Republic of Indonesia Dividends of Reforms December 2016 0
About Investor Relations Unit of the Republic of Indonesia 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 K. (International Department - Bank Indonesia, Phone: +6221 2981 8279) Dalyono (Fiscal Policy Office - Ministry of Finance) Farid Arif Wibowo (Directorate General of Budget Financing and Risk Management - Ministry of Finance) E-mail: contactIRU-DL@bi.go.id 1
Overview Institutional and Governance Effectiveness: Fiscal Performance and Flexibility: 1 4 More Fiscal Stimulus with Accelerated Reforms Agenda with Prudent Fiscal Management Institutional Improvement Economic Factor: Monetary and Financial Factor: 5 2 Strong and Stable Growth Prospects Credible Monetary Policy Track Record Remain Intact and Favourable Financial Sector Progressive Infrastructure Development: External Factor: 3 6 Strong Commitment on Acceleration Improved External Resiliency of Infrastructure Provision 2
Institutional and Government Effectiveness: 1 Accelerated Reforms Agenda with Institutional Improvement
Positive Global Perception Ease of Doing Business 1 Corruption Perception Index 2 * Both India and Brazil shared the same score (38) in 2015 55 2008 2009 2010 2011 2012 2013 2014 2015 2016 50 50 Higher rank is better 45 45 69 70 38* 40 90 91 36 35 99 35 30 110 25 123 Higher score is better 130 130 20 2010 2011 2012 2013 2014 2015 150 Indonesia India Brazil Philippines Turkey Indonesia India Brazil Philippines Turkey Global Competitiveness Index 3 World Governance Indicators 1 55 Higher rank is better 2009 2010 2011 2012 2013 2014 2015 2016 52 30 Higher rank is better 46 39 45 41 40 45 38 35 55 60 57 25 25 75 * Both ‘Rule of Law’ and ‘Regulatory Quality’ shared the same score (40) in 2015 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; 2. Source: Transparency International; 3. Source: World Economic Forum 4
Strong Improvement in Ease of Doing Business Rank* EODB 2017 EODB 2016 Change in EODB 2017 EODB 2016 Change in Rank Rank Rank Points Points Points Overall 91 106 15 61.52 58.51 3.01 Starting a business 151 167 16 76.43 67.51 8.92 Dealing with Construction Permit 116 113 3 65.73 65.26 0.47 Getting Electricity 49 61 12 80.92 77.60 3.32 Registering Property 118 123 5 55.72 53.24 2.48 Getting Credit 62 70 8 60.00 55.00 5.00 Protecting Minority Investors 70 69 1 56.67 56.67 0 Paying Taxes 104 115 11 69.25 64.47 4.78 Trading Across Borders 108 113 5 65.87 63.53 2.34 Enforcing Contracts 166 171 5 38.15 35.37 2.78 Resolving Insolvency 76 74 2 46.46 46.48 0.02 * Higher rank is better, EoDB 2017 is published in October 2016 - Government efforts to boost business growth through deregulations and de-bureaucratization have been recognized by the improvement of EODB. - Structural reforms will continue including in the budget and real sectors Source: World Bank 5
Indonesia Remains the Investment Destination of Choice Rising Direct Investments 1 Indonesia Enjoys Large Investments Relative to Peers within the Region 2 IDR tn 34.65 2016E Total Investment / GDP (%) 35 31.66 FDI DDI TOTAL 160 155.3 30 26.15 55.6 24.42 120 23.74 25 17.96 20 80 15 99.7 40 10 0 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0 2013 2014 2015 2016 Brazil India* Indonesia Malaysia Philippines Thailand JBIC: Amongst ASEAN countries, Indonesia is the most preferred place for The Economist: Indonesia among the top 3 destination for attracting investors in Asia (January 2016) 3 business investment (December 2016) 4 India 69.3 India 47.6 China 58.2 China 42.0 Indonesia 48.0 Indonesia 35.8 Vietnam 32.7 Philippines 37.2 Thailand 29.4 Malaysia 32.7 Mexico 25.9 Myanmar 32.2 USA 19.3 Vietnam 30.1 Philippines 10.6 Thailand 29.0 Myanmar 10.1 Japan 28.3 Brazil 7.2 Australia 27.1 Malaysia 6.8 Singapore 24.8 Singapore 4.8 South… 23.6 Russia 3.5 Hong Kong Korea 3.1 22.9 % of surveyed who consider each country has promising prospects % of surveyed who plan to increase investment in each country Turkey 2.5 Taiwan 18.9 0 5 10 15 20 25 30 35 40 45 50 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 The Economist – Asia Business Outlook Survey 2016; 1. Source: Indonesia Investment Coordinating Board (BKPM); 3. Source: JBIC – Outlook for Japanese Foreign Direct Investment (28th Annual Survey); 2. Source: IMF World Economic Outlook, Database October 2016, * actual figures; 4. 6
National Strategic Development Plan (Nawa Cita) The 3 Dimensions on Economic Development Priority Sector Human Development Equitable Development Development Food Security Education Inter- Income Group Energy & Electrical Security Health Maritime & Marine Inter-Region: Housing (1) Rural Area, Tourism & Industry (2) Periphery, (3) Outside Java, Water Security, Basic Character Infrastructure & Connectivity (4) Eastern Area. Necessary Condition Legal Certainty & Politic & Democracy Governance Security & Order Law Enforcement 7
Improving Investment Climate: Introduce the 3-hour investment licensing service to complement the One Stop Service (OSS) Requirement for utilizing 3-hour Investment Lisencing Service: 1. Minimum investment of IDR 100 billion (USD 8 million) and/or employing 1,000 local workers. No requirements for investment in infrastructure sector 2. Application must be submitted directly by at least one candidate of the proposed company stakeholder BKPM • Arrive at OSS at BKPM directly from the airport Obtain eight documents & letter of land Wait at the lounge while documents are • Consult with Director of Investment Service availability within three hours to start the processed by BKPM, in-house notary, • Submit the required documents & data ministries, & other government institutions business 9 documents obtained 2 documents needed Certainty to Certainty to start a business Investor identitiy as the prospective shareholders Import capital goods • Investment license • APIP / Import identification • ID Card • Certificate of incorporation • NIK / Customs registration • And/or Deed of Establishment (Indonesian company) or Article • NPWP / Tax Registration Number of Association (Foreign company) • TDP / Company Registration Flowchart of business activities workflow Accurate land Certainty to work information • Containing workflow from raw material production to the • Letter of land availability • RPTKA / Employment plan finished products • IMTA / Working permit Until November 2016, more than 180 companies have utilized the “ 3 hours services ” Source: Investment Coordinating Board (BKPM) 8
Improving Investment Climate: Introduce the 3-hour investment licensing service to complement the One Stop Service (OSS) Priority Investment Service No Requirements • No minimum investments or workers is Direct Construction (KLIK) required. • Available for 14 selected industrial parks . Investors can directly start their project construction before • Construction permits can be obtained in parallel obtaining construction permits. This service is supported by both Central and Regional Governments which become the with construction process. first step to synergize between central and local licensing • Obtain investment licence at OSS • Start the construction of your project. Survey a land within selected No other permits are required. at national or regional level. industrial parks. • Apply for building construction permit & • Acquire the land for your industry. environmental permit, in parallel with construction process. Until November 2016, 79 projects have utilized the “KLIK services ” Source: Investment Coordinating Board (BKPM) 9
Improving Investment Realization (Q3-2016) 373,560 Rp155.3 T 276,023 Rp140.3 T * Decreasing 10.7% 26.1% Q3-2015 Q3-2016 Q3-2015 Q3-2016 * person Rp55.6 T Rp99.7 T Rp47.8 T Rp92.5 T 7.8% 16.3% Q3-2015 Q3-2016 Q3-2015 Q3-2016 Source: Investment Coordinating Board (BKPM), compared to Q3-2015 period 10
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