INVESTMENT COORDINATING BOARD

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COORDINATING BOARD Imam Soejoedi Director of Indonesia Investment Promotion

1 invest in Korea MAT 2017 Seoul, 18 April 2017 UPDATES FROM INDONESIA Investment Opportunities in Logistics Infrastructures INDONESIA INVESTMENT COORDINATING BOARD Imam Soejoedi Director of Indonesia Investment Promotion Center (IIPC) - Seoul 2017 by Indonesia Investment Coordinating Board. All rights reserved

2 Growing Your Money Saving for Retirement WHERE..? Earning Higher Returns Reaching Financial Goals Finding Production Base

Market, Economy & Politics are Stable Indonesia could be the 4 th largest economy

movement of emerging economies up to the rankings into the top 10, with a

With the exception of Turkey, the E7 economies will dominate the top 7 places,

3 Why Indonesia? 60% Young Generation > 140 million people Abundant Natural Resources The Emerging Market, Economy & Politics are Stable Indonesia could be the 4 th largest economy in the world by 2050 Looking beyond the top three countries, we see a marked movement of emerging economies up to the rankings into the top 10, with a corresponding fall in the rankings of today s advanced economies. With the exception of Turkey, the E7 economies will dominate the top 7 places, with Indonesia, Brazil, Russia and Mexico taking 4 th to 7 th places in Table 1 shows how the rankings of GDP at PPPs changes from 2016 to and [PwC-WEF, 2016]

5 Indonesia Market : Waiting for The Wave

Indonesia from the Perspective of Trusted and Credible Institution Indonesia is a global destination for investment Rising Direct Investment Source: BKPM, January 2017 2015 43.

6 Indonesia from the Perspective of Trusted and Credible Institution Indonesia is a global destination for investment Rising Direct Investment Source: BKPM, January billion US dollars (IDR trillion) Investment realization billion US dollars (IDR 612.8trillion) Investment realization Indonesia: The 3 rd investment destination in Asia (Jan 16) Source: The Economist, Asia Business Outlook Survey % Investment realization growth (y/y) +12.4% Investment realization growth (y/y) Investment Grade Rating Japan Credit Rating: BBB- Stable Investment Grade Moody s: Baa3, Stable Investment Grade Indonesia S&P: BB+, Positive Fitch: BBB-, Stable Investment Grade Indonesia: The 2 nd most preferred place for business investment after India (Dec 2015) Source: JBIC (Japan Bank for Int l Corp) Survey, Outlook for Japanese FDI

[Public Dialogue by ISEI in Jakarta, 30 March 2016] SIMPLIFY THE BUSINESS LICENSING PROCESS,

7 President Jokowi: In the future, we will focus on the deregulation and infrastructure development in addition to the industrialization and human resources development. [Public Dialogue by ISEI in Jakarta, 30 March 2016] SIMPLIFY THE BUSINESS LICENSING PROCESS, BUSINESS FRIENDLY, OPENESS AND BEING APPROACHABLE DEVELOPING MANY INFRASTRUCTURE PROJECTS TOLL ROAD, RAILWAY, SEA PORT, AIRPORT, & IRRIGATION

8 RESULT ORIENTED

CEOs as partners and workers with humble, strong service attitude and low

9 FACT & FIGURE South Korea Presence in Indonesia Song Chang Keun (Korean Chamber of Commerce & Industry - Indonesia): Indonesia has a lot of good CEOs as partners and workers with humble, strong service attitude and low turnover rate (2%) [Indonesia-Korea Business Summit in Jakarta, 14 March 2017]

10 Investment Performance South Korea Investment Commitment Year Project Labor Absorption Investment (USD Million) Investment Growth(%) ,004 8, ,449 2, ,504 1, ,907 2, ,340 4, ,050 4, Total , ,254 25,619.3 More than 500 new projects are generated each year Positive contribution in creating job opportunities to support the government s 2 million jobs creation program by 2019 [Source: BKPM, February 2017] IndonesiaInvestment Coordinating Board 10

11 Investment Performance FDI Realization in Indonesia, By Country of Origin Top-10 Indonesia s Source of Investment, Based on Investment Value (USD million) (Excl. Upstream oil and gas, and financial sectors) Rank Countries Total 1 Singapore 5,123 4,856 4,672 5,832 5,901 9,179 35,563 2 Japan 1,516 2,457 4,713 2,705 2,877 5,401 19,669 3 South Korea 1,219 1,950 2,206 1,127 1,214 1,066 8,782 5 USA 1,488 1,238 2,436 1, ,162 8,517 4 Malaysia ,776 3,077 1,116 7,828 6 Netherlands 1, ,726 1,308 1,475 7,758 South Korea Investment Realization 2,500 2,206 1,950 2,000 7 United Kingdom ,076 1, ,827 8 British Virgin Island ,157 4,671 1,500 1,000 1,127 1,214 1,066 9 Hong Kong, PRC ,248 4, China ,665 4, Total (Top-10 Countries) 12,517 14,239 18,200 18,135 18,068 25, ,937 Total (129 Countries) 19,475 24,565 28,616 28,530 29,276 28, , [Source: BKPM, February 2017] IndonesiaInvestment Coordinating Board 11

12 Investment Performance South Korea s Top 5 Sectors in Indonesia Excl. Upstream oil and gas, and financial sectors (in USD Million) Investment Commitment (in USD Million) Rank Business Fields Projects Total Investment 1 Electricity, gas & water 33 7,527 2 Other services 304 5,508 3 Real estate, industrial estate & office building 79 2,035 4 Trade & reparation 1,215 1,723 5 Rubber & plastic industry 114 1,258 Others 1,550 7,568 TOTAL 3,295 25,619 Investment Realization (in USD Million) Rank Business Fields Projects 1 Metal, machinery & electronic industry Total Investment 885 3,665 2 Mining Rubber & plastic industry Textile industry 1, Electricity, gas & water Others 5,324 2,326 TOTAL 7,988 8,779 [Source: BKPM, February 2017] The Investment Coordinating Board of the Republic of Indonesia 12

13 KOREAN S WAVE IN INDONESIA

14 Korean Life in Indonesia South Korean expatriates are among the biggest foreign communities in Indonesia > South Korean live & work across Indonesia IndonesiaInvestment Coordinating Board 14

15 Where to invest in INDONESIA WHERE ON EARTH 34 provinces & 514 regions, decentralized

Prospective Location US$ 132 minimum wage (2016) Merak Port is located in proximity to the industrial estates Banten Modern Cikande Industrial Estate Krakatau Industrial Estate Cilegon East Java Java

16 Prospective Location US$ 132 minimum wage (2016) Merak Port is located in proximity to the industrial estates Banten Modern Cikande Industrial Estate Krakatau Industrial Estate Cilegon East Java Java Integrated Industrial & Port Estate (JIIPE) US$ minimum wage (2016) Tanjung Perak Port is located in proximity to the industrial estates [Source: Government Regulation No. 78 of 2015 (PP No. 78/2015) concerning wages] The Investment Coordinating Board of the Republic of Indonesia 38

Prospective Location : JIIPE Industrial Estate No Zone Area Average Area per Industry 1 2 3 4 Heavy Industry Medium Industry Light Industry Commercial Industry 454 Ha 527 Ha 134 Ha 118 Ha 25 65 3 3

17 Prospective Location : JIIPE Industrial Estate No Zone Area Average Area per Industry Heavy Industry Medium Industry Light Industry Commercial Industry 454 Ha 527 Ha 134 Ha 118 Ha Number of Company HA Supported by Competitive, Sustainable Utilities, Energies and Logistics No Industrial Category Automotive Building Material Chemical Consumer Goods Electronics F & B Garment Machine Metal Fabrication Miscellaneous Plastic Manufacturing No Industrial Category Packaging & Printing Logistics & Warehouse Pharmacy Machinery Trading Smelter Steel Related Pulp & Paper Export & Import Related Factory & Warehouse Leasing

18 Current Progress Port Estate Prospective Location : JIIPE Road Access inside Reclamation Area 1050 m x 10,5 m Natural Depth -14 LWS, proceed to -16 LWS Sea reclamation is proceeding. Currently the newly formed island for port is 80 ha. 1 st stage Jetty s completed 2 x 200 m x 30 m With Mooring Dolphin 50 m Trestle connecting port to Jetty 530 m x 13 m is completed Bridge Connecting Industrial Estate to Port 430 m x 14 m Completed

19 Logistics Infrastructures in INDONESIA WHERE ON EARTH 34 provinces & 514 regions, decentralized

Infrastructure Development 150 new seaports have been built since 2015 100 vessels developed, 86 pioneer sea lanes served since 2015 [Source: Ministry of Transportation

20 Infrastructure Development 150 new seaports have been built since vessels developed, 86 pioneer sea lanes served since 2015 [Source: Ministry of Transportation RI, May 2016] WHERE ON EARTH New Seaport in Wasior, West Papua Province (in picture) was finished in April It is one of 150 seaports built since Wasior, West Papua

Infrastructure Development Marine toll operates Tarempa Natuna Scheduled Freight

Ternate Babang Namlea Makassar Wanci Larantuka Kalabahi Moa Loweleba Waingapu

21 Infrastructure Development Marine toll operates Tarempa Natuna Scheduled Freight Liner Routes Lirung Tahuna Morotai Tobelo T - 1 = T - 2 = T - 3 = T - 4 = T - 5 = T - 6 = T. Priok, Jakarta [Source: Ministry of Transportation RI, May 2016] Surabaya Ternate Babang Namlea Makassar Wanci Larantuka Kalabahi Moa Loweleba Waingapu Sabu The Investment Coordinating Board of the Republic of Indonesia Rote Biak Manokwari Serui Wasior Fak - Fak Nabire Kaimana Timika Dobo Saumlaki Merauke 43

Infrastructure Development 19 new airports have been built since 2015 132 airports rehabilitated, 27 airports expanded since 2015 [Source: Ministry of Transportation

22 Infrastructure Development 19 new airports have been built since airports rehabilitated, 27 airports expanded since 2015 [Source: Ministry of Transportation RI, May 2016] WHERE ON EARTH New Mopah Airport in Merauke, Papua Province (in picture) is finished in Merauke is the easternmost city in Indonesia. Merauke, Papua

Infrastructure Development 1,000 km of new toll-roads to be finished by 2019 2,650 km of new roads development 46,770 km of existing roads rehabilitation [Source: Bank of Indonesia, May 2016] WHERE

23 Infrastructure Development 1,000 km of new toll-roads to be finished by ,650 km of new roads development 46,770 km of existing roads rehabilitation [Source: Bank of Indonesia, May 2016] WHERE ON EARTH Progress of Trans Sumatra toll road (in picture). Until 2019, km of toll-roads will be built in Sumatra, Indonesia s second most populous island. Sumatra Island, consisting of 10 provinces

WHERE ON EARTH Sulawesi, the third most populous island Infrastructure Development 2,159 km to be finished by 2019 of inter-urban railways 187 km of railways developed since 2015 [Source:

24 WHERE ON EARTH Sulawesi, the third most populous island Infrastructure Development 2,159 km to be finished by 2019 of inter-urban railways 187 km of railways developed since 2015 [Source: Ministry of Transportation RI, May 2016] Progress of Trans Sulawesi railway (in picture) Phase I, between Makassar and Pare-pare (145 km). The first railway project in Sulawesi will be finished in 2016.

Infrastructure Development 1,099 km of urban railways to be finished by 2019 Tramway under construction in Surabaya, 2 airport railways under construction in Jakarta & Padang [Source:

25 Infrastructure Development 1,099 km of urban railways to be finished by 2019 Tramway under construction in Surabaya, 2 airport railways under construction in Jakarta & Padang [Source: Ministry of Transportation RI, May 2016] WHERE ON EARTH Jakarta MRT (21.5 km, North-South Corridor) will be finished in 2017 (in picture). Progress 38% per January Jakarta, the capital city

26 What INDONESIA has to offer One-stop service for investment 3-hour service and direct construction Simplification of licensing Tax incentives Pro-investment policy reforms WHERE ON EARTH 34 provinces & 514 regions, decentralized

Investment List Checking Incentives offered by the

27 Investment Service Stage of Investment in Indonesia Defining Investment Interest Checking Negative Investment List Checking Incentives offered by the Government Looking for Land / Location of Investment Contact BKPM

28 Investment Service How to get the Permit? ONLINE SERVICE ONE-STOP SERVICE : BKPM OFFICE 3-HOUR SERVICE FOR 8 LICENSES

Investment Priority Service 3-hour Service Available for investors with minimum investment of IDR 100 billion (USD 8 million) and/or employing 1,000 local workers.

Working permit Certainty to import capital goods APIP / Import identification NIK / Customs registration Accurate land Information Letter of land availability BKPM Arrive at One-stop Service at BKPM

29 Investment Priority Service 3-hour Service Available for investors with minimum investment of IDR 100 billion (USD 8 million) and/or employing 1,000 local workers. 8 documents obtained Certainty to start a business Investment license Certificate of incorporation NPWP / Tax registration TDP / Company registration Certainty to work RPTKA / Employment plan IMTA / Working permit Certainty to import capital goods APIP / Import identification NIK / Customs registration Accurate land Information Letter of land availability BKPM Arrive at One-stop Service at BKPM directly from the airport. Consult with Director of Investment Service. Submit the required documents & data. Wait at the lounge while documents are processed by BKPM, in-house notary, ministries, & other government institutions. Obtain eight documents & letter of land availability within three hours to start your business.

Obtain investment licence Direct construction is supported by central and local governments Survey a land within selected industrial parks.

30 Investment Priority Service Direct Construction (KLIK) No Requirements No minimum investments or workers is required. Investors in all industries can imediately start their project construction within selected industrial parks. Permits can be obtained in parallel. Obtain investment licence Direct construction is supported by central and local governments Survey a land within selected industrial parks. Acquire the land for your industry. The Investment Coordinating Board of the Republic of Indonesia Start the construction of your project rightaway. No other permits are required. Apply for construction permit & environmental permit, in parallel with the construction. 52

31 Improvement of Investment Climate CUSTOMS CLEARENCE Four customs checking status: Red line is for new companies. Physical & document checks before transported from ports. Yellow line Document check before goods transported from ports. Green line Document check after goods transported from ports. Main Partner Priority for companies with proven track record. No checking required. New Facility: Status upgrade from red to green line for new companies under construction Import Facility for Capital Goods Acceleration and certainty in custom clearance process Faster & Certain Capital goods do not require screening. Cutting the processing time from 3-5 days to only 30 minutes. Simple requirements Projects under construction Obliged in reporting quarterly investment activities (LKPM) Recommendation from BKPM

logistic costs nationwide & improve domestic industry competitiveness 1,27 days

32 Pro Investment Policy Bonded Logistics Center 28 Bonded Logistics Centers (BLC) have been launched across Indonesia 25% efficiency Dwelling cost within BLC Reduce logistic costs nationwide & improve domestic industry competitiveness 1,27 days Average dwelling time within BLC The Investment Coordinating Board of the Republic of Indonesia 54

33 Pro Investment Policy Bonded Logistics Center Bonded Logistics Centers in Indonesia The Investment Coordinating Board of the Republic of Indonesia 55

34 Pro Investment Policy Regional Minimum Wages (Government Regulation No. 78 of 2015 (PP No. 78/2015) concerning wages) USD Range of minimum wages No Province 2015 Min Wage across 34 provinces in Indonesia 2016 Minimum Wage IDR US$ 1 Central Java *) N/A 1,909, East Java *) N/A 3,045, growth 3 DKI Jakarta 2,700,000 3,100, Papua 2,193,000 2,450, North Sulawesi 2,150,000 2,400, Bangka Belitung 2,100,000 2,341, South Sulawesi 2,000,000 2,250, West Java N/A 2,250, West Papua 2,015,000 2,237, South Sumatra 1,964,346 2,206, Riau Islands 1,954,000 2,178, North Kalimantan 2,026,126 2,175, East Kalimantan 2,026,126 2,161, Aceh 1,900,000 2,118, Riau 1,878,000 2,095, South Kalimantan 1,870,000 2,085, Central Kalimantan 1,896,367 2,057, No Province Jakarta USD Min Wage East Nusa Tenggara USD Minimum Wage IDR US$ growth 18 Jambi 1,710,000 1,906, Gorontalo 1,600,000 1,875, West Sulawesi 1,655,500 1,864, Southeast Sulawesi 1,652,000 1,850, North Sumatra 1,625,000 1,811, Bali 1,621,172 1,807, West Sumatra 1,615,000 1,800, Banten 1,600,000 1,784, Moluccas 1,650,000 1,775, Lampung 1,581,000 1,763, West Kalimantan 1,560,000 1,739, North Moluccas 1,577,617 1,681, Central Sulawesi 1,500,000 1,670, Bengkulu 1,500,000 1,605, West Nusa Tenggara 1,330,000 1,482, Yogyakarta 1,302,500 1,452, East Nusa Tenggara 1,250,000 1,425, *) East and Central Java provinces did not set minimum wage at the provincial level in 2016 but did so at the district/city level. The number provided above are minimum wage for Surabaya as the highest minimum wage in East Java and Semarang as the highest minimum wage in Central Java.

35 Tax Incentives TAX ALLOWANCE IMPORT DUTY FACILITY TAX HOLIDAY Gov t Regulation No.9/ % of investment value Reduction of corporate net income tax for 6 years, 5% each year. 145 business segments Eligible for tax allowance, expanded from 129 segments in the previous regulation. Under certain requirements among others: investment value or export orientation, manpower absorption, local content. MoF Regulation No.176/PMK.011/2009 jo. MoF Regulation No. 76/PMK.011/2012 jo. MoF Regulation 188/PMK.010/2015 Import duty on Machineries and Equipments, goods, and raw materials for production Exemption of import duty on machineries and equipments 2 years exemption of import duty on raw materials Additional 2 years import duty exemption for raw materials if company using locallyproduced machineries and equipments (min 30%) MoF Regulation No. 66/PMK.010/2015 Import duty on Capital Goods for Development and Expansion of Power Generation Industries for Public Purpose. The Investment Coordinating Board of the Republic of Indonesia MoF Regulation No.159/PMK.010/ years Tax relief facility, starting from the commencement of commercial production. Can be extended for Max. 20 years under certain consideration. IDR1 trillion Minimum investment plan (USD 80 million). Or Minimum IDR 500 Billion if introduce new technology Max % % Reduction of corporate income tax for Pioneer Industry. Max. 50% for industry that implement high technology with investment plan IDR 500 M less than 1 Trillion. Pioneer Industry 1. Upstream metal; 2. Oil refinery; 3. Basic organic-chemical from oil and gas; 4. Machinery industry that manufacture industrial machine; 5. Processing industry based on commodity from agriculture, forestry and fishery; 6. Telecommunication, information and communication; 7. Sea transport; 8. Processing industry as main industry located in Special Economic Zone (SEZ); and or 9. Infrastructure (economical, non-ppp scheme) 57

36 OSS Information System Investors may find out the stage of their application process by accessing BKPM s website:

37 Who will be your Advisor? 59

Indonesia Investment Promotion Center (IIPC) Seoul is a Government Agency

effective and efficient manner by working closely with the Indonesian Embassy

Clearing House Agent FREE of CHARGE IIPC Office at Seoul Two IFC, 15 th

9455 Fax: +82 2 6137 9456 Email: iipc.seoul@bkpm.go.

Email: rejakarta@gmail.com reza.m@bkpm.go.

38 Indonesia Investment Promotion Center (IIPC) Seoul is a Government Agency that promotes Indonesia s investment opportunities proactively in an effective and efficient manner by working closely with the Indonesian Embassy in Seoul through 3 main functions of: 1. Promotion Agency 2. Facilitator 3. Clearing House Agent FREE of CHARGE IIPC Office at Seoul Two IFC, 15 th Floor, 10 Gukjegeumyung-ro Yeongdeungpo-gu, Seoul Phone: Fax: iipc.seoul@bkpm.go.id MEMBER of ORGANIZATION Imam Soejoedi Director of IIPC Seoul imam_soejoedi@yahoo.com imams@bkpm.go.id Mobile : Reza Mawasthama Deputy Director of IIPC Seoul rejakarta@gmail.com reza.m@bkpm.go.id Mobile : Cheong Min Koung Senior Business Manager min9ng@gmail.com Mobile : Dahnia Kumala Putri Business Manager dahnia.iipc.seoul@gmail.com Mobile :

39 President Jokowi: We are still only at the beginning. We will still continue to simplify, continue to open up, continue to modernize our rules and regulations. ASEAN Economic Community conference in San Francisco, U.S., 17 Feb 2016 [Reuters]

40 KEEP UPDATED & FOLLOW US ON: Facebook Fan Page BKPM Indonesia Investment Coordinating Board ios & Android Apps BKPM Invest in Indonesia BKPM E-Newsletter Subscribe at YouTube Channel THEBKPMVIDEO LinkedIn Indonesia Investment Coordinating Board (BKPM) 62

41 IT IS TIME TO INVEST IN INDONESIA Badan Koordinasi Penanaman Modal (BKPM) Indonesia Investment Coordinating Board Jln. Jend. Gatot Subroto No. 44 Jakarta Indonesia t f e. info@bkpm.go.id

DOMESTIC AND FOREIGN DIRECT INVESTMENT REALIZATION IN QUARTER II AND JANUARY JUNE 2013

DOMESTIC AND FOREIGN DIRECT INVESTMENT REALIZATION IN QUARTER II AND JANUARY JUNE 2013 Invest in remarkable indonesia Invest in indonesia Invest in remarkable indonesia Invest in remarkable indonesia Invest in Invest in remarkable indonesia Invest in indonesia Invest in remarkable indonesia