Supported by: Let s invest in Indonesia Lifestyle and Tourism Industry Regional Investment Forum (RIF) 2018 Yogyakarta, 14 March 2018 INDONESIA INVESTMENT COORDINATING BOARD (BKPM) Thomas Trikasih Lembong Chairman 2017 by Indonesia Investment Coordinating Board. All rights reserved
WHY INDONESIA Growth of lifestyle, digital era & tourism among the rise of Middle Class President of Indonesia, Joko Widodo reiterated that nowadays Indonesia is entering lifestyle and digitalization era. Lifestyle era is driven by the rise of middle class, in the world and Indonesia. GDP Ranking 2016 (in US$ billion) United States China Japan Germany United France India Italy 2,465 2,264 1,859 4,940 3,478 2,648 11,199 18,624 GDP Ranking 2016, PPP (in US$ billion) China United States India Japan Germany Russian Federation Brazil Indonesia 5,267 4,041 3,397 3,147 3,037 8,718 21,451 18,624 According to McKinsey, by 2030 Indonesia will be home to an estimated 90 million additional consumers with considerable spending power, enabling Indonesia s consuming class stronger than any other countries in the world apart from China and India. These is a signal for international business to consider new opportunities in Indonesia. World Bank also highlighted that following a massive reduction in Indonesia s poverty rate in the last two decades, one in every five Indonesians now belongs to the middle-class group. Another 45 percent are part of an aspiring group who are no longer poor or vulnerable to poverty, and members of this aspiring class have yet to reach the level of economic security and lifestyle of the middle class. Brazil Canada Korea, Rep. Russian Spain Australia Mexico Indonesia Turkey Netherlands Switzerland Saudi Arabia 1,796 1,530 1,411 1,283 1,237 1,205 1,047 932 864 777 669 646 Source: World Bank, 2018 United Kingdom France Italy Mexico Turkey Korea, Rep. Saudi Arabia Spain Iran, Islamic Rep. Canada Thailand Australia 2,828 2,774 2,324 2,280 1,941 1,832 1,760 1,693 1,605 1,598 1,167 1,129 Source: World Bank, 2018 2
WHY LIFESTYLE INDUSTRY Indonesian consumption shifting not only spending on goods (non-leisure), but also to experience The rise of Indonesia s middle class is already affecting Indonesian lifestyle, and changing their spending behavior. Nowadays, Indonesian consumption shifting from goods (non-leisure) to experience (leisure economy) (Head of BPS, 2017). The drivers of leisure economy in Indonesia are: Consumption as lifestyle From goods to experience More stress, more travelling Low cost tourism And e-travel effect In lifestyle era, national economic growth can be driven by commodity lifestyle (for example coffee, cacao, cinnamon, palm sugar, nutmeg, textile and apparel, cosmetics, furniture, etc.) and services lifestyle (such as tourism, entertainment, wellness, restaurant) (Chairman of BKPM, 2017). Mckinsey research shows Indonesian consuming class will grow almost double in 10 years since 2010 265 280 280 240 145 110 180 Bellow 195 Consuming class 135 170 85 Consuming class 45 Financial services Food and beverage Leisure Apparel Education Transportation Housing and utilities Telecommunications Beauty and cosmetics Health care 2010 2020 3 2030 in 5-6% Additional people in The consuming class INDONESIAN MIDDLE CLASS SPENDING (US$ BILLION) 2011 2030 8 6 4 14 13 11 26 22 73 85 30 26 19 16 13 57 42 105 GDP scenario 194 2030 in 7% GDP scenario 40 90 125 565 Source: Canback Global Income Distribution Database; Indonesia s Central Bureau of Statistics, Mckinsey Consumer and Shopper Insight Indonesia Study, 2011, Mckinsey Global Growth Model; Mckinsey Global Institute analysis 3
Lifestyle Commodities I want to emphasize that lifestyle commodity plays an important part in the lifestyle industry. Nowadays; we have coffee, we have cocoa - President Joko Widodo. Global demand for cocoa is on the rise due to the rising demand from new market such as India and China. 70% of Indonesia s total cocoa production comes from South Sulawesi. The market started to grow beyond people who were just needs-based and into a lifestyle choice. Chocolate remain the most favorite snack in the world Rank Snacks Global Average 1 Chocolate 69% 2 Fresh Fruit 62% 3 Vegetables 52% 4 Cookies/Biscuits 51% 5 Bread/Sandwich 50% 6 Yogurt 50% 7 Cheese 46% 8 Chips/Crips 44% 9 Nuts/Seeds 41% 10 Gum/Ice Cream 33% Source: Nielsen, 2014 Production of cocoa beans in Indonesia from 2012/2013 to 2016/2017 (in 1000 tons) Indonesia is the 3 th Largest Cocoa producer with annual capacity around 770,500 metric tons. 410 375 325 320 330 Indonesia is the 4 th Largest Coffee producer with annual capacity around 660,000 metric tons 2012/2013 2013/2014 2014/2015 2015/2016* 2016/2017** Source: Statista, 2018 4
10 Priority Tourism Destinations to be Developed Toba Lake Area : 500 Ha USD 1 Billion Borobudur Area : 1000 Ha USD 1.5 Billion Mandalika Area : 1035 Ha USD 3.3 Billion Tanjung Kelayang Area : 1200 Ha USD 1.6 Billion Tanjung Lesung Area : 1500 Ha USD 5 Billion Seribu Islands Area : 1000 Ha USD 1 Billion Bromo Tengger Semeru Area : 1000 Ha USD 1 Billion Wakatobi Area : 500 Ha USD 1.4 Billion Labuan Bajo Area : 1000 Ha USD 1.2 Billion Morotai Area : 300 Ha USD 3 Billion The Investment Coordinating Board of the Republic of Indonesia 5
Investment Realization in Tourism Industry (2013-2017) Average Annual Growth (2013 2017): FDI : 20% DDI : 48% Avg. growth total : 20% DDI (23%) US$ 1,386 Mio 871 921 195 246 1,055 322 676 675 733 162 1,193 460 1,319 2013 2014 2015 2016 2017 Source: BKPM, 2018 FDI (77%) US$ 4,596 Mio FDI DDI 1,355 +31% 1,779 In the last 5 years (2013 2017) investment realization in tourism sector is still dominated by Foreign Investment (77%) with US$ 4.5 Billion. The number of project/company in Tourism sector also dominated by FDI with 10,654 projects in last 5 years, while DDI has 1,356 projects. However, average annual growth of Domestic Investment in tourism sector record higher growth by 48%, compared to foreign investment (20% growth). Number of Project / Company in Tourism in Last 5 Years PROJECT (Number) 2013 2014 2015 2016 2017 Total % Avg. Annual Growth FDI 1,225 1,158 1,951 2,345 3,786 10,465 36% DDI 103 61 306 335 551 1,356 109% TOTAL 1,328 1,219 2,257 2,680 4,337 11,821 39% Number of Local Worker (TKI) absorbed in Tourism in Last 5 Years WORKER (Number) 2013 2014 2015 2016 2017 Total % Avg. Annual Growth FDI 34,788 25,762 34,838 31,045 33,657 160,090 2% DDI 7,911 6,442 9,564 4,012 10,504 38,433 33% TOTAL 42,699 32,204 44,402 35,057 44,161 198,523 5% No Top 10 FDI in Tourism US$ Million Project % Share (Value) 1 Singapore 1,860 2,122 40% 2 Hongkong 527 365 11% 3 Japan 180 740 4% 4 South Korea 123 875 3% 5 Malaysia 114 307 2% 6 Australia 105 765 2% 7 Spain 101 93 2% 8 Luxembourg 83 22 2% 9 United Kingdom 83 360 2% 10 France 79 478 2% Other Countries* 1,341 3,338 71% TOTAL 4,596 10,465 100% Note: Tax Haven Countries such as British Virgin Islands, Cayman Island, Seychelles, etc. are included in Other Countries
CREATIVE ECONOMY OUTLOOK CREATIVE ECONOMY INDONESIA 2016 Contribution to Indonesian GDP (in IDR Trillion) 7,66% 525.96 7,41% 7,43% 638.39 581.54 7,42% 708.27 7,43% 784.87 7,39% 852.56 7,44% 922.59 Contribution on Creative Economy is dominated by 3 largest sector such as Culinary, Fashion and Craft, representing 74,81% of total creative economy 15.4 18.01 1.86 8.27 0.17 41.4 Culinary Fashion Craft TV & Radio App & Game Developer Film, Animation, & Video 2010 2011 2012 2013 2014 2015 2016 Indonesia is the 3 rd largest country contributors on creative economy to GDP in 2016 United States of America South Korea Indonesia Russia Singapore Philippines 11,12 % 8,67% 7,44% 6,06% 5,70% 4,92% 4,50% Canada Top 5 Largest Province (Share of Total Creative Economy) 1 2 3 4 5 Yogyakarta Bali West Java East Java North Sumatera 16,12% 12,57% 11,81% 9,37% 4,47% Source: BEKRAF, 2018 7
In 2017, Indonesia received at least US$ 4.9 Billion investment in Digital Economy Indonesia contributes to around 4% of Global E- Commerce Sales 4 Startups from Indonesia $ 1.2 Billion, backed by Tencent $ 1.1 Billion, backed by Alibaba $ 0.5 Billion, backed by JD.com $ 22 Million Source : E-Marketer, The Investment Coordinating Board of the Republic of Indonesia 8
Investment opportunities Indonesia Cinema & Film Industry Business Overview By 2030, 135 million consuming class offer USD105 billion market in entertainment. Box office market is increasing, the 16 th largest in the world (USD300 million). 0.4 screen per 100,000 population, compared to China (1.8) and India (0.9). Screens are not well distributed, 87% of screens are located in Java Island. More than 50 companies in film making and 30 companies in animation. More Indonesian films get global recognitions and attract millions of viewers. Market Share of Existing Cinema in Indonesia Cinema XXI (Market Share : 62.7% ) CGV Blitz (Market Share : 14%) Cinemaxx(Market Share : 10.2%) New Star (Market Share : 3.4%) Platinum Cineplex (Market Share : 2.6%) Movimax (Market Share: 0.07%) Independent Cinema (Market Share : 6%) * Market share is accounted from total cinema from each brand compared with total cinema in Indonesia Total Regency / City have access to Cinema 48 52 2014 2015 2016 2017 61 79 Indonesia Economy Creative Board (BEKRAF) has set up the target to build 5000 cinemas with 20.000 screen in 5 years. Up to 2017, total cinema in Indonesia is accounted for 263 cinemas with 1.412 screens located in 29 Provinces or 79 regency/city. Only 15% of total regency/city (515 regency/city) in Indonesia has access to cinema. Nearly 70% of Indonesian cinema is located in Java island. Source: filmindonesia.or.id In 2017, around 42,7 million audiences watching movie in cinemas. 9
Government Target to Ease Investment Services SERVICE COMMITMENT The Investment Coordinating Board of the Republic of Indonesia 10
Single Submission System (NSWi) to be Implemented this Year Transportation License TRANSPORTATION NPWP & KSWP FINANCE TAX Masterlist FINANCE CUSTOMES INTEGRATED BUSINESS LICENSING Single submission of data and information and single and synchronous processing of data and information MARINE FISHERY AGRICULTURE LEMSANEG LHK Digital Signature Forestry Permit All licensing data and business requirement compliance for every ministries /government agency will be in 1 integrated business license system Online Single Submission will be compiled since the enactment of this regulation andthe trial will be done at the latest bt 1 January 2018. NIK Deed of Establishment Authentication INSW HOME AFFAIRS KEMKUM HAM - AHU PTSP - DPMPTSP (ONLINE SINGLE SUBMISSION) KEMENPERIN KEMENDAG KEMENAKER TDP INA-TRADE Foreign Worker Online Single Submission will be operated gradually and will be started on 1 March 2018. Mining License Business License ESDM BIG The operational and the admin of Online Single Submission will be performed in 1 (one) building set by the Government KOMINFO E-licensing PPI BPJS PUPERA IUJK AGRARIA Building Permit (IMB) : Integrated : On Process : Coordinating : Un-Integrated Yet The Investment Coordinating Board of the Republic of Indonesia 11
PROMOTION EVENT IN INDONESIA IN 2018 8 14 October 2018 in Bali Indonesia has been selected as the host of IMF World Bank Annual Meetings 2018. The Meetings is one of the largest and influential events on finance and economy, where it brings together Central Bank Governors and Ministers of Finance from 189 countries along with prominent persons from private sector, academics, NGO, and media. In total, there will be approximately 15,000 participants. Also featured are side events, such as seminars, investment forum, FGD, workshop, and cultural events. The Investment Coordinating Board of the Republic of Indonesia 12
THANK YOU LETS INVEST IN INDONESIA Indonesia Investment Coordinating Board Badan Koordinasi Penanaman Modal (BKPM) Jl. Jenderal Gatot Subroto No. 44 Jakarta 12190 - Indonesia Tel: (+6221) 525 2008 Fax : (+6221) 525 4945 Contact Center : 0807 100 2576 E-mail : info@bkpm.go.id www.bkpm.go.id follow us on BKPMINDONESIA THEBKPMVIDEO Indonesia Investment Coordinating Board bkpm bkpm_id www.investindonesia.go.id