INDONESIA INVESTMENT UPDATE

Transcription

1 INDONESIA INVESTMENT UPDATE November, 2 nd 2018

2 Outline 1. Indonesia as Investment Destination 2. FDI Performance in Indonesia (2013-S1 2018) 3. Japan Investment in Indonesia (2013-S1 2018) 4. Investment Reforms The Investment Coordinating Board of the Republic of Indonesia 2

3 Indonesia as an Investment Destination INDONESIA INVESTMENT COORDINATING BOARD 2018 by Indonesia Investment Coordinating Board. All rights reserved

4 Indonesia s GDP Rises from 8th in 2016 to 4th in 2050 GDP at PPP Rankings (Projection for 2030 and 2050) PPP Rank Country GDP at PPP (2014 US$bn) Country Projected GDP at PPP (US$bn) Country Projected GDP at PPP (US$bn) 1 China 21,269 China 38,008 China 58,499 2 United States 18,562 United States 23,475 India 44,128 3 India 8,721 India 19,511 United States 34,102 4 Japan 4,932 Japan 5,606 Indonesia 10,502 5 Germany 3,979 Indonesia 5,424 Brazil Russia 3,745 Russia 4,736 Russia 7,131 7 Brazil 3,135 Germany 4,707 Mexico 6,863 8 Indonesia 3,028 Brazil 4,439 Japan 6,779 9 UK 2,788 Mexico 3,661 Germany 6, France 2,737 UK 3,638 UK 5,369 After around 2018, growth could get back on track both in China and in emerging Asia more generally, in part because China will be pushing its productive capacity into other lower cost places like Vietnam, Indonesia, the Philippines and maybe also Myanmar. Rebecca Harding, CEO of Delta Economics World Bank s Economic Growth Projection Country China Indonesia in 2045: Cambodia Philippines Vietnam Laos Myanmar Malaysia Indonesia Thailand Population: 309 million Working age population: 52% Urban population: 75% Middle class population: 80% Income per capita: USD 29,300 Share economy from service: 73% Source: How will the global economic order change by 2050, PwC, 2017; WorldBank,

5 China ASEAN-China FTA Japan Japan-Indonesia EPA ASEAN-Japan CEPA Korea Korea-Indonesia FTA ASEAN-Korea CEPA Pakistan Pakistan-Indonesia FTA Hong Kong ASEAN-HK, China FTA Australia Australia-Indonesia CEPA ASEAN-Australia & NZ CEPA New Zealand ASEAN-Australia & NZ CEPA Chile Chile-Indonesia FTA ASEAN FTA 10 members Indonesia-EFTA Indonesia, Iceland, Norway, Lichtenstein, Switzerland Regional CEPA ASEAN, Australia, China, India, Japan, Korea, NZ Trade Preferential System 41 OIC members Preferential Tariff Agr. 8 developing countries Indonesia CEPA and FTA A Production Base to Reach Global Market Trade Preferential System (41 members of OIC) The Investment Coordinating Board of the Republic of Indonesia Regional CEPA (ASEAN & 6 countries) ASEAN FTA (10 members) 5

6 Investment as the back bone of national economy GDP Components by Expenditures 2018 Growth Target GDP Private consumption 5,1 - Government consump. 3,8 - Investment (GCFCF) 6,3 - Export 5,1 Indonesia s 2018 economic growth target set at 5.4%. In order to achieve that, we need to increase investment, export, and spending. Economic growth target in % Consumption, export, and Investment must be drive the economic growth Investment is needed to support a strong economic growth. But government consumption will be limited due to narrow fiscal deficit and priority on capital expenditure allocation Copyright 2017 Indonesia Investment Coordinating Board. All rights reserved. 4

7 Indonesia has been considered as a secure, stable and reformist country by International Rating Agencies Safe Stable Reformist The Investment Coordinating Board of the Republic of Indonesia 7

8 WHY INVEST IN INDONESIA? Indonesia Ease of Doing Business is Improving. The Government is on track for Structural Reform Ease of Doing Business Indonesia Source: World Bank, BRIC Country Ranking Moody s: Baa2, STABLE Investment Grade Indonesia Fitch: BBB, Stable Investment Grade Country Russia Indonesia China India DB 2017 DB Japan Credit Rating: BBB, POSITIVE Investment Grade S&P: BBB-, Stable Brazil Copyright 2018 Indonesia Investment Coordinating Board. All rights reserved. 8

9 9 The Year of 2017: Investment Continues to Grow Beyond the Target Focusing on tourism and e-commerce to boost investment growth in 2018 Expected growth % FDI 16.0% DDI % % % Realization in 2017 growthcompared to its +23.1% target: 102.1% 2017 Y-o-Y DDI 21.3% FDI 8.5% Total 13.1% (Target) Source: BKPM, 2018 Investment Realization (IDR Trillion)

10 Investment Priority Sector BKPM s PRIORITY SECTORS Infrastructure 35 GW power generation 24 Sea ports Multimode Transportation Agriculture Food estate Corn Plantation Cattle Salt Labor-intensive industry Textile Food & Beverages Furniture Footwear Lifestyle Industry Import-substitution industry Export-oriented industry Downstream industry of natural resources Chemical & Pharmaceutical Electronics Iron & Steel CPO & Derivative Products Component Wood Products, Pulp & Paper Cacao Sugar Smelter Maritime Ship Building Cold Storage Tourism, SEZ & Industrial Park Digital Economy 10 Tourism Priority Destination e-commerce Marine Technology Defend Industry Automotive 10 Tourism SEZ 8 Existing SEZ 7 New SEZ Financial Technology IT Based Creative Economy 14 Priority Industrial Parks The new big deal Copyright 2018 Indonesia Investment Coordinating Board. All rights reserved. 10

11 Indonesia Tourism Development Focus on 10 Tourism Destination Priorities, with total investment around USD 20 Billion Morotai Danau Toba Tj. Kelayang Kep. Seribu Bromo Tengger - Semeru Wakatobi Tj. Lesung Borobudur Mandalika Labuan Bajo 4 Tourism Special Economic Zone (SEZ 6 National Tourism Strategic Area Toba Lake Area: 500 Ha Investment: USD 1 Bn Kelayang Cape Area: 1,200 Ha Investment: USD 1.6 Bn Lesung Cape Area: 1,500 Ha Investment: USD 5 Bn Seribu Islands Area: 1,000 Ha Investment: USD 1 Bn Borobudur Area: 1,000 Ha Investment: USD 1.5 Bn Bromo Tengger Semeru Area: 1,000 Ha Investment: USD 1 Bn Mandalika Area: 1,035 Ha Investment: USD 3.3 Bn Labuan Bajo Area: 1,000 Ha Investment: USD 1.2 Bn Morotai Area: 300 Ha Investment: USD 3 Bn Wakatobi Area: 500 Ha Investment: USD 1.4 Bn The Investment Coordinating Board of the Republic of Indonesia 11

12 E-COMMERCE: The new big deal in the 4th Industrial Revolution Era People Connecting to the Internet Year 2017 E-Commerce penetration (Buyers vs Population) Year 2017 E-Commerce Market Value for Consumer Goods Year 2017 (USD) People Purchasing Goods via E-Commerce Year ,7 11% $ Million Billion Million Indonesia s e-commerce market is on track to be one of the largest in Asia. Sumber: WeAreSocial, Hootsuite, Statista, Copyright 2017 Indonesia Investment Coordinating Board. All rights reserved. 12

13 FDI Performance in Indonesia (2013 Q2 2018) IndonesiaInvestment Coordinating Board 13

14 In the last 5 years, IDR 2,712.7 Tn Investment has been Recorded, with FDI Contributes to 63%, mostly from Asia DDI 36% (IDR 1,099.2T) FDI 64% (IDR 1,982.7T) Top 10 Investing Countries in Indonesia (2013 Q2 2018) In USD Million Rank Country Q Total 1 Singapore 4, , , , , , , Japan 4, , , , , , ,081.5 Africa 2% America 9% Europe 10% Australia & Pacific 1% Asia 63% 3 China , , , , South Korea 2, , , , , , , Malaysia , , , , , USA 2, , , , , Hong Kong , , , , Netherland , , , , , British Virgin Islands , , United Kingdom 1, , ,322.0 TOTAL (144 countries) 28, , , , , , ,899.3 Source: BKPM, September 2018

15 FDI is dominated by Secondary Sectors, accounted for 47% Primary 20% Tertiary 33% Secondary 47% Rank Business Field Q Total 1 Mining 4, , , , , , , Metal & Electronics Industry In USD Million 3, , , , , , , Electricity, Gas and Water 2, , , , , , , Basic Chemicals and Pharmaceuticals 3, , , , , , ,949.3 Paper & Printing 9% Other Manufactu ring Industry 18% Basic Metals & Electronics 25% 5 Real Estate , , , , , ,316.8 Other sectors 14, , , , , , ,939.2 Food Industry 15% Automotive Industry 15% Basic Chemicals & Pharmaceuticals 18% Total 28, , , , , , ,899.3 FDI Realisation in Indonesia (2013-Q2 2018) By Sectors Excl. Upstream oil, gas, and financial sectors Source: BKPM, September 2018

16 FDI are still concentrated within Java island, with 54% of total FDI Sumatera 15% Kalimantan 12% Sulawesi 8% 1% Papua 6% FDI Realisation in Indonesia (2013 Q2 2018) By Location Excl. Upstream oil, gas, and financial sectors Java 54% Bali and Nusa Tenggara 4% In USD Million Rank Region Q Total 1 Java 17, , , , , , , Sumatera 3, , , , , , , Kalimantan 2, , , , , , Sulawesi 1, , , , , , , Papua 2, , , , , , Bali and Nusa Tenggara , , , Maluku ,830.0 TOTAL 28, , , , , , ,899.3 Source: BKPM, September 2018

17 Japan Investment Performance in Indonesia (2013 Q2 2018) INDONESIA INVESTMENT COORDINATING BOARD 2018 by Indonesia Investment Coordinating Board. All rights reserved

18 Investment Performance of Japan (2013 Q2 2018) Rank 2 nd Among total FDI in 2013 Q By location 23 billion US dollars Total FDI realization in 2013 Q billion USD In Q billion USD in Q By sector Transportation Equipment and Other Transportation (37%) Basic Metal, Metal Goods, Machinery, and Electronic Industry (16%) Electricity, Gas, and Water (12%) House, Industrial Estate, and Office(8%) Basic chemical, chemical, & pharmaceutical(6%) Others (21%) 4, , , , , , % Y-o-Y FDI realization Commitment Realization Java (94%) Sumatra(5%) 2, , , , , ,359.2 Kalimantan (1%) Sulawesi, Papua, Maluku, Bali, and Nusa Tenggara Q (0%) Source: BKPM, September 2018 Total Project : 11,321 Projects Local Workers : 661,034 People

19 Japan Investment to the world (2013 Q2 2018) Investment Realization Based on Capital Expenditure (USD Million) Excl. financial sectors Others 39% Real Estate 18% Coal, Oil and Natural Gas 16% Metals 6% Automotive Components 9% Automotive OEM 12% Rank Destination Capex % 1 United States 47, China 24, Vietnam 23, Thailand 16, Indonesia 16, India 16, Malaysia 15, Myanmar 14, Mexico 11, United Kingdom 8, Total Top-10 Countries 194, Rank Company Capex % 1 Mitsui & Co. 28, Mitsubishi Corporation 24, Toyota Motor 20, Marubeni 12, Sumitomo Group 9, Honda 7, Nissan 7, Aeon Co. Ltd. 6, Nippon Telegraph & Telephone (NTT) Nippon Yusen Kabushiki Kaisha (NYK Line) 5, , Total Top-10 Companies 126, Total (110 countries) 287, % Total (1,084 Companies) 287, % The Investment Coordinating Board of the Republic of Indonesia Source: FDI Markets

20 FDI Realization in Indonesia by Country Japan ranked 2 nd in 2013 Q FDI Realization in Indonesia by Origin Country Top-10 Countries Based on Total Capital Expenditure (USD million) 2013 Q Excl. oil. gas. and financial sectors Rank Country of Origin Q Total 1 Singapore 4, , , , , , , Japan 4, , , , , , , China , , , , South Korea 2, , , , , , , Malaysia , , , , , USA 2, , , , , Hong Kong , , , , Netherland , , , , , British Virgin Islands , , United Kingdom 1, , ,322.0 Total (144 Countries) 28, , , , , , ,899.3 The Investment Coordinating Board of the Republic of Indonesia 20 Source: BKPM, September 2018

21 Investment Realization from Japan (2013 Q2 2018) by Sectors Excl. Upstream oil, gas, and financial sectors Tertiary 26% Primary 2% Secondar y 72% (In Million US$) Rank Business Field Q Total 1 2 Transportation Equipment & Other Transportation Industry Basic Metal, Metal Goods, Machinery and Electronic Industry 3, , , , , , , Electricity, Gas and Water , , House, Industrial Estate and Office , Basic Chemical, Chemical and Pharmaceutical Industry , Food Industry Paper Industry Rubber Mining Trade & Reparation Other sectors ,877.1 Total (24 sectors) 4, , , , , , ,081.5 The Investment Coordinating Board of the Republic of Indonesia Source: BKPM, September

22 Investment Realization from Japan (2013 Q2 2018) by Location Excl. Upstream oil, gas, and financial sectors 1% 5% 94% (In Million US$) Rank Region Q Total 1 Java 4, , , , , , , Sumatra , Kalimantan Bali and Nusa Tenggara Sulawesi Maluku Papua TOTAL 4, , , , , , ,081.5 The Investment Coordinating Board of the Republic of Indonesia Source: BKPM, September

23 Investment Realization from Japan (Q2 2018) Excl. Upstream oil, gas, and financial sectors Basic Chemical & Pharmaceutic al Industry 7% Non-Logam Mineral Industry 2% Others 13% Electricity, Gas, & Water 31% Kalimantan 0% Sumatera 3% Sulawesi 1% Bali and Nusa Tenggara 1% Papua 0% Transportatio n Equipment & Other Transportatio n Industry 12% Real Estate 17% Basic Metal, Metal Goods, Machinery, & Electronic Industry 18% By Sector Java 95% by Location 2,027 Japan companies has realized their business in Indonesia in Jan-June 2018 The Investment Coordinating Board of the Republic of Indonesia 23 Source: BKPM, August 2018

24 Investment Performance of Japan (2013 Q2 2018) Excl. Upstream oil, gas, and financial sectors 8,099.1 Total Project : 11,321 Local Workers : 661,034 4, , , , ,996.2 Commitment Realization 2, , , , , , Q (In Million US$) Q Q Commitment ,359.2 Realization 2, , % decrease in Japan s investment realization in S Q % Realization % % The Investment Coordinating Board of the Republic of Indonesia Source: BKPM, August

25 Investment Reforms INDONESIA INVESTMENT COORDINATING BOARD 2018 by Indonesia Investment Coordinating Board. All rights reserved

26 5 Common Challenges faced by Investor on Doing Business in Indonesia Regulation Tax & Incentive Land Acquisition Skilled Labor & Foreign Worker Public Infrastructure Issues: Uncertain regulation, Licensing is considered complicated, Lack of coordination among Ministries and Central-Local Government Issues: Complicated tax collection, slow service of tax collection Fiscal incentive is not attractive to investors Government Efforts: Issues: Land acquisition is the biggest challenge for foreign investors The process may take years, and could cause substantial delay and uncertainty. Speculative rising price of land Issues: Limited number of skilled labor Complicated procedure to obtain Foreign Worker Permit Issues: Slow dwelling time on the port Lack of infrastructure caused by lack of funding Government Efforts: Government Efforts: In the Economic Package 16 th launched on September 2017, the Government released a Presidential Regulation No. 91 Year 2017 regarding to Acceleration of Doing Business. Single submission system that implying the investors will only have to go one place to obtain all required licenses. The IT and database system will be connected Ministry of Finance on 21 Feb launched tax data integration system to improve taxpayer data transparency Ministry of Finance will revise tax incentives regulation for more wide range of business sectors. At least 20 business sectors to be added from existing 145 business field in Tax Allowance. The regulation also will give simpler mechanism on applying Tax Allowance/Tax Holiday Ministry of Finance has issued regulation No. 35/2018 on Tax Holiday Government Efforts: Issuance of Government Regulation No. 13 year 2017 on RTRW (spatial plans). The Minister of Agrarian could issue a recommendation of space utilization to speed up project permissions. The Ministry of Industry to set a price ceiling for industrial land, intended to maintain price stability and enhance the attractiveness of industrial land Government Efforts: The Government is preparing incentives formulation for industry that supporting vocational and training program The Government is preparing Government Regulation that process of obtaining Foreign worker Permit will be delegated to BKPM (one roof) Governmenr Regulation No. 22 of 2018 has released to ease foreign worker. Starting on Feb 1, the Government implement postborder system, in which the physical checking of some restricted goods will be done outside the customs area of the port, in order to reduce the length of time goods remain in the port Indonesian Government offer several alternative financing i.e. PINA (Non State Budget Financing) through various financial instrument (perpetual bonds, securitization, etc.)

27 Indonesia has created some breakthrough to improve business climates Jan 2015: One Stop Service (OSS) at BKPM to simplify investment procedures ministries & institutions integrated; 2. More than 9,600 Permits issued; 3. 61% Regional PTSP implement e-licensing. BKPM 26 Oct 2015: 3-Hrs Investment Licensing The service is part of BKPM s OSS program, which will allow prospective investors with a minimum investment of IDR 100 billion (US$7.33 million) and/or absorb a workforce of more than 1,000 people to have their preliminary permits 15 Dec 2015: Green Lane Facility Acceleration and certainty in custom clearance process 22 Feb 2016: Direct construction Phase I Investors can directly start their project construction before obtaining construction permits. April 2016: Negative Investment List Revision 1. More business fields open to 100% FDI 2. Less business fields open with condition, reduced from 664 to More business fields open to foreign majority share ownership (>50% FDI). 4. Less business fields reserved for domestic investment 5. Simpler investment procedures BKPM 30 Jan 2017: 3-Hrs Investment Licensing Services for Energy Sectors This rapid licensing procedure is for nine types of operations (eight of which are for oil and gas sectors and one of them is for electricity procurement industry) 5 Feb 2017: Direct construction Phase II Extended number of industrial estates that are eligible to utilize direct consruction facility 3 July 2017: Digital Principal License Starting from 3rd July, the principle license will be issued on digital document 2 Jan 2018: Simplification of Investment and Import Procedures following the issuance of BKPM Regulation No. 13/2017 and 14/2017 Acceleration of Doing Business following Presidential Regulation No. 91/2017 February 2018: Direct Construction Phase III 9 July 2018: Online Single Submission Investment Licensing through OSS system following Govt. Regulation No.24/2018 EoDB Improvements Copyright 2018 Indonesia Investment Coordinating Board. All rights reserved. 27

28 Simplification of Licensing Procedures for Investment in SEZ/KPBPB/KI/KSPN : Direct Construction (KLIK) (BKPM Regulation No. 13 / 2017 ) Investors can directly start their project construction before obtaining construction permits. This service is supported by both Central and Regional Governments. Available for 47 selected industrial parks in 12 provinces No minimum investments or workers is required Construction permits can be obtained in parallel with construction process. Preparation Construction Production Investment Licenses Plus 7+1 products* *List of Products: 1. Deed of Establishment 2. Tax ID (NPWP) 3. Expatriate Employment Plan (RPTKA) 4. Expatriate Employment Permit (IMTA) 5. Company Registration Number (TDP) 6. Importer Identification Number (API) 7. Custom Registration 8. Register IMPORT DUTY Can be processed SIMULTANEOUSLY Technical Licenses Regional Licenses Business Licenses Copyright 2018 Indonesia Investment Coordinating Board. All rights reserved. 28

29 47 Industrial Estates with Direct Constructions (KLIK) Facility North Sumatra KI Medan Riau KI Dumai KI Tanjung Buton Riau Islands Batamindo Industrial Park Bintang Industriall Park II Kabil Integrated Industrial Park West Point Maritime Industrial Park Bintan Inti Industrial Estate East Kalimantan KI Kariangau South Sulawesi KI Bantaeng KI Makassar West Sumatera KI Padang Banten Modern Cikande Industrial Estate KI Wilmar Krakatau Industrial Estate Cilegon Millenium Industrial Estate DKI Jakarta Kawasan Berikat Nusantara/KBN KI Jakarta Industrial Estate Pulagadung/JIEP Yogyakarta KI Piyungan West Java Bekasi Fajar Industrial Estate KI Delta Silicon 8 Karawang Internasional Industrial City Suryacipta City of Industry GT Tech Park Artha Industrial Hill KI Marunda Center KI Greenland International Industrial Center (GIIC)/Deltamas KI Jababeka Tahap III KI Kota Bukit Indah Ind. City KI Indotaisei Kota Bukit Indah East Jakarta Industrial Park Bekasi International Industrial Estate MM 2100 Industrial Town KI Terpadu Indonesia - China KI Kujang Cikampek KI Lion Cibinong Center Industrial Estate KI Rancaekek Central Java KI Kendal KI Bukit Semarang Baru KI Wijayakusuma KI Demak Tanjung Emas Export Processing Zone East Java Java Integrated Industrial & Port Estate KI Maspion KI Tuban Safe N Lock Industrial Estate Copyright 2018 Indonesia Investment Coordinating Board. All rights reserved. 29

30 Recently Launched - ONLINE SINGLE SUBMISSION (OSS) SYSTEM A. NEW INVESTOR (New Registration) B. EXISTING INVESTOR (Re-registration) Company OSS Individual Obtaining NIB (Business Identification Number) the single identity used in OSS system Copyright 2018 Indonesia Investment Coordinating Board. All rights reserved. 30

31 NEW REGIME: ONE 1 ONE INSTITUTION TO PUBLISH BUSINESS LICENSING CENTRAL/ REGION OSS SUPPORT SYSTEM BKPM (Central PTSP) SPIPISE Province/Regency/ City (DPMPTSP) SPIPISE + REGIONAL LICENSING SYSTEM integration GOVERNMENT OF REPUBLIC OF INDONESIA integration GENERAL LAW ADMINISTRATION ONLINE (AHU) Population and Civil Registration (DUKCAPIL) insw DG of TAX-NPWP others Sumber: Kantor Kemenko Perekonomian, 2018 Copyright 2017 Indonesia Investment Coordinating Board. All rights reserved. 31

32 NEW REGIME: ONE STAGE 2 'ONE' STAGE OF PROCESSING OLD MECHANISM OR INVESTOR NOTARY MIN. of LAW AHU BKPM/DPMPTSP INVESTOR BKPM/DPMPTSP NOTARY MIN. of LAW AHU NEW MECHANISM Started with Business Establishment INVESTOR NOTARY MIN. of LAW AHU OSS INSTITUTION Sumber: Kantor Kemenko Perekonomian, 2018 Copyright 2017 Indonesia Investment Coordinating Board. All rights reserved. 32

33 NEW REGIME: ONE STAGE OLD MECHANISM FULLFILLMENT REQUIREMENTS PUBLISHING PERMISSIONS Post Audit Pre-Audit NEW MECHANISM SELF DECLARATION Commitment PUBLISHING PERMISSIONS FULLFILLMENT OF COMMITMENT REQUIREMENTS Post Audit COMMITMENT OF INVESTORS RESPONSIVENESS OF GOVERNMENT OFFICIALS Sumber: Kantor Kemenko Perekonomian, 2018 Copyright 2017 Indonesia Investment Coordinating Board. All rights reserved. 33

34 Investment Incentive - New Tax Holiday Policy New Scheme of Tax Holiday Based on Ministry of Finance Regulation No. 35 Year 2018 Tax Payer Document Submission PROVISIONS Subject AFTER (MoF Regulation No. 35 of 2018) New Investment with minimum value of 500bn Rupiah One Stop Service at BKPM Criteria and Requirements check Approval by Minister of Finance BKPM Recommendation 5 Working Days Note: New scheme is faster than previous procedure with 45 working days Must be submitted before commercial phase. Not only for new company. Tax Holiday application can be submitted simultaneously at investment registration or at least 1 (one) year after the investment registration issued Equitable and Non discriminatory treatment against country of origin Industry Groups Reduction rate Concession Period Transition time After Tax Holiday Copyright 2017 Indonesia Investment Coordinating Board. All rights reserved. Applied to 17 industry group 100% (single rate) No. Time Period Investment Value 1. 5 years IDR 500 billion up to less than IDR 1trillion 2. 7 years IDR 1 trillionup to less than IDR 5trillion years IDR 5 trillion up to less than IDR 15 trillion years IDR 15 trillion up to less than IDR 30 trillion years Minimum IDR 30 trillion 50% reduction for the next 2 years Tax allowance for business expansion can be provided with T&C applied. 34

35 Tax Allowance Facility 30 TAX ALLOWANCE Government Regulation No. 9 of 2016 % of investment value Reduction of corporate net income tax for 6 years, 5% each year. 145business fields Eligible for tax allowance, expanded from 143 segments in the previous regulation with additional segment: clothing industry. Under certain requirements among others: investment value or export orientation, manpower absorption, local content, and project location (especially outside Java island). SOP to process TA facility is 25 working days Equitable and Non discriminatory treatment against country of origin For those taxpayers who have : Principal licenses (IP) and its changes issued by BKPM; Principal Licenses for Expansion (IP-PL) and its changes issued by BKPM; or Investment licenses issued by other authorized agency These three types of license must be issued after 5 May 2015 Taxpayers who have applied for import duty facility or corporate income tax reduction according to Article 29 of Government Regulation No. 94 of 2010 is rejected by Ministry of Finance. Manufacturing Industry Iron and Steel Clothing Semi conductors Electronic components Computer Communication devices Television Wheel Pharmaceutical Cosmetics Fish and Shrimp processing Transportation and Warehouse Urban transportation Cargo handling Power Generation Geothermal Renewable energy Oil and Gas Industry Oil refineries Liquefied Natural & Petroleum Gas Lubricants Notes: Certain business fields and location are based on on Attachment I and II of Government Regulation No. 18 of 2015 Jo. No. 9 of 2016

36 Import Duty Exemption IMPORT DUTY FACILITY (MoF Regulation No.110/PMK.011/2005 MoF Regulation No.76/PMK.011/2012, MoF Regulation No.66/PMK.010/2015 and Chairman of BKPM Regulation No. 16/2015) Exemption of import duty on imported capital goods (machines) for 2 years during construction period. Exemption of import duty on imported goods and material for production for 2 years during initial production (or 4 years for companies using locally-produced machines min.30% from total value of machines for production). Equitable and Non discriminatory treatment against country of origin GREEN LINE ACCELERATION FACILITY 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. 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 New Facility: Status upgrade From RED to GREEN line for new companies under construction

37 37 Thank You Terima Kasih Badan Koordinasi Penanaman Modal (BKPM) Indonesia Investment Coordinating Board Jln. Jend. Gatot Subroto No. 44 Jakarta Indonesia t f e. info@bkpm.go.id follow us on: BKPM Indonesia Investment Coordinating Board THE BKPM VIDEO Indonesia Investment Coordinating bkpm_id

38 New Regulation of Fiscal Incentive for Investment : 17 Pioneer Industries Upstream Metal Industry Oil-and-Gas Refinery Oil-Gas-and-Coal Based Petrochemical Non-Organic Chemical Organic Chemical Raw-material for Pharmaceuticals industry Semi-Conductor & other Component Main Component for Telecommunicati on Equipment Main Component for Healthcare Equipment Industrial Machinery Production Main Component for Machinery Robotic Component Main Component for Shipping Industry Main Component for Aeroplane Industry Main Component for Train Industry Economic Infrastructure Power Plant Industry The Investment Coordinating Board of the Republic of Indonesia 38