“INDONESIA GOES BUSINESS” Jl. Jenderal Gatot Subroto No. 44. Jakarta Indonesia Telephone: ∙ Fax: Website: ∙ Hari Baktio Deputy Chairman for Investment Cooperation The Investment Coordinating Board Republic of Indonesia Jeju Island, ROK, May 31 st

22 USA Industrial Production & Capacity Utilization AS Japan IP dan Capacity Utilization Asian Economics GrowthAsian Export Growth Significant Decrease of Economic Perfomances Suffered by USA,, Japan and Asia on the 1st Quarter of 2009

3 World Economic Growth Projections in ,7 Argentina 0,3 BRAZIL 3,0 CANADA 4,0 USA 2,8 MEXICO 2,4 EU 3,7 UK 3,3 FRANCE 4,3 ITALY 5,3 GERMAN 3,3 TURKEY 5,6 RUSIA 6,6 JAPAN 3,0 South Korea 0,3 Australia Philipine 2,5 Saudi Arabia 0,7 INDIA 4,3 CHINA 6,3 INDONESIA 3,4 5,0 Singapur 2,0 Thailand 0,2 Malaysia Sources, IMF, ADB South Africa 0,8 : Growth (+): Growth (-) 3

4 INDONESIA Biggest archipelago country in the world - Island : > Lands : ± 2 million km 2 - Sea : ± 5.8 million km 2 - Coastal line : ± km Population people Hundreds of ethnics More than 750 languages & dialects One of biggest democratic country Vast natural resources Huge potential market and competitive workforce Strategic location Km 4

5 Indonesia Situation Today Macroeconomic Indicators Reserve (Apr 09)US$ Billion Interest Rate7. 25 % Foreign Debt Ratio (08)30.7 % Inflation yoy (Apr 09 : Apr 08) Apr 09 Inflation Jan 09 – Apr % -0.31% 0.05% Market Cap (Oct08)US$ Billion GDP5.5 %6.3%6.1% 5

6 Unemployment No. of Unemployed :8.46% (Feb’08) Growth of Workforce p/a :2.31 M people 1% Economic Growth = Workforce 6

7 NoCOUNTRY VALUE OF INVESTMENT (US$. Million) NUMBER OF PROJECT 1Japan 21,063.71,819 2Singapore 13,537.11,106 3Mauritius 10, United Kingdom 8, United States of America 7, South Korea 5,133.01,236 INVESTMENT REALIZATION BY COUNTRY 1990 – APRIL

8 NoSECTOR VALUE OF INVESTMENT (US$. Million) NUMBER OF PROJECT 1Metal, Machinery & Electronic Industry 1, Chemical & Pharmaceutical Industry Textile Industry Leather Goods & Footwear Industry Food Industry INVESTMENT REALIZATION FROM SOUTH KOREA BY SECTOR APRIL

9 Workforce Absorption Total by the end of 2005 Addition 2006 Addition 2007 Addition 2008 Addition by the end of Feb 2009 TOTAL

10 Measures to Reform and to Improve Investment Climate Introduction of new and revisions of existing laws and regulations Institutional changes to improve overall governance as well as to enhance its competence Accelerate the development various types of important infrastructures Change of Mindset 10

11 INDONESIA COMMITMENT Indonesia is pro business Indonesia is pro growth Indonesia is pro job creation Indonesia is pro to poverty elimination 11

12 Economic Reform Agenda Reduction of tariff and non-tariff barriers Improving economic competitiveness through simplification of regulations, consistent enforcement of regulations, better tracking mechanism for trade activities Convening regular public and private dialogue involving all stakeholders. 12

13 Features of Law on Investment 1.Equal Treatment 2.No Minimum Capital Requirement 3.Free to Repatriate Investment & Profit 4.Legal Guarantee 5.Dispute Settlement 6.Investment Services 13

14 Opportunities to Invest in Indonesia Encouraging law and regulations Large amount of potential enterprises Value added target Competitive cost producer Open market-oriented economy Prospective sectors Free foreign currency exchange regime 14

15 Comparative Advantages (Natural Resources) NoCommodityProductionLocation Rank in the World 1Crude Palm Oil19 million ton (2008)Sumatera, Kalimantan, Sulawesi, Papua 1 st 2Tin65 Thousand ton (2007) Sumatera 2 nd 3Cocoa770 thousand ton (2007) Sulawesi, Sumatera, Java, Kalimantan, East Nusa Tenggara 2 nd 4Copper818 thousand ton (2006) Papua, Maluku, Nusa Tenggara 2 nd 5Nickel4.35 million ton (2006)Sulawesi, Sumatera, Maluku, Papua 5 th 6Gold89 thousand kg (2007)Kalimantan, Sumatera, Maluku, Papua 7 nd 7Coal178 million ton (2006)Kalimantan, Sumatera 8 th 15

16 AEC Blueprint single market and production base competitive economic region equitable economic development in the region integration into the global economy 16

17 Most Prospective Countries for FDI by Japanese Manufactures Rank China 2USAThailand India 3IndonesiaUSA IndiaThailandVietnam 4ThailandIndonesiaVietnam Thailand Russia 5IndiaVietnamIndiaUSA RussiaThailand 6VietnamIndiaIndonesiaRussia USABrazil 7PhilippinesKorea IndonesiaKoreaBrazil USA 8MalaysiaTaiwan KoreaIndonesiaKoreaIndonesia 9BrazilMalaysia TaiwanBrazilIndonesiaKorea 10TaiwanBrazilRussiaMalaysiaTaiwan 17

18 FDI FLOWS TO ASEAN 18

19 ASEAN FDI INFLOWS FROM KOREA 19

20 MAJOR SOURCES OF FDI FLOWS TO ASEAN Rank United KingdomJapan 2 United States ASEAN 3 United Kingdom NetherlandsUnited Kingdom 4Netherlands ASEANUnited KingdomUnited States 5 ASEANNetherlandsUnited StatesNetherlands 6Taiwan (ROC)Cayman IslandsFranceCayman IslandsRep. of Korea 7 GermanyLuxembourgGermanyBermuda 8FranceBermudaGermanyBermudaHong Kong 9LuxembourgRep. of KoreaChinaHong KongCayman Islands 10Cayman IslandsChinaRep. of Korea France 20

21 ASEAN FDI INFLOWS BY SECTOR 21