2018 International Conference on Forward Looking Water Management in Taiwan

Taipei, 8th-9th November 2018

Indonesia’sWater Resources Development:

Situation and Business Market of Water Resources Infrastructure

THE REPUBLIC OF INDONESIA

COORDINATING MINISTRY FOR ECONOMIC AFFAIRS

Mohammad Zainal FatahAssistant to Deputy Minister for Water Resources Infrastructure

2

GENERAL CONDITIONECONOMIC GROWTH, INVESTMENT CLIMATE, AND INFRASTRUCTURE DEVELOPMENT

33

41

36

2009 2010 2011 2012 2013 2014 2015 2016 2017

Global Competitiveness Index 3.0

China India Indonesia

Thailand Philippines Vietnam

106

91

72

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Ease of Doing Business

Indonesia Thailand Vietnam

Philippines Malaysia Brunei

High rank is better

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Moody’s: change the outlook from Stable to Positive

JCR: change the outlook from Stable to Positive

R&I: change the outlook from Stable to Positive

S&P: upgrade rating to Investment Grade

Fitch: change the outlook from Stable to Positive

Positive Opinions from Rating Agencies

Fitch: change the rating from BBB- to BBB

Indonesia's GCI rating rose from 41 in 2016/2017 to 36 in 2017/2018. Indonesia's EoDB ranking has increased very sharp in the last 2

years from rank 106 in 2016 to 72 in 2018 (increased 34 ratings).

ECONOMIC GROWTH

Source : World Economic Forum (2018)

Source : World Bank Group (2018)

2017

44

INVESTMENT CLIMATE CONDITION

Rank Country Index Score

1 Singapore 97

2 Norway 93

3 Iceland 93

4 Finland 93

5 Uzbekistan 91

6 HongKong 91

7 Switzerland 90

8 Canada 90

9 INDONESIA 89

10 Denmark 88

Source: Gallup World Polls,2018

afe

table

eformist

3.79 4.3

8.38 8.36

3.35 3.02 3.612.88

0

2

4

6

8

10

2011 2012 2013 2014 2015 2016 2017 Sep-18

Inflation (%, yoy)

During the trade wars, INDONESIA keep on maintaining its inflation stability and redeem its volatile movement under 3%.

Source: Central Bureau of Statistic Indonesia (2018)

Top Ten SAFEST Countries

55

18th Asian Games, XVIII Asia and also known as Jakarta–Palembang 2018, was a pan-Asian multi-sport event an successfully held from 18 August to 2 September 2018 in the Indonesian cities of Jakarta and Palembang.

3rd Asian Para Games and also known as Indonesia 2018, was a pan-Asian multi-sport event for athletes with disability, that held from 6 to 13 October 2018 in Indonesia's capital city of Jakarta.

The Annual Meetings of the International Monetary Fund and World Bank Group held in Nusa Dua, Bali from 8-14 October 2018

INTERNATIONAL EVENTS HELD IN INDONESIA (2018)

66

In USDMillion

Rank Country 2013 2014 2015 2016 2017 Q1 2018 Total

1 Singapore 4,672.0 5,832.1 5,901.2 9,178.7 8,441.6 2,648.2 36,673.8

2 Japan 4,712.9 2,705.1 2,877.0 5,400.9 4,996.2 1,362.0 22,054.1

3 South Korea 2,205.5 1,126.6 1,213.5 1,065.8 2,024.6 940.0 8,576.0

4 China 296.9 800.0 628.3 2,665.3 3,361.2 676.2 8,427.9

5 Malaysia 711.3 1,776.3 3,077.0 1,115.6 1,213.6 274.6 8,168.3

6 USA 2,435.8 1,299.5 893.2 1,161.9 1,992.8 372.2 8,155.4

7 Netherland 927.8 1,726.3 1,307.8 1,475.2 1,489.4 170.4 7,097.0

8 Hong Kong,PRC 376.2 657.3 937.2 2,248.3 2,116.5 516.1 6,851.6

9British Virgin

Islands

785.7 624.0 730.5 1,157.3 844.8 378.0 4,520.3

10 United Kingdom 1,075.8 1,588.0 503.2 307.3 774.8 37.0 4,286.0

Total (Top 10 Countries) 18.199,9 18.135,3 18.068,8 25.776,3 27.255,6 7,374.7 114,810.5

15 Taiwan 402.6 114.7 107.9 149.1 397.0 39.0 1,210.3

Source: BKPM / Indonesia’s Investment Coordinating Board (2018)

INDONESIAPopulation : 265.32MGDP Nominal : USD 1.07T

Top 10 Investors in Indonesia (2013- Q1 2018)by Country Excl. Upstream oil, gas, and financial sectors

53 times biger, in size

TAIWANPopulation : 23.61MGDP Nominal : USD 613.29B

77

Investment Needs for Infrastructure Project

NMTDP 2015-2019: infrastructure investment US$ 359.2Billion (estimated)

President’s direction:

1

Encouraging the involvement of the private

sector or business entities to finance

infrastructure projects(Cabinet Meeting, 3th May 2017)

Encouraging the infrastructure development

project by Public-Private-Partnership (PPP)

scheme.(Cabinet Meeting, 26 Oct 2016)

2

Source : Ministry of NDP (2015)

In the next National Medium Term Development Plan), Indonesia needs to increase its infrastructure development budget by around 30%, while non-state budget will cover 59% of the total investment (est).

Investment Needs For Infrastructure Project

STATE BUDGET

REGIONALBUDGET

SOE OTHERSTOTAL NEEDS

US $359.2

SOE and Private

PartnershipUS $ 210.99B

(Billion)

(29,88%)

(22,20%)

(36,50%)

(11,42%)

8

WATER RESOURCES OVERVIEWOPPORTUNITIES, TARGETS, ACHIEVMENTS, & CHALLENGES, AND BUSINESS MARKET

9

±8,000 watersheds

managed in 131 river basins

Average annual rainfall

2,350 mm

840 lakesPotential

Groundwater520 billion m³

“Indonesia is a country which has rich of water resources.

Seasonal variability creates water stress in dry season, water excess in rainy season.”

Source: Ministry of PWH (2017) & ADB (2016)

INDONESIA WATER POTENTIAL

3.9 trillions m³/year

World 5th highest water resources potential

Equal with 21% of water storage in

Asia Pacific

Water Resources Condition at Glance #1/3

282 Existing Dam

10

Improvement on Drinking Water Supply Access

Improvement on Sanitation Access

Access to Drinking Water Supply is not 100% yet

Access to Sanitation Facilities Is not 100% yet

Recently we still have some challenges:

Water Resources Condition at Glance #2/3

Improvement on Water Storage Capacity and Optimizing the Utilization

of Idle Capacity

some regions still face droughts and floods

11

Water Resources Condition at Glance #3/3

In 2018:±62,81 m3/ capita/year

Ideal Condition:

1,975 m3/capita/yearor

469.4 bil. m3/year

43 62.81746

1287 1406

2486

3255

4729

6150

0

1000

2000

3000

4000

5000

6000

7000

Wat

er s

tora

ge p

er c

apit

a (m

3)

Source : World Bank (2004) &Ministry PWH (2018)

The utilization of Potential Water Resources is not optimal

Water Storage per capita/year

only covered 3% Ideal Condition

25%Already Utilized Irrigation MunicipalityDrinking Energy

75%Idle Capacity

IndustryTotal Potential

691.3 billion m3/year

High Idle Capacity75% of Total Potential

Water Resources

12

National Medium-Term Development Plan (N-MTDP) Policy in

Water Resources and Sanitation (2015-2019)

Universal Access for Drinking Water Supply• 85% (population) served under the 4K Principle (Quantity, Quality, Continuity and Affordability).

• 15% (population) served according to basic needs (60 liters/person/day).

Universal Access for Sanitation• 85% (population) served according to minimum services standard.

• 15% (population) served according to basic needs.

Development of 65 Dams• 49 new dams.

• 16 ongoing dams.

Development & Rehabilitation of Irrigation System• Development of 1 million hectare.

• Rehabilitation of 3 million hectare.

1

2

3

4

TARGETS, ACHIEVEMENTS, AND CHALLENGES #1/4

SUPPORT SDGS TARGET

13

SANITATIONDRINKING WATER SUPPLY

100%72.04%

2017 target 2019

100%61.83%

2017 target 2019

Limited of State

and Local Govt.

Budget

Technical and

Design need to

be developed

High of Non

Revenue Water

TARGETS, ACHIEVEMENTS, AND CHALLENGES #2/4

Required growth : 13.98% / year

to achieve 100% access in 2019

Low quality

of domestic

wastewater

Limited land

availability in

slum urban area

Polluted

water sources

Institution

Low awareness

of hygiene and

sanitation in

communities

Required growth : 19.09% / year

to achieve 100% access in 2019

14

TARGETS, ACHIEVEMENTS, AND CHALLENGES #3/4

Existing(2015)

In 2019 In 2023

National Water Storage(Dam Capacity)

12,617 14,415 19,137

-

5,000

10,000

15,000

20,000

25,000St

ora

ge C

apac

ity

(bill

ion

m3)

6,520 B/ m3

408.69 MW

Benefits

61,97 m3/secWater Supply

Irrigation

Energy (Power Plant)

460,382 Ha

Flood reductions 19,919 m3/sec

29 dams constructed

65 dams constructed

DAMS DEVELOPMENT

15

DAMS USEFUL LIFE3%

16%

53%

28%

>100 years

50 - 100 years

20-50 years

<20 years

Total 282 Dams

72% of dams in Indonesia were built more than 20 years ago

The decline in dam capacity in Indonesia due to sedimentation reached 19-21%, and 31% in Java.

The useful life of the reservoir will be shorter than the plan.

TARGETS, ACHIEVMENTS, AND CHALLENGES #4/4

732.15

0.55

1,790.85

1,062.37

678.01

436.56

161.79

1,738.97

21.83

302.33

107.55

16.83

40.18

0.17

767.51

52.33

248.35

48.44

50.63

159.08

5.34

129.57

7.91

4.53

- 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

BBWS MESUJI SEKAMPUNG

BBWS Ciliwung Cisadane

BBWS Citarum

BBWS Cimanuk Cisanggarung

BBWS Pemali Juana

BBWS Serayu Opak

BBWS Bengawan Solo

BBWS Brantas

BWS Bali Penida

BBWS Jeneberang Pompengan

BWS NUSA TENGGARA I

BWS NUSA TENGGARA II

(million m3)

Vol. Total Pemantauan Vol. Total DesainTotal Design CapacityTotal Actual Capacity

16

DEVELOPMENT OF WATER RESOURCES INFRASTRUCTURE

WATERSUPPLY

DAMCONSTRUCTION

DAMREHABILITATION

FLOODCONTROL

SANITATION

HYDROPOWER PLANT

To cope this challenges,

we intend to accelerate our

water resources

infrastructure development

17

Jatiluhur Karian Jatigede Pekanbaru

JatiluhurCapacity : 5 m³/sUS$ 128 Million

PekanbaruCapacity : 0,5 m³/sUS$ 32,13 Million

Karian*Capacity : 3,2 m³/s US$ 400 Million

JatigedeCapacity : 3,5 m³/sUS$ 149,73 Million

Water Resources Infrastructure Projects in 2018-2019

*Source: Ministry of PWH (2018) and Ministry of NDP (2018)

Nambo

NamboCapacity : 500-600 RDF$ 44.4 Million

UmbulanCapacity : 4 m³/sUS$ 172,07 Million

Umbulan

Muara Juloi DamStatus : OBC

KertasariStatus: OBC

Jakarta Sewerage SystemStatus: OBC

Water Supply

Waste Management

OBC

56 Dams development

1818

Public-Private Partnership Regulations in Infrastructure Provision

Ministry of National Development Planning Regulation

Number 4 /2015 on General Guidelines of PPP

Minister of Finance

Regulation Number 223 / PMK.11 /2012

PRESIDENTIAL REGULATION

NUMBER 38/2015 on PPP

Head of National Public Procurement Agency Regulation

Number 19 / 2015 on Provision by Business Entity

AV

AIL

AB

ILIT

Y

PA

YM

EN

T

Minister of Finance

Regulation Number 260/PMK.08/2016

Minister of Home Affairs

Regulation Number 96 /2016

Aspects Regulation

Subject of

partnership

Government

1. Minister;

2. Head of Institution;

3. Head of Region;

4. SOE/ROE.

Business Entity

1. SOE/ROE;

2. Foreign Business Entity;

3. Limited Liability Company;

4. Cooperative.

Object of

PartnershipEconomic and social infrastructures (19 sectors of

infrastructure)

Government

Contribution

1. Government in-kind;

2. Government support (i.e. Viability Gap Fund);

3. Government guarantee.

1. User charge (payment by user in the form of tariff)

2. AP (payment of service availability);

3. Other forms as long as it does not contravene

with the law.

Phases 1. Planning phase;

2. Pre paration phase;

3. Transa ction phase.

Investment Return

for Business Entity

GO

VE

RN

ME

NT

GU

AR

AN

TE

E Presidential Regulation Number 78/2010

Minister of Finance

Regulation Number 260/PMK.011/2010 jo. Minister

of Finance Regulation Number 8/PMK.08/2016

GO

VE

RN

ME

NT

SU

PP

OR

T

(VG

F)

1919

OS

S

Obtaining NIB

(Nomor Induk Berusaha)

the single identity used in

OSS system

Company

Individual

www.oss.go.id

A. NEW INVESTOR (New Registration)

B.EXISTING INVESTOR (Re-registration)

INVESTMENT REFORM - ONLINE SINGLE SUBMISSION SYSTEM (OSS)

1. Starting from June 1, 2018, all licensing processes are carried out through the OSS system.

2. Ministries and Regional Governments are no longer permitted to issue permits in the sectors listed in this regulation

3. Purpose:

1. To simplify the business licensing process to be more efficient, simple and modern

2. Simplification of regulations

3. To increase investment

4. Reforming the service system is inline with current technology

4. the Coordinating Ministry for Economic Affairs as the main implementing body.

Government Regulation No. 24/2018(Online Single Submission/OSS)

2020

Jalan Lapangan Banteng TimurNo. 2-4,

Jakarta 10710

Indonesia

telp.: +62 21 385 2477

fax.: +62 21 352 1985

website: www.ekon.go.id

Coordinating Ministry for

Economic Affairs

The Republic of Indonesia

thank you

terima kasih

谢谢