Indonesia Investment Updates & Japan Investment Overview

Transcription

1 Indonesia Investment Updates & Japan Investment Overview Jakarta, 15 February 2019 Wisnu Wijaya Soedibjo Deputy Chairman for Investment Cooperation, Indonesia Investment Coordinating Board, BKPM

2 Indonesia Investment Updates

3 Why Indonesia? Indonesia s economy is forecast to be the world s 10th largest by 2025 $1 trillion GDP of more GDP (PPP) than $1 trillion The largest economy in ASEAN Only ASEAN Member in the G20 Indonesia is the fourth most populous country in the world Population of 260 million 2x Consuming class twice the size of the population ofaustralia 44% Young and dynamic people 44% of Indonesians are aged under 25 Indonesia is a global leader in social media. It has: More Facebook and Twitter users than the population of Australia The world s third largest market for Facebook The most active city for Twitter in the world: Jakarta Source: various sources, 2018

4 Indonesia among the top 10 optimist and safest countries TOP 10 OPTIMISTS TOP 10 SAFEST COUNTRIES TOP 10 HAPPY COUNTRIES Country Net Score Country Index Score Country Net Score Nigeria +59 Singapore 97 Fiji +92 Vietnam +55 Indonesia +53 India +46 Philippines +32 Albania +31 Bangladesh +30 Norway 93 Iceland 93 Finland 93 Uzbekistan 91 Hong Kong 91 Switzerland 90 Colombia +87 Philippines +84 Mexico +82 Vietnam +77 Kazakhstan +74 Papua New +74 Guinea Fiji +27 Kosovo +25 Pakistan +20 Source: Gallup International,2017 Canada 90 Indonesia 89 Denmark 88 Source: Gallup World Polls, 2018 Indonesia +68 India +64 Argentina, +64 Netherland Source: Gallup International,2017 Maybe we are not the most advanced one, but it turns out that we are one of the happiest people in the world President Jokowi at the IMF-WB 2018Annual Meeting

5 Indonesia in the future Emerging markets will dominate the world s top 10 economies in 2050 (GDP atppps)

6 Indonesia is the 4 th Most Prospective Investment Destination and its sovereign credit rating continues trending higher US China India Indonesia Thailand Brazil UK Germany Mexico Philippines Spain Vietnam Singapore Canada Australia Source: UNCTAD, 2017

7 Investment Realisation in Indonesia Reaches Rp721.3 Trillion in 2018 and rise by 4.1%. 38% 62% Investment Realisation (IDR Trillion) 4.1% DDI FDI 16.0% % % %

8 In the last 6 years ( ), FDI in Indonesia is dominated by Asian countries (including Japan) America 11% Europe 12% Africa 2% Australia 2% Asia 73% 2018 (in USD Bil) (in USD Bil) Rank Cty Invest. Cty Invest. 1 Singapore 9.19 Singapore Japan 4.95 Japan China 2.38 China Hong Kong 2.01 Malaysia Malaysia 1.77 South Korea South Korea 1.60 US US 1.22 Hong Kong BVI 1.04 Netherlands Netherlands 0.94 BVI Australia 0.60 UK 4.52

9 Priority Sectors for Investment Infrastructure Energy, transportation, road, railway, airport, seaport, etc Including Special Economic Zone (SEZ) Industrial Estate (IE) Maritime Including fisheries and cold storage Agriculture Tourism 10 New Bali Lifestyle Industry e.g: creative economy, digital industry The newbig deal Manufacturing Industry Labor intensive, export oriented, import substitute, and value added industry

10 Investment Climate is one of the critical points that the government is actively trying to improve The government today is focused on regulation and bureaucracy reform, as well as simplifying the permit and requirements to invest. Indikator Indonesia s Doing Business Rank DB 2017 Ranking DB 2018 DB Starting a Business Dealing with Construction Permits Getting Electricity Registering Property "Improvement of every indicator must become the priority of ministries and state institutions, so that efforts will be more focused, while concrete targets must be set. (President Joko Widodo) Getting Credit Protecting Minority Investors Paying Taxes Tradingacross Borders Enforcing Contract Resolving Insolvency

11 Fiscal Incentives Facility TAX ALLOWANCE Government Regulation No.9/ % reduction of Corporate Income Tax (for 6 years, 5% each year) 145 Eligible business fields IMPORT DUTY FACILITY MoF Regulation No.176/PMK.011/2009 jo. MoF Regulation No. 76/PMK.011/2012 jo. MoF Regulation 188/PMK.010/2015 GREEN LANE FACILITY Exemption of import duty on machineries and equipment 2 years exemption of import duty on raw materials Additional 2 years import duty exemption for raw materials if using locally-produced machineries and equipment (min 30%) Facility for custom clearance at ports in Indonesia for capital goods, machinery or raw material For new companies under construction phase Require BKPM recommendation and LKPM obligation fulfilled

12 Tax Allowance Government Regulation No 9/2016 Agriculture Livestock Corn Plantation Soybean Plantation Rice farming Tropical fruits plantation Power Generation Geothermal Alternative energy Oil and Gas Industry Oil refineries Liquefied Natural & Petroleum Gas Lubricants Manufacturing Industry Iron and Steel Clothing Semi conductors Electronic components Computer Communication devices Television Wheel Pharmaceutical Cosmetics Fish and Shrimp processing

13 Tax Holiday Primary Amendments of PMK 150/2018

14 Pioneer Industries 1. integrated upstream basic metals (which covers general smelting activities); 2. integrated oil and gas refining; 3. integrated petrochemicals arising from oil, gas or coal; 4. integrated inorganic basic chemicals; 5. integrated organic base chemicals derived from agricultural, plantation or forestry activities; 6. integrated pharmaceutical raw materials; 7. manufacturing of semi-conductors and other components integral to computers; 8. manufacturing of the main components of communication equipment integral to smartphones; 9. manufacturing of the main components of health equipment integral to irradiation, electro medical, or electrotherapy equipment; 10. manufacturing of the main components of industrial to electrical motors or internal combustion engines; 11. manufacturing of the main components used in motor vehicle production; 12. manufacturing of the main components integrated with robotics; 13. manufacturing of the main components of vessel production; 14. manufacturing of the main components of aircraft production; 15. manufacturing of the main components of locomotive production; 16. power plant machinery (including waste to power); and 17. economic infrastructure 18. Digital economy

15 The 16 th Economic Package is issued to support the development of digital economy in Indonesia Expansion of Tax Holiday Will expand the categories, duration and amout of investment Investment worth IDR 100 billion IDR 500 billion can benefit from a 50% income tax reduction for 5 years New sectors are introduced to get tax holiday facility: a. processing industry based on agriculture; b. plantations or forestry; c. the digital economy Adjustment to the Negative List (DNI) New additional sectors will be fully opened for foreign investments, including digital economy, such as: a. Internet cafes; b. Fixed, data and content services telecommunication network organization; c. Network access point services and other multimedia services; d. Information center and other additional phone services; e. Financial technology. Incentives for Export Earnings (DHE) Provide final income tax cuts for exporters who deposit their earnings (DHE) in designated bank accounts.

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17 18 Categories of Pioneer Industry

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19 15 Online Single Submission (OSS) as integrated online system with data sharing Monitoring A.NEW USER (New Registration) B.EXISTING INVESTOR (Re-registration) OSS Obtaining Licenses/Permit Related to Investment Activity in Indonesia Single Business Number (Nomor Induk Berusaha) Business License Commercial/Operation al License Etc. National TASK FORCE Ministry TASK FORCE Provincial/ Municipality TASK FORCE

20 Japan Investment Overview

21 Japan Investment Performance ( ) <<< before IJEPA after IJEPA >>> The Investment Coordinating Board of the Republic of Indonesia 21

22 15 Years ( ) Japan Investment Contribution to FDI Japan Investment Performance Compared to Total FDI Japan Investment Growth (YoY) <<< before IJEPA after IJEPA >>>

23 No. RANK OF SECTOR BEFORE IJEPA ( ) IJEPA (2008) No. RANK OF SECTOR AFTER IJEPA ( ) 1 Industri Alat Angkutan dan Transportasi Lainnya 2 Industri Logam Dasar, Barang Logam, Mesin dan Elektronik 3 Industri Kimia Dasar, Barang Kimia, dan Farmasi 4 Industri Karet, Barang dari Karet dan Plastik 5 Industri Tekstil 6 Industri Lainnya 7 Perdagangan dan Reparasi 8 Jasa Lainnya 9 Industri Makanan 10 Konstruksi 11 Perumahan, Kawasan Industri dan Perkantoran 12 Industri Kertas, Barang dari Kertas, dan Percetakan 13 Kehutanan 14 Industri Mineral Non Logam 15 Hotel dan Restoran 16 Industri Kayu 17 Transportasi, Gudang dan Telekomunikasi 18 Perikanan 19 Industri Instrumen Kedokteran, Presisi, Optik, dan Jam 20 Pertambangan Almost no difference in sectors interest before and after IJEPA 1 Industri Alat Angkutan dan Transportasi Lainnya 2 Industri Logam Dasar, Barang Logam, Mesin dan Elektronik 3 Industri Kimia Dasar, Barang Kimia, dan Farmasi 4 Perumahan, Kawasan Industri, dan Perkantoran 5 Industri Makanan 6 Industri Tekstil 7 Perdagangan dan Reparasi 8 Industri Karet, Barang dari Karet dan Plastik 9 Industri Kertas, Barang dari Kertas, dan Percetakan 10 Listrik, Gas dan Air 11 Pertambangan 12 Jasa Lainnya 13 Transportasi, Gudang, dan Telekomunikasi 14 Konstruksi 15 Industri Mineral Non Logam 16 Industri Lainnya 17 Hotel dan Restoran 18 Industri Kayu 19 Industri Kulit, Barang dari Kulit dan Sepatu 20 Perikanan Only 4 sectors which are difference (2 sectors in each periods)

24 Secondary Sector ,0 45,0 45,7 40,0 35,0 30,0 25,0 20,0 18,3 15,0 10,0 5,0 0,0 3,2 4,2 0,1 0,5 2,4 6,5 3,4 0,6 0,1 1, Percentage (%)

25 Japan Investment to the world Investment Realisation Based on Capital Expenditure (USD Million) Excl. financial sectors Rank Destination Capex % 1 United States 49, China 26, Vietnam 23, India 17, Indonesia 17, Thailand 16, Malaysia 15, Myanmar 14, Mexico 11, United Kingdom 9, Total Top-10 Countries 203, Total (110 countries) 303, % Metals 6% Others 42% Real Estate 17% Rank Company Capex % 1 Mitsui & Co. 29, Mitsubishi Corporation 27, Toyota Motor 21, Marubeni 12, Sumitomo Group 10, Nissan 8, Honda 7, Aeon Co. Ltd. 6, Nippon Telegraph & Telephone (NTT) 6, Shin-Etsu Chemical 4, Total Top-10 Companies 134, Total (1,084 Companies) 303, % Source: fdimarkets Coal, Oil and Natural Gas 15% Automotive OEM 12% Automotive Components 8% The Investment Coordinating Board of the Republic of Indonesia 25

26 FDI Realisation in Indonesia by Country Japan ranked 2 nd in FDI Realisation in Indonesia by Origin Country Top-10 Countries Based on Total Capital Expenditure (USD million) Excl. oil. gas. and financial sectors Rank Country Total 1 Singapore 5.832, , , , , ,8 2 Japan 2.705, , , , , ,0 3 China 800,0 628, , , , ,4 4 Malaysia 1.776, , , , , ,4 5 Hong Kong, PRC 657,3 937, , , , ,7 6 South Korea 1.126, , , , , ,2 7 Netherland 1.726, , , ,4 943, ,9 8 USA 1.299,5 893, , , , ,1 9 British Virgin Islands 624,0 730, ,3 844, , ,9 10 United Kingdom 1.588,0 503,2 307,3 774,8 271, ,4 Total (Top 10 Countries) , , , , , ,7 TOTAL (144 countries) , , , , , ,9 Source: BKPM, January 2019 The Investment Coordinating Board of the Republic of Indonesia 26

27 Investment Performance of Japan ( ) Now... Rank 2 nd Among total FDI in By location 7% Java (93%) Sumatra(6%) Kalimantan (1%) 93% 20,9 billion US dollars Total FDI realization in Java Sulawesi, Papua, Maluku, Bali, and Nusa Tenggara (0%) Outside Java 4,95 billion USD in ,99 billion USD in 2017 By sector Primary 2% Tertiary 34% Secondary 64% 4, , , , , ,438.3 Transportation Equipment and Other Transportation (29%) Electricity, Gas, and Water (18%) House, Industrial Estate, and Office (10%) Machinery, Electronic, Medical Instrument, & Optic, and Watch Industries(8%) Basic Metal, Metal Goods, Machinery, and Electronic Industry (7%) 4, , , ,359.2 Source: BKPM, January 2019 Total Project : Projects Local Workers : People Others (28%) 21% Y-o-Y FDI realization Commitment Realization

28 Investment Realisation from Japan ( ) by Sectors Excl. Upstream oil, gas, and financial sectors Primary 2% Tertiary 34% Secondary 64% (In Million US$) Rank Business Field Total 1 Transportation Equipment & Other Transportation Mode Industry 1.260, , , ,4 812, ,2 2 Electricity, Gas and Water 13,7 134,4 604, , , ,0 3 House, Industrial Estate and Office 71,2 519,9 330,1 470,5 607, ,9 4 Machine, Electronic, Medical Instrument, Elect. Equipment, Optic, and Watch Industry 354,8 250,2 403,8 306,6 245, ,5 5 Basic Metal, Metal Goods, Non-Machinery and Its Equipment Industry 158,0 176,1 436,2 507,0 281, ,9 6 Basic Chemical, Chemical and Pharmaceutical Industry 126,3 72,8 733,5 129,5 199, ,4 7 Food Industry 137,6 88,1 206,5 67,4 87,8 587,3 8 Mining 49,9 117,6 94,5 244,1 62,9 569,0 9 Paper Industry 88,7 65,7 27,9 288,8 49,1 520,1 10 Non-Metal Mineral Industry 8,1 6,1 118,9 210,1 174,7 517,9 Other sectors 436,2 265,5 568,9 589,5 567, ,8 Total (24 sectors) 2.705, , , , , ,0 Source: BKPM, January 2019 The Investment Coordinating Board of the Republic of Indonesia 28

29 Top 10 Japanese Investors in Indonesia ( ) Excl. Upstream oil, gas, and financial sectors Rank Company Business Fields Capex (USD Mn) % 1 Bhimasena Power Indonesia Power Plant and Transmission 1.827,9 8,7 2 Bhumi Jati Power Power Plant 1.582,8 7,6 3 Suzuki Indomobil Motor Spare Parts and Automotive Accessories 878,6 4,2 4 Asahimas Chemical Basic Inorganic Chemical Industry 651,4 3,1 5 Medco Geopower Sarulla Power Plant 575,9 2,8 6 Astra Honda Motor Motorbikes and Motorcycle Components Industry 539,7 2,6 7 Krakatau Nippon Steel Sumikin Steel Rolling Industry 503,3 2,4 8 Mitsubishi Motors Krama Yudha Indonesia Spareparts and Motorcycle Components Industry 442,2 2,1 9 Aeon Mall Indonesia Wholesaler 372,6 1,8 10 Asahimas Flat Glass Tbk. Flat Glass Industry 327,7 1,6 Total Top-10 Companies 7.702, Total (2,352 Companies) , % Source: BKPM, January 2019 The Investment Coordinating Board of the Republic of Indonesia 29

30 CONCLUSIONS The Japanese Investment both before and after the entry into forced of the IJEPA Agreement is FOCUSED ON SECONDARY SECTORS, especially Automotive Industry IJEPA Agreement is not only to guarantee the certainty of investing in Indonesia, but also to be POSITIONED JAPANESE TO MAINTAIN ITS DOMINATION IN Certain Sectors in Indonesia Electricity, Gas And Water as well as Property sectors became THE NEW PRIMA DONNA for Japanese investors in the recent 4 years in Indonesia the New Scheme of Tax Holiday and other Investment facilities are expected to make Japanese Investors are MORE AGGRESSIVE TO INVEST IN MANY SECTORS in Indonesia

31 THANK YOU LET S INVEST IN INDONESIA Indonesia Investment Coordinating Board Badan Koordinasi Penanaman Modal (BKPM) Jl. Jenderal Gatot Subroto No. 44 Jakarta Indonesia follow us on BKPMINDONESIA THEBKPMVIDEO bkpm bkpm_id Tel: (+6221) Fax : (+6221) Contact Center : info@bkpm.go.id Indonesia Investment Coordinating Board