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Investment Opportunities in Indonesia

Discover the investment potential in Indonesia, a rising global destination with a growing economy, favorable investment climate, and increasing foreign direct investment. Explore the investment performance, sectors, and how to invest.

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Investment Opportunities in Indonesia

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  1. Zaragoza, 4 July 2017 INVESTMENT OPPORTUNITIES IN INDONESIA Nurul Ichwan Director of IIPC London

  2. OUTLINE • Introduction • Investment Performance • What and Where to Invest? • How to Invest?

  3. Our Strength and Positioning Introduction

  4. INDONESIA SPAIN Population: 40.56 million GDP: USD 1,199 trillion Population: 258 million(4th in the world; 40% of ASEAN) GDP : USD 861 billion (35% of ASEAN GDP) Madrid 12,181 km, 15 hours flight (no flight direct from Madrid to Jakarta) Jakarta

  5. Indonesia’s Population Projection NUMBER OF PEOPLE KALIMANTAN SULAWESI SUMATERA PAPUA MALUKU JAVA NUSA TENGGARA BALI Source: National Statistic Agency (BPS), 2017. PRODUCTIVE AGE

  6. Global Population World’s Largest Markets European Union (EU) Population: 514 million GDP: USD 18.46 trillion United States Population: 322 million GDP: USD 17.42 trillion China Population: 1,368 million GDP: USD 10.35 trillion India Population: 1,252 million GDP: USD 2.05 trillion Global Inward FDI 2016 [Source: FDI Markets of the Financial Times, 2017] Southeast Asia (ASEAN) Population: 618 million GDP: USD 2.16 trillion HALF OF GLOBAL FDI IN 2016 RECEIVED BY ASIA-PACIFIC COUNTRIES Source: World Bank, CIA World Factbook, 2016.

  7. Foreign Direct Investment Inflow Investment in Southeast Asia Jan -Dec 2016 Myanmar 4.9% portion FDI PORTION TO ASEAN Thailand 3.6% portion Vietnam 36.6% portion Phillippines 6.2% portion Malaysia 20.5% portion Singapore 5.8% portion Indonesia 17.9% portion Source: fdimarkets.com , 2017.

  8. A Brief Overview of Indonesia Spatial GDP Growth GDP:bilion source: world bank Projected Economic Growth: source: Ministery of Finance Population: million (4th largest population) $ 859 Sulawesi GDP Growth Q3 2016: 0.40% Kalimantan GDP Growth Q3 2016: 0.18% Sumatera GDP Growth Q3 2016: 0.84% Papua & Maluku GDP Growth Q3 2016: 0.34% 5.0% 258 46,5 Middle-Income Class ASEAN, 190 million Times of Singaporen’s population Java GDP Growth Q3 2016: 3.24% Indonesia 64 million Bali & Nusa Tenggara GDP Growth Q3 2016: 0.16% National Statistic Agency (BPS), Nov 2016 2.9 times of Singapore’s GDP Other 9 countries 41 39 81 57 60 WEF Global Competitiveness 2016-2017 Shifting from comodity-based economy to manufacturing &service sector. Growing Digital Economy 18 billion US dollars Online sales in 2015, up 40% (y/y) 130 billion US dollars Online sales in 2020 (projection) Source: wearesocial.com, Sept 2016

  9. Indonesian people by age and gender 258 MILLION PEOPLE MEN: 129.98 M WOMEN: 128.71 M

  10. Indonesia has shown progressive achievement in the past years TARGET TOP 40 15 91 106 Indonesia’s Ease of Doing Business Rank, 2013-2017 109 120 129 2016 2015 2017 2014 2018 2013

  11. Indonesia in the future... 2030... 2050... Emerging markets will dominate the world’s top 10 economies in 2050 (GDP at PPPs)

  12. Indonesia as an investment destination Investment Performance

  13. Indonesia is a global destination for investment Rising Direct Investment Investment Grade Rating (May 2017) Source: BKPM, February 2017 43.6 billion US dollars (IDR 545.4 trillion) Investment realization +17.8% Investment realization growth (y/y) 2015 2016 45.4 billion US dollars (IDR 612.9 trillion) Investment realization +12.4% Investment realization growth (y/y) Indonesia: The 3rdinvestment destination in Asia (Jan ‘16) Indonesia: The 3rd most preferred place for business investment after India and China (Dec 2016) Source: The Economist, Asia Business Outlook Survey 2016 Source: JBIC (Japan Bank for Int’l Corp) Survey, Outlook for Japanese FDI

  14. Top 10 global countries for FDI in Indonesia from 2010-2016Spain is on the 27th place in terms of value invested in the last six years FDI Realizationfrom the World to Indonesia, 2010-2016 (in USD million)

  15. Top 10 global countries for FDI in Indonesia in 2016 ONLYSpain invested USD 50 million in 103 projects in 2016 FDI Realizationfrom the World to Indonesia, 2010-2016 (in USD million)

  16. From 2010-2016, FDI realization from top 10 European countries contributed to 10%of the total FDI in Indonesia (excl. from BVI) Top 10 European countries for FDI based on investment value from 2010-2016 (excl. investment from British Virgin Island) Spain's FDI realization in Indonesia by sector from 2010 - 2016 (in USD million) • Most of Spanish FDI in Indonesia are concentrated on the tertiary sector namely: construction services, hotels & restaurants • The biggest year of Spanish FDI realization in Indonesia in the last six years was on 2015 with USD 56.59 million

  17. In 2016 ONLY, FDI realization from top 10 European countries contributed to 9.98%of the total FDI in Indonesia (excl. from BVI) Top 10 European countries for FDI based on investment value in 2016 only (excl. investment from British Virgin Island) FDI Realizationfrom Europe to Indonesia From 2010-2016 (in USD million) • In 2016 only, Spain was the 9th biggest investor from Europe in terms of total value of investment realization • FDI realization from European countries peaked in 2014 with total realization value of USD 3.91 billion

  18. Priority Sectors What and Where to Invest?

  19. Indonesia has determined its infrastructure targets for the period of 2016 – 2019 which were stipulated in the National Medium Term Plan Logistic Related Sea toll concept as a means to support Indonesia in becoming the world maritime axis. • develop 24 new seaports • increase number of substantial vessels (pioneer cargo, transport vessels, pioneer crossing vessels) • develop 60 crossing ports Banda Aceh Miangas Belawan Kuala Tanjung Maratua Pontianak Bitung Dumai Singkawang Batam Pohuwato Maloy Halmahera • Strengthen connectivity through air transport infrastructure development • develop 15 new airports • develop air cargo facilities in 6 locations • increase number of pioneer airplanes Padang Muara Teweh Jayapura Sorong Tojo Una-Una Pangkal Pinang Taria Enggano Banjarmasin Sultan Hassanuddin Palangkaraya Ambon Location of 24 new seaports & 15 new airports Source: Bappenas Kenyam Namniwel Aboy Makassar Panjang Tj. Priok Tj. Perak • Develop urban transport • develop Bus Rapid Transit (BRT) in 29 cities • develop Mass Rapid Transit (MRT) in 6 metropolis and 17 large cities. • Reduce logistic cost by improving railway infrastructure • develop new tracks in Java, Sumatra, Sulawesi, and Kalimantan: • 2,159 km inter-urban railways • 1,099 km urban railways Improve transport efficiency by road development and maintenance • develop 2,650 km of new roads • develop 1,000 km of new toll roads • rehabilitate 46,770 km of existing road Kertajati Koroway Batu Merauke Cilacap Moa Lombok Kupang Energy Related Achieve electrification ratio of 96.6% by 2019 through generating capacity improvement • develop power plants with total capacity of 35,000 MW • Achieving food sovereignty through irrigation system improvement • develop 33 new dams and 30 hydropower plants • expand 1 million ha irrigation system • rehabilitate existing irrigation system Ensure efficiency of fuel production by optimizing domestic refineries • build new oil refineries of 2x300,000 barrels • Expand existing refineries in Cilacap and Balongan Source: KPPIP, 2017

  20. Tourism is “the next big thing” FDI & DDI in tourism sectors grew by +20.0% (in IDR value) FDI &DDI inTourism Sectors by Location (2012-2016, in %) FDI & DDIInflow* in Tourism Sectors (in IDR tn) Riau Islands 8% +20% Jakarta 25% West Java 9% Bali 33% East Java 4% *Note: based on internal BKPM calculation method Source: BKPM

  21. Tourism is “the next big thing”: 10 New Bali (1/2) Tourism: The industry of 21st century 10 National Strategic Tourism Areas (“New Bali”) SEZ Kelayang Cape SEZ Lesung Cape Toba Lake Bromo Tengger Semeru Seribu Islands Komodo SEZ Mandalika Borobudur Wakatobi SEZ Morotai

  22. 10 Priority Tourism Destinations in Indonesia Toba Lake (North Sumatera) Mandalika (West Nusa Tenggara) Wakatobi (South East Sulawesi) Morotai Island (North Maluku) Kelayang Cape (Bangka Belitung) Lesung Cape (Banten) Borobudur Temple (Central Java) Kepulauan Seribu dan Kota Tua Jakarta (DKI Jakarta) Bromo-Tengger- Semeru (East Java) Labuan Bajo (East Nusa Tenggara) National Strategic Tourism Zone Tourism Special Economic Zone

  23. LAKE TOBA AT A GLANCE

  24. 10 Priority Tourism Destinations in Indonesia Investment Profile Total Investment USD 20 Milion (USD 10 Bilion Public Investment and USD 10 Bilion Private Investment)

  25. 10 Priority Tourism Destinations in Indonesia Development Profile Total Estimated Area of Zone Development: 11,736 Ha* * Indicative area based on updated plan on April 2016

  26. Procedure to Establish Business in Indonesia How to Invest?

  27. FLOW CHART – How to Set Up Business in Indonesia? 1. Consultation • Establishment of the Company (PT PMA): • Request PT Name to Ministry of Law & Human Rights (MLHR) • Deed of Establishment PT & AoA • Certificate of Domicile • Tax ID number • Legalization of AoA by MLHR 2. Check Negative Investment List /NIL (Presidential Regulation No. 44 of 2016). If opens 100% for foreign investors -> suggest the investor(s) to find local partner(s) If opens partially for foreign investors -> investors need to find local partner(s) 1. Finding Local Partner(s), if required by Negative Investment List (NIL) 2. Setting Up PT PMA. Before/after obtaining Principle License from BKPM INVESTOR KBRI/KJRI IIPC LONDON/BKPM MINISTRIES/ INSTITUTIONS • Requirements: • Application Form • Applicant’s ID • Detail of Activity Plan & Work Flow Chart for Manufacturing Companies • Recommendation from Relevant Ministry, if needed • Signatures & Stamps of the Applicants or Proxies • Presentation in front of BKPM Officials, if needed. 1. Consultation Special Permit/Certification or Recommendation, if required. Certain ministries assigned Attaché in KBRI: Trade or Transportation or Education Representatives from 22 ministries sit in BKPM’s OSS. 2. Check Negative Investment List/ NIL (Pres Reg. 44/16) 3. Matchmaking 4. Principle License 5. Proposing Fiscal Incentives to Ministry of Finance via BKPM, if requested.

  28. BKPM has strengthened its one-stop service Licensing process for Foreign, Across Provinces, and Strategic investments: Apply Principle License Apply Business Incentives Apply Business License 1 2 4 HQ OFFICE HQ OFFICE HQ OFFICE • Central office comprises representatives from 22 ministries • Central office provides 3-hour licensing process* to start construction • Direct construction* facility in 32 industrial parks • Business activities can be kick-started 3 Apply Operating Licenses REGIONAL OFFICE *Terms & Conditions Apply Source: BKPM

  29. Indonesia Investment Promotion Centre (IIPC) Beijing Opening in 2017 Badan Koordinasi Penanaman Modal (BKPM) Indonesia Investment Coordinating Board www.bkpm.go.id

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