1. INVESTMENT POLICIES AND OPPORTUNITIES IN INDONESIA invest in Invest in remarkable indonesiaInvest in remarkable indonesiaindonesia Invest in remarkable indonesia indonesia Invest in Invest in remarkable indonesia indonesia Invest in able indonesiaInvest © 2011 by Indonesian Investment Coordinating Board. All rights reserved Presented in SBC Industrial Coordinator Program June 2012

2. The Investment Coordinating Board of the Republic of Indonesia 2 Outline I. WHY – Investment in Indonesia II. WHAT – Investment Opportunities III. HOW – Investment Policies and Procedures

3. The Investment Coordinating Board of the Republic of Indonesia 3 I. WHY - Investment in Indonesia

4. The Investment Coordinating Board of the Republic of Indonesia 4 INDONESIA Land Area1,904,443 sq km Sea Area3,116,163 sq km Total Area5,020,606 sq km Coastal Line81,000 km Population 245.6 Million people (4 th biggest population) Main Towns Jakarta (Capital) Surabaya Bandung Semarang Medan Samarinda Makassar 9,558 2,584 2,393 1,553 2,109 791 1,339 LanguangeIndonesian (Bahasa Indonesia) As well as some 7500 other regional languanges and dialects. Country Snapshot: the biggest archipelago Population (‘000) Jakarta (Capital) East Java West Java Central Java North Sumatera East Kalimantan South Sulawesi 16.3 14.7 14.3 8.5 5.4 6,2 2.3 GDP Share (%) The rising population share of Indonesia ’s middle class those who spend US$2 - US$20 per day (% of Pop) 49.1% 2006 54.4% 2011 GDP Size (at PPP)US$ 1,116 Bi GDP percapita (at PPP) US$ 4,540 Source: various GDP/Capita (US$ ‘000) 9.9 2.3 1.7 1.5 2.3 10.0 1.6 Introduction : Indonesia at a glance

5. The Investment Coordinating Board of the Republic of Indonesia 5 Demographic: dynamic demographic base China 1,3 Bi India 1,2 Bi US 310 Mn Indonesia 242 Mn The Big 5 : Indonesia is the 4th most populous nation in the world. Brazil 190 Mn Of the 240 million people in Indonesia, over 60% of the population is under 39 years old, providing a dynamic workforce. Age 100+ Age 0 Year 2010Year 2030EYear 2050E

6. The Investment Coordinating Board of the Republic of Indonesia 6 Investment Climate in Indonesia : International Credit Ratings BB+ / POSITIVE 1 Notch closer to Investment Grades BBB- / STABLE Investment Grades Baa3/ STABLE Investment Grades BBB / STABLE Investment Grades

7. The Investment Coordinating Board of the Republic of Indonesia 7 2010 GDP ~US$ 700 billion GDP per capita US$ 3.000 (2010) Largest No-17 in the world 2025 GDP ~US$ 4,3 trillion GDP per capita projection ~US$ 14.900 (high income country) Largest No-12 in the world 2045 GDP ~US$ 16,6 trillion GDP per capita projection ~US$ 46.900 Predicted to be the largest no 7 or 8 in the world RUPM Vision Until Year 2025: "Sustainable Investment in the framework to realize of Indonesia's Independent, Forward, and Prosperity." Investment Policy: Implementation Roadmap of Indonesia Investment Guidelines Government Policies (Fiscal, Monetary, And Investment)

8. The Investment Coordinating Board of the Republic of Indonesia 8 6 Economic Corridors Establishing center of development in every corridor Developing industry clusters Special economic zone based on commodities resoursed Strengthening National Connectivity Intra and inter connectivity of centres of development Intra islands (corridors) International trade National Science and Technology Acceleration Human resources to support the development of the main program Government Strategies: Master Plan of Acceleration and Expansion of Indonesia’s Economics Development (MP3EI)

9. The Investment Coordinating Board of the Republic of Indonesia 9 II. WHAT - Investment Opportunities in Indonesia

10. The Investment Coordinating Board of the Republic of Indonesia 10 Natural Resources: Need Value Added (1) SumateraKalimantan Sulawesi Papua Bali - Nusa Tenggara Investment Opportunities Source: BKPM, 2011 Java Crude Palm Oil Production: 23,2 Milliontons (2012) Tin Production: 105.000 metric tons (2010) Rubber Production: 2,4 Milliontons (2010) Cocoa Production: 936.000 ton (2012) Nickel Production: 12,4 millionton (2012)

11. The Investment Coordinating Board of the Republic of Indonesia 11 NATURAL GAS Has 165 TCF gas reserves COAL 2nd World Export, Major Player in the world CPO World’s Biggest Export with over 19 million ton/year TIN Second world biggest producen NICKEL Has 12% world’s reserves (4th in the world) GEO THERMAL Has 40% world’s geothermal (biggest in the world) Investment Opportunities Natural Resources: Need Value Added (1)

12. The Investment Coordinating Board of the Republic of Indonesia 12 Secondary and Tersier Sector Properties Needed ±15 million unit/year Real Estated market increased Healthcare More Appropriated Facility in remote area hospital Bed Occupancy Rate in Indonesia still under 50% Tourisms and Utilities Water treatment, Waste treatment Hotels, Cottages Investment Opportunities

13. The Investment Coordinating Board of the Republic of Indonesia 13 Infrastructure PROBLEMS

14. The Investment Coordinating Board of the Republic of Indonesia 14 III. HOW - Investment Policies and Procedures in Indonesia

15. The Investment Coordinating Board of the Republic of Indonesia 15 STARTING BUSINESS IN INDONESIA Investment Law 25/2007 Simplified procedures * BUSINESS SECTOR All business sectors or business types shall be open to investment activities, except for business sectors or business types that are declared to be closed and open with requirements. (Presidential Regulation Number 36 Year 2010) Principal License Implementation License Location License Building License Nussiance License (UUG/HO) Operational Permit Permanent Licence Negative List * President Regulation 36/2010 Negative List * President Regulation 36/2010 PERKA 5/2013

16. The Investment Coordinating Board of the Republic of Indonesia 16 PRESIDENT REGULATION NO. 36 of 2010 a.Reserved for Micro, Small and Medium Enterprise and Cooperatives b.Partnership c.Foreign Capital Ownership d.Certain Location e.Special License f.100% Local Capital g.Foreign Capital and Location Ownership h.Special Licence and Fpreign Capital Ownwership i.100% LocalCapital and Special License. j.Foreign capital ownership requirement and/or location for capital investment from ASEAN countries REQUIREMENT

17. The Investment Coordinating Board of the Republic of Indonesia 17 NoBusiness Field KBLIConditionsDetails of Conditions abcdefgcde 4 Geothermal Drilling Services 06202 √ Maks 95% NoBusiness Field KBLIConditionsDetails of Conditions abcdefgcde 3 Geothermal Drilling Services 06202 √ Maks 95% NoBusiness Field KBLIConditionsDetails of Conditions abcdefgcde 2 Rattan Business. 02131 √ NoBusiness Field KBLIConditionsDetails of Conditions abcdefgcde 1 Main crop plant cultivation (corn, soy, peanuts, green beans, rice, cassava, sweet potato), for an area less than or equal to 25 Ha. 0111 √

18. The Investment Coordinating Board of the Republic of Indonesia 18  HGU (Right to Cultivate) 35 (granted) + 25 (extended) + 35 (renewable)  HGB (Right to Build) 30 (granted) + 20 (extended) + 30 (renewable)  Hak Pakai (Right to Use) 25 (granted) + 20 (extended) + 25 (renewable)  HGU (Right to Cultivate) 35 (granted) + 25 (extended) + 35 (renewable)  HGB (Right to Build) 30 (granted) + 20 (extended) + 30 (renewable)  Hak Pakai (Right to Use) 25 (granted) + 20 (extended) + 25 (renewable) LAND (years) LICENSE SERVICES  One Stop Service for Investment (OSSI) ( Central, Provinces, Districs/Municipalities – Government)  On Line Systems (NSWi)  One Stop Service for Investment (OSSI) ( Central, Provinces, Districs/Municipalities – Government)  On Line Systems (NSWi) INVESTMENT INCENTIVES

19. The Investment Coordinating Board of the Republic of Indonesia 19  For two years operation  Provided after company start production  For two years operation  Provided after company start production EXEMPTION OF IMPORT DUTY ON RAW MATERIALS  For industry which produce goods and/or  Industry which produce services (Tourism and Culture, Transportation / Communications for Public, Transport Services, Public Health Services, Mining, Construction, Telecommunication Industry, and Port)  Import duty exemption is given in following conditions: a.Not been domestically produced b.Produced domestically, yet incompatible to required specifications c.Have been produced within the country, yet insufficient for industrial needs  For industry which produce goods and/or  Industry which produce services (Tourism and Culture, Transportation / Communications for Public, Transport Services, Public Health Services, Mining, Construction, Telecommunication Industry, and Port)  Import duty exemption is given in following conditions: a.Not been domestically produced b.Produced domestically, yet incompatible to required specifications c.Have been produced within the country, yet insufficient for industrial needs EXEMPTION OF IMPORT DUTY MACHINERY/EQUIPMENT FOR INDUSTRY

20. The Investment Coordinating Board of the Republic of Indonesia 20 Fiscal Incentives

21. The Investment Coordinating Board of the Republic of Indonesia 21 Investment Realization in 2012: Based on Country of Origin

22. The Investment Coordinating Board of the Republic of Indonesia 22 Note: 2010-2012:Investment Realization ∆ : Investment Realization y-o-y T : Trillion Rupiah M : Billion USD Investment Realization in 2010 – 2012 And 2013 Investement Target REALIZATIONRp.US$.Rp.US$.∆Rp.US$.∆Rp. PMA147,9 T16,4 M175,3 T19,5 M18,5 %221,0 T24,6 M26,1 %272,T PMDN60,6 T6,7 M76,0 T8,4 M25,4 %92,2 T10,2 M21,3 %117,7 T TOTAL208,5 T23,1 M251,3 T27,9 M20,5 %313,2 T34,8 M24,6 %390,3 T 201020112012 2013

23. THANK YOU Invest in... © 2011 by Indonesian Investment Coordinating Board. All rights reserved CONTACT US BAAND KOORDINASI PENANAMAN MODAL (BKPM) Jl. Jend. Gatot Subroto No. 44, Jakarta 12190 P.O. Box 3186, Indonesia P : +62 21 5292 1334 F : +62 21 5264 211 E : info@bkpm.go.idinfo@bkpm.go.id