Indonesia Investment Outlook and Policy Development
-
Upload
nurman-hartono -
Category
Economy & Finance
-
view
227 -
download
0
description
Transcript of Indonesia Investment Outlook and Policy Development
INDONESIA INVESTMENT COORDINATING BOARD (BKPM)
© 2014 by Indonesian Investment Coordinating Board. All rights reserved
invest in
INDONESIA INVESTMENT OUTLOOK AND POLICY
DEVELOPMENT
Jakarta, 2 September 2014
The Investment Coordinating Board of the Republic of Indonesia
2
World’s Most Populous Country
4th 248 million
Population (in 2013)
17,508
islands
Biggest Archipelagic Nation
16th World’s Largest Economy
G20Member State
1trillio
n USD GDP (PPP) 4,876 USD GDP
per capita (PPP)
“Investment Grade”
(Moody’s, Fitch and R&I)
I N D N E S I A
The Investment Coordinating Board of the Republic of Indonesia
3
Indonesia’s GDPIn the last 10 yearsat 2000 Constant Market Prices by Expenditure 2004-2013 (IDR Trillion)
GDP Growth in 2013
5.8% 2nd
fastestGrowing Economy Among G-20 Countries (After China, in 2013)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-
500
1,000
1,500
2,000
2,500
3,000
“Indonesia’s Growth
Beats Estimates…”
Indonesia’s GDP growth in 2013 beats all estimates in a Bloomberg News survey of 25 economists, where the median was 5.34 percent.
(Bloomberg, 2014)
The Investment Coordinating Board of the Republic of Indonesia
4
Investment Realization in IndonesiaBased on Capital Expenditure (USD Billion) Excl. oil, gas, and financial sectors
Assumption: Q1-Q2 rate USD 1 = IDR 9,300Q3-Q4 rate USD 1 = IDR 9,600
Source: BKPM, 2014
23.4
27.9
34.8
42.2
Sustainable Investment Growth
total investment realization in Jan - June 2014 (IDR 222.8 trillion),48.8 % achievement of the 2014 target,IDR 456.6 trillion.
USD 21.7 billion
15.6% increasefrom Jan - June 2013 (IDR 192.8 trillion)
13.5 % increasefrom Jan – June 2013
67.3 % shareof total investment realization
20.2 % increasefrom Jan - June 2013
32.7 % shareof total investment realization
FDIJan –June
2014
DDIJan - June
2014
2010 2011 2012 2013 Jan-June 2014
6.8 8.4 10.213.6
7.5
16.619.5
24.6
28.6
14.2
21.7
The Investment Coordinating Board of the Republic of Indonesia
5Source: BKPM, 2014.
FDI Realization in Indonesia by Origin CountryTop-10 Countries Based on Capital Expenditure (USD million) in Jan –June 2014 Excl. oil, gas, and financial sectors
Rank Country 2010 2011 2012 2013 Jan-June 2014
1 Singapore 5,565 5,123 4,856 4,671 3,393
2 Japan 713 1,516 2,457 4,713 1,541
3 Malaysia 472 618 530 711 717
4 US 931 1,488 1,238 2,436 663
5 South Korea 329 1,219 1,950 2,205 654
6 UK 276 419 934 1,076 646
7 Netherlands 608 1,354 967 928 604
8 Australia 214 89 743 226 449
9 Mauritius 23 73 1,059 780 430
10 British Virgin Islands 1,616 517 856 786 368
11 China 173 128 140 296 231
Total (97 Countries) 16,215 19,475 24,565 28,616 14,287
Singapore, Japan and Malaysiaon the Top-3 Biggest Investors in January – June 2014
2010 2011 2012 2013 Jan - June 2014
0
1000
2000
3000
4000
5000
6000
Singapore Japan Malaysia USSouth Korea China
24%
11%
5%5%5%
51%
FDI Realization by Origin Country in Jan – June 2014
The Investment Coordinating Board of the Republic of Indonesia
6
FDI Realization in Indonesia by SectorTop-10 Sectors Based on Capital Expenditure
(USD million)Excl. oil, gas, and financial sectors
Rank Sector 2010 2011 2012 2013 Jan-June 2014
1 Mining 2,201 3,619 4,255 4,816 2,739
2 Food Industry 1,026 1,105 1,783 2,118 2,064
3 Transport., Storage & Telecom. 5,072 3,799 2,808 1,450 1,649
4 Food Crops & Plantation 751 1,222 1,602 1,605 1,141
5 Transport Equipment Industry 394 770 1,840 3,732 1,027
6 Chemical & Pharmaceutical Ind. 793 1,467 2,770 3,142 979
7 Metal, Machinery & Electronic Ind. 590 1,773 2,453 3,327 859
8 Paper & Printing Industry 46 258 1,307 1,169 535
9 Non Metalic Mineral Industry 28 137 146 874 522
10 Electricity, Gas & Water Supply 1,429 1,865 1,515 2,222 429
Total (All Sectors) 16,215 19,475 24,565 28,616 14,287
Source: BKPM, 2014.
47% of FDI flowed to secondary sectors in Semester I 2014, while mining still got the biggest share
Component of FDI RealizationBased on Group of Sectors
2010 2011 2012 2013 Jan-June 2014
19% 25% 24% 23% 28%21%
35% 48% 55% 47%
61%40% 28% 22% 25%
Primary Sectors Secondary SectorsTertiary Sectors
2010 2011 2012 2013 Jan-June 2014
0
1000
2000
3000
4000
5000
6000
The Investment Coordinating Board of the Republic of Indonesia
7
FDI Realization in Indonesia by LocationBased on Capital Expenditure (USD million) in 2013 Excl. oil, gas, and financial sectors
Rank Economic Corridor 2009 2010 2011 2012 2013
1 Java 9.371 11.499 12.325 13.660 17.325
2 Sumatra 777 747 2.077 3.729 3.395
3 Kalimantan 284 2.011 1.919 3.209 2.773
4 Maluku & Papua 9 596 1.487 1.333 2.735
5 Sulawesi 142 859 715 1.507 1.498
6 Bali & Nusa Tenggara 234 503 953 1.127 889
Total (All Locations) 10.817 16.215 19.475 24.565 28.616
Source: BKPM, 2014.
2009 2010 2011 2012 2013
87%71% 63% 56% 61%
7%
5%11%
15% 12%
3%
12% 10% 13% 10%
4% 8% 5% 10%5% 4% 6% 5%3% 5% 5% 3%
FDI is still concentrated in Java Island,incentives are offered to improve investment
distribution
Jakarta
The Investment Coordinating Board of the Republic of Indonesia
8
World’s biggest democracy (after India and US)
3r
d The third direct Presidential Elections
has been held in July 2014.
Direct Election
The highest
democracy Index in ASEAN Indonesia scored 6.76, higher than average in Asia (5.56) and in Latin America (6.36).(The Economist, 2013)
Unity in Diversity248 million population
300 ethnic groups700 languagesvarious faiths17,508 islands
The Investment Coordinating Board of the Republic of Indonesia
9
“Remarkable progress over the
past 15 years - economically, socially,
and politically...” (UNDP, 2013)
In 2001, transformed from an authoritarian state to a regional role model.
Decentralization
34 provinces500 districts
Provinces and districts provided with greater autonomy.
Vision 2025
MP3EI as the master plan (2011-2025) to transform Indonesia into one of the world’s top 10 economies.
The Investment Coordinating Board of the Republic of Indonesia
10Source: PwC
APEC CEO Survey, 2013
APEC CEOs: Indonesia has capacity to surprise
with greater business opportunities than expected...
The Investment Coordinating Board of the Republic of Indonesia
11
Rank 2005 2006 2007 2008 2009 2010 2011 2012 2013
1 China China China China China China China China Indonesia
2 India India India India India India India India India
3 Thailand Vietnam Vietnam Vietnam Vietnam Vietnam Thailand Indonesia Thailand
4 Vietnam Thailand Thailand Russia Thailand Thailand Vietnam Thailand China
5 US US Russia Thailand Russia Brazil Indonesia & Brazil Vietnam Vietnam
6 Russia Russia US Brazil Brazil Indonesia - Brazil Brazil
7 Korea Brazil Brazil US US Russia Russia Mexico Mexico
8 Indonesia Korea Indonesia Indonesia Indonesia US US Rusia Myanmar
9 Brazil Indonesia Korea Korea Korea Korea Malaysia US Rusia
10 Taiwan Taiwan Taiwan Taiwan Malaysia Malaysia & Taiwan Taiwan Myanmar US
The most promising country for overseas business
(Japan Bank for International Cooperation Survey 2013)
Source: JBIC, November 2013
Positive Factors1. Future growth potential of local market
2. Inexpensive source of labor3. Current size of local market
4. Supply base for assembler5. Industrial cluster development
Issues of Concern1. Rising labor costs2. Underdeveloped infrastructures3. Execution of legal system unclear (frequent changes)4. Intents competition with other companies5. Difficult to secure management-level staff6. Labor problems
The Investment Coordinating Board of the Republic of Indonesia
12
Indonesia stable at the top five destinations.
(Results from UNCTAD’s World Investment Prospects Survey which polls TNC executives on their investment plans)
Top-4 Most Prospective Host Economies for 2013-2015
United Nations Conference on Trade and
Development
The Investment Coordinating Board of the Republic of Indonesia
13
World’s Most Populous Country
4th
70 %
2015 Population (projected)in Middle Income with per capita expenditure per day USD 2-20
Covering more than
total population of South East Asia
39% More than
Population in working age
60%
Population in Middle Income with per capita expenditure per day USD 2-20
Source: Bank Indonesia and Indonesia Statistics Agency, 2012 (Projection)
1999 2003 2009 2010 2015
45
8193
134
170 million
Middle class growthin Indonesia
2012-2020
174% Source: AC Nielsen, 2013
The Investment Coordinating Board of the Republic of Indonesia
14
Asia and World PopulationSource: Coordinating Ministry For Economic Affairs RI, 2011
Global Economic Growth for Each Decades(Average percent per year)
Source: World Bank, 2011
Beyond Indonesia:In the heart of the world’s economic growth
The Investment Coordinating Board of the Republic of Indonesia
15
Investment Opportunities The most promising sectors
Export-oriented sectors: downstream industry of palm and
rubber, electrical equipment, metal,
paper, textile.
Import substitution of capital goods and
raw materials: machinery, iron and
steel, automotive and spare parts, and basic
chemical.
Import substitution of consumer goods:
food and beverages, home appliances, and oil refinery industries.
Downstream industries of
mining, agriculture, fisheries and forestry:
smelter, CPO and cocoa industries, paper,
furniture.
Industrial sectors with increasing domestic
consumption trend: cement and building material
industries.
Infrastructure sector encouraged
through PPP: energy, air and sea ports, roads, water supply, waste management and
railways.
Tourism and creative
industries.
The Investment Coordinating Board of the Republic of Indonesia
16
Infrastructure & logistics
Investment climate
Incentives & facilities
Ease of doing businessCommitment & What have been done
The Investment Coordinating Board of the Republic of Indonesia
17
Investment Climate Development:
The New Negative List (Presidential Regulation Number 39 of 2014)
Background for amendment of the negative list– ASEAN Economic Community 2015
• Economic integration – single market and production base• Free movement of goods, services, investment, skilled labour and
free flow of capital• ASEAN Comprehensive Investment Agreement (ACIA), 2012
– Towards a free and open investment in 2015– 16 reservation sectors for Indonesia
– National interest: preparation of future national economic development• Boost national competitiveness• Support specific sectors that can still benefit from foreign
investment (healthcare, national logistical system...)
The Investment Coordinating Board of the Republic of Indonesia
18
The New Negative List
What changes– Liberalisation of certain sectors
• New sectors» Ex: treatment and disposal of non-hazardous waste open to 95% foreign
ownership, previously closed under “private cleaning management”• Ease restrictions on foreign investment
» Ex: Public-Private-Partnerships• New opportunities for ASEAN investors
» Ex: Specialist and subspecialist hospital services (throughout Indonesia, maximum of 67% for foreign investors; capital cities of Eastern Indonesia, except Makassar and Manado, maximum of 70% for ASEAN investors)
– New restrictions in other sectors• New restrictions on foreign investment
– New sectors open only to domestic investment» Ex: retail of certain goods and E-commerce and via post
– Reduction of permitted foreign investment» Ex: from 95% to 30% foreign ownership for horticulture (in accordance with
Horticultural Law)– Introduction of new limitations
» Ex: Distribution limited to 33% foreign ownership
The Investment Coordinating Board of the Republic of Indonesia
19
Indonesia Ease of Doing Business Improvement
Ease of Doing Business Improvement has achieved:
8 Area of Improvement inEase of Doing Businessconsist of…
• Starting a Business
• Getting Electricity
• Paying Taxes and Premium Insurance
• Enforcing Contract• Resolving Insolvency• Registering Property
• Dealing with Construction Permits
• Getting Credit
1. Business entity (Limited Liability/PT) establishment by online system.
2. Simplification on the issuance of Permanent Business Trading License (SIUP) and Company Registration Certificate (TDP).
3. Expedite workers registration.
4. On line registration for Workers Social Security Program.
5. Simplification on procedures, reducing cost and time for electricity connection.
6. Tax report by online.
7. Online system for payment of social insurance provided (BPJS) by e-payment mechanism.
8. Accelerate the settlement of commercial disputes in enforcing contract.
9. Accelerate the judicial procedure in resolving insolvency.
10. Time reduction for land certificate examination and transfer of land rights.
11.Building construction permit (IMB) by online.
12. Accelerate water connection services (PDAM).
13. Accelerate telephone connection services (PLN).
14. Regulation for Private Credit Bureau (LPIP) establishment.
15.Collateral Registry Administration System by online.
The Investment Coordinating Board of the Republic of Indonesia
20
25 high priority infrastructure projectsReady for Ground Breaking Between 2015 and 2017 ( = Potential for PPP) No. Sumatra USD Mio.
1 Toll Road: Medan–Binjai (15.8 km) 210
2 Toll Road: Palembang–Indralaya (22 km) 180
3 Toll Road: Pekanbaru–Kandis–Dumai (135 km) 1,530
4 Toll Road: Bakauheni–Terbanggi Besar (150 km) 2,372
5 Toll Road: Tebing Tinggi–Kisaran–Rantau Prapat (178 km) 1,396
6 Toll Road: Panimbang–Serang (83 km) 1,191
7 Toll Road: Lubuk Pakam–Tebing Tinggi (43.5 km) 708
8 Seaport: Hub Kuala Tanjung 2,795
9 Seaport: Tanjung Sauh, Batam N/A
Total Sumatra (9 projects) 10,382
No. Java USD Mio.
1 Access Road: Purwakarta Industrial Area (7.8 km) 71
2 Water Supply: Umbulan 211
3 Port and Access Road: Cilamaya (30 km) 4,176
4 Airport and Access Road: Karawang 3,747
5 Railway: Madiun–Surabaya (165 km, Double Track) 430
6 Coal-Fired Power Plant: Indramayu 4 (1x1000 MW) 2,116
Total Java (6 projects) 10,750
No. Kalimantan USD Mio.
1 Toll Road: Balikpapan-Samarinda (99.02 km) 1,261
2 Railway: Purukcahu–Bangkuang– Mangkatip (290 km) 2,277
3 Coal-Fired Power Plant: Asamasam 5-6 (2x100 MW) 331
Total Kalimantan (3 projects) 3,869
No. Bali-Nusa Tenggara USD Mio.
1 Water Supply: South Bali 282.2
Total Bali-NT (1 project) 282
No. Sulawesi USD Mio.
1 Road: Palu–Parigi (37.4 km) 104
2 Toll Road: Manado–Bitung (46 km) 353
3 International Hub: Bitung 3,208
4 Railway: Makassar–Pare-Pare (136.3 km) 621
5 Hydro Electric Power Plant: Karama (4x112.5 MW) 1,376
Total Sulawesi (5 projects) 5,662
No. Maluku-Papua USD Mio.
1 Road: Enarotali–Tiom (240 km) 174
Total Maluku-Papua (1 project) 174
Source: Coordinating Ministry for Economic Affairs, 2013
The Investment Coordinating Board of the Republic of Indonesia
21
TAX HOLIDAY TAX ALLOWANCE
IMPORT DUTY FACILITY
(Government Regulation No.52/2011) (MoF Regulation No.176/PMK.011/2009)(MoF Regulation No.130/PMK.011/2011)
129business
segments
Eligible for tax allowance, expanded from 38 segments in the previous regulation.
30 % of investment value Reduction 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).
5-10
years
Tax relief facility, starting from the commencement of commercial production.
Pioneer industry1. Basic metal industries;2. Oil refinery industries and/or basic
organic chemicals;3. Machinery industries;4. Industries of renewable resources;5. Communication devices industries.
50 % for a further 2
years
Reduction of income tax after the expiration of the tax holiday and can be extended by MoF.
IDR 1
trillion
Minimum investment plan.
2 years import duty exemption or 4 years for companies using locally-produced machines (min.30%).
Machines, goods, materials for production
Which produces goods and/or services, including:
1. Tourism and culture 2. Public transportation 3. Public health services 4. Mining 5. Construction 6. Telecommunication 7. Port
Industries
ONE-STOP SHOPFOR
INVESTMENT Establishing an Investor Relation Unit for information, facilitation and inqueries handling from existing and potential investors.
Rolling-out the Electronic Information Services and Investment Licensing (SPIPISE) in 105 regions throughout Indonesia.
Helping contain various obstacles and giving consultation.
Facilitating foreign workers permit.
Providing online investment tracking system.
Providing online application process for the principal license. Other steps needed would be moved online later in 2014.
We provide “one-stop shop” (PTSP) licensing provision and our
services for investors include…
Badan Koordinasi Penanaman Modal (BKPM)
Indonesia Investment Coordinating BoardJln. Jend. Gatot Subroto No. 44Jakarta 12190 - Indonesiat . +62 21 525 2008f . +62 21 525 4945 e . [email protected]
www.bkpm.go.id
Thank You Terima Kasih
Indonesia Investment Promotion Centre (IIPC)