Presented by: Mr. Priyo Iswanto Minister /Deputy Chief of Mission Embassy of the Republic of Indonesia Treviso, 20 March 2013

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1 Presented by: Mr. Priyo Iswanto Minister /Deputy Chief of Mission Embassy of the Republic of Indonesia Treviso, 20 March 2013

INDONESIA: THE LARGEST ARCHIPELAGIC STATE Total area : 5.180.053 sq km (land: 1.922.

716 km (2nd in the world) 3 time zones (GMT +7 / +8 / +9) Population : 242 million

2 INDONESIA: THE LARGEST ARCHIPELAGIC STATE Total area : sq km (land: sq km; waters: sq km) Coastal Line: km (2nd in the world) 3 time zones (GMT +7 / +8 / +9) Population : 242 million people (4th in the world) Multi-ethnic (More than 300 ethnic groups) Capital City : Jakarta (Population >10 million) Unity in Diversity

POLITICAL SITUATION: STABLE Political parties in Indonesia: amount to 44 parties (2009 Election) Direct election Democracy Social Harmony Stability

3 POLITICAL SITUATION: STABLE Political parties in Indonesia: amount to 44 parties (2009 Election) Direct election Democracy Social Harmony Stability Women participation and representation is increasing Decision making at the regional or local level Decentralization Opportunities for the people Market

4 Economic Growth ,5% 6,2% 6,5% 6,3% GDP (PPP) USD 994,8 billion USD 1,056 trillion USD 1,209 trillion USD 1,212 trillion GDP per capita USD USD USD USD Public debt 29% of GDP 27,4% of GDP 25% of GDP 24,8% of GDP Budget deficit -1,8% -1,5% -1,6% -1,7% Total export USD 116,5 billion USD 157,7 billion Total import USD 96,8 billion USD 135,6 billion Total trade balance Total FDI ECONOMIC SITUATION: GROWING Surplus 19,6 billion Surplus USD 22,1 billion USD 203,4 billion USD 190 billion USD 177,4 billion USD 191,7 billion Surplus USD 26 billion Defisit USD -1,6 billion USD 10,7 billion USD 15,5 billion USD 19,3 billion USD 23 billion

5 Industrial production growth rate is 5,2 % Services include trade and investment Foreign trade accounts for around 30% of total GDP FDI accounts for around 70 percent of total investment

Rising population of middle class (37,7% in 2003 60,9% in 2011) An increase of ±7 million

6 Indonesia is the largest market in Southeast Asia Over 50% of the population is under 29 years old, with the same percentage living in urban areas and adopting a modern lifestyle. Rising population of middle class (37,7% in ,9% in 2011) An increase of ±7 million every year Rising middle class in Indonesia help transform the country's consumer market

7 INDONESIA S LATEST SOVEREIGN RATINGS Source : Indonesia Investment Coordinating Board, 2013 RATING AGENCY RATINGS OUTLOOK Baa3 Stable BB+ Positive BBB - Positive

8 Political and Economic stability WHY INDONESIA? Competitive Labour Skillful; Productive age; Minimunwage : US$ 228/month Large Domestic Market Domestic market accounts 70% of total GDP Indonesians spend up to 50,6 % of their household income on food Huge Reserves of Energy and Natural Resources Natural gas; Coal; Geothermal; Palm Oil; Cocoa; Tin; Rubber; Nickel; Copper; Bauxite; Timber; Fisheries Legal Warranty Equal Treatment, No Minimum Capital Requirement, Free to Repatriate Investment & Profit, No nationalization, Dispute Settlement, Investment Services

9 Indonesia s potentials and natural resources

10 IMF: Indonesia s Economy will be the 6th Largest in the World by 2030

11 Indonesia Today and in th largest economy in the world 6 th largest economy in the world 45 million members of the consuming class 53% population in cities producing 74% of GDP 135 million members of the consuming class 71% population in cities producing 86% of GDP 55 million skilled workers 113 million skilled workers needed $ 0.5 trillion market opportunity in consumer services, agriculture and fisheries, resources and education $ 1.8 trillion market opportunity in consumer services, agriculture and fisheries, resources and education Source: McKinsey Global Institute(2012) 11

Indonesia Economic Corridors: Masterplan Basically MP3EI is based on these strategic initiatives: 1. Encourage a large scale investment realization in 22 main economic activities 2.

12 Indonesia Economic Corridors: Masterplan Basically MP3EI is based on these strategic initiatives: 1. Encourage a large scale investment realization in 22 main economic activities 2. Synchronization of national action plan to revitalize the real sector performance 3. The development of center of excellence in 6 (six) economic corridors Main strategy of MP3EI: 1. Economic potential development through economic corridor 2. Strengthening the national connectivity 3. Strengthening national human resources capability and science and technology 12

13 22 main economic activities in 8 main programs of MP3EI are identified in each economic corridor 13

19 MP3EI REALIZATION IN 2012 Total investment realization of MP3EI in 2012 reached Rp 623,91 trillion (USD 65,6 billion) with a total number of 184 projects Stakeholders Number of Projects Realization State-Owned Enterprises (BUMN) 57 Rp 121,89 trillion / USD 12,83 billion Private companies 70 Rp 275,24 trillion / USD 28,97 billion State Budget (APBN) 43 Rp 119,14 trillion / USD 12,54 billion Government and Private Cooperation Source: Ministry of Finance 14 Rp 107,53 trillion / USD 1,33 billion Rp 243 trillion (USD 25,57 billion) has been realized for infrastructure projects, which consist of roads, transportation, water and energy resources; with the largest investment allocation in transportation. Distribution of MP3EI projects: Sumatera (Rp127,8 trillion); Java (Rp 263,6 trillion); Kalimantan (Rp125.3 trillion); Sulawesi (Rp 74,4 trillion); Bali and NTT (Rp 44.4 trillion); Papua, Maluku, North Maluku, and West Papua (Rp 115,5 trillion)

26 (2x600MW) (1x600MW)

Automotive Industry Development Target MPV, Light Commercial Truck. 80% design of motor cycle.

Base Production for certain Model of Vehicle 2010 Manufacture of engine, transmission for MPV

2015 MPV, Commercial Truck s/d 24 ton, SUV and small economical sedan.

Manufacture of engine, transmission for Commercial Truck up to 24 ton, SUV and small economical

MPV, SUV, Small economical sedan, Commercial truck > 24 ton, Medium size sedan, Hybrid car.

Commercial truck component > 24 ton, Medium size sedan, Hybrid car.

29 Automotive Industry Development Target MPV, Light Commercial Truck. 80% design of motor cycle. Area of Cooperation : 1. Green Car Industry 2. Base Production for certain Model of Vehicle 2010 Manufacture of engine, transmission for MPV and Light Commercial Truck. Supplier of component for MPV and Light Commercial Truck MPV, Commercial Truck s/d 24 ton, SUV and small economical sedan. 80% design of 4W motor vehicle for MPV and Light commercial truck. Manufacture of engine, transmission for Commercial Truck up to 24 ton, SUV and small economical sedan. Supplier of component for Commercial Truck up to 24 ton, SUV and small size sedan. MPV, SUV, Small economical sedan, Commercial truck > 24 ton, Medium size sedan, Hybrid car % design of 4W motor vehicle for sedan and SUV. Hybrid engine, ECU integration system. Commercial truck component > 24 ton, Medium size sedan, Hybrid car MPV, SUV, Small economical sedan, Commercial truck > 24 ton, Medium size sedan, Hybrid car and Luxury car. 80% design of 4W motor vehicle for medium size sedan. Manufacture of luxury car quality component. Supplier of luxury car quality component. 29

Shipbuilding Industry Development Target 2010 Capable to build any kind of ships (commercial ships, passenger

shipyards, ship equipment and ship component industry to supply domestic market as well as export 2015 Capable to

capability increase 2020 Capable to build any kind of ships (commercial ships, passenger ship, working ships) up

build any kind of ships (commercial ships, passenger ship, working ships) up to 300,000 dwt Design and

Indonesian and Korea to Improve the quality of human resources Join operation of ship design such as : basic

and/or Foreign Direct Investment for developing shipyard to produce a good quality of new shipbuilding in

30 Shipbuilding Industry Development Target 2010 Capable to build any kind of ships (commercial ships, passenger ship, working ships) up to 50,000 dwt National shipbuilding and Engineering Center (NasDEC) invesment on big size shipyards, ship equipment and ship component industry to supply domestic market as well as export 2015 Capable to build any kind of ships (commercial ships, passenger ship, working ships) up to 80,000 dwt Design and engineering capability increase 2020 Capable to build any kind of ships (commercial ships, passenger ship, working ships) up to 200,000 dwt Design and engineering capability increase KKIGK= Shipbuilding Industrial Zone 2025 Capable to build any kind of ships (commercial ships, passenger ship, working ships) up to 300,000 dwt Design and engineering capability increase Area of Cooperation : Exchange employees of shipbuilding companies between Indonesian and Korea to Improve the quality of human resources Join operation of ship design such as : basic design, contract design, and Detail Engineering Drawing (DED) for the ship that built in Indonesia Join Operation and/or Foreign Direct Investment for developing shipyard to produce a good quality of new shipbuilding in Indonesia Join Operation and/or Foreign Direct Investment in ship equipment and ship component industry to supply domestic market as well as export. 30

Electronic & ICT Industry Development Target 2010 Toward Digital/ICT based and

Financial and Management Software Application, Animation and Content Industry

Industry Digital/ICT based and environment friendly products and component developed

products ( Mobile phone, 4G Application) 2020 Shopisticated Software Application,

nano technology Local Telecommunication Industry plays significat role in domestic as

Content Industry dominate domestic and regional markets.

market and global market Indonesia become production base for consumers electronics

31 Electronic & ICT Industry Development Target 2010 Toward Digital/ICT based and environment friendly products. Financial and Management Software Application, Animation and Content Industry Computer industry 2015 Manufacturing Software Application, Animation and Content Industry Digital/ICT based and environment friendly products and component developed Computer component industry and its supporting industries Wireless communication products ( Mobile phone, 4G Application) 2020 Shopisticated Software Application, Animation and Content Industry already developed Electronic and ICT Products using nano technology Local Telecommunication Industry plays significat role in domestic as well as international market 2025 Domestic Software Application, Animation and Content Industry dominate domestic and regional markets. Domestic wireless telecommunication industry has high competitiveness in domestic market and global market Indonesia become production base for consumers electronics and control/measurement devices industry in ASEAN and Asia Area of Cooperation: 1. ICT system for road transportation (Electronic Toll card system,etc) 2. Digital base Electronic Industry 3. Mobile Phone Industry 31

Machinery Industry Development Target 2010 Spread and improvement of agricultural

agricultural machinery Reestablishment of national tooling machine industry, although

Industries in Indonesia 2015 Realization of turbine manufacturing in power plant as

in the country in a restructuring program sugar mill TURBINE 2025 Increase the human

industrial machinery equipment to fulfill the needs of machinery equipment Increasing

industries in Java and outside Java Increasing the ability of industrial machinery

of Textile and Sugar Machinery Industry to support restructuring program for Textile

Joint Investment and/or joint operation to build Power Plant to support 10.

32 Machinery Industry Development Target 2010 Spread and improvement of agricultural machinery industries outside Java, one of the efforts is establishing center of agricultural machinery Reestablishment of national tooling machine industry, although still limited within certain specification product Establishment Medical Device Industries in Indonesia 2015 Realization of turbine manufacturing in power plant as well as industrial purposes Realization of some of the use of machine-made equipment in the country in a restructuring program sugar mill TURBINE 2025 Increase the human resource capacity to support industrial machinery equipment Increasing the ability of industrial machinery equipment to fulfill the needs of machinery equipment Increasing the new investment / business expansion and spread of common equipment machinery industries in Java and outside Java Increasing the ability of industrial machinery equipment to produce capital goods Power Plant AREA OF COOPERATION : Joint Investment of Textile and Sugar Machinery Industry to support restructuring program for Textile and Sugar Industry (Modernizing production Facility). Joint Investment and/or joint operation to build Power Plant to support MW second stage program. Joint Investment to develop supporting Industry (Machinery) for Energy Sector Joint Investment to develop Medical Device (Disposal product) 32

Steel Industry Development Target 2010 Mid Term Target ( 2010-2014) 1. Optimalized installed capacity of crude steel industry (6.0 million tons / year) 2.

33 Steel Industry Development Target 2010 Mid Term Target ( ) 1. Optimalized installed capacity of crude steel industry (6.0 million tons / year) 2. Developed domestic supporting industries / workshops 3. Increasing steel consumption from 29 kg/capita in 2004 to 44 kg/capita in Established of information exchange to encourage synergies among the upstream and downstream national steel industry with associated institutions 2015 Long Term Target ( ) The growth of making coal-based iron industry (coal base), which used gas and iron ore local with capacity of 5 million tons / year 2. The growth of pelletizing and pig iron with a capacity of 2.5 million tons / year 3. The development of iron making industry from 1.5 million tons / year to 3.0 million tons / year 4. The development of crude steel industries from 6.0 million tons / year to 10 million tons / year 5. Integrated steel smelting industry with stainless steel industry (slabs, HRC and CRC) 6. The development of steel industry (HRC, Plate, CRC, and long product to 20 million / year 7. The increase in steel consumption to 100 kg/capita in 2025 Area of Cooperation : Slab and HRC Industry PT Krakatau POSCO, a joint venture between PT. Krakatau Steel and POSCO (Pohang Iron and Steel Corporation) located at Krakatau Industrial Estate Cilegon has been established to produce slab and HRC with capacity MT/year. Plant construction will be done in two phases, the first phase the factory will be built with a capacity of 3 million tons which will be completed in The second phase will be completed two years later. 33

34 LIST OF BUSINESS FIELDS CLOSED TO Agriculture - Marijuana Cultivation INVESTMENT Forestry -Capturing of Fish Species as Stated in Appendix I (CITES), The use (removal) of coral/atoll from nature for construction material Industry -Alcohol Beverage Industry, Mercury processed Chlorine Alkali Maker, Chemical Material Industry that can damage the environment, Chemical Material Industry Schedule 1 Chemical Weapon Convention Transportation -Providing and Implementation of Land Terminals, Implementation and Operation of Weight Stations, Implementation of Motor Vehicle Type Tests, Implementation of Motor Vehicle Periodic Tests, Telecommunication/Supporting Facility of Shipping Navigation, Vessel Traffic Information System (VTIS), Air Traffic Guiding Service Communication and Informatics -Management and Implementation of Radio Frequency and Satellite Orbit Spectrum Monitoring Stations Culture & Tourism - Public Museums, Historical and Ancient Heritage, Residential/Traditional Environment, Monuments, Gambling/Casinos

35 BILATERAL TRADE INDONESIA-ITALY TOTAL TRADE 2.047, , , , , ,8 EXPORT TO ITALY IMPORT FROM ITALY 1.380, , , , , ,0 667,5 999,2 726,2 909, , ,8 *In million USD Source: Ministry of Trade, Republic of Indonesia Main Indonesian exports to Italy: Coal, Palm Oil, Rubber, Footwear, Textile and textile products, Coffee, Tin, Pneumatic tyres, Coconut, Video recording equipments, Furniture, Chemical Woodpulp, Paper, Wood Main Indonesian imports from Italy: Machinery for cleaning; Taps, cocks, valves; Machines and mechanical appliances ; Tubes and pipes;parts and accessories of motor vehicles; Leather; Turbojets, turbo propellers and other gas turbines;motor cars and other motor vehicles; Telephone sets

36 ITALIAN FDI IN INDONESIA Year USD(million) , , , , , , ,9 (Source : Indonesia Investment Coordinating Board) In 2012, Pirelli pledged to invest in establishing a motorcycle tyre factory in Indonesia worth USD 130 million MAJOR ITALIAN COMPANIES IN INDONESIA: ENEL Il Ponte di Archimede ENI Saipem (gas) Perfetti OCRIM IVECO FIAT Piaggio Pirelli Coeclerici Fincantieri Finmeccanica Trevi (submarine) Mastrotto Top Italian Investments in Indonesia: 1. Hotel and Restaurant 2. Food Industry 3. Automotive 4. Health Equipment 5. Iron and Steel Industry 6. Leather Products and Footwear 7. Textile Industry 8. Chemical Industry and medicine 9. Transportation and Telecomunications

37 ITALY S RANK IN INDONESIA COMPARED TO OTHER EUROPEAN COUNTRIES IN 2012 Rank TRADE Rank INVESTMENT 1 Germany 7.263,5 1 Netherlands 966,5 2 Netherlands 5.544,5 2 UK 934,4 3 Italy 3.800,8 3 Switzerland 255,1 4 UK 3.063,0 4 France 158,7 5 France 3.055,1 5 Luxembourg 98,0 6 Spain 2.528,3 6 Germany 75,0 7 Belgium 1.925,8 7 Belgium 23,9 8 Sweden 1.465,0 8 Italy 22,9 9 Finland 646,5 9 Austria 6,8 10 Switzerland 600,1 10 Sweden 5,2 Source: Ministry of Trade (in million USD) Source: Indonesian Investment Board (in million USD)

TEXTILE INDUSTRY OF INDONESIA. By Indonesian Consul General in Mumbai

TEXTILE INDUSTRY OF INDONESIA. By Indonesian Consul General in Mumbai TEXTILE INDUSTRY OF INDONESIA By Indonesian Consul General in Mumbai 1 Indonesian Textile Industry Overview The Ministry of Industry targets the textile industry and textile products (TPT) to grow by 6.3%