1. Indonesia Richard Rothman Senior Commercial Officer U.S. Embassy - Jakarta

2. Geography Archipelago of 17,000 Islands Size of United States Located in South East Asia Indonesia

3. Facts and Figures Population Diversity 4th Largest Country in the World 230 Million 300 Dialects; 5 Main Religions

4. Indonesia 1995 Era of the Big Emerging Markets 1997 Asian Financial Crisis 1998 Era of Economic & Political Reforms 2004Election of Susilo Bambang Yudhoyono Indonesia Historical Perspective

5. Indonesia Today Security Situation Political Conditions Economic Performance Assessing the Commercial Environment:

6. Security Conditions Improving Security Situation: October 12, 2002Bali Bombings Kill 202 August 5, 2003 Marriott bombing September 2004Australian Embassy Bombing October, 2005Bali Bombings Kill 23 2006No Bombing

7. Political Conditions 1998 Financial Crisis prompts Suharto’s resignation; VP B.J. Habibie becomes President 1999 Democratic Elections Held Abdurrachman Wahid becomes President 2001 Abdurrachman Wahid impeached;VP Megawati becomes President 2004First Democraticly Elected Government; SBY becomes President

8. Key Economic Indicators GDP Growth: 2006 = 5.8% 2005 = 5.6% 2004 = 4.8% Per capita GDP 2006 = $ 1,430 Per capita GDP 2005 = $ 1,233 Purchasing Power Parity = $3,800 (2006, estimated) Inflation Rate: 2007 = 6.10%, target 2006 = 6.60% 2005 = 17.11% (Fuel prices) 2004 = 6.40% Exchange Rate: 2007 = Rp9,300 to US$1.00, estimated 2006 = Rp9,166 to US$1.00 2005 = Rp9,810 to US$1.00 2004 = Rp8,600 to US$1.00

9. Key Economic Indicators Purchasing Power Parity = $3800 Percentage

10. Key Economic Indicators US$

11. Key Economic Indicators Percentage

12. Key Economic Indicators Rupiah to US$1.00

13. U.S. - Indonesia Trade In 2005, U.S. was the 4th Largest Source of Indonesian imports after Japan, Singapore and China USA Other countries combined Japan Singapore China Malaysia Thailand Saudi Arabia South Korea

14. U.S. - Indonesia Trade In 2006, Indonesian Imports from USA = $3.08 Billion Machinery Misc Grain Cotton Aircraft Electrical Soap/Wax Etc Others

15. U.S. - Indonesia Trade In 2006, Indonesian Exports to USA = $13.40 Billion Other Fish & Shellfish Natural rubber and similar gums Apparel & Household Goods Manufactured Goods Classified Chiefly by Material Sporting and camping apparel, footwear and gear Furniture, household items, baskets Television receivers, vcr's & other video equip

16. 2006U.S. Exports to Indonesia$3.08 billion U.S. Imports from Indonesia$13.40 billion U.S. Deficit$10.32 billion 2005U.S. Exports to Indonesia$3.05 billion U.S. Imports from Indonesia$12.02 billion U.S. Deficit$8.97 billion 2004U.S. Exports to Indonesia$2.67 billion U.S. Imports from Indonesia$10.81 billion U.S. Deficit$8.14 billion U.S. Trade Balance with Indonesia

17. In Billion

18. Indonesia Leads ASEAN Region for Export Success in FY 2007 Indonesia Leads ASEAN Region for Export Success in FY 2007

19. Top Ten US Exporting States to Indonesia - 2005

20. Foreign Direct Investment Approval in Indonesia As of January 2007 Year 13,635.00 565.80 10,894.30 142.80 16,014.90 236.30 15,201.90 87.70 9,955.40 468.50 14,278.10 211.70 10,415.60 133.30 13,579.20 91.20 13,889.40 133.20

21. Top 10 Things to Know about Doing Business in Indonesia 1 Need an Agent »Required by Law »Needs Government Permit »Familiar with U.S. Business Practices 2 Most Business People Speak English 3 State Owned Enterprises = 40% Market Activities

22. 4 Corruption 5 Problems With Contract Enforceability 6 IPR Violations (2005 Piracy $253 Million) 7 Deteriorating Infrastructure 8 Active Foreign Business Community Continued... Top 10 Things to Know about Doing Business in Indonesia

23. 9 U.S. Government Agencies Who Can Assist You: –U.S. Embassy (Commercial Service, ECON) –Trade Development Agency, EXIM bank, OPIC 10 Secretary Rice signed waiver for Indonesia – January 2006 FMS and Direct Sales of Defense and Security Equipment allowed Licensing requirements still apply, as always Continued... Top 10 Things to Know about Doing Business in Indonesia

24. Market Opportunities Strong Demand Imported Products $187.4 Million in 2006 U.S. Market share : 10-15% Sizeable Police Budget: 2005 Credit export: $64.71 Million State Budget: $1.1 Billion 2006 State Budget: $1.6 Billion Security & Safety: Anasia Silviati

25. Power Shortage in 2005, demand increase 8%/year Imported Products Over $688 Million (Estimated) 13 Future Projects - Demand for Subcontracts Oil and Gas Investment $7.7 Billion in 2006 U.S. Products $200 Million in 2005 15 New Blocks Offered in 2006 Market Opportunities Energy: Anasia Silviati

26. Market Opportunities Market size is estimated $4 billion in 2006 U.S. Share of import market estimated at 15% Growth rate is forecasted at 30 – 40% Imports accounted for 90% of market Cellular operators invest $1.9 billion in 2006 Best prospect: Cellular System, 3G Software, Network Management Systems, Cellular HandSets Telecommunication Equipment and Services Kalung Riang

27. Market Opportunities Industrial Chemicals : Dependence on imports of chemicals –Total imports in 2006: $8.1 Billion –U.S. Market Share : 5% –Jan-July 2006: $101.6 Million In Foreign Direct Investment Major players: USA, Japan, Germany, China and South Korea Promising sub-sectors: –Organic chemicals (HS 29) –Plastic products & raw materials (HS 39) Anasia Silviati

28. Market Opportunities Environmental Technologies: The market estimated at $23 million and projected to grow by 10 percent in 2006. Major issues: Deforestation, Water Pollution, Sewage, Air Pollution, and Smoke and Haze from Forest Fires. The U.S. is strong in pumps and water treatment chemicals. U.S. exports to Indonesia = $10 million in 2005. Main suppliers are USA and Japan. Aulia Rochaini

29. Opened to foreign investment in 1998 Sales in 2006 predicted to reach $5.4 billion Most foreign investment is in the hypermarket sector Foreign retailers account only 8 percent of outlets, but capture 40 percent of the total retail sales U.S. retailers are strong in the specialty shop and minimarket sectors Retail : Market Opportunities Henry Sutanto

30. Franchises : Market Opportunities Home to 250 foreign and 50 local franchises Best prospective sub-sectors: Food and Beverages, Educations, Retail and Business Aids and Services. American franchises dominate, but strong competition come from Singapore, France, Australia, the United Kingdom, Thailand, and domestic franchises Estimated future growth around 5 percent. Hanry Sutanto

31. Estimated market was $230 million in 2006 2006 Imports estimate= $190 million: over 50 percent was from U.S Competitors: China, Taiwan, and European Countries Best Prospects: Degenerative Prevention Products, Diet and Aesthetics Products, Maintenance of Vitality and Stamina Products, and Vitamins and Minerals Food Supplements : Market Opportunities Sharon Chandra

32. Market size is estimated $1.9 billion in 2006 Growth rate is forecasted at 15% Imports accounted for 50 – 80% Best Prospect: PC’s+ High End Servers U.S. Share of import market estimated at 70- 80% Information Technology : Market Opportunities Kalung Riang

33. 18 scheduled and 35 chartered airline companies Number of domestic passengers increase 10%, estimated at 27.8 million in 2006 Imports of aircraft & parts in 2006: $290 million U.S. products hold 20% market share Opportunities: leasing commercial aircraft, upgrading airports facilities, supplying spare parts Aviation : Market Opportunities Anasia Silviati

34. List of the Indonesian government’s priority projects Security Equipment and Services: Airport and Seaport Waste Management & Water Treatment Energy Transportation Projects: City of Jakarta Health Care Services Electronic Government Internet Community Access Point

35. U.S. & Foreign Commercial Service U.S. Embassy Jakarta Services Offered: Single Company Promotions Gold Key Service International Partner Search Market Research Video Conferencing Company Background Check Asia Now Initiative www.buyusa.gov/indonesia Richard.Rothman@mail.doc.gov

36. Important Websites Business Chambers U.S. Government  www.usembassyjakarta.org  http://www.state.gov/r/pa/ei/bgn/2748.htm  www.buyusa.gov  www.opic.gov  www.exim.gov  www.tda.gov  www.export.gov  www.amcham.or.id  www.aiccusa.org  www.us-asean.org  www.kadin.or.id