2013
Country Report - Indonesia
International Development Group
Building & Construction Authority
Table of Contents
I General Information
4
Government Structure
4
Population
5
Economic Indicators
6
Economic Sectors
6
II
9
Economic Forecast
GDP Growth
9
FDI Inflow
10
Overview of the Construction Sector
11
III
12
The Construction Industry
Construction Share of GDP and Growth
12
- National or Key Projects in Pipeline
12
- Construction Growth Trends
14
- SWOT
14
Cost of Materials
15
Labour Cost
17
Types of Available Projects
18
Business Cultures
23
FDI in Construction
24
Setting up Business in Indonesia
24
Green Building Standards
26
IV
BCA, MND, Industry Engagements and Issues
26
V
Conclusion
28
2
VI Embassy Information
28
VII Bibliography
28
Complied by
Date
: Yong Ser Joo
: Dec 2013
The information contained herewith is for general information only and it is not be construed as advice
of any kind. Accordingly BCA does not make any warranty, expressed or implied, regarding the
accuracy, correctness, completeness or use of any information depicted in this report. BCA will also not
assume legal or any liability for the use of any such information or acts or omissions committed as a
result of the use of this information.
3
I
General Information
Government Structure
1
Indonesia is a presidential representative democratic republic, where the
President is the Head of State and the Head of Government. The executive power is
exercised by the government, with the assistance of the cabinet, while the legislative
power is vested in both the government and the People’s Consultative Assembly
(MPR).
2
The President and Vice-President are voted by the citizens for five-year terms
and a maximum of two terms is allowed. The President heads the United Indonesia
Cabinet, being responsible for the appointment of the cabinet, domestic governance
and policy-making and foreign affairs. He is also the commander-in-chief of the
Indonesian armed forces.
Source: http://en.wikipedia.org/wiki/President_of_Indonesia
Fig.1 – President Susilo Bambang Yudhoyono of Indonesia
[1]
3
The MPR consists of an upper house known as the Regional Representatives
Council (DPD) and a lower house, ie the House of Representatives (DPR). The DPD
consists of four representatives from each of Indonesia’s 33 provinces. Although it can
make proposals and submit opinions on legislative matters, it does not have the power
to create legislation. On the other hand, the MPR has the power to inaugurate and
impeach the President upon the recommendation of the DPR [2][3].
4
4
For each of the 33 province, the Head of the local government is the Governor.
The local government is responsible for the developmental projects in the province and
hence the local government plays an important role in the construction industry.
Population
5
The population statistics of Indonesia is based on an estimate given by the US
Bureau of the Census. Their estimation is based on statistics from population
censuses, vital statistics registration systems, or sample surveys pertaining to the
recent past and assumptions on future needs.
Population
Millions
250
243
242
245
238
240
238
235
235
230
246
245
240
235
231
228
225
225
220
215
210
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: http://www.indexmundi.com/g/g.aspx?v=21&c=id&l=en
Fig. 2 – Population of Indonesia from 2000 to 2011
[4]
6
Figure 2 depicts that the population of Indonesia has been increasing at a steady
rate for the past decade, with an exception of a 2006 to 2007. The total population stood
at 246 million in 2011, which placed the country as the 4th most populated country in the
world [5].
5
Economic Indicators
7
According
ing to the World Bank
Bank,, the Indonesian Gross Domestic Product (GDP)
[[6]
was US$846.8 billion in 2011 , while the Gross National Income (GNI) per capita stood
at US$2,940[7], placing the country in the lower middle income group in the world.
world
Economic Sectors
8
The Indonesian economy vastly relies on the primary (agriculture),
(agriculture) secondary
(manufacturing) and tertiary (services) sectors for growth. Recent diversification in
export of non-oil
oil and gas commodities has strongly emerged due to industrialisation
industrialis
and
[8]
it has become a strong push factor for Indonesia’s economic growth .
Sectoral Contribution to GDP
%
40
35
30
25
20
38.5
33.6
27.9
15
10
5
0
Primary
Secondary
Tertiary
Source: www.economywatch.com (2009)
Fig. 3 – Contribution to GDP by Sectors in 2009
[9]
6
Sectoral Employment
%
45
40
35
30
25
44.3
36.9
20
15
18.8
10
5
0
Primary
Secondary
Tertiary
Source: www.economywatch.com (2009)
Fig. 4 – Employment by Sectors in 2009
[9]
9
Figures 3 and 4 depict that the primary sector contributes 33.6% to Indonesia’s
GDP and it provides 44.3% of the total employment, placing the country as the fourth
largest producer of rice and coffee in the world. The country exported 271,000
271,
tons of
[9]
coffee in 2007 .
Industry
Petroleum refinery industry
Liquefied natural gas
Textile, leather products and footwear
Wood and wood products
Paper and printing products
Cement and non-metallic
metallic quarry
Iron, steel and other basic metals
Transport equipment, machinery and
apparatus
Other manufacturing industries
Value in million Rp
119,833,900
53,791,300
90,871,700
44,410,400
39,968,900
29,015,100
20,492,200
221,891,800
7,148,300
Source: www.economywatch
Fig. 5 – Values of Industries in 2006
[9]
10
The secondary sector contributes 27.9% to Indonesia’s GDP and provides 18.8%
of the total employment. Figure 5 shows some of the major industries in 2006, where
7
the transport equipment, machiner
machinery and apparatus
ratus sector contributed the highest at Rp
221,891,800.
11
With 38.5% contribution to the country’s GDP, the tertiary sector remained as the
largest pillar of the Indonesian economy. According to the Tourism and Culture
Ministry, there were 493,799 tourist visits in September 2009 alone, despite the
recession [9].
Contribution to GDP at Current Market
Prices
%
26.4
30
25
20
15
15.3
10.5
13.4
9.9
6.3
10
10.2
7.2
0.8
5
0
Source: Central Bureau of Statistics, Indonesia (2009)
Fig. 6 – Contribution to GDP at Current Market Price by Industries in 2009
[8]
12
The manufacturing industry was the largest contributor to Indonesia’s GDP,
standing at 26.4%, while the utilities industry contributed 0.8%.
8
II
Economic Forecast
GDP Growth
Indonesia GDP Growth
%
7
6.5
6.2
6.0
6
4.6
5
4
3
2
1
0
2008
2009
2010
2011
Source: The World Bank Data
Fig. 7 – GDP Growth from 2008 to 2011
[10]
13
Based on a report by the World Bank, the economic outlook for Indonesia in
2013 and 2014 remain to be positive despite a weak global economy, if strong
investment growth can be maintained. The World Bank projects a growth of 6.1% for
Indonesia in 2012 and a marginal rise to 6.3% in 2013, assuming that domestic
consumption & investment growth remain to be strong and Indonesia’s major trading
partners experience gradual improvements in growth, which will support the country’s
modest recovery in exports [11]. However, it is a slight dip compared to the 6.5% in 2011.
The outcome of the fiscal cliff negotiations in the US,
developments in the Euro area, as well as any further
slowdown in China’s economy, can impact our baseline
growth projections. And investment growth domestically –
which has been crucial for Indonesia’s recent strong
economic performance- also faces risks.
Stefan Koeberle
World Bank Country Director for Indonesia
9
Foreign Direct Investment (FDI) Inflow
FDI Inflow
US$ billion
25
19.2
20
13.8
15
10
9.3
6.9
4.9
5
0
2007
2008
2009
2010
2011
Source: OECD International direct investment database, Eurostat, IMF
Fig. 8 – FDI Inflow from 2007 to 2011
[12]
14
FDI inflow has been increasing steadily from US$4.9 billion in 2009 to US$19.2
billion in 2011. According to an annual survey conducted by the United Nations
Conference on Trade and Development (UNCTAD) in 2012, the ranking of Indonesia
among the top priority host economies chosen by transnational corporations (TNCs) has
risen significantly. In addition, prospects are promising for further increases in FDI
inflows to Indonesia [13].
15
Indonesia is the most popular destination for FDI in Southeast Asia, attracting a
record level of US$22.8 billion in 2012. The Lee Kuan Yew School of Public Policy
expects the country to become the world’s 7th largest economy by 2030 as more foreign
investors are attracted to it. According to data from the Indonesia’s Investment
Coordinating Board, the country’s FDI for the last quarter of 2012 rose 22.9% compared
to that of 2011. FDI is expected to increase by 23% in 2013, after a significant growth of
26.7% in 2012 [14].
10
Overview of the Construction Sector
16
The construction sector is expected to benefit from the highest ratio of
investment to GDP in the past 18 years. As a result, construction operators have been
expanding their businesses to gain advantage from the momentum of increasing
domestic economic activities, as well as a multi-year investment plan initiated by the
Indonesian government that requires strong cooperation with the private sector.
17
The strong growth expected in the construction sector is mainly due to robust
infrastructure projects, coupled with lower project delay or cancellation in the current
strong economic environment. The approval of the National Land Acquisition Law by the
House of Representatives lowers the time for acquiring land used for public facilities.
Previously, if acquisition turned complicated, the project could be stalled for years, with
additional costs incurred due to legal proceedings. As a result, this increased efficiency
boosts activities in the construction sector.
18
More importantly, the two key international rating agencies, Fitch Ratings and
Moody’s Investors Service, have upgraded Indonesia’s rating to investment grade for
the first time. This upgrade provides better bargaining power for construction developers
to seek financing from the capital market, which increases construction activities.
19
The Indonesian government also launched a 15-year economic development
master plan known as MP3EI to connect Indonesian’s resources, industries and people.
This plan requires Rp 4,000 trillion in investment on construction activities, which is
expected to come primarily from the private sector [15].
11
III
The Construction Industry
Construction Share of GDP and Growth
Contribution to GDP by Construction
Sector in Constant Price
Rp in billion
160,000
140,000
120,000
112,234
121,809
131,010
140,268
100,000
80,000
60,000
40,000
20,000
0
2006
2007
2008
2009
Source: BPS – Statistics Indonesia
Fig. 9 – Contribution to GDP by the Construction Sector in Constant Price from 2006 to 2009
[16]
20
Figure 9 shows that the contribution to GDP by the construction sector has been
on a rising trend from Rp 112,234 billion in 2006 to Rp 140,268 billion in 2009.
According to JP Morgan, the construction sector has contributed approximately 10% of
Indonesia’s GDP since 2009, higher than the average 6-8% in 2001-2007 [15].
-
National or Key Projects in the Pipeline
21
The Indonesian government implemented an economic development master plan
known as MP3EI to utilise all resources in the different islands, where it aims to become
one of the world’s 10 biggest economies by 2020, boosting per capita income to US
$15,000 annually [15]. The plan consists of 6 economic corridors as follows:
i) Sumatra Economic Corridor – ‘Centre for Production and Processing of Natural
Resources and As Nation’s Energy Reserves’
ii) Java Economic Corridor – ‘Driver for National Industry and Service Provision’
12
iii) Kalimantan Economic Corridor – ‘Centre for Production and Processing of
National Mining and Energy Reserves’
iv) Sulawesi Economic Corridor – ‘Centre for Production and Processing of National
Agricultural, Plantation, Fishery, Oil & Gas, and Mining
v) Bali-Nusa Tenggara Economic Corridor – ‘Gateway for Tourism and National
Food Support’
vi) Papua-Kepulauan Maluku Economic Corridor – ‘Centre for Development of Food,
Fisheries, Energy, and National Mining’ [16]
22
Apart from MP3EI, the Indonesian government also collaborates with the private
sector to carry out five major infrastructure projects as follows:
Other Projects
2000-MV Power Plant
$3 billion
35-km Rail Link from South Jakarta to $700 million
Soekarno-Hatta Airport
Highway stretching from Medan to $476 million
Koalanamo
Potable-water Project in Umbulan
$200 million
9000 sq-metre Cruise Ship Terminal on $24 million
Bali
Source: The Report Indonesia 2012 by the Oxford Business Group
Value
[16]
Fig. 10 – National Projects and their values
13
%
12
Construction Growth Trends
Constuction Growth
10.4
10.5
10
7.95
8
7.3
7.4
2010
2011
6
4
2
0
2007
2008
2009
Source: Central Bank of Indonesia, Finance Ministry of RI, www.oilprice.net (2009)
[18]
Fig. 11 – Construction Growth from 2007 to 2011
23
Figure 10 shows that the construction sector had double-digit growths from 2007
to 2008 but it declined to 7.95% in 2009. The sector picked up its pace in 2011 with a
marginal increase of 0.1%. The slow down brought concerns about the construction
sector, including increases in the price of construction materials, legal/political
uncertainties, bureaucracy-related delays and heightened costs. In residential
construction, laws discouraging foreign ownership could affect its growth [15].
24
According to Oxford Business Group in 2012, the Indonesian government has
pledged to spend US $150 billion on infrastructure projects over the next five years in its
2011 budget, and an additional US $115 billion in infrastructure projects are being
planned [16].
-
SWOT
25
Despite several economic down turn, riot and political instability in the past
decades in Indonesia, the country has managed to bounce back within short period of
time. This is largely due to the fact that the country has wealth of economic and natural
14
resources, including manpower resources. The availability of tertiary institutions in
Indonesia also helps in the upgrading of the manpower resources. The rich resources
and the availability of construction workers & professionals provide the fundamental
condition for the development of the construction industry.
26
On the other hand, the huge population in Indonesia and vast land mass
imposed significant problems to ensure across-the–board development for the entire
nation. Hence, income disparity has become a time bomb that could trigger the
political instability in Indonesia.
27
Political stability is essential for construction and development projects. The
soon-to-be-held Presidential election scheduled for 2014 without any clear leadership
emerging at this stage has cast some sort of uncertainties with the political leadership.
In addition, corruption in the country is another problem that could rock the country, if it
is not managed properly, as large scale corruption could affect the funding for the
projects.
Cost of Materials
Construction Materials
Price/Rp
Sand Clay for Embankment (per m3)
175.000
Soil for Embankment (per m3)
130.000
Sand for Bricklayer (per m3)
145.000
Sand for Masonry (per m3)
150.000
Sand for Concrete (per m3)
195.000
White Sand in Bangka (per m3)
175.000
White Sand in Rangkas (per m3)
170.000
Sandy Gravel (per m3)
110.000
Gravel 1/2 (per m3)
150.000
Gravel 3/4 (per m3)
165.000
Fly Ash (per m3)
145.000
15
Boulder (per m3)
135.000
Sand with Gravel (m3)
135.000
Gravel (per m3)
210.000
Stone (per m3)
130.000
Pressed Brick (unit)
413.000
Normal Brick (unit)
303.000
Cement
Cement by Cibinong (50kg)
46.000
Cement by Tiga Roda (50 kg)
46.000
White Cement by Tiga Roda (40kg)
62.500
Cement in Gresik (50kg)
43.550
Cement by Holcim
44.850
Concrete steel
Diameter 6mm (12m)
21.000
Diameter 8mm (12m)
32.000
Diameter 10mm (12m)
49.000
Diameter 12mm (12m)
64.000
Diameter 16mm (12m)
110.000
Source: www.duniarunah.com
Fig. 12 – Cost of Main Construction Materials
[19]
16
Labour Cost
Wage
Rp
120
115
115.97
110.82
115.02
111.75
110.8
113.35
110
108.8
105
103.84
100
101.1
97.54
95
90
85
Q1-06
Q2-06
Q3-06
Q4-06
Q1-07
Q2-07
Q3-07
Q4-07
Q1-08
Q2-08
Source: CBS (2009)
Fig. 13 – Wages from 2006 to second quarter of 2008
[19]
28
The unit cost of labour fluctuates throughout the years and a low of Rp 97.54 was
reached in the first quarter of 2007. However, cost pressure for construction is on the
rise as Indonesian workers have been pushing for an increase of the minimum wage to
Rp 3.7 million per month, although the current minimum wage of Rp 2.2 million was set
less than one year ago.
17
Types of Available Projects
Area
Main
Economic
Activity
Stakeholder
Supporting
Infrastructure
(Available Projects)
Investment
value/ IDR
Trillion
Sumatra Economic Corridor
Sei Mangke
Area
Palm Oil
SOE
Railway, road, power &
energy
2.50
Dumai
Industrial
Area
Palm Oil
Private
Road, port, power &
energy
5.36
Tanjung ApiApi/Tanjung
Carat
Coal
Private
Railway, road, power &
energy
1.80
Muara Enim
Palm Oil
Private
Railway, road, power &
energy
0.29
Pendopo
Coal
Private
Power & energy
27.49
Sunda
Straits
Strategic
Area
Sunda Straits
Bridge
Government, Sunda Straits Bridge
Private
150.00
Cilegon
Iron Steel
SOE, Private Power & energy, water
utility
57.90
Java Economic Corridor
Banten
Food &
Beverage
Transportation
Equipment
Private
Roads, power & energy,
airports, ports, railway,
other infrastructure
5.12
Roads, power & energy,
airports, ports, railway,
other structure
2.46
18
Jabodetabek
Jabodetabek
Area
Bogor
Transportation Private
Equipment
Roads, power & energy,
other infrastructure
1.27
Bekasi Area
Transportation Private
Equipment
Roads, ports, railway,
power & energy, other
infrastructure
22.57
Food &
Beverage
Roads, ports, railway,
power & energy, other
infrastructure
6.08
Airports, ports, power &
energy, other
infrastructure
1.58
Railway, roads, power &
energy, other
infrastructure
0.38
Roads, ports, power &
energy, railway, other
infrastructure
3.46
Roads, ports, power &
energy, other
infrastructure
0.91
Roads, ports, railway,
power & energy
4.44
Roads, power & energy
9.00
Bandung
Area
Defense
Equipment
Government, Airports, railway, ports,
351.89
SOE &
roads, other infrastructure
Private
SOE &
Private
Textile
Southern
Central Java
Food &
Beverage
Private
Textile
Metropolitan
Gerbang
Kertosusila
Food &
Beverage
Soe &
Private
PasuruanMalang
Food &
Beverage
Private
Roads, railway, power &
energy, other
infrastructure
2.06
Trans Java
Toll Road
Cross Sector
Government
& Private
-
51.64
Railway &
Cross Sector
Government, -
Shipping
204.54
19
Express
Train
SOE &
Private
Kalimantan Economic Corridor
Bontang,
Kutai Timur
Balikpapan
Bauxite
Palm Oil
Government, Port, road, railway, power
SOE &
& energy
Private
36.00
5.35
Coal
62.79
Timber
7.45
Palm Oil
Oil & Gas
Government, Port, bridge, road, water
SOE &
utilities
Private
Timber
0.30
158.65
0.55
Rapak dan
Ganal Kaltim
Oil & Gas
Private
-
70.00
Kotabaru,
Tanah
Bambu
Steel
SOE &
Private
Overland conveyor,
power & energy, road
6.56
Barito
Palm Oil
Coal
5.42
Timber
1.27
Steel
Palm Oil
Government, Power & energy, port,
SOE &
road
Private
Timber
Pontianak,
Mempawah
Coal Railway
& Trans
Kalimantan
2.81
Bauxite
Palm Oil
35.00
2.79
6.29
Government, Airport, road, power &
SOE &
energy
Private
62.22
17.97
Coal
4.50
Timber
9.59
Cross Sector
Government
& Private
-
61.15
20
Road
Sulawesi Economic Corridor
Kolaka,
Konawe,
Mandiodo
Nickel
SOE &
Private
Kendari
Fishery
Government, SOE &
Private
8.00
Makasar,
Wajo, Maros
Food
Agriculture
Government
& Private
Irrigation, water ponds
11.54
Wajo
Oil & Gas
Private
-
6.19
Luwu
Nickel
Private
Power & energy
18.90
Mamuju
Oil & Gas
SOE
Power & energy
0.65
Cocoa
SOE &
Private
-
1.30
Nickel
SOE &
Private
Roads, power & energy
37.70
Oil & Gas
SOE &
Private
-
2.60
Morowali,
Tojo UnaUna
Fishery
Government
& private
-
0.40
Banggai,
Luwuk
Oil & Gas
SOE &
Private
-
55.10
Banggai
Fishery
SOE &
Private
-
0.20
Kotamobagu, Oil & Gas
Tomohon
SOE
Power & energy
3.18
Bitung
Private
Fishing port
0.15
Morowali
Fishery
Road, power plant, jetty
43.79
21
Bali-Nusa Tenggara Economic Corridor
Jimbaran,
Bangli,
Buleleng
Tourism
SOE &
Private
Port, Nusa Dua – Ngurah
Rai – Benoa Airport, Toll
Road
20.34
Badung
Fishery
SOE
Production Facilities
0.08
Lombok
Tourism
SOE &
Private
Airport
30.00
Bima
Animal
Husbandry
Government
Road, port
0.12
Nagekeo,
Ngada,
Manggarai
Timur
Animal
Husbandry
Private
Road, port, airport
5.30
Nagekeo,
Ende
Fishery
Government
& Private
Road, port
0.49
Timor
Animal
Tengah
Husbandry
Selatan,
Flores Timur,
Timor
Tengah
Utara
Government
& Private
Road, port
0.43
Kupang
Government
& Private
Road, port
0.31
Fishery
Papua – Kepulauan Maluku Economic Corridor
Morotai
Fishery
Government
& Private
Sea port, power &
energy, water utility,
production facilities
30.54
Halmahera
Nickel
SOE &
Private
-
83.00
Ambon
Fishery
Government
& SOE
-
0.15
22
Sorong &
Teluk Bintuni
Oil & Gas
Private
Sea port, road, power &
energy
50.00
Timika
Copper
Private
Sea port, road, power &
energy
197.20
Merauke
Food
Agriculture
Government, Sea port, road & bridge,
SOE &
air port, power & energy
Private
80.00
Trans Papua
Across
Sectors
Government
50.00
-
Source: Masterplan for Acceleration and Expansion of Indonesia Economic Development 2011 - 2025
Fig. 14 – Types of Available Projects
[17]
Business Cultures
29
As in many countries, Indonesia tend to adopt a more relaxing business culture.
The recognition of time is based on a cyclic interpretation whereas the western cultures
recognize time based on a linear interpretation. In particular, this means that for
westerners it is important to have a defined start, a result and work steps to reach the
result. On the other hand, Indonesia businessmen think of the “right time” for issues.
Hence, certain topics need not be finalized on a fixed date or deadline, but at the right
time to do it.
30
Indonesian rarely openly demonstrates disagreement. The culture is based on
the principle of harmony & consensus and thus a clear “No” to something would
contradict those principles. When talking to Indonesian business partners, a person
tend to get the feeling that everything is absolutely right and everybody agrees to the
ideas and proposals. However, it is important to be aware that there are different levels
of “Yes”, eg “Yes, I hear you talking.”; “Yes, I understand what you have said.”; “Yes, I
agree with you.” Do not take the first “Yes” as an overall agreement.
31
One of the most important issues in Indonesia is building up good relation with
business partners. This process is time consuming and it requires a potential foreign
partner to present himself as a personal friend rather than a businessman.
http://www.indosight.com/blog/understanding-indonesian-business-culture/
[20]
23
FDI in Construction
FDI in Construction
US$ million
250
196
200
130
150
85
100
50
0
24
6
-18
2004
2005
2006
2007
2008
2009
2010
-50
-50
-100
Source: Bank of Indonesia Statistics
Fig. 15 – FDI in Construction from 2004 to 2010
[21]
32
The FDI in construction fluctuates from 2004 to 2010, with the highest inflow of
US$196 million in 2007 and the highest outflow of US$50 million in 2010.
Setting up Business in Indonesia
No.
(i)
Procedure
Obtain the standard form of the company deed.
Time
Required
Associated
Costs
4 days
Included in
4
4 days
IDR
4,464,464
Arrange for a notary electronically.
Obtain clearance for the Indonesian company’s
name at the Ministry of Law and Human Rights.
(ii)
Notarise company documents before a notary
public.
24
(iii)
Obtain a certificate of company domicile from the
local municipality.
2 days
-
(iv)
Pay the State Treasury for the non-tax state
revenue (PNBP) fees for legal services at a bank.
1 day
IDR
200,000
(Name
check) +
IDR
1,580,000
(PNBP fees
for legal
services)
(v)
Apply to the Ministry of Law and Human Rights for
approval of the deed of establishment.
7 days
Included in
4
(vi)
Apply at the One Stop Service for the permanent
business trading license (SIUP) and the company
registration certificate (TDP).
15 days
IDR
500,000
(TDP)
(vii)
Register with the Ministry of Manpower.
14 days
-
(viii) Apply for the Workers Social Security Programme.
(ix)
7 days
(Simultaneous
with 7)
Obtain a taxpayer registration number (NPWP) and 1 day
a VAT collector number (NPPKP).
(Simultaneous
with 8)
Source: The World Bank, International Finance Corporation
Fig. 16 – Procedures to set up Business in Indonesia
[22]
33
Indonesian company formation allows a company to be 100% foreign-owned and
controlled. A minimum of two shareholders and directors is required. However, an
Indonesian Joint Venture company requires an Indonesian citizen to hold a share of at
least 5% in the company [22].
34
The minimum paid-up capital to set up a company is IDR 12,500,000 [21] and the
company is liable to pay a corporate tax of 25% on income sourced in Indonesia[23].
25
Green Building Standards
35
The Governor of Jakarta issued a decree in April 2012. The Decree, which took
effect in April 2013, required owners of large buildings in Jakarta to follow environmental
guidelines for green buildings.
Under this decree, the local government is authorised to
withhold the issue of construction permits to new buildings and occupation permit to
existing buildings unless the developers or owners comply with the environmental
measures. 25 buildings have been identified to be affected by this decree.
36
Government agencies in Jakarta dealing with construction such as Housing &
Public Building Department and Construction Industries Development Board have since
then expressed interest to learn Singapore’s experiences in green buildings.
37
The interest on Green Buildings is at its infancy in Indonesia.
‘GreenShip’
offered by the Green Building Council of Indonesia (GBCI) have completed only 5
projects, including the Ministry of Public Works Building, in Indonesia. The National
Association of Indonesia Consultants (INKINDO) sent a 40-man delegation to visit BCA
in Jun 2013 with the primary objective of studying the BCA Green Mark. INKINDO has
set up Badan Konstrucksi Berkelanguten Nasional (National Construction Sustainability
Body, BKBN) and it has expressed its interest to adopt BCA Green Mark.
Hence, the
prospect of green buildings in Indonesia is positive.
IV
BCA, MND, Industry Engagements and Issues
38
Apart from the possible collaboration in green building standard, BCA has regular
bilateral exchanges with the Indonesian counterparts.
Indonesia hosted 19th Asia
Construct in Nov 2013. Asia Construct is an annual conference participated by the
representatives of 14 countries or region, viz Australia, China, Hong Kong, India,
Indonesia, Japan, Malaysia, Mongolia, New Zealand, the Philippines, Singapore, South
Korea, Sri Lanka and Vietnam, for the purpose of networking of the construction
professionals in the region and sharing of best practices for mutual benefit.
It was
agreed that the members will host the conference on a rotational basis.
26
39
Singapore has been an active member of this conference since 1995 and BCA
hosted the conference in 2012, in conjunction with IGBC in the same year. The opening
ceremony for the event was officiated by Mr Cho Whatt Bin, Executive Director
(Services) of Building and Construction Authority, Singapore, and it was attended by 53
delegates comprising of Researchers, Academic of Institute of Higher Learning,
Government officials and Professionals from Korea, Japan, Hong Kong, Malaysia,
Indonesia and Singapore.
40
The event for 2013 was hosted by the National Construction Service
Development Board (NCSDB) of Indonesia and it will be supported by the Ministry of
Public Works. The conference for 2013 was held in conjunction with the celebration of
Konstruksi Indonesia, ie Indonesia Construction Week, at Jakarta Conference Centre.
41
As in the previous years, each member prepared a Country Report and a theme
paper. The members presented the theme papers during the conference and NCSDB
distributed the country report during the conference.
The theme paper for 2013 was
‘Construction Economics’ or ‘Construction for Disaster Reduction’.
42
BCA organised Singapore Pavilion during 2013 GreenRight Expo and
Conference hosted by GBCI in April 2013. 3 companies, viz Lutron, Ong& Ong and ProTech Glass Systems, exhibited the products. In addition, a business mission was
organised with the following participating companies:
Lutron GL Limited
G-Energy Global Pte Ltd
Building System and Diagnostics Pte Ltd
Kaer Pte Ltd
Surbana International Consultants Pte Ltd
Look Architects
27
Jurong Consultants Pte Ltd
Eastman Chemical, Asia Pacific Pte Ltd
ABD International Consultancy Pte Ltd
Anacle Systems Pte Ltd
Schneider Electric
Pro-Tech Glass Systems (Singapore)
V
Conclusion
43
Despite several rounds of political unrest in the past decades and severe
corruption problem, Indonesia has managed to bounce back economically and emerged
as a key player in Asean. Given the wealth of natural resources, vast land area, well
trained human resources, etc, Indonesia is of huge potential to the construction
industry. Apart from the Central Government of Indonesia, IDG will engage the local
government to seek opportunities for Singapore firms. The close relationship between
Singapore and Indonesia Government will pave the way for more collaboration.
44
In the area of green building standard, Indonesia has just started to embark on its
green journey. With more experiences, Singapore can provide the much needed help
to Indonesia for the benefit of Singapore companies in this sector.
VI
Embassy Information
Country
Indonesia
VII
Address
7 Chatsworth Road
Singapore 249761
Tel
6737 7422
Fax
6737 5037
Bibliography
Books
Oxford Business Group. (2012). The Report Indonesia 2012. 165, 166, 170. [16]
Coordinating Ministry for Economics Affairs. (2011). Masterplan for Acceleration and
Expansion of Indonesia Economic Development 2011 – 2025. 72, 94, 117, 138, 154,
174. [17]
28
Online Articles
Economy Watch Content. (2010). Indonesia Economic Structure.
http://www.economywatch.com/world_economy/indonesia/structure-of-economy.html#
[9]
The World Bank Group. (2012). Indonesia: Policies in Focus Going into 2013.
http://www.worldbank.org/en/news/press-release/2012/12/18/Indonesia-policies-infocus-going-into-2013 [11]
Channelnewsasia. (2013). Indonesia is top SEA destination for foreign investment.
Retrieved 26 March, 2013 from
http://www.channelnewsasia.com/stories/economicnews/view/1255861/1/.html [14]
Muhamad Al Azhari. (2013). Construction sector gears up for growth.
http://www.thejakartaglobe.com/energy/construction-sector-gears-up-for-growth/564244
[15]
Online Journals
Lukmansah Hardigaluh. (2010). Indonesia Economic Sectors. 1. Retrieved 4 February,
2013 from
http://www.osec.ch/de/filefield-private/files/2917/field_blog_public_files/1789 [8]
OECD. (2013). FDI in Figures. 2.
http://www.oecd.org/daf/internationalinvestment/FDI%20in%20figures.pdf [12]
Fadjar Majardi & Juli Budi Winantya & Diana Permatasari. (2011). 2011 Economic
Report on Indonesia. 216.
http://www.bi.go.id/NR/rdonlyres/988C4E59-3DDC-44E9-8EC7ED77DF207C3B/26346/Appendices.pdf [16]
Akhmad Suraji & Krishna S Pribadi & Ismono. (2012). 18th Asia Construct Conference.
http://www.asiaconst.com/past_conference/conference/18th/Indonesia.pdf [18]
Akhmad Suraji & Garwono W Surarso & Yaya Supriyatna. (2008). 15th Asia Construct
Conference. 7, 8.
http://www.asiaconst.com/past_conference/conference/15th/3Indonesia.pdf [19]
29
Websites
http://en.wikipedia.org/wiki/President_of_Indonesia [1]
http://en.wikipedia.org/wiki/Politics_of_Indonesia [2]
http://globaledge.msu.edu/countries/indonesia/government [3]
http://www.indexmundi.com/g/g.aspx?v=21&c=id&l=en [4]
https://www.cia.gov/library/publications/the-world-factbook/geos/id.html [5]
http://data.worldbank.org/country/indonesia [6]
http://data.worldbank.org/indicator/NY.GNP.PCAP.CD [7]
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG [10]
http://unctad.org/en/Pages/PressRelease.aspx?OriginalVersionID=81&Sitemap_x0020_
Taxonomy=640; [13]
http://www.indosight.com/blog/understanding-indonesian-business-culture/[20]
http://www.bi.go.id/web/en/Statistik/Statistik+Ekonomi+dan+Keuangan+Indonesia/Versi
+HTML/Sektor+Eksternal/ [21]
http://www.doingbusiness.org/data/exploreeconomies/indonesia/starting-a-business/ [22]
http://www.asiabusinesssetup.com/business-setup/indonesia-company-formation.html
[23]
Drafted by
: Yong Ser Joo
Vetted by
: GD/Koh Lin Ji
Date
: 17 Dec 2013
30