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Why Invest In Indonesia

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July 2019

11

Table of Contents

1. Macro Overview

2. Indonesia : Map

3. Infrastructure Investment

4. Tourism Industry

5. Recent Foreign Investors

6. Key Industries in Indonesia

7. Government Polices

22

1. Macro Overview

1. Country Profile1. Land Area : 1,904,569 sq km

2. Population : 265 million

3. GDP in 2018 : USD1,022 billion

4. CAGR of GDP (2000-2018) : 5.18%

5. Current Balance (% GDP of GDP in 2018) : -3

6. Unemployment Rate in 2018 : 16.3%

7. Exchange Rate : USD1 = IDR14,308.78

8. Total Trade in 2018 : deficit USD1.10 billion

9. Top Five Trading Partners : China, United States, Japan, India,

Singapore

2. Overview

1. Indonesia is the world largest archipelago with more than

seventeen thousand islands and recognized as the 14th largest by

land area and the 7th largest in combined sea and land area in the

world.

2. Indonesia has the largest gold mine with the best quality gold in the

world, the largest natural gas reserves in the world and Indonesia

also has a fertile soil that makes Indonesia is ranked number 1 in

agricultural products, and number 2 in rubber and crude palm oil

that makes more attractive for business due to its natural

resources.

3. Indonesian official language, Bahasa, is the Top 10 Most Used

Languages in the world.

Source : Trading Economics, Indonesia Investment, Badan Pusat Statistik Indonesia, Badan Koordinasi Penanaman Modal

(BKPM)

16214.8

19474.5

24564.7

28617.5 28529.7 29275.9 28964.1

7293.78259.7

0

5000

10000

15000

20000

25000

30000

35000

2010 2011 2012 2013 2014 2015 2016 Q1 2017 Q2 2017

USD milExhibit 2 : Foreign Direct Investment in Indonesia

FDI

Exhibit 2 : Foreign Direct Investment in Indonesia

Exhibit 1 : GDP of Indonesia

33

2. Indonesia: Map

JAKARTA

The largest city, the

capital city

government,

business district and

the most populous

city in the country.SURABAYA

The second largest city,

the capital of East Java

Province, has the busiest

port in Indonesia, one of

the best marine vessel

manufacturers in Asia.

MAKASSAR

The capital of South

Sulawesi province,

center of production

and processing of

agricultural,

plantation, fishery

products and nickel

mining.

MEDAN

The capital of North

Sumatera province,

production and processing

centre of agricultural

products and principal

mining and energy

resources.

BANDUNG

The capital of West

Java Province, the

biggest fashion city

in Indonesia, also

known as the

beautiful city.

YOGYAKARTA

The city of tourism,

become one of the

destinations for

domestic and

foreign tourist.

DENPASAR

The capital of Bali

province, the most

popular tourism

destination, one of the

International getaways

to Indonesia.

BANJARMASIN

The biggest producer

of diamonds and

precious stones in

Indonesia.

BALIKPAPAN

The largest oil refinery

and port that is quite

busy.

MERAUKE

The Centre of food,

fishery, energy, and

national mining

development.

SAMARINDA

The centre of

production and

processing of mining

and energy resources.

ARWANDOP

The world’s largest

gold mine and the

world’s third largest

copper mine.

Source : Platinum Research

44

3. Infrastructure Investment

Source : Presidenri.go.id, Indonesia Investment, PWC, Finance Detik, Nasional Kontan, CNBC Indonesia, Kompas

1. Road Infrastructure

I. Trans-Sumatran Highway (Completed in Dec 2018) – linking Banda

Aceh to Bandar Lampung to increase the development

competitiveness and economic growth points around this road.

II. Trans-Java Toll Road (Phase 2) (To be completed by 2019) – linking

Merak (northwestern end of Java) to Banyuwangi (eastern end of

island in Indonesia).

2. Rail Infrastructure

I. Jakarta MRT (Phase 1) (Completed in Mar 2019) – linking Lebak

Bulus to Bundaran HI.

II. Jakarta LRT (Phase 1) (To be completed by 2021) – LRT is meant to

handle Jakarta’s more respectable option traffic clog and to replaces

the Jakarta Monorail venture which has been cancelled.

3. Port Infrastructure

I. Kalibaru Port (Phase 2) (To be completed by 2023) – the largest

container terminal in Indonesia in order to increase annual capacity of

Tanjung Priok more than triple.

4. Long-term Airport Developments

I. New Yogyakarta International Airport, Central Java – To be

completed in April 2019.

II. Kediri International Airport, East Java – To be completed in 30 years.

III. New North Bali International Airport, Bali – Completion date is not

disclosed.

IV. Terminal IV Soekarno-Hatta International Airport – Completion date is

not disclosed.

1

2

3

4

5

6

7

8

9

Exhibit 3 : Indonesia Future Infrastructure Map

55

4. Tourism Industry

1. Overview

1. Travel & Tourism grew at 7.8% in 2018 – double the global

average of 3.9%

2. The largest inbound international markets were Singapore (15%);

Malaysia (14%); China (13%); Australia (11%); and Japan (5%).

3. The Government of Indonesia’s focus on building infrastructure

will boost tourism growth i.e 10 new airports between 2015-2018

and 5 new airports to open in 2019.

2. GDP Contribution – 6.0% to Indonesia’s GDP, direct & indirect

contribution worth IDR 890,428 billion (USD 62.6 billion), and is forecast

to rise by 5.2% in 2019.

3. Employment : Direct Contribution – Supported 10.3% of all

Indonesia’s employment, or 13 million jobs.

4. Visitor Exports – generated IDR192,608 billion (USD14.4 billion), 7%

of total exports in 2017 and forecast to grow 6.4% per annum from 2018-

2028 to IDR372,088 billion (USD27.8 billion)

Source : Ceicdata, Indonesia Investments, World Travel and Tourism Council, Badan Pusat Statistik

Exhibit 4 : Foreign Exchange Earning

2.93.2

2.8 2.952.7 2.64

2.82 2.67 2.813.1

2.81 2.73 2.84

-15%

-10%

-5%

0%

5%

10%

15%

0

0.5

1

1.5

2

2.5

3

3.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

YoYNights Average Lengths of Stay

Average Lengths of Stay Growth

Exhibit 6 : Average Lengths of Stay

5.56.23 6.32

7 7.65 8.048.8 9.44 9.73

11.52

14.04

15.8

0%

5%

10%

15%

20%

25%

0

5

10

15

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

YoYMilExhibit 5: Foreign Tourist Arrivals

Foreign Tourist Arrivals Growth

8.6 9.110.2 11.2 12.2

16.315

17

0

5

10

15

20

2011 2012 2013 2014 2015 2016 2017 2018

USD bil

Foreign Exchange Earnings

66

5. Recent Foreign Investors (Project Size In USD)1. China Railway Group Limited (CREC) – High Speed Rail in Indonesia (Jakarta –

Bandung)

1. Sept 2015 – Indonesia granted the rail venture to China.

2. Ongoing – Building the connection from Halim (Jakarta) to Tegalluar (Bandung) – USD5.5

billion.

2. Japan International Cooperation Agency (JICA) – High Speed Rail in Indonesia (Jakarta

– Surabaya)

1. Mar 2017 – Indonesian Government choose Japan as the accomplice for the rejuvenation

of the railroad associating Jakarta and Surabaya – USD4.4 billion.

3. DP World (Dubai) – Kuala Tanjung Port (USD2.5 billion)

1. 2015-2017 – First Stage : development multipurpose terminal.

2. 2018-2018 – Second Stage : improvement of 3000 hectares of a mechanical zone.

3. 2017-2019 – Third Stage : improvement of a compartment port and local location.

4. 2012-2023 – Fourth Stage : development of an incorporate mechanical zone or a port city.

4. Japan International Cooperation Agency (JICA) – Jakarta MRT (USD1.49 billion)

1. Mar 2019 – Phase 1 of undertaking was subsidized through a delicate advance from JICA

with a 30 years residency and 0.25% intrigue per annum.

2. Oct 2018 – JICA marked an arrangement to fund the MRT Phase 2. The loan fee is at 1%

with a 40-year residency.

Exhibit 7 : Projected Development of Jakarta MRT

Source : Indonesia Investment, Reuters, ABC News, The Jakarta Post, The Strait Times, Finance Detik

77

6. Key Industries in Indonesia

Agriculture, Livestock, Forestry, and Fishery

Indonesia is the worldwide pioneer in the production of three commodities

namely palm oil, cinnamon, and cloves. The country is the second most

noteworthy worldwide maker of nutmegs, cassava, coconut oil, vanilla, and

natural rubber. Indonesia is the third biggest worldwide maker of cocoa and

rice, the fourth all inclusive in creating espresso, the fifth biggest worldwide

maker of tobacco, and the sixth biggest in delivering tea.

Source : Worldatlast.com, Indonesia Investment, Trading Economics, Tempo.co, Straits Times

Mining

Indonesia was the main Asian individual from the Organization of Petroleum

Exporting Countries (OPEC) until 2008, and is at present a net oil merchant.

At first, the mining business was engaged around silver, tin, and bauxite. In

recent and future plans, the government is pointing towards the extension of

copper, coal, gold, and nickel for exportation to other markets.

Non-oil and Gas Manufacturing

Indonesia is a main maker in this sector with products like motorcycles. In

2010, Indonesia sold 7.6 million bikes, which was for the most part delivered

in the nation with practically 100% local components. Non-oil and gas

industries posted 4.71% development in the first quarter of 2017. BPS

recorded that non-oil and gas industry contributed 18.08% in the first quarter

of 2017.

Leisure & Tourism Industry

Indonesia is the biggest Archipelago in the world. In 2017 almost 4 million

tourists visited Bali. That is a 25% increase in arrivals over last year, when

tourism contributed 11% or IDR172 trillion (SGD17 billion) to Indonesia’s

GDP. Indonesian President Joko Widodo is planning to make another Bali

and will launch a programme called 10 New Balis to attracting more tourists.

Exhibit 8 : Key Industries in Indonesia

88

7. Government Policies1. Buying Land – For a long time Indonesia has proclaimed that land in Indonesia must be claimed by Indonesian residents. In the late 90s, new laws were

initiated that foreigners are allowed to buy apartments and office space in Indonesia if the structure has a strata title status. Further laws were passed in

2010 and 2015 which may make it simpler for expats to hold 70-year rents shore.

2. Value Added Tax on Apartments – the VAT rate is 10% in Indonesia. Nonetheless, the precise rate may expanded or diminished to 15% or 5% as

indicated by government guideline. VAT on the export of taxable tangible and intangible goods is fixed at 0%.

3. Taxes for Property – Property tax is demanded at dynamic rates on the surveyed estimation of the property. 0.01% tax rate for up to IDR200 million

(USD13,761), 0.1% for IDR200 million – IDR2 billion (USD13,761), 0.2% for IDR2 billion – IDR10 billion (USD688,054) and 0.3% for over IDR10 billion

(USD688,054).

4. Taxes for Rental Income – The rental pay of non-residents is exhausted at a last retention rate of 20% of gross salary.

5. Capital Gains Tax (CGT) – A 2.5% tax on sales value is collected on organizations and people for the deal/exchange of land rights. For exchanges of

straightforward houses and apartments by citizens occupied with property advancement business the tax rate is 1%. The 2.5% tax on value is final. The

net gains from asset revaluations are liable to 10% final tax. And additional final income tax of 15% is forced if the revalued resources are sold or

exchange inside a specific period. Foreign companies and people are liable to a 20% withholding tax on dividends from property organizations. A final tax

of 0.1% applies to income from sale of shares at IDX. The rate is 0.6% if the seller is an establishing investor. A 5% tax is applicable to the sale of shares

by foreign shareholder, except if it is exempted under a tax treaty.

Source: Expat.or.id, JLL, Indonesia Investments, Global Property Guide

99

Appendices

1010

App 1 – [10 Year Relative Performance IDR to USD]

Source: Bloomberg

1111

App 2 – [International Airports]1. Indonesian Airports

1. Indonesia currently has 24 airports spread throughout Java, 40 airports throughout Sumatra, 22 airports throughout Kalimantan, 19 airports throughout

Sulawesi, 17 airports throughout Lesser Sunda Islands, 16 airports throughout Maluku Islands, and 17 airports throughout Papua.

2. Soekarno-Hatta International Airport (CGK) is the major airport in Indonesia, located at Tangerang City, Banten.

3. Kertajati International Airport (KJT) is the largest international airport of Indonesia, opened in 2018, located at Majalengka, West Java .

2. Indonesia Current Passenger Movements

1. In 2012, Jakarta’s Soekarno-Hatta International Airport was the world’s ninth busiest airport and the third busiest in Asia, served 66.9 million

passengers in 2018.

2. Bali is served by Ngurah Rai International Airport, presently the nation’s second busiest airplane terminal, found south of Denpasar and served 23.8

million passengers in 2018.

3. Surabaya’s Juanda International Airport is the nation’s third busiest airport and served 20.2 million passengers in 2018.

3. Indonesia Recent Airports Development

1. West Java International Airport in Majalengka, West Java – Completed in 2018

2. Aji Pangeran Tumenggung International Airport in Samarinda, East Kalimantan – Completed in 2018

3. Letung Airport in Anambas Islands Regency, Riau Archipelago – Completed in 2018

4. Maratua Airport in Derawan Islands, East Kalimantan – Completed in 2017

5. Miangas Airport in Miangas Islands, North Sulawesi – Completed in 2017

6 . Werur Airport in Tambrauw, West Papua – Completed in 2018

7. Tebelian Airport in Sintang, West Kalimantan – Completed in 2018

8. Maleo Airport in Morowali, Central Sulawesi – Completed in 2018

9. Namniwel Airport in Buru Islands, Maluku – Completed in 2017

10. Koroway Batu Airport in Boven Digul, Papua – Completed in 2017

11. Buntu Kunik Airport in Tana Toraja, South Sulawesi – Completed in 2019

12. Pantar Airport in Alor, East Nusa Tenggara – Completed in 2019

13. Pihise Airport in Sitaro, North Sulawesi – Completed in 2019

14. Beringin Airport in Muara Teweh, Central Kalimantan – Completed in 2019

15. Tambelan Airport in Bintan, Riau Archipelago – Completed in 2019

Source : Indonesia Travel, RedDoorz

1212

App 2 – [Top 10 Listed Companies In Indonesia]

Source: Bloomberg

Top 10 Listed companies by Market cap Date as of 09-Jul-2019

Market Cap Avg Daily Turnover Return

Ticker Short Name (USD m) (USD) Last Price P/E YTD (% ) Sector

1 BBCA IJ EQUITY BANK CENTRAL ASI 51,750 28,377,500 Rp 29,675.00 27.70 15.07 Financials

2 BBRI IJ EQUITY BANK RAKYAT INDO 38,300 33,206,033 Rp 4,390.00 16.21 24.06 Financials

3 TLKM IJ EQUITY TELEKOMUNIKASI 30,129 23,388,434 Rp 4,300.00 23.00 19.43 Communication Services

4 HMSP IJ EQUITY HM SAMPOERNA TBK 25,998 6,120,415 Rp 3,160.00 26.71 -11.76 Consumer Staples

5 BMRI IJ EQUITY BANK MANDIRI 25,994 26,062,613 Rp 7,875.00 13.93 10.11 Financials

6 UNVR IJ EQUITY UNILEVER IND TBK 24,299 6,941,420 Rp 45,025.00 38.10 0.90 Consumer Staples

7 ASII IJ EQUITY ASTRA INTERNATIO 20,760 19,975,805 Rp 7,250.00 13.39 -10.05 Consumer Discretionary

8 BBNI IJ EQUITY BANK NEGARA INDO 12,003 13,888,496 Rp 9,100.00 10.98 5.92 Financials

9 GGRM IJ EQUITY GUDANG GARAM TBK 10,486 7,568,191 Rp 77,050.00 17.96 -4.76 Consumer Staples

10 ICBP IJ EQUITY INDOFOOD CBP SUK 8,310 4,595,167 Rp 10,075.00 24.98 -2.26 Consumer Staples

Top 10 Listed companies by Avg Daily Turnover

Market Cap Avg Daily Turnover Return

Ticker Short Name (USD m) (USD) Last Price P/E YTD (% ) Sector

1 BBRI IJ EQUITY BANK RAKYAT INDO 38,300 33,206,033 Rp 4,390.00 16.21 24.06 Financials

2 BBCA IJ EQUITY BANK CENTRAL ASI 51,706 28,377,500 Rp 29,650.00 27.68 15.07 Financials

3 BMRI IJ EQUITY BANK MANDIRI 25,994 26,062,613 Rp 7,875.00 13.93 10.11 Financials

4 TLKM IJ EQUITY TELEKOMUNIKASI 30,129 23,388,434 Rp 4,300.00 23.00 19.43 Communication Services

5 ASII IJ EQUITY ASTRA INTERNATIO 20,760 19,975,805 Rp 7,250.00 13.39 -10.05 Consumer Discretionary

6 BBNI IJ EQUITY BANK NEGARA INDO 12,003 13,888,496 Rp 9,100.00 10.98 5.92 Financials

7 POOL IJ EQUITY POOL ADVISTA IND 327 12,645,036 Rp 2,050.00 - -59.61 Financials

8 UNTR IJ EQUITY UNITED TRACTORS 7,308 9,985,363 Rp 27,700.00 8.87 4.49 Energy

9 TRAM IJ EQUITY TRADA ALAM MINER 421 8,644,677 Rp 120.00 20.81 -29.41 Industrials

10 PGAS IJ EQUITY PERUSAHAAN GAS N 3,566 8,446,093 Rp 2,080.00 12.31 0.69 Utilities

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App 3 – [Regional Snapshot]

Source : World Population Review, Badan Pusat Statistik

Top 10 Regional Demographics

Top 10 Gross Regional Domestic Product (In IDR)

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1515

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