Indonesia Investment Updates on Eco- Products

Transcription

1 Indonesia-Japan 60 TH Anniversary Workshop for Forest Business Indonesia Investment Updates on Eco- Products IMAM SOEJOEDI DIRECTOR OF INVESTMENT PROMOTION 4 December 2018

2 INVESTING IN INDONESIA: WHY NOW? We are once again confronting challenging times in Indonesia. The world looks full of uncertainty and risk. What does it all mean? It means that today is the time to invest - the best time to invest. President Joko Widodo at Singapore-Indonesia Business Dialogue 2017 WHY INDONESIA Steady economic growth in the past 10 years Investment grade by all major rating firms 5th largest economy in the world by million consuming class by million population in productive age by 2030 Significant imporvement in regulatory environment as reflected in Ease of Doing Business WHY NOW? Most aggressive infrastructure development in Indonesia s history Extra incentive for investments in industrial, tourism and special economic zones Fiscal reform for long term sustainable growth Law reform to ease business and investment Concrete policy for eradication of corruption Citizens trust on the Indonesian Government is at all time high Strong investors confidence to invest further in Indonesia Policies reform in ICT Sectors Source: WorldBank Report,

3 ..as a result, Indonesia has been considered as a SECURE, STABLE AND REFORMIST country by International Rating Agencies Top Ten Safest Countries Rank Country Index Score 1 Singapore 97 Safe Stable Reformist 2 Norway 93 3 Iceland 93 4 Finland 93 5 Uzbekistan 91 6 Hong Kong 91 7 Switzerland 90 8 Canada 90 9 Indonesia Denmark 88 Source: Gallup World Polls, 2018 On 27 June 2018, Indonesia has successfully organized 171 regional elections (Pilkada Serentak) in order to choose executive heads in 17 provinces, 115 regencies, and 39 cities. The most talked-about regions is West Java, East Java, & Central Java. The previous simultaneous elections were in 2015 with 269 regions and in 2017 with 101 regions. 3

4 Indonesia s GDP Rises from 8th in 2016 to 4th in 2050 GDP at PPP Rankings (Projection for 2030 and 2050) PPP GDP at PPP Projected GDP at Projected GDP at Rank Country Country Country (2014 US$bn) PPP (US$bn) 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 World Bank s Economic Growth Projection Country China Cambodia Philippines Vietnam Laos Myanmar Malaysia Indonesia Thailand Source: How will the global economic order change by 2050, PwC, 2017; WorldBank, 2018 Indonesia in 2045: 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% 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 4

5 5 Common Challenges faced by Investor on Doing Business in Indonesia Issues: Regulation Uncertain regulation, Licensing is considered complicated, Lack of coordination among Ministries and Central-Local Government Issues: Tax & Incentive Complicated tax collection, slow service of tax collection Fiscal incentive is not attractive to investors Government Efforts: Issues: Land Acquisition 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: Skilled Labor & Foreign Worker Limited number of skilled labor Complicated procedure to obtain Foreign Worker Permit Issues: Public Infrastructure 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 post-border 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.) 5

6 In the last 5 years, IDR 3,248.1 T Investment has been Recorded, with Japan as the 2 nd Largest Investing Countries DDI 36% (IDR 1,184.0T) In USD Million Rank Country Q Total FDI 64% (IDR 2,064.1T) 1 Singapore 4, , , , , , , Japan 4, , , , , , , China , , , , Malaysia , , , , , , South Korea 2, , , , , , USA 2, , , , , , Hong Kong, PRC , , , , Netherland , , , , , British Virgin Islands , , United Kingdom 1, , ,484.2 Total (Top 10 Countries) , , , , ,6 19, ,709.8 TOTAL (144 countries) 28, , , , , , ,548.2 Source: BKPM, November

7 Japanese Investment Realization in Indonesia Continues to Increase (2013 Q3 2018) Rank 2 nd Among total FDI in 2013 Q billion US dollars Total FDI realization in 2013 Q billion USD in Q billion USD in 2017 Q3 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%) By location Basic chemical, chemical, & pharmaceutical(6%) Others (21%) 11% Y-o-Y FDI realization Java (94%) Sumatra(5%) Kalimantan (1%) Sulawesi, Papua, Maluku, Bali, and Nusa Tenggara (0%) Source: BKPM, November 2018 Total Project : 12,404 Projects

8 Some Big Japanese Companies Have Invested in Indonesia 8

9 INDONESIA S INVESTMENT 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 Importsubstitution 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 Eco-Products as the NEW BIG DEAL 63% of Indonesian consumer are willing to take Eco-products, despite the different price [Nielsen, 2017] 9

10 Indonesia New Big Things: Creative Industry, Lifestyle, Digital Economy, and Tourism 7.38% of 2016 GDP valued for IDR 852 trillion grow 4.38% yoy Culinary (41.69%)*; Fashion (18.15%); Craft (15.70%); TV & radio (7.78%); Publishing (6.29%); Architecture (2.30%); Apps & game developer (1.77%); Advertising (0.80%); Music (0.47%); Photography (0.45%); Performing arts (0.26%); Product design (0.24%); Fine arts (0.22%); Interior design (0.16%) Film (0.16%); Visual comms. Design (0.06%). *Proportion of each sub sector to total creative economy GDP, Source: Barekraf, 2017; pic: network.bbtv.com,

11 Indonesia New Big Things: More Tourism Destinations are Created, including Eco-Tourism The 10 New BALI Lake Toba Morotai Tj. Kelayang Kep. Seribu Wakatobi Tj. Lesung Bromo Tengger - Semeru Borobudur Mandalika Labuan Bajo 4 Tourism SEZ 6 National Strategic Tourism Zones (KSPN) IndonesiaInvestment Coordinating Board 11

12 Indonesia New Big Things: Indonesia s Energy Consumption is Shifting from Oil and Coal to Renewable Resources 31% 23 % 22 % % % 30 % Korean Companies (GIMCO) has signed MoU with local companies to invest in wood pellet industry that will be exported as Korean power plant fuel. Some Japanese companies have invested in hydropower plant, such as KEPCO, J-Power, etc. IndonesiaInvestment Coordinating Board 12

13 Sumatera Region 1 Geothermal MW Hydro MW Micro Hydro MW Solar MWp 5 5 Wind MW - 6 Biomass/MSW MW Marine MW - 8 Bio-Fuel Thou KL 411 Total MW Java-Bali Region No Power Plants Capacity Total 1 Geothermal MW Hydro MW Micro Hydro MW Solar MWp - 5 Wind MW Biomass/MSW MW Marine MW - 8 Bio-Fuel Thou KL 439 Total MW Kalimantan Region 1 Geothermal MW - 2 Hydro MW Micro Hydro MW 10 4 Solar MWp - 5 Wind MW 15 6 Biomass/MSW MW 41 7 Marine MW - 8 Bio-Fuel Thou KL 830 There are 21.6 GW RE potential spreads in 12 regions Sulawesi & Nusa Tenggara Region No Power Plants Capacity Total 1 Geothermal MW Hydro MW Micro Hydro MW Solar MWp 52 5 Wind MW Biomass/MSW MW 21 7 Marine MW - 8 Bio-Fuel Thou KL Total MW Maluku & Papua Region 1 Geothermal MW 75 2 Hydro MW Micro Hydro MW 43 4 Solar MWp - 5 Wind MW - 6 Biomass/MSW MW 55 7 Marine MW - 8 Bio-Fuel Thou KL 469 Total MW 290 Source: RUPTL PT. PLN Persero 13

14 Mentawai Off-Grid Biomass Power Plant Project Project Site: Siberut and Mentawai Islands, West Sumatera Investment Opportunity: Development, implementation, and operation an Off-Grid Bamboo- Based Biomass Power Plant Project with a total capacity of 5 MW Construction a power plant in each 20 villages located in Siberut and Mentawai Islands Project Schedule: Recent status: Feasibility Stage 2018: contract signing at tariff US cent 16.41/kWh (85% of BPP US cent 19.30/kWh) Contracting Agency: PT Charta Putra Indonesia CP: Jaya Wahono Investment Plan: Project cost: USD 27.7 Mn Concession period: 20 years FIRR/ NPV: 13%/ USD 9 Mn Source: PPP Book, 2018

15 Eco-Products in Industry 4.0 Cyber-Physical, Internet of things, Collaborative manufacturing Focus on 5 industry sectors : 1.Food & beverage 2.Textile 3.Automotive 4.Electronics 5.Chemical Source:, Ministry of Industry,

16 Where to invest? 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 16

17 Where to invest? 11 Special Economic Zones Arun Lhoksemawe Petrochemical, Logistics, Oil & Gas Food & Paper Manufacture Sei Mangkei Palm Oil & Rubber Industry, Fertilizer, Logistics, Tourism Bitung Fishery, Coconut Oil & Herbal Pharmacies Industries, Various Industry, Logistics Fiscal incentives in SEZ are regulated under Minister of Finance Regulation No. 104/PMK.010/2016): Morotai Tourism, Fishery Industry, Manufacture & Logistics Tanjung Api-api Palm Oil, Rubber, Petrochemical Industries Maloy Batuta Kelayang Palm Oil, Coal and Mining Tourism Palu Manufacture, Agro (Rubber, Cacao, Seaweed, & Rattan) Nickel & Ore Industry, Logistics Sorong Shipyard, Fishery & Tourism Tanjung Lesung Tourism Mandalik a Tourism Tax Incentive: Income tax reduction from 20% up to 100% for periods of max 25 years Free VAT for import on raw materials Facility: Property ownership and residence permit for foreigner The ease of investment licensing, land, immigration and work integrated in SEZ 17

18 New Regime: One Single Submission (OSS) #2 One Stage of Processing 18

19 New Regime: One Single Submission (OSS) #3 One Format of Business Licensing 19

20 Investment Incentives: New Tax Holiday Policy New Scheme of Tax Holiday Based on Ministry of Finance Regulation No. 35 Year 2018 PROVISIONS AFTER (MoF Regulation No. 35 of 2018) Tax Payer Document Submission Subject 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 Applied to 17 industry group No. Time Period 100% (single rate) Investment Value 1. 5 years IDR 500 billion up to less than IDR 1 trillion 2. 7 years IDR 1 trillionup to less than IDR 5 trillion 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. 20

21 New Fiscal Incentive Regulation for Investment is on the Draft 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 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 Transportation and Warehouse Urban transportation Cargo handling Power Generation Geothermal Renewable energy Oil and Gas Industry Oil refineries Liquefied Natural & Petroleum Gas Lubricants NOTE The Government under Ministry of Finance is now finalizing the new regulation for tax allowances, tax holidays, tax deductions for small and medium enterprises (SMEs), as well as incentives for companies that carried our research and development (R&D) activities. The government would expand the number of business sectors that would be eligible for the incentives. There will be simpler procedures to obtain the incentives.

22 Import Duty Exemption IMPORT DUTY FACILITY GREEN LINE ACCELERATION 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 locallyproduced machines min.30% from total value of machines for production). Equitable and Non discriminatory treatment against country of origin 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

23 About the Investment Promotion Agency Indonesia Investment Coordinating Board (BKPM) Who We Are Primary interface between business and the government to boost FDI and DDI through the creation of conducive investment climate. Our Services ADVISOR CONSULTANT PARTNER IndonesiaInvestment Coordinating Board 23

24 Arigato Gozaimasu 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 IIPC Office in Tokyo Indonesia Investment Promotion Center Fukoku Seimei Building 16F Uchisaiwai-cho Chiyoda-ku Tokyo , Japan t f e. bkpm521@bkpm-jpn.com iipctokyo@gmail.com Director: Rakhmat Yulianto e. rakhmat.yulianto@bkpm.go.id 24

25 Business fields related to NTFP Sectors No Business Fields KBLI/ ISIC Ownership Tax Holiday Tax Allowance Import Duty 1 Forest Business: Rattan, oleopine resin, bamboo, shorea javanica, agarwood, shellac, sago, latex, honeybee 0213 With condition: Partnership v 2 Crops and Plantation: Peppercorn, clove, essential oil, medicinal, other spice % v 3 Primary Forest Product Processing Industry: Rubber latex, rattan, shorea javanica, agarwood, shellac, sago, honeybee 02301, 02302, 02304, 02305, 02306, 02307, % v 4 Furniture Industry: Bamboo, rattan, and other NTFP materials 31002, % v v *) Klasifikasi Baku Lapangan Usaha Indonesia/ Indonesian Standard Industrial Classification 25

26 Business fields related to ESNT Sectors No Business Fields KBLI/ ISIC Ownership Tax Holiday Tax Allowance Import Duty 1 2 Natural Tourism Object Business Outside Conservation Areas Natural Tourism Object Business: Natural tourist park, highway forest park, hunting park % 91032, 91033, % 3 Nature tourism business: natural baths % 4 5 Nature tourism business: Natural adventure tourism, cave tourism, and hunting block business, Nature tourism business in the form of provision of ecotourism facilities, activities and services within forest areas including water tourism 93222, % 93241, 93242, 93243, *) Klasifikasi Baku Lapangan Usaha Indonesia/ Indonesian Standard Industrial Classification 49% v v v v v 26

27 New Tax Holiday Policy: 17 Pioneer Industries 27

28 Licensing Simplification (1/3) 28

29 Licensing Simplification (2/3) 29

30 Licensing Simplification (3/3) 30