1 SESSION 2: WHAT SECTORS SHOULD BKPM TARGET FOR FDI? 10:15-11:15 www.wavteq.com
Why develop a sector targeting strategy? 2 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? o Identifying the target sectors for FDI attraction is critical to success in attracting FDI and should drive the overall investment promotion strategy o Sector strategy informs proactive investment promotion and lead generation activities o The sectors being targeted help determine: + What sector marketing materials and value propositions are needed? + Which trade shows and events to attend? + What countries to target for FDI? + Which overseas missions to make? + What partnerships to create? + Which specific companies to target? www.wavteq.com
How to develop a sector targeting strategy? 3 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? o When identifying ”sectors” its is essential to be as focused as possible. Most IPAs have far too broad sector strategies, which makes it very difficult to proactively target companies. Targeting the “food” sector or the “IT” sector or “renewable energy” sector is not sufficient for an investment promotion strategy – the specific subsectors and individual product areas to target must be identified o The sector targeting strategy of IPAs may not fit standard industry classification systems. For example, Cyber security, artificial intelligence, and big data are amongst the hottest subsectors for FDI but fit no standard industry classification. Furthermore, many IPAs are actually targeting business activities which are often sector agnostic e.g. an IPA may target BPO operations, which can come from multiple industry sectors o Most IPAs build sector teams who have the sector expertise to be able to help companies invest and expand their operations in the location and create local linkages with SMEs, research institutions, skills and training centers, and other entities www.wavteq.com
Framework for identifying target sectors 4 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? WAVTEQ Three Force Model of target sector identification www.wavteq.com/publications 2. Competitive position 1. Economic 3. Market development demand objectives TARGET SECTORS www.wavteq.com
Exercise handout – sector information 5 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Please see the below handouts providing sector data to help identify sectors to target for FDI into Indonesia 1. Inward FDI flows to Indonesia by sector (BKPM data – covers all types of FDI) 2. Inward FDI projects, jobs and capital investment into Indonesia by cluster, sectors, subsector and activity (FT data – covers greenfield FDI only) 3. Indonesia top export sectors (ITC data) 4. Indonesia top import sectors (ITC data) 5. Global FDI flows by sector (UNCTAD data – covers all types of FDI) 6. ASEAN inward FDI projects, jobs and capital investment by cluster, sectors, subsector and activity (FT data – covers greenfield FDI only) Please take 20 minutes to look through the handouts www.wavteq.com
Group brainstorm – what sectors to target for FDI? 6 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? What should be the key sectors (and subsectors) to target for FDI into Indonesia? 1. Infrastructure – energy, mining, transportation, electricity – conventional and renewables especially (priority of government) 2. Manufacturing – food (exports), industrial machinery, heavy industry (value added), textiles (jobs), pharma and chemicals (import substitution and reduce costs in Indonesia), electronics, automotive 3. Maritime – cold storage, fish processing, harbor, ship and boat building 4. Agriculture – cattle, livestock (food security) 5. Tourism – hotels, restaurants, travel agents, SEZs 6. Lifestyle/Digital – e-commerce, software development, retail, film, creative industries 7. Services – financial, professional (increases competitiveness of all sectors, knowledge-transfer, high income – but min. FDI threshold too high perhaps!), and education 8. Xx 9. Xx 10. xx www.wavteq.com
Target sectors identified as part of TPSA project to attract 7 Canadian FDI to Indonesia WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Renewable Energy 1. Biomass Aligning Indonesia sector strengths for FDI with outward FDI sectors from Canada 2. Solar Services 3. Professional, scientific & technical services 4. Software & IT (digital media, e-commerce, and mobile) Manufacturing 5. Machinery & Equipment (Agriculture, Construction, Mining) 6. Pesticides, Fertilizers & other Agricultural Chemicals Transportation 7. Air Transportation (PPP, support services, freight & distribution services) Agri-business 8. Dairy Products 9. Fisheries www.wavteq.com
Indonesia’s competitive sectors for FDI – Solar 8 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – Biomass 9 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – Chemicals 10 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – Machinery 11 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – Fisheries 12 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – Dairy 13 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – IT 14 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – Technical services 15 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
Indonesia’s competitive sectors for FDI – Air Transport 16 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? Source: Developed by WAVTEQ for TPSA project www.wavteq.com
How to benchmark location competitiveness? 17 WHAT SECTORS SHOULD BKPM TARGET FOR FDI? To benchmark locations there are many data sources: o International organizations e.g. + https://data.iadb.org/ + https://data.worldbank.org/products/wdi o Competitiveness reports e.g. + https://www.weforum.org/reports/the-global-competitiveness-report- 2017-2018 o Subscription databases e.g. + https://eiu.bvdep.com/frame.html + www.fdibenchmark.com o National governments e.g. + www.state.gov/e/eb/rls/othr/ics/2017/wha/270080.htm + https://2016.export.gov/ + www.export.gov/ www.wavteq.com
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