JAKARTA

KalimantansulawesiNusa tanggaraPapua

SMART TEXTILESINVESTMENT

bkpm.go.id

The overall textile industry has recovered vigorously from the 2008 crisis.

The overall textile and footwear industry is recording a steady growth supported by high domestic and regional demand.

As reflected by the steady textile output growth (CAGR 5%) to reach IDR 63.5 trillion (US$ 4.5 billion), Indonesia has become a regional base for basic garment to fashion and smart textile industry.

Why IndonesiaMarket opportunities

Indonesia is evolving from a place to source fashion and sportswear suppliers to a primary market.

The synthetic fibre industry has been a major positive contributor to the recovery.

In addition of an overall growing textile industry (+7.5%, 2013), the demand as been increasingly important in higher value added textile products made from synthetic fibre – with a yearly growth rate comprised between 2.5% and 14% in the recent years.

Indonesia’s textile industry can count on strong sectors such as petroleum, plastics and chemicals to support its growing smart-textile industry

16thIndonesia as exporter of

textiles worldwide

10thIndonesia as synthetic fibre

producer worldwide

23thIndonesia’s world rank oil producer

852k barrels per day (2014)

900number of large and medium

manufacturing in the chemicals

industry

3rdChemicals sector’s contribution

rank to manufacturing industry

1500Number of large and medium

manufacturers in the rubber and

plastics industry

2.3VALUE OF ELECTRICAL & ELECTRONIC

EQUIPMENT IMPORT IN 2014

BILLION

4.7GDP GENERATED BY THE TEXTILE

INDUSTRY

BILLION

Textile and footwear ‘s output contribution to Real GDP, base Year 2010 (IDR Trillions)

2010 2012 2013 201420110

10

20

30

40

50

60

70CARG 5% 9.1%

Textile industry’s contribution to the Non Oil & Gas manufacturing

sector

0

-5

-10

-15

5

10

15 2009 2010 2011 2012 2013

Synthetic Fiber Yarn & Woven fabric

Knitting

Total industry Growth (%)

Apparel Other textile

Source: BPS analysed by Ministry of Industry (2014)

Textile and Textile Product Industry Growth (%)

Supporting sectors

rank

rank

US$

US$

ABOUT INDONESIA

255 million (4th) US$ 943 Billion

19th

Joko WIDODO (2014)

US$ 10,641 124 million

BAHASA INDONESIA

6.4%

US$ 581 billion US$ 598 billion US$ 28,500 million US$ 7,077 million

POPULATION

SumatraJava

GDP

Economy rank

REpublic of Indonesia

South east asia

President

GDP per capita Labour force

Language

INFLATION

imports EXPORT Inward FDI outward FDI

Archipelagic nation13,466 islands spanning over 6,500km. Java is as big as England

+100 million active monthly smartphone users by 2018**e-Marketer (2015)

Indonesia represents

40% of ASEAN’s population

Home to a digitally-savvydiscerning and aspirational consumer base.

55% of Indonesians are from the middle income group, growing from 140milion in 2014 to 150million people by 2030.

3rd largest Facebook mobile phone audience*

Business environment (2015) Sector (% GDP)

S&P: BB+Moody’s: Baa3

Fitch: BBB-OECD: 3

SIN: 1h40BKK: 3h30KUL: 2h50

HKG: 5hrsPEK: 7h20HRT: 7h20DOH: 10h55

AMS: 14h20 LHR: 14h55

JFK: 26h+LAX: 18h33GRU: 24h++

SYD: 6h50

Investment grades: Primary: 12%

Manufacturing: 25%

Trade & Hospitality: 18%

Transport & communication: 11%

Finance, real estate, business services: 10%

Mining & Quarrying: 7%

Construction: 7%

Other services: 10%

ASEAN Asia

Europe Americas

OCEANIA

Indonesia’s rankings:Doing Business: 109th (5)(Brazil 116th / India 130th)

Global Competitiveness: 37th

Prospective host emerging economy: 3rd

(Philippines 47th / Vietnam 56th)

(Brazil 4th / Mexico 5th)

Badan Koordinasi Penanaman Modal (BKPM) Jl. Jend. Gatot Subroto No.44 Jakarta 12190, PO Box 3186Indonesia +62 21 5252 008 info@bkpm.go.id www.bkpm.go.id

This leaflet has been developed with the support of:

Source: WEF, UNCTAD, BPS, World Bank, Rating Agencies, BKPM

Flying time from CGK to:

20102011

20122013

20142015

20162017

20182019

20202021

20232022

FORECAST

0

10

20

30

40

50

60

80

90

A fast-growing middle-class driving the demand for hi-tech clothing and footwear

Indonesia capabilities Key organizations to support your business.

Location: where opportunities lie

Many companies are already tapping into Indonesia’s fast-growing smart textile industry

Household spending on clothing and footwear as been increasing steadily over the past

decades, driven by a growing middle class. The increase is set to continue over the next

decade with an estimated annual average growth of 5.7% (Oxford Economics, 2014).

Measured at US$ 52 billion in 2014, the spending on clothing and footwear should reach

US$ 90 billion by 2024.

A cost effective location.

Of the total 255 million population…

Indonesia is the 2nd most cost-competitive country among the 7 major ASEAN markets

when it comes to labour costs for a typical Textiles Manufacturing Plant*.

The majority of Indonesian textile establishments are concentrated on the island of Java.

39% of the establishments are located in West Java, 23% in Central Java, and 13% are

based in Jakarta.

* Based on a textile manufacturing plant of 900 people, comprised as follows: 680 low-skilled

production operatives; 130 skilled production operatives; 29 highly-skilled production operatives; 20

warehouse and distribution operatives; 15 secretaries; 10 quality control specialists; 10 engineers;

2 facilities and office service specialists and 1 of each of the following: head of manufacturing; head

of quality assurance; production manager and a quality control manager.

Indonesia’ s consumer spending on clothing and footwear, billions US$ (PPP)

Indonesia’s middle class on the rise, in number of households by income band

20070.0

5,000

10,000

15,000

20,000

20082009

20102011

20122013

20142015

20162017

20182020

2019

$10,000 - 20,000FORECAST

$2,000 - 5,000

$5,000 - 7,500

$7,500 - 10,000

$20,000 - 35,000

$35,000 - 70,000

$1,000 - 2,000

$70,000 - 1000,000

Key employment and education indicators:

Textiles Manufacturing Plant*

committed Government to fully support your projects

Indonesian FDI in clothing and footwear manufacturers have been supplying for global organisations including:

30

145

% of investment valueReduction of corporate net income tax for 6

years, 5% each year.

Under certain requirements among others: minimum amount of investment value and workforce, and certain project location (especially outside Java island).

A variety of sectors are covered in this regulation.

2 years import duty exemption or 4 years for companies using locally produced machines (30% - 40%)

Industries which produces goods and/or services, including:• Tourism and culture • Public transportation • Public health services• Mining • Construction • Telecommunication • Port

previously it was for 10 years and it can now be extended up to 20 years.

Ratio of tax holiday: 10%-100%

Period of tax holiday:

Minimum amount of investment:

5-15 years

IDR 1 Trillion

Machine, goods, materials for production

Business segments

Smart textile - investment bkpm.go.id

15.5are in the manufacturing

sector

million (15%)170

are of active working age

million (67%)12

are tertiary-level educated

million

5.8%Unemployment rate

4%Forecasted CAGR of workforce

absorbed by the textile industry

868,000NUMBER OF GRADUATES per year

2,400Number of large and medium

manufacturers in the textile industry

Fiber manufacturers:

( NATO uniforms (through PT Sritex)

( Nike

( New Balance ( Forever 21 ( H&M

( Zara ( Guess

( Lenzing / PT. South Pacific Viscose (SPV)

( Nagatex, in partnerships with Clariant and BASF

( Toray Synthetics

Source: Oxford Economics estimates derived from National Bureau of Statistics - Indonesia

Source: fDi Benchmark (Financial Times)

Source: BKPM (2014)

Source: WEF, BPSSource: Oxford Economics estimates derived from Statistics Indonesia and the Standardized World Income Inequality Database

Labor costMyanmar

Indonesia

Vietnam

Philippines

Malaysia

Malaysia

Singapore

0M 2M 4M 6M 8M 10M 12M 14M 16M

USD - United States Dollar

Key Industry Ministries and Associations

Universities and centres of excellence

Ministry of Industry www.kemendag.go.id

Ministry of Trade www.kemenperin.go.id

Indonesia Footwear Association (Aprisindo)www.aprisindo.or.id

Academy of Leather Technology www.atk.ac.id

Indonesian Chamber of Commerce and Industry www.kadin-indonesia.or.id

Ministry of Finance, Diretorate General of Customs and Excisewww.beacukai.go.id

Indonesian Tanners (leather) Association (APKI) www.indonesiantanners.com

Technical Institue of Bandungwww.ftmd.itb.ac.id

Indonesia Textiles Association (API)www.apidki-jakarta.weebly.com

Trisakti UniversityFaculty of Engineeringwww.trisakti.ac.id

Center of Leather, Rubber and Plastics (under Ministry of Industry)www.bbkkp.go.id

Indonesian Synthetic Fiber Producers Association (APSyFI)www.fiber-indonesia.com

College of Textile Technology (STTT) www.politeknikstttekstil.ac.id

IDR 223.8 TRILLIONSUmatRA IDR 67.8 TRILLION

KALIMANTAN

IDR 1 TRILLIONNUSA TENGGARA

IDR 22.4 TRILLIONSULAWESI

IDR 25 TRILLIONPAPUA

IDR 1,517.3 TRILLIONJAVA

The government has projected targets of investment in the manufacturing sector

between 2014 and 2019 as per the locations shown below:

JAKARTA 13%Central java 23%

WEST JAVA 39%

Indonesian Business Association (APINDO)www.apindo.or.id

TAX ALLOWANCE TAX HOLIDAY IMPORT DUTY FACILITY

(Government Regulations No.18/2015 and No.9/2016)

(MoF Regulations No. 159/PMK.010/2015 and No.103/PMK.010/2016)

(MoF Regulations No.176/PMK.011/2009 and No. 76/PMK.011/2012)