Investing in Indonesia: Recent Development Theopita I. Tampubolon Deputy Director Indonesia Investment Promotion Centre (IIPC) London

Transcription

1 Investing in Indonesia: Recent Development Theopita I. Tampubolon Deputy Director Indonesia Investment Promotion Centre (IIPC) London Madrid, June 2018

2 2 OUTLINE 2 Investment Performance 1 Introduction 3 Investment Opportunities 4 Investment Regulatory Reform

3 INTRODUCTION Gili Trawangan, Lombok The Investment Coordinating Board of the Republic of Indonesia 3

4 2018 GDP Growth Prospect (y/y) 5.17% (Ministry of Finance) 5.2% Indonesian Central Bank 5.3% World Bank 5.3% Asian Development Bank Indonesian Economy GDP per capita GDP US$ 3, (2017) US$ Trillion (2017) Source: IMF and Ministry of Finance Unemployment Population 5.13 % (February, 2018) million (2016) Indonesia Spatial GDP Growth in 2017 Sumatera GDP Growth 4.30% Kalimantan GDP Growth 4.33% Sulawesi GDP Growth 6.99% Papua & Maluku GDP Growth 4.89% Java GDP Growth 5.61% The Investment Coordinating Board of the Republic of Indonesia Bali & Nusa Tenggara GDP Growth 3.73% 4

5 The Largest Economy in Southeast Asia ASEAN GDP in 2017 (USD Billion) Indonesia $1,010 Thailand $437 Phillipines Malaysia Singapore Vietnam $321 $309 $305 $215 Myanmar Cambodia Lao PDR $22 $17 $66 Brunei Darussalam The Investment Coordinating Board of the Republic of Indonesia $11 Source: International Monetary Fund (IMF) 5 $- $200 $400 $600 $800 $1,000 $1,200

6 WEF Global Competitiveness Index ( ) Indonesia Competitiveness Rank compare to other emerging markets COUNTRY Indonesia India Brazil Philippines Vietnam More countries are able to innovate, but they must do more to spread the benefits. Major emerging markets such as China, India, and Indonesia are becoming centers for innovation, catching up with advanced economies. - The Global Competitiveness Report The Investment Coordinating Board of the Republic of Indonesia 6

7 EODB Indicators Change World Bank's Doing Business 2018: Indonesia Climbs in Rank 72 nd + TOP REFORMER COUNTRY Increased from 106 rank in Doing Business 2016 Policy Reform 3 7 Deregulations Starting a business Dealing with construction permit Registering property Getting electricity Paying taxes Trading across boders Getting credit Protecting minority investor Enforcing contract Resolving insolvency 166 The Investment Coordinating Board of the Republic of Indonesia

8 Indonesia Investment Grade Rating (May 2018) Rating : BBB Outlook: Stable December 20 th 2017 Rating : Baa2 Outlook: Positive April 13 th 2018 Rating : BBB- Outlook: Stable May 19 th 2017 Japan Credit Rating Agency, Ltd. Rating : BBB+ Outlook: Stable February 9 th 2018 R&I Rating and Investment Information Rating : BBB Outlook: Stable The Investment Coordinating Board of the Republic of Indonesia March 8 th

9 Investment Performance Indonesia as an investment destination Mount Bromo, West Java The Investment Coordinating Board of the Republic of Indonesia 9

10 Indonesia: The 3rd investment Destination in Asia Source: The Economist Corporate Network, 2017 Labuan Cermin Lake, East Borneo

11 Total FDI Realization in : Based on Top 20 Country of Origin Source: BKPM, 2018

12 Top 10 EU Members Investment in Indonesia Source: BKPM, 2018

13 Jakarta, the Capital City of Indonesia Spain s Investment in Indonesia

14 The number of projects of investment from Spain in Indonesia have increased rapidly during Between 2010 and 2013, investment value took a dip, but later regained growth by 2014.

15 Total FDI Realization in from Spain: Based on Sector During , there are 322 projects from Spain. And more than a half of projects (217 projects) are on the Other services, Trade and Reparation, and Hotel and Restaurant

16 Total FDI Realization in from Spain: Based on Investment Value

17 Spain Outward Investment Destination April 2018 *USD - millions Source:

18 Spain Outward Investment Based on Industry Sectors April 2018 *USD - millions Source:

19 Spain Outward Investment Based on Parent Companies April 2018 *USD - millions Source:

20 LISTS OF BUSINESS FIELDS THAT ARE CONDITIONALLY OPEN FOR INVESTMENT* Tourism Industry Energy Related Infrastructures Agricultures *) Presidential Regulation Number 44 of 2016 Concerning Lists of Business Fields That Are Closed To Investment and Business Fields That Are Conditionally Open For Investment

21 Business Fields That Are Open under Specific Conditions: Tourism Industry Foreign investment: Max. of 67% Operation of historical and archaeological remains, such as temples, Sultan s palaces, inscriptions, ruins, ancient buildings; 2 star hotels; 1 star hotels; Non-star hotels; Foreign investment: Max. of 51% ASEAN countries investors: Max. of 70% Exploitation of natural tourism through provision of ecotourism facilities, activities and services within the forestry areas, including water tours, natural adventure tours, and Spelunking tours. Art Galleries; Art Theatres; Operation of karaoke; Operation (exploitation) of coin/cardoperated games; Operation of natural tourism objects other than in conservation areas.

22 Business Fields That Are Open under Specific Conditions: Tourism Industry Foreign investment: Max. of 67% Operation of Museums Travel bureaus Catering Motel Billiards houses ASEAN countries Bowling alleys investors: Max. of 70% Golf courses Impresario services Organization of Meeting, Incentive, Convention, and Exhibition (MICE) Domestic investment: 100% ASEAN countries investors Max. of 51% Motion picture advertising, advertisements, posters, stills, photographs,slides, negatives, banners, pamphlets, balihos, folders etc.

23 Business Fields That Are Open under Specific Conditions: Energy Related Infrastructures Foreign investment: Max. of 49% Oil and gas construction services: Spherical tanks; Oil and gas construction services: Offshore pipeline installation; Foreign investment: Max. of 67% Foreign investment: Max. of 75% Geothermal power generation with a capacity of 10 MW; Oil and gas construction services: Platform; Offshore oil and gas drilling services Oil and gas, geologic and geophysical surveying services; Small-scale power generation (of 1 10 MW); Foreign investment: Max. of 90% Geothermal operating and maintenance services Power construction and installation: High / extra-high; Foreign Investment Max of 95 %. Power generation of > 10 MW; Power transmission; Testing and analysis of Electrical installation: Electrical utility construction and high / extra-high voltage electrical installation voltage electrical installation. Max. of 100% in case of Government- Private Cooperation during a concession period) Power distribution.

24 Business Fields That Are Open under Specific Conditions: Energy and Mineral Resources Foreign Investment: Max. of 95% Geothermal surveying services Domestic capital: 100% Oil and gas construction services: Onshore oil and natural gas upstream production installation Oil and gas construction services: Onshore pipeline installation Geothermal drilling services Oil and gas construction services: Horizontal / vertical tanks, onshore oil and natural gas storage and marketing installation Power installation consultancy Onshore oil and gas drilling services Oil and gas support services: Well operation and maintenance services Power construction and installation: Electrical utility construction Oil and gas support services: Oil and gas design and engineering services Oil and gas support services: Technical inspection services Operation and maintenance of electrical installation Power generation of < 1 MW Testing and analysis of electrical installation: Low / medium voltage electrical installation

25 Business Fields That Are Open under Specific Conditions: Agriculture GROWING PERBENIHAN Foreign investment: Max. of 30% Annual fruit crops (01139) grapes Tropical fruits Citrus fruits Apples, pome, stone Berries Annual vegetables Perennial vegetables Drug crops Floriculture crops GROWING BUDIDAYA Foreign investment: Max. of 30% Grapes Tropical fruits Citrus fruits Apples, pome, stone Berries Annual fruit (01132) Leafy vegetables Root vegetables Fruit bearing vegetables Chili peppers, paprika Mushrooms Ornamental plants Non-flower ornamental plants OTHER BUSINESS FIELD Foreign investment: Max. of 30% Manufacture of horticultural crops: Post-harvest of fruits and vegetables Horticultural research and quality test laboratories Horticultural agrotourism activities horticultural post-harvest services Retail sale of flower arrangement/florists/decorators Horticultural development consultants Horticultural landscaping Horticulture courses services

26 Business Fields That Are Open under Specific Conditions: Agriculture SEEDING (PERBENIHAN) FOOD CROPS Foreign investment: Max. of 49% Rice Corn Soybeans Groundnuts Green beans Sweet potatoes, Cassava GROWING (BUDIDAYA) FOOD CROPS Foreign investment: Max. of 49% Rice Corn Soybeans Groundnuts Green beans Sweet potatoes, Cassava OTHER BUSINESS FIELD Foreign investmen t: Max. of 49% Specific locations specified by the Ministry of Agriculture Research and development on agricultural genetic resources sciences and engineering Research and development on GMO (Genetically Modified Organisms) products sciences and engineering (genetic engineering) Breeding and raising of swine (pigs) of more than 125 in number PLANTATION BREEDING (PERBENIHAN) AND FARMING (PERKEBUNAN) Foreign investment: Max. of 95% The nucleus is subject to sourcing at least 20% of its production from the plasma/sma llholders Jatropha curcas Cashews Other sweetener crops Coconut palms Sugar cane Oil palms Tobacco Beverage crops (tea, coffee and cocoa) Textile raw materials and and cotton Rubber and other trees for extraction of sap Essential oil crops Peppercorns Other spice crops Medicinal/pharmaceutical crops Other crops not elsewhere classified Cloves

27 Business Fields That Are Open under Specific Conditions: Agriculture INTEGRATED PLANTATION FARMING AND PROCESSING Foreign investment: Max. of 95% The nucleus is subject to sourcing at least 20% of its production from the plasma/smallholder s Cashews and manufacture of dried cashew nuts and cashew nut shell liquid (CNSL) Peppercorns and manufacture of dried white peppercorns and dried black peppercorns Jatropha and manufacture of jatropha oil Sugar cane, manufacture of cane sugar, sugar cane top and sugar cane bagasse Tobacco and manufacture of dried tobacco leaves Cotton and manufacture of cotton Coconut palms and manufacture of coconut oil Coconut palms and manufacture of copra, fiber, coconut shell charcoal, dust, nata de coco Oil palms and manufacture of palm oil (CPO) Coffee and manufacture of coffee bean peeling, cleaning and sorting Cocoa and manufacture of cocoa bean peeling, cleaning and drying Growing of tea and manufacture of black tea/green tea Cloves and manufacture of dried clove buds Essential oil crops and manufacture of essential oil Rubber and manufacture of sheets, concentrated latex Grains other than coffee beans and cocoa beans and manufacture of grain peeling and cleaning other than coffee beans and cocoa beans MANUFACTURE INDUSTRY Foreign investment: Max. of 95% Subject to sourcing at least 20% of raw materials from own farms Crude vegetable and animal oils (edible oils) Rude jatropha oil Copra, fiber, coconut shell charcoal, dust, nata de coco Rubber for sheets, concentrated latex Coconut oil Cotton fiber and cotton seeds Palm oil Dried clove buds Peeling, cleaning, drying, and sorting of plantation products (cocoa beans and coffee beans) Peppercorns for dried white peppercorns and dried black peppercorns Cane sugar, sugar cane top and sugar cane bagasse Cashews for dried cashew nut and cashew nut shell liquid (CNSL) Black tea/green tea Dried tobacco leaves

28 Priority Sectors What and Where to Invest? Mentawai Island, West Sumatra The Investment Coordinating Board of the Republic of Indonesia 28

29 Tourism Mentawai Island, West Sumatra The Investment Coordinating Board of the Republic of Indonesia 29

30 The Travel & Tourism Competitiveness Index , Overall Rank Indonesia ranks 42 nd (2017) from 136 countries, climbing 38 places since 2008.

31 Travel & Tourism Competitiveness Index 2017: Indonesia Overall Performance

32 GLOBAL ACKNOWLEDGEMENT TO INDONESIA S TOURISM In 2017, Bali succeeded in reaching the Top in the prestigious Trip Advisor Travelers Choice Award named as the World s Best Destination Outranked London, Paris, Rome, New York, Crete, Barcelona, Siam Reap, Prague and Phuket. During 2017, Wonderful Indonesia received 27 awards at various events in 13 countries. Indonesia won Dive Magazine s Travel Award 2017 (Dive Magazine s Travel Award, London) Best Destination: Indonesia (1 st Winner for 2 years) Best Resort, and Spa Siladen, Bunaken (1 st Winner) Wakatobi (3 rd Winner) 14 th Best UNWTO Live Aboard Awards for Innovation in Tourism, Spain, 18 th January 2018 Pelagian, Sulawesi (2 nd Winner) Tourism Inovation Non-Governmental Organizations (NGO); TripOnYu (1 st Winner) rd

33 Ten New Bali: National Tourism Priority Destination Lake Toba Area : 1175 Ha Investment : USD 1,6 Billion Tanjung Kelayang Area : 324 Ha Investment : USD 1.4 Billion Borobudur Area : 309,5 Ha Investment : USD 1.5 Billion Wakatobi Area : 532 Ha Investment : USD 1,5 Billion Morotai Area : 300 Ha Investme USD 2,9 Billion Tanjung Lesung Area : 1500 Ha Investment : USD 4 Billion Kep. Seribu & Kota Tua Area : 1009 Ha Investment : USD 1,5 Billion Bromo Tengger Semeru Area : 325 Ha Investment : USD 1,4 Billion Mandalika Area : 1175 Ha Investment : USD 3 Billion Labuan Bajo Area : 400 Ha Investment USD 1,2 Billion Tourism Authority Tourism Special Economic Zone National Strategic Tourism Zone

34 Growth of Foreign Tourist Arrival Foreign tourist arrivals to the country was recorded at million in 2017, or percent higher than the figure in the previous year, which was at million, or 125 percent higher than the figure in Source: Indonesia Statistics, 2018

35 Foreign Tourist Arrival : Based on Nationality 78 percent of foreign tourist are from Asia Pasific Region. Most foreign tourist during originated from Singapore, Malaysia, Australia, Japan, and China. Source: Indonesia Statistics, 2018

36 Infrastructure Mass Rapid Transportation, Jakarta

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38 35 GW Electricity Program Status *) Per April GW Electricity program 1,584 MW are operating (4%) 17,024 MW are in construction (46%) 12,690 MW have signed PPA (37%) prior to financial close 3,414 MW are in procurement (10%) 1,095 MW are in planning (3%) Source : Ministry of Energy & Mineral Resources (MEMR) The Investment Coordinating Board of the Republic of Indonesia 38

39 Independent Power Producer (IPP) Potential Projects (I) No Type Location Capacity (MW) COD Target Province 1 Hydro Power Scattered South Sulawesi 2 Hydro Power Bakaru 2 2x South Sulawesi 3 Hydro Power Buttu Batu 2x South Sulawesi 4 Hydro Power Poigar North Sulawesi 5 Hydro/Mini Hydro Power Scattered 582, Aceh 6 Hydro/Mini Hydro Power Scattered 147, North Sumatera 7 Hydro/Mini Hydro Power Scattered 21, Bengkulu 8 Hydro/Mini Hydro Power Scattered West Sumatera 9 Wind Power Scattered South Sulawesi 10 Gas Gunung Megang (Expansion) South Sumatera 11 Gas/Gas Engine Belitung /2020 Bangka Belitung Island Source: PLN, RUPTL The Investment Coordinating Board of the Republic of Indonesia 39

40 IPP Potential Projects (II) No Type Location Capacity (MW) COD Target Province 12 Combined Cycle Gas Fired Jawa East Java 13 Combined Cycle Gas Fired Riau Riau 14 Combined Cycle Gas Fired Jawa East Java 15 Combined Cycle Gas Fired Senipah (ST) East Kalimantan 16 Wind/Solar Power Scattered Bali 17 Wind/Solar Power Scattered Bali 18 Waste to Energy Power Scattered DKI Jakarta 19 Coal Fired Jawa-5 (FTP2) Banten 20 Coal Fired Sulbagsel 2x /24 South Sulawesi 21 Coal Fired Kalbar 2 2x /22 West Kalimantan 22 Coal Fired Poso Peaker 2x South Sulawesi 23 Coal Fired Sulbagut 3 2x /24 Gorontalo 24 Coal Fired Bau-bau 2x /22 Southeast Sulawesi 25 Main Mouth Coal Kalselteng South Kalimantan Source: PLN, RUPTL The Investment Coordinating Board of the Republic of Indonesia 40

41 IPP Potential Projects (III) No Type Location Capacity (MW) COD Target Province 26 Geothermal Wayang Windu (FTP2) West Java 27 Geothermal Rawa Dano (FTP2) Banten 28 Geothermal Scattered Central Java 29 Geothermal Baturaden/Slamet (FTP2) Central Java 30 Geothermal Baturaden/Slamet (FTP2) Central Java 31 Geothermal Dieng (FTP2) Central Java 32 Geothermal Ijen (FTP2) East Java 33 Geothermal Wilis/Ngebel (FTP2) East Java 34 Geothermal Ijen (FTP2) East Java 35 Geothermal Wilis/Ngebel (FTP2) East Java 36 Geothermal Lahendong VII & VIII 2x North Sulawesi 37 Geothermal Scattered Central Java Source: PLN, RUPTL The Investment Coordinating Board of the Republic of Indonesia 41

42 HOW TO PARTICIPATE IN ELECTRICITY PROJECTS IN INDONESIA for Foreign Direct Investment (FDI) ELECTRICITY PROJECTS - INVESTMENT SCHEME Independent Power Producer (IPP) Engineering Procurement and Construction (EPC) Contract Private Power Utility (PPU) Public Private Partnership (PPP) Project This scheme is implemented on electricity development. As IPP, private sector roles as project owner and our State Owned Company (PT PLN) as an off-taker. Private sector acts as contractor / sub-contractor both for government projects and private s projects through tender process and the project owner provides financing. It is a private initiative or B- to-b projects that mainly used for own interest/purpose and not guaranteed by the government. This scheme is used for government infrastructure projects which cooperated with private sector. By this scheme, the investor is given a consession time to operate the project. After concession period is completed, the project must be transfered to the Government. Source: BKPM 42

43 NEGATIVE INVESTMENT LIST Foreign Capital Ownership for Electricity Project Power Plant Power Transmission Power Distribution Power Installation Consultation Sector Maximum Foreign Capital Ownership < 1 MW Closed for Foreign Investor 1 10 MW 49 % 10 MW 67 % (for Geothermal PP/PLTP) > 10 MW 95 % (for non PPP scheme) or 100% (for PPP scheme during concession period) 95 % (for non PPP scheme) or 100% (for PPP scheme during concession period) 95 % (for non PPP scheme) or 100% (for PPP scheme during concession period) 95% Construction and Installation of Electric Power Operation and Maintenance of Electric power Installation 95% (for power plant), 49% (for power transmission), Closed for Foreign Investor (for power distribution) 95% Examination and Testing of Electric Power Installation 49% (for power plant and power transmission), Closed for Foreign Investor (for power distribution) Source: Presidential Regulation Number 44 Year 2016 Indonesia Investment Coordinating Board 43

44 Power Tariff by Region (cent/kwh) National Tariff: 7.4 Regional Tariff: Aceh 10.4 North Sumatera 9.3 East Kalimantan 10.2 West Sumatera 8.1 South Sumatera 7.9 Riau 10.1 Bangka 13.7 West Kalimantan 12.4 South & Central Kalimantan 9.0 North & Central Sulawesi 12.1 Maluku 17.3 Papua 13.5 Lampung 7.8 South Sulawesi 12.1 Java-Bali 6.5 West Nusa Tenggara 13.7 East Nusa Tenggara 17.5 Source: Ministry of Energy and Mineral Resources Decree No. 1404/2017 The Investment Coordinating Board of the Republic of Indonesia 44

45 IPP BUSSINESS PROCESS SCHEME Lender(s) Financing Process Shareholders Agreement Financing Agreement Project Sponsors Special Purpose Company Procurement Process Power Purchase Agreement O&M Contract Fuel Supplier O&M Contractor EPC Contractor Source: PLN The Investment Coordinating Board of the Republic of Indonesia 45

46 Stages to Process the IPP Project Source: PLN The Investment Coordinating Board of the Republic of Indonesia 46

47 PROCUREMENT PROCESS FOR IPP PROJECT PROCUREMENT SCHEME OPEN TENDER DIRECT SELECTION DIRECT APPOINTMENT REGULATORY Law (UU) No 30/2009 Gov. Reg. (PP) No. 23/2014 MEMR Reg. No. 01/2006 jo No. 04/2007 MEMR Reg. 10/2017 (New) MEMR Reg. 19/2017 (New) DIRECT ASSIGNMENT (TO PLN SUBSIDIARIES IP/PJB) Law (UU) No 30/2009 President Reg. 14 Tahun 2017 (New) Project Criteria By bussiness nature, the project can be opened to many participants (open competition) a) Expansion of the existing IPP project in the same grid system but different location. b) There are more than one interested parties. a) IPP with energy from : renewable energy; marginal gas, main mouth coal and another local energy. b) Excess Power c) Condition of crisis or emergency for electricity provision. d) Expansion for the same location. a) Main Mouth / Non Main Mouth CFSPP (PLTU) b) Open/ Combined Cycle Gas Fired Power Plant (PLTG/PLTGU) Source: PLN The Investment Coordinating Board of the Republic of Indonesia 47

48 DIRECT ASSIGNMENT TO PLN SUBSIDIARIES (IP/PJB) RUPTL Project IPP PLN issues Assignment and also the project document to PLN Subsidiaries (IP or PJB) Partner selection process by IP/PJB (IP/PJB : min. share 51%) Approval from Ministry of Energy and Mineral Resources (ESDM) IP/PJB & Selected Partner submit the project proposal to PLN Price Negotiation Sign of the Agreement (PPA) The Investment Coordinating Board of the Republic of Indonesia 48

49 Engagement with PLN Subsidiary for Coal Fired Plant Project Projects Announcement Projects Announcement Newspaper media: The Jakarta Post Letter of Interest (LoI) to: Director of Business and Development PT.Indonesia Power Jl. Gatot Subroto, Kav.18 Letter of Interest (LoI) to: PT PJB Representative Office Cq. Division Head of Business Development, Product and Marketing PLN Building, 2nd Floor. Jalan Gatot Subroto Kav 18, Jakarta Document reviewed by PT Indonesia Power (Legal and Financial Aspects) Document reviewed by Price Waterhouse Coopers (as PJB s consultant) duration 3 weeks RFP (Shortlisted) RFP (Shortlisted) One-on-One Meeting Partnership scheme: PT Indonesia Power (Share 51%); PT Indonesia Power (Share Equity 10%); Max 2 entities (Local/Foreign) Contact: Henry Asdayoka Kepala Divisi Pengembangan Bisnis HP: The Investment Coordinating Board of the Republic of Indonesia One-on-One Meeting Partnership scheme: PT Indonesia Power (Share 51%); PT Indonesia Power (Share Equity 10%); Max 2 entities (Local/Foreign) Contact: Nyoman Ngurah Widyatnya Kepala Divisi Strategi Bisnis, Produk dan Pemasaran HP:

50 PRIVATE POWER UTILITY (PPU) Procedure on Determining of the Business Area (Penetapan Wilayah Usaha) Investors OSS - BKPM Investment Registration From One Stop Service BKPM Local Government Directorate General of Electricity, Ministry of Energy & Mineral Resources Site Visit to the Business Area Meeting by MEMR, PLN, and BKPM to response the application of certain Business Area (Due Diligence) By Team Directorate General of Electricity and Local government 2 Construction 3 Determination of Business Area (MEMR Regulation No. 35/2014) Recommendation / Official Report on the Release of the Business Area Establishment of IUPTL By Local Government / Regional DPMPTSP (UU No. 23/2014) Commercial Operation Date Source: Ministry of MEMR Regulation No. 28 Year 2012 j.o Ministry of MEMR Regulation No. 7 Year 2016 IndonesiaInvestment Coordinating Board 50

51 Business Flowchart for Electricity Project Company Establishment Licensing Process 4. - Investment License - Certificate of incorporation - NPWP / Tax registration - TDP / Company registration - RPTKA / Employment plan - IMTA / Working permit - APIP / Import identification - NIK / Customs registration - Letter of land availability Commercialization 3. Principle License Location Permit Temporary IUPTL Land Acquisition Construction Phase Contracts & Financing PPA Financial Close Certificate of Operation Worthiness (Sertifikat Laik Operasi/SLO) Commercial Operation Date (COD) Environment License, Construction Permit (IMB), and IUPTL should be obtained first Construction A business license must be granted before an entity can supply electrical power or run an electrical power-supporting business. Business licenses for the supply of electrical power consist of the following: a) An IUPTL to supply electricity for public use, which may be issued for a maximum validity period of 30 years and may be extended; and b) An Izin Operasi to supply electricity for own use (i.e. for PPUs) with electricity capacity of more than 200 kva, which may be issued for a maximum validity period of ten years and may be extended The Investment Coordinating Board of the Republic of Indonesia 51

52 Investment Regulatory Reform PRO INVESTMENT POLICY The Investment Coordinating Board of the Republic of Indonesia Borobudur Temple, Yogyakarta 52

53 BKPM Priority Agenda Improving Investment Services in Central and Regional All sectors 167 permits are delegated to BKPM Industry, power generation, oil & gas, tourism at one place 96% Regional PTSP formed.68%regi onal PTSP implement e- licensing. One place 22 ministries integrated One-Stop Service (PTSP) at BKPM KLIK Direct Construction Facility for Investment project 3-hour Investment Licencing Service 3-hour Investment Licencing Service for Infrastructure and mineral resources One-Stop Integrated Services The Investment Coordinating Board of the Republic of Indonesia 53

54 ONLINE SINGLE SUBMISSION SYSTEM (NSWI) 2018 Agenda: Single Submission System (NSWi) INTEGRATED BUSINESS LICENSING Single submission of data and information and single and synchronous processing of data and information. All licensing data and business requirement compliance for every ministries /government agency will be in 1 integrated business license system. The operational and the admin of Online Single Submission will be performed in 1 (one) building set by the Government. NIK Deed of Establishment Authentication MARINE FISHERY INSW HOME AFFAIRS KEMKUM HAM - AHU AGRICULTURE Transportation License TRANSPORTATION NPWP & KSWP FINANCE TAX PTSP - DPMPTSP (ONLINE SINGLE SUBMISSION) Masterlist FINANCE CUSTOMES LEMSANEG LHK KEMENAKER Digital Signature Forestry Permit PERINDUSTRIAN PERDAGANGAN TDP INA-TRADE Foreign Worker Mining License Business License ESDM BIG KOMINFO AGRARIA Building Permit (IMB) E-licensing PPI BPJS PUPERA IUJK : Integrated : On Process : Coordinating : Un-Integrated Yet The Investment Coordinating Board of the Republic of Indonesia 54

55 3-Hour Investment Licensing Service REQUIREMENTS: Minimum investment of IDR 100 billion (USD 8 million) and/or employing 1,000 local workers BKPM Exception for investment plan in infrastructure sector (power, transportation, public works and ICT) and oil and gas sector urce: BKPM, 2017 Certainty to start a business Investment license Certificate of incorporation NPWP / Tax registration TDP / Company registration Certainty to work RTKA / Employment plan IMTA / Working permit 3 Hours Investment Licensing Service For Energy And Mineral Resources Sector 9 documents obtained Certainty to import capital goods APIP / Import identification NIK / Customs registration Accurate land information Letter of land availability ESDM3J service is given if the company has fulfilled the checklist of administrative and technical requirements as regulated on MEMR Ministerial Decree No. 15 of Arrive 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. NO TYPE OF SERVICES REGULAR SERVICE 1. Temporary Business License for Electricity 20 Working Days 2. Temporary Business License for Oil / Fuel / LPG Storage 32 Working Days 3. Temporary Business License for Storage of Processed Products / CNG 32 Working Days for Processed Products Working days for CNG 4. Temporary Business License for LNG Storage 32 Working Days 5. Temporary Business License for Oil Refinery 32 Working Days 6. Temporary Business License for Processing Oil Residue Industry 32 Working Days 7. Temporary Business License for Natural Gas Processing 32 Working Days 8. Temporary Business License for General Trade of Oil/Fuel 40 Working Days 9. Temporary Business License for General Trade of Processed Products 40 Working Days The Investment Coordinating Board of the Republic of Indonesia 55

56 3 HOURS INVESMENT LICENSING SERVICE FOR ENERGY AND MINERAL RESOURCES SECTOR BKPM RECEIVE Requested licensing products WAITING In Priority Lounge 9 Type of Licensing Issued by ESDM3J service Director ARRIVES at Central OSS. SUBMIT required documents. REQUIREMENTS ESDM3J service is given if the company has fulfiiled the checklist of administrative and technical requirements as regulated on MEMR Ministrial Decree No. 15 of 2016 as revised in Ministerial Decree No. 13 of NO TYPE OF SERVICES REGULAR SERVICE 1. Temporary Business License for Electricity 20 Working Days 2. Temporary Business License for Oil / Fuel / LPG Storage 32 Working Days 3. Temporary Business License for Storage of Processed Products / CNG 32 Working Days for Processed Products Working days for CNG 4. Temporary Business License for LNG Storage 32 Working Days 5. Temporary Business License for Oil Refinery 32 Working Days 6. Temporary Business License for Processing Oil Residue Industry 32 Working Days 7. Temporary Business License for Natural Gas Processing 32 Working Days 8. Temporary Business License for General Trade of Oil/Fuel 40 Working Days OSS : One Stop Service (PTSP) MEMR : Minister of Energi and Mineral Resources 9. Temporary Business License for General Trade of Processed Products 40 Working Days The Investment Coordinating Board of the Republic of Indonesia 56

57 Direct Construction Facility/KLIK Direct Construction Investors can directly start their project construction before obtaining construction permits. This service is supported by both Central and Regional Governments. No Requirements No minimum investments or workers is required. Available for 47 selected industrial parks in 12 provinces and 12 existing SEZs. Construction permits can be obtained in parallel with construction process. Obtain investment licence at One-stop Service (PTSP) at national or regional level. Set Up Factory in Non- KLIK Area e: BKPM, 2018 Principle Permit / Investment Permit Land Transaction Set Up Factory in Industrial Estate with KLIK Facility KLIK Land Transaction Survey a land within selected industrial parks. Acquire the land for your industry. Requirements preparation of IMB IMB Application (10-14 days) Example: EIA /AMDAL, Environmental Permit (6 months-1,5 year) Doing Construction (1 2 years) in parallel processing technical permits Ready for commercial production (all technical permits complete) IMB EIA (AMDAL) etc. Construction (1 2 years) The Investment Coordinating Board of the Republic of Indonesia Ready for commercial production (all technical permits complete) Business Permit/IUI By investing in KLIK Industrial Estate, investor will efficiently safe time ± 6 months 1,5 year Start the construction of your project. No other permits are required. Apply for building construction permit & environmental permit, in parallel with construction process. Project that already utilized KLIK ( ): 115 Projects, total area 1.322,96 ha, investment value IDR 130,62 Trillion (10% of National Investment Realization) 57

58 47 Industrial Estates in 12 Provinces for KLIK Head of BKPM Decree No. 41 of 2018 on the Enactment of Certain IEs for KLIK (Direct Construction Facility). North Sumatera (1) Medan IE Riau (2) Dumai IE Tanjung Buton IE Riau Islands (5) Batamindo IE Bintang Industrial Park II Kabil Integrated Industrial Park West Point Maritime Industrial Park Bintan Inti IE Total Luas : ,85 ha di 12 Provinsi 25 Kab/Kota East Kalimantan (1) KI Kariangau West Sumatera (1) Padang Industrial Park Banten (4) Modern Cikande IE Wilmar IE Krakatau IE Cilegon Millenium IE Phase I Phase II Phase III Note: IZ: Industrial Zone DKI Jakarta (2) Kawasan Berikat Nusantara/KBN Jakarta IE Pulagadung/JIEP D.I. Yogyakarta (1) Piyungan IE West Java (19) Bekasi Fajar Industrial Estate Delta Silicon 8 IE Karawang Internasional Industrial City Suryacipta City of Industry GT Tech Park Artha Industrial Hill Marunda Center IE Greenland International Industrial Center (GIIC)/Deltamas Jababeka Tahap III Kota Bukit Indah Ind. City Indotaisei Kota Bukit Indah IE East Jakarta Industrial Park Bekasi International IE MM 2100 Industrial Town KI TeIDRadu Indonesia China Kujang Cikampek IE Lion IE Rancaekek IE Cibinong Center IE South Sulawesi (2) Bantaeng Indutrial Park Makassar Industrial Park Central Java (5) Kendal IE Bukit Semarang Baru IE Wijayakusuma IE Jatengland Industrial Park Sayung Tanjung Emas Export Processing Zones East Java (4) Java Integrated Industrial & Port Estate Maspion IE Tuban IE Kawasan Industri & Pergudangan Safe N Lock 58 IndonesiaInvestment Coordinating Board 58 58

59 Fiscal Incentives for Investment (MoF Regulation No. 35/PMK.010/2018) 5-20years tax exemption* With another 50% tax exemption for additional 2 years (transitional period). 17 eligible pioneer industries: 1. Basic metal industries; 2. Oil refinery industries ; 3. Petrochemical industries from oil, gas, or coal; 4. Basic an-organic chemicals 5. Basic an-organic chemicals from agriculture, plantation, or forestry; 6. Basic material industry for pharmaceutical ; 7. Semi-conductor and other computer main component industries; 8. Main component industry for telecommunication; 9. Main component industry for medical devices; 10. Machinery industries; 11. Machinery industries for automotive; 12. Main component industry for robotic; 13. Main component industry for marine transportation; 14. Main component industry for aiidrlane; 15. Main component industry for railway; 16. Electric Power Generation industries; 17. Economic infrastructure. 0,5 trillion Minimum investment plan (USD 38 million). IDR Tax Holiday *) Based on value of investment threshold. Tax Allowance (Government Regulation No.9/2016) 30 % 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 absorbtion, local content, and project location (especially outside Java island). Import Duty Facility (MoF Regulation No.176/PMK.011/2009 juncto. No. 188/PMK.010/2015) a. Machinery/equipment import duty exemption b. Raw materials for production - 2 years import duty exemption or - 4 years for companies using locallyproduced machines/equipment (min.30%). Industries Which produces goods and/or services, including: 1) Tourism and culture 2) Public transportation 3) Public health services 4) Mining 5) Construction 6) Telecommunication 7) Port

60 Thank You THEOPITA I. TAMPUBOLON DEPUTY DIRECTOR OF IIPC LONDON Indonesia Investment Promotion Centre (IIPC) Landmark Barbican, 200 Aldersgate (South) London EC1A 4HD United Kingdom T: +44(0) D: +44 (0) W: