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Transcript of Invest in 2014 by Indonesian Investment Coordinating Board. All rights reserved 5th International...
invest in
© 2014 by Indonesian Investment Coordinating Board. All rights reserved
5th International Conference & Exhibition on Palm Oil| Jakarta, 26 May 2014
Investment Policy on Sustainable Palm Oil Industry
Hanung Harimba Rachman Director of Planning for Agribusiness Industry and Other Natural Resources
The Investment Coordinating Board of the Republic of Indonesia2
Topic of Discussion
The Investment Coordinating Board of the Republic of Indonesia3
I. Investment Policy: sustainable economic growth
The Investment Coordinating Board of the Republic of Indonesia4
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 9,600Q1 2014 & Q1 2013 rate USD 1 = IDR 10,000
Sustainable direct investment growthtotal investment realization
in Q12014 (IDR 106.6 trillion),13.5% higher than Q1 2013 of IDR 105.3 trillion equvalent USD 10.7 billion or 23.3% of 2014 target
Source: BKPM, 2014
15
23.4
27.9
34.8
42.2
10.79.4
Year Indonesia GDP Growth
World GDP Growth
2007 6.30% 5.3%
2008 6.00% 2.70%
2009 4.60% -0.40%
2010 6.10% 5.20%
2011 6.50% 3.90%
2012 6.23% 3.20%
2013 5.78% 3.00%
Q1-2014 5.21% 3.70%*
IndonesiaMacroeconomic Overview 2007 - 2013
Source: BPS, IMFNotes: *) 2014 World GDP Growth projection data by IMF
The Investment Coordinating Board of the Republic of Indonesia5
Source: McKinsey Global Institute, September 2012
Indonesia Today… and Indonesia in 2030
Remarkable Indonesia
The World’s 3rd Largest Democratic and
Decentralized Nation
251 million of population in 2013
The World’s Biggest Archipelagic Nation
17,508 islands81,000 km Coastal Line
1.9 million sq km Land Area3.1 million sq km Sea Area
3 time zones
G-20 Member State
USD 1 trillion of GDP (PPP) in 2012
USD 4,540 of GDP per Capita (PPP)
One of Asia Pacific’s most vibrant democracies that has maintained
political stability…(The World Bank, 2013)
The World’s Most
Stable Economy in the Last Five Years. (The Economist, 2012)
The Investment Coordinating Board of the Republic of Indonesia7
Abundant Natural Resources: The Key Indicators
Indonesia is one of the world’s major producer of a broad range of commodities.
Source: Coordinating Ministry For Economic Affairs RI, 2011
In 2013. the export of palm oil reached 21 million ton/year
The Investment Coordinating Board of the Republic of Indonesia8
Source: PricewaterhouseCoopers, 2013
APEC CEOs: Indonesia has capacity to surprise with greater business opportunities
than expected...
The Investment Coordinating Board of the Republic of Indonesia9
Indonesia’s Investment PerformanceIndonesia is the 3rd
Investment Destination in Asia(Source: The Economist, 2013)
15.2
21.4
26.2
27.0
28.1
28.9
34.8
37.7
38.6
43.0
53.5
54.1
73.8
51.2
58.8
55.4
47.6
45.5
46.1
53.9
32.8
33.9
38.5
27.1
32.0
20.6
3.2
1.5
3.1
5.6
0.8
3.1
0.7
3.3
2.4
2.2
0.8
0.7
30.4
18.3
15.4
19.8
25.6
21.9
10.6
26.2
25.2
16.3
18.6
13.9
5.0
Taiwan
Hong Kong
Japan
Australia
Philippines
South Korea
Singapore
Vietnam
Thailand
Malaysia
Indonesia
India
China
Increase their level of investmentStill in the market, but will not invest moreReduce their investmentHave no plans to invest
Total Investment (% GDP)(Source: Bloomberg, 2013)
Source : World bank (2013)
The Investment Coordinating Board of the Republic of Indonesia10
The Most Attractive Investment Destination in ASEAN
Notes: (1) Value next to each bar reflects the percentage of respondents that plan to invest or increase investments while value within the bar shows respondents’ average rating on the investment attractiveness of each country. (2) Each respondent was allowed to select multiple responses. Percentages do not sum up to 100%.
The 2012 ASEAN-BAC Survey on ASEAN Competitiveness collated responses from businesses across all ten ASEAN ountries, comprising a mix of small, medium and large firms. A majority of the businesses had been in operation for more than ten years, had trade/investment linkages within ASEAN and had at least general knowledge of ASEAN policy initiatives.
“Half of 405 businesses surveyed intended to invest in
Indonesia over the next years (2011-2014).”
Source: ASEAN-BAC, 2012
The ASEAN Business Advisory Council Survey on ASEAN Competitiveness 2012
The Investment Coordinating Board of the Republic of Indonesia11
Japan Bank for International Cooperation Survey 2013
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
Indonesia: 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 market2. Inexpensive source of labor3. Current size of local market4. 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 staff.6. Labor problems
INDONESIA INVESTMENT COORDINATING BOARD
Establishing an Investor Relation Unit at BKPM 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.
Launching the online investment tracking system.
We provide “one-stop shop” (PTSP) licensing provision and our
services for investors include…
The Investment Coordinating Board of the Republic of Indonesia13
17 Action Plans Package to Improve the Ease of Doing Business
Starting a business 5 actions plan involving the Ministry of Manpower and Transmigration, Ministry of Trade, Provincial Government of DKI Jakarta, and Ministry of Law and Human Rights.
Getting electricity 2 actions plan, the issuance of Ministry of Energy and Mineral Resources and State Electricity Company (PLN) regulation regarding mechanism/procedures of electricity connection
Paying taxes and insurance premium 2 actions plan, the issuance of regulation regarding online tax reporting system and simplification of procedures for the payment of social security program consisting of: pension insurance, death insurance, working accident insurance and health insurance
Enforcing contract 2 actions, study on Small Claim Court as a reference for the formulation of the Supreme Court Regulation and prepare academic paper about procedure to resolve small claim cases
Resolving insolvency assess compatibility between regulations and implementation of procedures, time, and cost for resolving insolvency or bankruptcy process
Registering property issuance of regulation on the property registration/land ownership transfer certificate which includes the simplification of procedures, time and cost
Dealing with construction permits 3 actions plan involving Provincial Government of DKI Jakarta, PT PAM Jaya, and PT Telekomunikasi Indonesia
Getting credits issuance of implementing regulation of Bank Indonesia concerning Credit Indformation Management Institution
2
1
3
4
5
6
7
8
The Investment Coordinating Board of the Republic of Indonesia14
Sectors Focused in BKPM’s Plan
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.
Investment Opportunities: Quality Investments
The Investment Coordinating Board of the Republic of Indonesia15
Roadmap of Indonesia Investment
Quick wins and low hanging fruitsEncouraging and facilitating ready-to-invest investors
Knowledge-Based EconomyDeveloping economy by innovation and high-technology
Development of Big-Scale IndustryDeveloping big-scale industrials through industry cluster (e.g. Petrochemical, transportation means, and national defense)
Acceleration of Infrastructure DevelopmentDeveloping soft infrastucture (education and health facilities) and hard infrastructure (bridge, port, etc) through Private-Public Partnership Scheme
More than 15 years
Source: BKPM
The Investment Coordinating Board of the Republic of Indonesia16
Policy on Palm Oil Downstream Industries: Quality Investments
Source: The Royal Plantation, 2014
The Investment Coordinating Board of the Republic of Indonesia17
II. Policy on Palm Oil: supporting downstream industry
The Investment Coordinating Board of the Republic of Indonesia18
Investment RealizationInvestment Realization of Oil-Producing Fruit Crops
(US$ ‘000)
Investment Realization of CPO and Cooking Palm Oil(US$ ‘000)
Source: BKPM, 2014
The Investment Coordinating Board of the Republic of Indonesia19
TAX ALLOWANCE
IMPORT DUTY FACILITY
(Government Regulation No.52/2011) (MoF Regulation No.176/PMK.011/2009)
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).
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
Investment Incentives
The Investment Coordinating Board of the Republic of Indonesia20
Granted tax holiday
1 PT Unilever Petrokimia received tax holiday facility since end of 2012. It plans to develop the palm oil downstream industry in Sei Mangke, North Sumatera.
2 PT Petrokimia Butadiene plans to develop the factory of butadiene in Cilegon, Banten.
Application on processs 1. Sinar Mas Group
2. Musim Mas Group 3. Wilmar Group 4. Domba Mas 5. Salim Ivomas Pratama 6. Asian Agri Group
Source: Merdeka, 2014
The Investment Coordinating Board of the Republic of Indonesia21
Negative Investment List: Presidential Regulation No.39 of 2014
The Investment Coordinating Board of the Republic of Indonesia22
Negative Investment List: Presidential Regulation No.39 of 2014
Business Fields KBLI Conditions
Palm plantation cultivation for area less than 25 Ha 01262 Reserved for micro, small, medium enterprises and cooperatives
Seeding palm plantation for area less than 25 Ha 01262 Reserved for micro, small, medium enterprises and cooperatives
Palm Oil Industry below certain capacity according to Regulation of Minister of Agriculture Number 26 of 2007 and/or its amendment
10431 Reserved for micro, small, medium enterprises and cooperatives
Seeding palm plantation for area equal or more than 25 Ha
01262 maximum 95 % for foreign capital ownership , and recommendation of the Minister of Agriculture cq. The Director General of Plantation
Palm plantation for an area of 25 Ha or more, up until a certain area according to Regulation of Minister of Agriculture Number 26 of 2007, without a processing unit
01262 maximum 95 % for foreign capital ownership , and recommendation of the Minister of Agriculture cq. The Director General of Plantation
Palm oil industry, with similar capacity or exceeding a certain capacity, according to Regulation of Minister of Agriculture Number 26 of 2007 and/or its amendment
10432 maximum 95 % for foreign capital ownership , and recommendation of the Minister of Agriculture cq. The Director General of Plantation
Palm plantation and palm oil industry (CPO) for 25 Ha area of land or more, integrated to the processing unit by the same capacity or exceeding a certain capacity according to Regulation of Minister of Agriculture Number 26 of 2007 and/or its amendment
01262and
10432
maximum 95 % for foreign capital ownership , and recommendation of the Minister of Agriculture cq. The Director General of Plantation
The Investment Coordinating Board of the Republic of Indonesia23
To support sustainable downstream palm oil industry
Industrial Area Development • Facilitation and Coordination of Industrial Estate Development in Sei Mangkei (North Sumatra), Kuala Enok-Dumai (Riau), and Maloy (East Kalimantan);
• Establishment of Innovation Center for Palm Oil Downstream Industry in Industrial Estate Sei Mangkei, North Sumatra.
Anti Negative Campaign • Active participation in the Promotion of Investment and Anti Negative Campaign• Implement the Indonesia Sustainable Palm Oil (ISPO) to certified palm oil companies in Indonesia in order to compete in world wide market.
Restructuring CPO Export Duty and derivative products through Finance Minister Regulation (PMK) 75 of 2012 in conjunction with PMK No. 128 in 2011.
Badan Koordinasi Penanaman Modal (BKPM)
Indonesia Investment Coordinating BoardJln. Jend. Gatot Subroto No. 44Jakarta 12190 - Indonesiat . +62 21 5292 1334f . +62 21 5264 211 e . [email protected]
www.bkpm.go.id
Thank You
Terima Kasih
Indonesia Investment Promotion Centre (IIPC)