EAST MIDLANDS INTL ASSOCIATION ( EMITA ) VIDEO CONFERENCE FRIDAY, 8 FEBRUARY 2008

TRADE & INVESTMENT FIGURES As at 3rd quarter 2007 UK Exports: £ 204 million (2006 : £318 million) (many goods transhipped via Singapore and unrecorded) UK Imports: £ million (2006 : £1 billion) UK Investment: UK leading investor but accurate figures not available, British Virgin Islands described as British investments. Could be worth USD 20 billion or more (USD 11 billion in Oil & Gas - BP’s investment over USD 6 billion) Major British Companies: Unilever, Jardine Matheson, Rio Tinto, BHP Billiton, HSBC, Standard Chartered, Prudential, Premier Oil, Shell, Rolls Royce, Wedgewood/Royal Doulton, GlaxoSmithKline, Dewhirst Growing British Retail presence (through franchises) : includes M&S, Debenhams, Boots, Next, Mothercare, etc.

GOOD NEWS STORIES Indonesia provides major part of Jardine’s global income. Prudential’s Premium Income increased by 112% in They have 49,000 sales agents. Barclays Capital joint-led Indonesia USD 2 billion sovereign Global Bond offering in early January. Their second participation (first in 2006). Dewhirst/Wedgwood Royal Doulton both increased production. Harvey Nichols to open first flagship store in Southeast Asia (second in Asia after Hong Kong) in August. Premier Oil has signed a Head of Agreement with Singaporean company for major gas sales into Jurong Petrochemical Complex in Singapore.

CLIMATE CHANGE Bali Climate Change Conference in December 2007 momentous achievement for President Yudhoyono and his government. Bali Action Plan represents the most significant collective agreement to protect the world since the Kyoto Protocol was signed 10 years ago. For the first time prospect of finance on the scale required to reduce deforestation has been raised as part of the post 2012 Framework. Good business prospects for Clean Development Mechanism (CDM) projects, particularly in power generation, chemicals, coal mines, oil & gas and steel/cement production. Long way to go in this market - globally 742 CDM projects registered with UN, only 11 of which are in Indonesia.

POLITICAL /ECONOMIC DEVELOPMENTS Indonesia did well in political stability under President Yudhoyono government bearing fruit. Prudent, consistent macro economic policy pursued by able economic ministers. New Year catch phrase “cautious optimism”. Democratic reforms continue to embed Local democracy/autonomy developing Local and Presidential elections in 2009 Moderate mainstream Islamic organisations gaining ground.

Strong performance by macro economy. GDP growth 6.3%, driven by domestic consumption (60%) and increasing investment (23%) and exports (particularly of high priced commodities). Indonesia back to pre Asia Financial crisis growth for the first time. Foreign currency reserves over US$ 56 billion Standard & Poor rating : BB- (Outlook : stable) Moody’s rating : B1 (Outlook : positive) Inflation reduced to 6.6%. Stock market up 52% (third best in Asia) Informal sector remains very strong Resident British companies expect 2008 to be at least as good as 2007

BUT Impact of US economic problems likely; but Indonesia better able to withstand fall-out aided by regional trade (China and India) and de-coupling from US economy. Exports to Asia had risen to over 40% in , whilst exports to the US had dropped to about 10% of total. Analysts forecast GDP growth will fall to 6% in Three key issues hampering real economic progress : corruption/legal certainty, impunity and reform of bureaucratic civil service. Some progress on reform but unsurprisingly slow. Important new legislation under debate in Parliament : Labour Law, Tax Law and Mining Law.

New Investment Law and Negative Investment List causing concern. Although investment picking up, remains well below pre-1997 levels. Poverty eradication targets not being met. Economy needs to grow by 7% just to provide new employment opportunities. Combined rates of unemployment and under-employment sticking around at least 40%. About 65% of Indonesia’s 230 million + population live on less than US 2/day. Infrastructure development - government’s top priority making slow progress. Ambitious plan to increase power by 10,000 MW (needed to meet demand) being undertaken by Chinese contractors.