property & infrastructure. Cost ReducCon
Gas and electricity price reduc<on for industry. DeregulaCon Review on 134 regula<on in 16 areas with a spirit of pro-­‐
investment. IndonesiaInvestment Coordina/ng Board 12 Tax FaciliCes 20-­‐100% tax discounts for period up to 25 years. Free VAT for importa<on of raw materials. Property ownership & residence permit for foreigners. Ease of investment, land, immigra<on & working permits integrated at SEZs. IncenCves Investment Climate Economic Stimulus for Special Economic Zones Bitung Fishery & Agro Industries, Logis<cs Sei Mangkei Palm Oil, Rubber, Fer<lizer Industries, Logis<cs, Tourism Tanjung Api-­‐api Tourism, Manufacturing Industry, Logis<cs Maloy Batuta Palm Oil, Coal, Mineral Industries Palm Oil, Rubber, Petrochemical Industries Morotai Palu Smelters, Agro Industry, Logis<cs Tanjung Lesung Tourism Improvement on Investment Climate Mandalika Tourism Economic Package 6 IndonesiaInvestment Coordina/ng Board 13 3,519 trillion Strategic Plan of Investment 2015-­‐2019 Investment Target IDR 2015 2016 2017 2018 2019 FDI 343.7 429.0 494.7 569.9 DDI 175.8 208.4 249.8 297.8 363.0 Total 1 386.4 519.5 594.8 678.8 792.5 933.0 Growth 12.2% 14.5% 14.1% 16.8% 17.7% in 2015-­‐2019 from 2010-­‐2014 period (IDR 1,632.8 trillion) average growth targeted in 2015-­‐2019 period 2 2010-­‐2014 Period (Completed) •  Investment realisa<on: IDR 1,633 trillion •  Investment plan (Principal license stock 2010 -­‐ April 2015): IDR 4,125 trillion. 2015-­‐2019 Period (Plan) •  Investment realisa<on: IDR 3,519 trillion •  By using assump<on that 50% of investment plan will be realized, Indonesia investment plan needs is IDR 7,000 trillion, therefore we s<ll need principal license stock for IDR 3,000 trillion. 3 115
15.1% % increase
(IDR trillion) Excl. Financial Sectors and Upstream Oil and Gas Summary total investment targeted FDI 63.2 DDI 36.8 2015-­‐2019 2015-­‐2019 % average share
of total investment target in 2015-­‐2019 % average share
of total investment target In 2015-­‐2019 IndonesiaInvestment Coordina/ng Board Source: BKPM, 2015 14 Strategic Plan of Investment 2015-­‐2019 Investment Target by Region 1000.0 1000.0 900.0 900.0 800.0 37,3% 700.0 27,8% 600.0 26,7% 500.0 400.0 36,3% 54,0% 42,9% 50,4% 300.0 200.0 100.0 0.0 26,3% 39,7% Investment RealizaCon (Trillion Rupiah) Investment RealizaCon (Trillion Rupiah) by Sector Average Share Primary : 15,7% Secondary: 53,5% Tertiary : 30,8% 49,7% 800.0 700.0 24,1% 23,5% 21,8% 2015 2016 2017 2018 19,8% 2019 IndonesiaInvestment Coordina/ng Board 43,1% 600.0 42,2% 500.0 400.0 32,9% 41,1% 43,9% 300.0 200.0 19,7% Average Share Java : 46,5% Outside Java : 53,5% 100.0 0.0 67,1% 58,9% 56,1% 57,8% 56,9% 2015 2016 2017 2018 2019 15 Investment Opportunities in Indonesia 2015-­‐2019 Investment Priority Sectors Infrastructure 35 GW power generaCon 24 Sea ports Agriculture Food estate Corn PlantaCon CaSle Labor-­‐intensive industry TexCle Food & Beverages Furniture Toys Import-­‐subsCtuCon industry Chemical & PharmaceuCcal Iron & Steel Electronics CPO & derivaCve products Wood products, pulp & paper AutomoCve Machinery Rubber products Fish & derivaCve products Shrimp Cacao Sugar Smelter MariCme Ship building Fishery Industry Cold storage Tourism,SEZ & Industrial Park Strategic tourism areas MICE 8+11 SEZs Industry Export-­‐oriented industry Downstream industry of natural resources 15 New Ind. Parks IndonesiaInvestment Coordina/ng Board 16 Are We Optimistic? Why? IndonesiaInvestment Coordina/ng Board 17 Direct Investment Inflow Indonesia Investment Trend 2010-­‐2014 22,4% investment growth (y-­‐o-­‐y) over the last 5 years (2010-­‐2014) Direct Investment Inflow (IDR trillion) FDI DDI Target Average 2010-­‐2014 59% Share of FDI: 69% Share of DDI: 31% Growth: 22.4% Foreign DI 2010 2010 145.9 2011 2011 175.3 2012 2012 221.0 2013 2013 270.4 2014 2014 Total 307.0 1,119.6 DomesCc 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 1,632.8 155.0 240.0 283.5 390.3 456.6 1,525.4 133.3% 104.7% 110.5% 102.1% 101.4% 107.0% 21.6% 24.6% 27.2% 16.2% Target % Achieved Growth y-­‐o-­‐y Por<on of direct investment was s<ll concentrated in Java Island • 2005-­‐2012, Exchange Rate USD1 = Rp 9,000 • 2013 (Q I and Q II), Exchange Rate USD1 = Rp 9,300 (based on Na<onal Budget/APBN 2013) • 2013 (Q III and Q IV), Exchange Rate USD1 = Rp 9,600 (based on Na<onal Budget/APBN 2013) • 2014 (QI-­‐QIII) Exchange Rate USD1 = Rp 10,500 (based on Na<onal Budget/APBN 2014) • 2014 (QIV) Exchange Rate USD1 = Rp 11,600 (based on Na<onal Budget/APBN-­‐P 2014) IndonesiaInvestment Coordina/ng Board 18 IndonesiaInvestment Coordina/ng Board 19 Rp Trillion 36% 550 500 450 400 350 300 250 200 150 100 50 0 Direct Investment Inflow Indonesia Investment Progress Por<on of FDI in Indonesia compare to DDI in Jan-­‐Sep 2015 Q I 2014 Q II 2014 Q III 2014 Jan-­‐Sep 2014 Q I 2015 Q II 2015 Q III 2015 Jan-­‐Sep 2015 Target 2015*) Achievement
s**) TOTAL 106.6 116.2 119.9 342.7 124.6 135.1 140.3 400.0 519.5 77.0% DDI 34.6 38.2 41.6 114.4 42.5 42.9 47.8 133.2 175.8 75.8% FDI 72.0 78.0 78.3 228.3 82.1 92.2 92.5 266.8 343.7 77.6% IndonesiaInvestment Coordina/ng Board 20 IndonesiaInvestment Coordina/ng Board 21 IndonesiaInvestment Coordina/ng Board 22 IndonesiaInvestment Coordina/ng Board 23 Improvement of Investment Climate USD 162.6 B of Investment Interests Identified The Marketing Team is following-­‐up USD 162.6 B of investmet interests (Oct 2014-­‐Nov 2015). China and Hong Kong represent the biggest portion with 36% of total investment interest. Australia No. Priority Sectors 1.0% (USD 1.62 billion) Investment (USD billion) 1% 0% 1% 44.8 1 Infrastructure 2 Agriculture 1.3 3 Labor-­‐Intensive Industry 9.2 4 Import-­‐SubsCtuCon Industry 10.3 5 Export-­‐OrientaCon Industry 0.7 6 Downstream Industry of Natural Resources 7 MariCme 8 Tourism and Special Zones 10.9 9 Others 21.9 0% 8% 11% 37% 14% 58.0 28% 5.4 Total China and HK South Korea MEA America and Europe Japan Australia Taiwan Malaysia Singapore 162.6 IndonesiaInvestment Coordina/ng Board 24 Investment Interest Progress: Australia (Period : October 22, 2014 -­‐ November 13, 2015) Interest Serious NO. Priority Sector #of USD Mil company ProspecCve Total 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 Import Subs<tu<on Industry 2 35 0 0 0 0 2 35 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 7 Mari<me 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 22 1.056 8 560 2 0 32 1.616 4 5 Export Orienta<on Industry 6 Downstream Mineral Resources TOTAL IndonesiaInvestment Coordina/ng Board 25 Indonesia’s Economic Performance Reviews AmCham & USCC: 75% ANZ Survey: ASracCve as an Investment Des<na<on The Economist: 2nd US companies plan to expand AmCham & USCC: 84% US companies expect profit increase in 2016 Indonesia JBIC: 2nd Most Promising Country Investment Priority for Overseas Business in Asia UNCTAD: The Highest FDI Growth in Southeast Asia, 2014 Moody’s, Fitch, Japan Credit Ra<ng: Investment Grade IndonesiaInvestment Coordina/ng Board 26 BKPM Priorities: Development of Investment Climate Progress of Ease of Doing Business in Indonesia There are significant decrease in total procedure and total time (days) EODB 2016, World Bank will announce the result in October 2015. BKPM has reported the progress of indicators improvement, by directly met IFC-­‐World Bank in Washington DC in June 2015 No Indicators EODB Survey Results 2015 towards 2016 1 StarCng a business 10 procedures, 52.5 days 7 procedures, 9.2 days 2 Dealing with construcCon permit 17 procedures, 202 days 10 procedures, 149 days 3 Registering property 5 procedures, 25 days 5 procedures, 11 days 4 Geqng electricity 5 procedures, 94 days 4 procedures 35 days 5 Paying taxes and assurance 65 payments 43 payments 6 Enforcing contract 40 procedures, 460 days, with cost of 118,1% claim cost 3 procedures, 56 days, without cost 7 Resolving Insolvency 23 months, with cost of 20-­‐22% asset 11 months with cost of 5,08% asset IndonesiaInvestment Coordina/ng Board 27 How About Our Investment Relation? IndonesiaInvestment Coordina/ng Board 28 FDI Realization in Indonesia by Country Australia ranked 11th in 2010 – Q3 2015 FDI RealizaCon in Indonesia by Origin Country Top-­‐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 5,565
5,123
4,856
4,671
5,832
3,551
29,599
1 Singapore 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 Bri<sh 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 Mauri<us 23
73
1,059
780
541
34
2,509
566
135
310
376
657
417
2,461
11,099 12,462 15,156 18,682 17,876 13,294 88,569 214 90 744 226 647 105 2,026 174 128 141 297 800 406 1,946 16,215 19,475 24,565 28,618 28,530 21,337 138,738 10 11 12 Hong Kong Total 10 Countries Australia China Total (113 Countries) IndonesiaInvestment Coordina/ng Board Source: BKPM, 2015. 29 Investment Performance Australia’s FDI Realization by Sector Based on Capex (USD million) in 2010 – Q3 2015, not including financial, oil & gas sectors Compared to Jan-­‐Sep 2014, total FDI realiza<on from Australia is declining from USD 469.2 million to USD 105 million 3500 3000 2500 2000 1500 1000 500 0 Ter<ary 11% Secondary 47% Primary 42% Total 2010-­‐Q3 2015 3,204 2,586 476 214 2010 Plan: USD 7,651 million Realiza<on: USD 2,026 million Workforce: 51,458 people 862 744 321 90 2011 2012 Plan 647 226 2013 201 105 2014 Q3 2015 Realiza<on Group of sectors 2010 2011 2012 2013 2014 Jan -­‐ Sep 2015 Total 19 30 89 59 580 66 843 181 -­‐ 572 81 -­‐ -­‐ 834 -­‐ 30 25 22 5 9 91 4 Electricity, Gas and Water -­‐ -­‐ 30 31 24 4 89 5 Other Services 6 Other Sectors 7 2 3 13 11 6 42 5 214 24 90 12 744 18 226 22 647 16 105 97 2,026 Rank Business Field 1 Mining Basic Chemical, Chemicals and Pharmacy Basic Metals, Metals, Machinery & 3 Electronics 2 TOTAL IndonesiaInvestment Coordina/ng Board 30 Jakarta Investment Performance Australia’s FDI Realization by Location Based on Capex (USD million) in 2010 – Q3 2015, not including financial, oil & gas sectors 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 Bali & Nusa Tenggara 7 0 30 32 18 4 91 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 11 214 90 744 226 647 105 2,026 4 TOTAL IndonesiaInvestment Coordina/ng Board Source: BKPM, 2015. 31 Indonesia’s Investment to AUSTRALIA 2010 – Sep 2015 Investment RealizaCon Based on Capital Expenditure (USD Million) Excl. financial sectors Rank Destination Investment RealizaCon by Company Capex % Based on Capital Expenditure (USD Million) Excl. financial sectors 4,757 64 Rank Company Capex % Ba<k Air 21 70% PT. Telekomunikasi Indonesia 7 30% Total (2 Companies) 30 100% 1 China 2 Myanmar 920 12 1 3 Egypt 320 4 2 4 Mauritania 270 4 5 Nigeria 189 3 6 Vietnam 180 2 7 Malaysia 141 1 Based on Capital Expenditure (USD Million) Excl. financial sectors 8 Singapore 102 1 Rank 9 Philippines 86 1 1 82 1 2 7,047 95 Australia 30 0 Total (24 Countries) 7,397 10 Kazakhstan Total Top-­‐10 Countries 16 Investment RealizaCon by Sector Company Capex % Transporta<on 21 70% Communica<on 7 30% Total (2 Companies) 30 100% IndonesiaInvestment Coordina/ng Board 32 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. Main Issues •
•
•
•
•
land acquisi<ons, misuse of permits, supply of raw materials, coopera<on contracts, tax regula<on. Debottlenecking Australian Companies 16
48
Sector Value Problems Mining -­‐ Undergorund Coal Gasifica<on regula<on is not clear Basic Chemicals IDR 1.596 Billion Building permit has not released yet. IndonesiaInvestment Coordina/ng Board Source: BKPM, 16 Oct 2015 33 What Need to be Done to Enhance & Strengthen Our Two Way Investment IndonesiaInvestment Coordina/ng Board 34 What Need to be Done? Investment Opportuni<es Strategic Partnership Investment Climate Improvement Linkages exist between Indonesia and Australia at the levels of government ? IndonesiaInvestment Coordina/ng Board 35 Contact UUSs Contact www.bkpm.go.id Embassy of the Republic of Indonesia in Canberra Consulate General of the Republic of Indonesia in Sydney 8 Darwin Avenue, Yarralumla. ACT 2600 Phone : +61 2 6250 8600 236-­‐238 Maroubra Road, Maroubra, Sydney NSW 2035, Australia Phone : (61-­‐2) 934-­‐49933 E: info@kjri-­‐sydney.org Indonesia Investment Promotion Centre (IIPC) Sydney Consulate General of the Republic of Indonesia in Melbourne Gold Field House 1 Alfred Street Suite 903 Sydney NSW 2000 Tel. +61 2 9252 0091 Fax. +61 2 9252 0092 Director : Ms. Sri MoerCningroem 72 Queens Road, Melbourne, Vic 3004 – Australia (Entrance from 72 Queens Lane) Phone : +61 3 9525 2755 E: consular@kjri-­‐melbourne.org Consulate General of the Republic of Indonesia in Perth E-­‐mail : nunu@bkpm.go.id Investment Marketing Executive for Australia BKPM Jln. Jend. Gatot Subroto No. 44, Jakarta Selatan 12190 Phone : +62-­‐21 526 2008 Mr. Ikmal Lukman (ikmal@bkpm.go.id / ikmal.lukman@yahoo.com) Mr. Heldy Satrya Putera (heldy_sp@bkpm.go.id / heldy_sp@yahoo.com) 134 Adelaide Terrace PO Box 6683, East Perth, WA, 6892, Australia Phone : (61-­‐8) 9221 5858 E: contact@kjri-­‐perth.org.au Consulate General of the Republic of Indonesia in Darwin 20 Harry Chan Avenue -­‐ Darwin N.T. 0800, GPO BOX 1953, Darwin N.T. 0801. Phone : +61 (08) 8943 0200 E: kridrw@indoconsdarwin.org.au IndonesiaInvestment Coordina/ng Board 36 Thank You Terima Kasih Badan Koordinasi Penanaman Modal (BKPM) Indonesia Investment Coordina<ng Board Jln. Jend. Gatot Subroto No. 44 Jakarta 12190 -­‐ Indonesia t . +62 21 525 2008 f . +62 21 525 4945 e . info@bkpm.go.id www.bkpm.go.id The Investment Coordina/ng Board of the Republic of Indonesia 37