INVESTMENT COORDINATING BOARD

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

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

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 2050. Table 1 shows how the rankings of GDP at PPPs changes from 2016 to 20130 and 2050. [PwC-WEF, 2016]

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 billion US dollars (IDR 545.4 trillion) Investment realization 2016 46.1 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 2016 +17.8% 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

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

RESULT ORIENTED

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]

Investment Performance South Korea Investment Commitment 2011-2016 Year Project Labor Absorption Investment (USD Million) Investment Growth(%) 2011 590 140,004 8,936.2-2012 513 80,449 2,766.9-69 2013 589 71,504 1,590.9-42 2014 560 81,907 2,612.9 64 2015 510 76,340 4,824.1 84 2016 533 93,050 4,888.1 1 Total 2011-2016 3,295 543,254 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

Investment Performance FDI Realization in Indonesia, By Country of Origin Top-10 Indonesia s Source of Investment, Based on Investment Value (USD million) 2011 2016 (Excl. Upstream oil and gas, and financial sectors) Rank Countries 2011 2012 2013 2014 2015 2016 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 1,300 893 1,162 8,517 4 Malaysia 618 530 711 1,776 3,077 1,116 7,828 6 Netherlands 1,354 967 928 1,726 1,308 1,475 7,758 South Korea Investment Realization 2,500 2,206 1,950 2,000 7 United Kingdom 419 934 1,076 1,588 503 307 4,827 8 British Virgin Island 517 856 786 624 731 1,157 4,671 1,500 1,000 1,127 1,214 1,066 9 Hong Kong, PRC 135 310 376 657 937 2,248 4,663 10 China 128 141 297 800 628 2,665 4,659 500 Total (Top-10 Countries) 12,517 14,239 18,200 18,135 18,068 25,776 106,937 Total (129 Countries) 19,475 24,565 28,616 28,530 29,276 28,964 159,428 0 2012 2013 2014 2015 2016 [Source: BKPM, February 2017] IndonesiaInvestment Coordinating Board 11

Investment Performance South Korea s Top 5 Sectors in Indonesia 2011 2016 Excl. Upstream oil and gas, and financial sectors (in USD Million) Investment Commitment 2011 2016 (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 2011 2016 (in USD Million) Rank Business Fields Projects 1 Metal, machinery & electronic industry Total Investment 885 3,665 2 Mining 187 905 3 Rubber & plastic industry 461 808 4 Textile industry 1,090 635 5 Electricity, gas & water 42 440 Others 5,324 2,326 TOTAL 7,988 8,779 [Source: BKPM, February 2017] The Investment Coordinating Board of the Republic of Indonesia 12

KOREAN S WAVE IN INDONESIA

Korean Life in Indonesia South Korean expatriates are among the biggest foreign communities in Indonesia >60.000 South Korean live & work across Indonesia IndonesiaInvestment Coordinating Board 14

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 Integrated Industrial & Port Estate (JIIPE) US$ 150-220 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 Number of Company 18 81 44 40 183 1.716.10 HA Supported by Competitive, Sustainable Utilities, Energies and Logistics No 1 2 3 4 5 6 7 8 9 10 11 12 Industrial Category Automotive Building Material Chemical Consumer Goods Electronics F & B Garment Machine Metal Fabrication Miscellaneous Plastic Manufacturing No 13 14 15 16 17 18 19 20 21 22 Industrial Category Packaging & Printing Logistics & Warehouse Pharmacy Machinery Trading Smelter Steel Related Pulp & Paper Export & Import Related Factory & Warehouse Leasing

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

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 RI, May 2016] WHERE ON EARTH New Seaport in Wasior, West Papua Province (in picture) was finished in April 2016. It is one of 150 seaports built since 2015. Wasior, West Papua

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 RI, May 2016] WHERE ON EARTH New Mopah Airport in Merauke, Papua Province (in picture) is finished in 2015. 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 ON EARTH Progress of Trans Sumatra toll road (in picture). Until 2019, 191.6 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: 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: 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 2016. Jakarta, the capital city

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 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

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. 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.

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

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

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

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

Pro Investment Policy Regional Minimum Wages (Government Regulation No. 78 of 2015 (PP No. 78/2015) concerning wages) USD 106-230Range of minimum wages No Province 2015 Min Wage across 34 provinces in Indonesia 2016 Minimum Wage IDR US$ 1 Central Java *) N/A 1,909,000 141 2 East Java *) N/A 3,045,000 226 growth 3 DKI Jakarta 2,700,000 3,100,000 230 14.8 4 Papua 2,193,000 2,450,770 182 11.7 5 North Sulawesi 2,150,000 2,400,000 178 11.6 6 Bangka Belitung 2,100,000 2,341,500 173 11.5 7 South Sulawesi 2,000,000 2,250,000 167 12.5 8 West Java N/A 2,250,000 167 9 West Papua 2,015,000 2,237,000 166 11.0 10 South Sumatra 1,964,346 2,206,000 163 11.7 11 Riau Islands 1,954,000 2,178,710 161 11.5 12 North Kalimantan 2,026,126 2,175,340 161 7.4 13 East Kalimantan 2,026,126 2,161,253 160 6.7 14 Aceh 1,900,000 2,118,500 157 11.5 15 Riau 1,878,000 2,095,000 155 11.5 16 South Kalimantan 1,870,000 2,085,500 154 11.5 17 Central Kalimantan 1,896,367 2,057,550 152 8.5 No Province Jakarta USD 230 2015 Min Wage East Nusa Tenggara USD 106 2016 Minimum Wage IDR US$ growth 18 Jambi 1,710,000 1,906,650 141 11.5 19 Gorontalo 1,600,000 1,875,000 139 17.2 20 West Sulawesi 1,655,500 1,864,000 138 12.6 21 Southeast Sulawesi 1,652,000 1,850,000 137 12.0 22 North Sumatra 1,625,000 1,811,875 134 11.5 23 Bali 1,621,172 1,807,600 134 11.5 24 West Sumatra 1,615,000 1,800,725 133 11.5 25 Banten 1,600,000 1,784,000 132 11.5 26 Moluccas 1,650,000 1,775,000 131 7.6 27 Lampung 1,581,000 1,763,000 131 11.5 28 West Kalimantan 1,560,000 1,739,400 129 11.5 29 North Moluccas 1,577,617 1,681,266 125 6.6 30 Central Sulawesi 1,500,000 1,670,000 124 11.3 31 Bengkulu 1,500,000 1,605,000 119 7.0 32 West Nusa Tenggara 1,330,000 1,482,950 110 11.5 33 Yogyakarta 1,302,500 1,452,400 108 11.5 34 East Nusa Tenggara 1,250,000 1,425,000 106 14.0 *) 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.

Tax Incentives TAX ALLOWANCE IMPORT DUTY FACILITY TAX HOLIDAY Gov t Regulation No.9/2016 30 % 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.010/2015 5-15 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. 1 00 % 10-100% 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

OSS Information System Investors may find out the stage of their application process by accessing BKPM s website: www.bkpm.go.id

Who will be your Advisor? 59

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 150-945 Phone: +82 2 6137 9455 Fax: +82 2 6137 9456 Email: iipc.seoul@bkpm.go.id MEMBER of ORGANIZATION Imam Soejoedi Director of IIPC Seoul Email: imam_soejoedi@yahoo.com imams@bkpm.go.id Mobile : 010-4701-7099 Reza Mawasthama Deputy Director of IIPC Seoul Email: rejakarta@gmail.com reza.m@bkpm.go.id Mobile : 010-2912-2984 Cheong Min Koung Senior Business Manager Email: min9ng@gmail.com Mobile : 010-4292-4685 Dahnia Kumala Putri Business Manager Email: dahnia.iipc.seoul@gmail.com Mobile : 010-988-05111

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]

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IT IS TIME TO INVEST IN INDONESIA Badan Koordinasi Penanaman Modal (BKPM) Indonesia Investment Coordinating Board Jln. Jend. Gatot Subroto No. 44 Jakarta 12190 - Indonesia t. +62 21 525 2008 f. +62 21 525 4945 e. info@bkpm.go.id www.bkpm.go.id