Republic ublic of Indone nesia ia Buildin lding Exter ernal Resil ilie ience nce of Indon onesia esia March 2017 0
About Investo tor Relatio tions ns Unit of the Republic ublic of Indones nesia ia Investor Relations Unit (IRU) of the Republic of Indonesia has been established as a joint effort between Coordinating Ministry of Economic Affairs, Ministry of Finance and Bank Indonesia since 2005. The main objective of IRU is to actively communicate Indonesian economic policy and to address concerns of investors, especially financial market investors. As an important part of its communication measures, IRU maintains a website under Bank Indonesia website which is administered by International Department of Bank Indonesia. However, day-to-day activities of IRU are supported by all relevant government agencies, among others: Bank Indonesia, Ministry of Finance, Coordinating Ministry for Economic Affairs, Investment Coordinating Board, Ministry of Trade, Ministry of State Owned Enterprises, Ministry of Energy and Mineral Resources and Financial Services Authority. IRU also convenes an investor conference call on a quarterly basis, answers questions through email, telephone and may arrange direct visit of banks/financial institutions to Bank Indonesia and other relevant government offices. Published by Investor Relations Unit – Republic of Indonesia Contact: Wiwit Widyastuti (International Department - Bank Indonesia, Phone: +6221 2981 8279) Adrianto (Fiscal Policy Office - Ministry of Finance, Phone: +6221 345 0012 ) Farid Arif Wibowo (Directorate General of Budget Financing and Risk Management - Ministry of Finance, Phone: +6221 351 0714) E-mail: contactIRU-DL@bi.go.id 1
Overv rview iew Fiscal Performance and Flexib ibil ility ity: Institu itutio tional and Governance Effectiv tiveness: 1 4 More Fiscal Stimulus with Accelerate ted Reforms Agenda with th Institu itutio tional Improvement Prude dent t Fiscal Management Economic ic Factor: Moneta tary and Financia cial Fact ctor: 2 5 Strong and Stable Growth th Prospects ts Credib ible Moneta tary Policy Track k Record and Favourable Financia ial Secto tor Remain in Intact Progressiv ive Infrastr tructu ture Development: t: 6 3 External Facto tor: Strong Commitm itment t on Acceleratio tion Improved External Resil ilie ience of Infrastr tructu ture Provis isio ion 2
Sec ection on 1 Inst stitu itution tional and Govern ernme ment nt Effectiv tivene ness: s: Accele elerate ted Reform orms Agen enda da with th Instit titutio tiona nal Improv ovement ement
Positiv itive Global bal Perceptio eption Ease of Doing ng Busine ness 1 Corrupti uption n Perce cept ption n Index 2 2008 2009 2010 2011 2012 2013 2014 2015 2016 50 Higher score is better 50 Higher rank is better 45 41 70 69 40 40 37 90 91 35 35 99 110 30 123 25 130 130 * Both India and Brazil shared the same score (40) in 2016 20 150 2012 2013 2014 2015 2016 Indonesia India Brazil Philippines Turkey Indonesia India Brazil Philippines Turkey Globa bal l Competi titi tivene ness Index 3 World ld Governance Indicato tors 1 Higher rank is better 55 52 2009 2010 2011 2012 2013 2014 2015 2016 30 46 45 Higher rank is better 39 41 40 45 38 35 55 60 57 25 25 * Both ‘Rule of Law’ and ‘Regulatory Quality’ shared the same score (40) in 2015 75 15 81 2010 2011 2012 2013 2014 2015 90 Voice and Accountability Political Stability/Absence of Violence Indonesia India Brazil Phillipines Turkey Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 1. Source: World Bank – Doing Business 2017 Report; 2. Source: Transparency International – Corruption Perceptions Index 2016 Report; 3. Source: World Economic Forum – The Global Competitiveness Report 2016 – 2017 4. Source: World Bank 4
Indone nesia ia Remain ins the Investme tment Destina inatio tion of Choice The Economist: Indonesia among the top 3 destination for attracting Indonesia Enjo joys Large Investments Relative to Peers within the Region 2 investors in Asia (January 2017) 1 40 China 71.6 stment / GDP (%) 34.65 India 55.7 35 31.66 Indonesia 53.7 Vietnam 46.2 30 26.15 Phillipines 39.4 24.42 23.74 Thailand 33.3 25 E Total Invest Myanmar 28.4 17.96 20 Malaysia 27.7 Australia 26.3 15 South Korea 25.3 2016E Hong Kong 24.8 10 Japan 21.3 201 5 Singapore 18.9 Taiwan 18 0 0 10 20 30 40 50 60 70 80 Brazil India Indonesia Malaysia Philippines Thailand UNCTA TAD: Indonesia among the top p 10 investment destination country JBIC IC: Amongst ASEA EAN N countries, Indonesia is one of preferred place for (January 2017) 3 business investment (December 2016) 4 India United States 47.6 47 China 42.0 China 21 Indonesia 35.8 India 19 Vietnam 32.7 United Kingdom 15 Thailand 29.4 Japan 13 Mexico 25.9 Germany 13 USA 19.3 Mexico 11 Philippines 10.6 Brazil 11 Myanmar Indonesia 10.1 8 Brazil 7.2 Australia 5 Malaysia 6.8 France 5 Singapore Philippines 4.8 5 Russia Malaysia 5 3.5 Vietnam Korea 3.1 4 % of surveyed who consider each country has promising prospects Turkey Myanmar 2.5 4 0 10 20 30 40 50 0 5 10 15 20 25 30 35 40 45 50 1. Source: The Economist – Asia Business Outlook Survey 2017 3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2016 2. Source: IMF World Economic Outlook, Database October 2016 4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (28th Annual Survey) 5
Strong ng Confid idenc nce on Indone nesia ia as Refle lected ted in Improvement nt of Rating ing Outlo look JCRA BBB BBB Baa3 / Positive - Investm tment nt Grade Feb 201 2017, , Baa3, , Outlook ok Revis ised to Posit itiv ive “ We changed the outlook on Indonesia's sovereign Belo low Investm tment nt Grad ade Fitch rating to positive from stable to reflect emerging signs of a reduction in structural constraints, including its BB+ BB level of external vulnerability and the strength of its S & P R & I institutions.“ BBB- / BBB / Positive BB Des 201 2016, , BBB-, Outlook ok Revis ised to Posit itiv ive “Key drivers of the Positive Outlook are the build -up of a track record of macroeconomic stability in the past few years, and a strong structural reform drive since September 2015.” BB- Moody's BB+ + / Positive June 2016, , BB+ , Posit itiv ive Ratin ing Affir irmed “The ratings on Indonesia balance the country's low per B+ capita income plus middling fiscal and external indicators, against improved policy and institutional 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 settings, credible monetary policy, and buoyant economic growth.” BBB BBB- / / Stable BBB- / BBB / Positive April il 201 2016, BBB-, Stable Rating Affir irmed March 201 2017, , BBB-, Outlook ok Revis ised to Posit itiv ive “JCR has changed the rating outlook from Stable to Positive, based “Indonesia's economy has been stable despite uncertainty lingering over external demand.... Fiscal deficits are kept low, and fiscal soundness is on the recent improvement on the investment climate promoted by a maintained. In light of these factors, R&I has affirmed the Foreign series of Economic Policy Packages & the containment of private Currency Issuer Rating at BBB- with a Stable Rating Outlook.” external debt brought by Bank Indonesia’s prudential regulations on external borrowing.” 6
Natio iona nal Strateg tegic ic Develo elopment nt Plan (Nawa Cita) The 3 Dimension ons on Economic Develop opment Priority Sector Human Development Equitable Development Development Food Security ity Educatio ion Inter- Incom ome Group Energy & Electr tric ical Security ity Health Inter-Regi egion on: Maritime itime & Marin ine (1) Rural Area, Housi sing ng (2) Periph pher ery, Touris ism & Industr try (3) Outsid side Java, Character er Water r Securit rity, Basic (4) Easter ern Area. Infra rastru ructure re & Connectiv ivit ity Necessary Condition Legal Certainty & Governance Politic & Democracy Security & Order Law Enforcement 7
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