REPUBLIC OF INDONESIA REPUBLIC OF INDONESIA REFORMS IN THE MAKING REFORMS IN JUNE 2016 THE MAKING APRIL 2016 0
About the Republic of Indonesia Investor Relations Unit The Republic of Indonesia Investor Relations Unit (IRU) has been established as the joint effort between the 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 address concerns of investors, especially financial market investors. IRU is expected to serve as a single point of contact for the financial market participants. As an important part of its communication measures, IRU maintains a website under Bank Indonesia website which is being administrated by the International Department of Bank Indonesia. However, investor relations activities involve a coordinated efforts which are supported by all relevant government agencies, i.e. Bank Indonesia, the Ministry of Finance, the Coordinating Ministry for Economic Affairs, Investment Coordinating Board, Ministry of Trade, Ministry of Industry, State Ministry of State Owned Enterprises, State Asset Management Company, and the Central Bureau of Statistics. IRU also holds 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 Fiscal Performance and Flexibility: 4 1 Effectiveness: Unwavering More Fiscal Stimulus with Prudent Commitment on Reforms Agenda Fiscal Management Economic Factor: Healthy Growth 2 Monetary Factor: Monetary Policy 5 Prospects Remain Intact Anchors Price Stability 3 External Factor: Improved Wide Range of Policy Reforms to 6 External Resiliency Boost Economic Growth 2
Unwavering Commitment on Reforms Agenda 1 Section Institutional And Governance Effectiveness:
Improving Global Perception WEF Global Competitiveness World Governance Indicators 55 55 53 2009 2010 2011 2012 2013 2014 2015 50 30 49 37 45 42 47 40 45 49 35 34 55 54 31 30 60 56 56 25 Higher rank is better 20 75 75 2010 2011 2012 2013 2014 75 87 Higher rank is better 90 Voice and Accountability Political Stability/Absence of Violence Government Effectiveness Regulatory Quality Indonesia India Brazil Phillipines Vietnam Rule of Law Control of Corruption Ease of Doing Business Corruption Perception Index 2009 2010 2011 2012 2013 2014 2015 2016 60 0 Higher rank is better 50 50 30 32 44 38 60 40 35 73 90 36 30 109 127 28 120 116 Higher score is better 129 130 20 132 2010 2011 2012 2013 2014 2015 150 Indonesia India Brazil South Africa Indonesia Thailand Malaysia Source: World Economic Forum; World Bank; Transparency International 4
Indonesia Remains the Investment Destination of Choice Indonesia Enjoys Large Investments Relative to Peers within the Region 2 Rising Direct Investments 1 IDR tn 34,0 FDI DDI Total 35 2015E Total Investment / GDP (%) 150 145.4 30,7 30 26,5 46.2 24,7 25 100 20,7 18,0 20 15 99.2 50 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0 Brazil India Indonesia Malaysia Philippines Thailand 2013 2014 2015 2016 The Economist: Indonesia among the top 3 destination for attracting JBIC: Amongst ASEAN countries, Indonesia is the most preferred place for investors in Asia (January 2016) 3 business investment (December 2015) 4 India 40,4 India 69,3 Indonesia 38,8 China 58,2 China 38,8 Indonesia 48,0 Thailand 30,7 Philippines 37,2 Vietnam 27,5 Malaysia 32,7 Mexico 23,6 Myanmar 32,2 USA 16,6 Vietnam 30,1 Philippines 11,5 Thailand 29,0 Brazil 11,1 Japan 28,3 Myanmar 7,9 Australia 27,1 Malaysia 6,2 Singapore 24,8 Russia 5,5 South Korea 23,6 Singapore 4,6 Hong Kong 22,9 Korea 3,9 % of surveyed who consider each country has promising prospects % of surveyed who plan to increase investment in each country Taiwan 18,9 Turkey 3,9 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 0 5 10 15 20 25 30 35 40 45 The Economist – Asia Business Outlook Survey 2016; 1. Source: Indonesia Investment Coordinating Board (BKPM); 3. Source: JBIC – Outlook for Japanese Foreign Direct Investment (27th Annual Survey); 2. Source: IMF World Economic Outlook, Database October 2015; 4. 5
National Strategic Development Plan (Nawa Cita) The 3 Dimensions on Economic Development Priority Sector Equitable Development Human Development Development Food Security Education Inter- Income Group Energy & Electrical Security Health Maritime & Marine Housing Inter-Region: (1) Rural Area, Tourism & Industry (2) Periphery, (3) Outside Java, (4) Eastern Area. Water Security, Basic Character Infrastructure & Connectivity Necessary Condition Legal Certainty & Politic & Democracy Governance Security & Order Law Enforcement 6
Improving Investment Climate: Introduce 3-hour investment licensing service to complement One Stop Service (OSS) 9 documents obtained Priority Investment Service Certainty to start Certainty to import 3-hour Service a business capital goods • Investment license • APIP / Import identification • Certificate of incorporation • NIK / Customs registration Available for investors with minimum investment of IDR 100 billion (USD 8 million) • NPWP / Tax registration • TDP / Company registration and/or employing 1,000 local workers. No requirements for investment in Accurate land Certainty to work infrastructure sector. Information • RPTKA / Employment plan • Letter of land availability • IMTA / Working permit BKPM • Arrive at One-stop Integrated Service at Wait at the lounge while Obtain eight documents & letter BKPM directly from the airport. documents are processed by of land availability within three • Consult with Director of Investment BKPM, in-house notary, ministries, hours to start your business. Service. & other government institutions. • Submit the required documents & data. Until April 2016, there were 43 companies obtained 3 hours services Source: Investment Coordinating Board (BKPM) 7
Improving Investment Climate: Introduce 3-hour investment licensing service to complement One Stop Service (OSS) Priority Investment Service No Requirements Direct Construction (KLIK) • No minimum investments or workers is required. • Available for selected industrial parks . Investors can directly start their project construction • Construction permits can be obtained in parallel with before obtaining construction permits. This service is construction process. supported by both Central and Regional Governments . KLIK also as the first step to synergize between central and local licensing. • Start the construction of your • Survey a land within Obtain investment licence at One-stop Integrated Service selected industrial parks. project. No other permits are required. • Acquire the land for your • Apply for building construction permit & (PTSP) at national or regional level. industry. environmental permit, in parallel with construction process. Source: Investment Coordinating Board (BKPM) 8
Improving Investment Realization (Q1-2016) Rp146.5 T 327,170 315,229 Rp124.6 T * 17.6% 3.8% Q1-2015 Q1-2016 Q1-2015 Q1-2016 * person Rp50.4 T Rp96.1 T Rp82.1 T Rp42.5 T 17.1% 18.6% Q1-2015 Q1-2016 Q1-2015 Q1-2016 Source: Investment Coordinating Board (BKPM), compared to Q1-2015 period 9
FDI Realization by Sectors (Q1-2016) Leather Goods and Footwear Industry US$26.7 mn Rubber and 55.4% Plastic Industry US$199.6 mn Chemical and Pharmaceutical Industry 27.6% US$954.81 mn 54% 96.3% Other Services Real Estates, Industrial Estate and Business Activities US$219.1 mn etc US$6.392 Mn US$380.12 mn 50.8% 61% 13.0% Transport Equip and Other Transport Industry Metal, Machinery and Electronic Industry US$828.90 mn US$696.9 mn 42.4% 8.9% Mining US$189.22 mn 83.3% Source: Investment Coordinating Board (BKPM), compared to Q1-2015 period 10
Healthy Growth Prospects Remain Intact 2 Section Economic Factor:
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