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INVESTMENT PROCEDURES AND OPPORTUNITIES

INVESTMENT PROCEDURES AND OPPORTUNITIES. Guyub S. Wiroso Head of IIPC. THE INDONESIAN INVESTMENT PROMOTION CENTRE (IIPC) (LONDON REPRESENTATIVE OFFICE OF THE INVESTMENT COORDINATING BOARD OF THE REPUBLIC OF INDONESIA) STOKE-ON-TRENT, 16 JUNE 2010. INDONESIA AT A GLANCE.

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INVESTMENT PROCEDURES AND OPPORTUNITIES

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  1. INVESTMENT PROCEDURES AND OPPORTUNITIES Guyub S. Wiroso Head of IIPC THE INDONESIAN INVESTMENT PROMOTION CENTRE (IIPC) (LONDON REPRESENTATIVE OFFICE OF THE INVESTMENT COORDINATING BOARD OF THE REPUBLIC OF INDONESIA) STOKE-ON-TRENT, 16 JUNE 2010

  2. INDONESIA AT A GLANCE • Consists of more than 17,500 islands (5 biggest islands being Java, Sumatera, Kalimantan, Sulawesi and Papua) • Geographical size: Land 2 million km2 and sea 5.8 million km2 • Population ± 240 million people with middle class around 18 million people • Hundreds of ethnic groups - 2 -

  3. INVESTMENT NEEDED IN 2010 • Investment target : US$. 164 billion • Investment from private sector is needed to achieve the target - 3 -

  4. TOTAL FOREIGN DIRECT INVESTMENT APPROVAL (2005 – 2009) - 4 - Source: Indonesia Investment Coordinating Board (BKPM), 2010

  5. UK’s FOREIGN DIRECT INVESTMENT APPROVAL (2005 – 2009) - 5 - Source: Indonesia Investment Coordinating Board (BKPM), 2010 * Contribution of UK’s direct investment to total foreign direct investment

  6. 10 BIGGEST FOREIGN DIRECT INVESTMENT BY COUNTRY(1967 – 2009) - 6 - Source: Indonesia Investment Coordinating Board (BKPM), 2010

  7. 10 BIGGEST UK’S FOREIGN DIRECT INVESTMENT BY SECTOR(2005 – 2009) - 7 - Source: Indonesia Investment Coordinating Board (BKPM), 2010

  8. INDONESIA – UK BILATERAL TRADE BALANCE(2005 – 2009) - 8 - Source: Ministry of Trade, Republic of Indonesia, 2010

  9. Main Export Commodities/Products to UK - 9 -

  10. Main Import Commodities/Products from UK - 10 -

  11. Indonesia’s attractiveness as Investment Destination • Abundant and diversified natural resources • Potential market demand out of 240 million population • Competitive labour forces • Sustainable economic growth - 11-

  12. BUSINESS ACCESS: “Negative List of Investment” • Business Fields Closed to Investment • Business Fields Opened to Investment WITH CONDITIONS: • AGRICULTURE SECTOR • ENERGY AND MINERAL RESOURCES SECTOR • PUBLIC WORKS SECTOR • HEALTH SECTOR - 12 -

  13. Business Field which REQUIRES Fiscal Facilities Investment Registration at BKPM Notary Investment Registration at BKPM Ministry of Law and Human Rights Approval Stage Investment Registration at BKPM Investment Principal License • Producer Importer Identification Number (API-P) • Foreign Manpower Usage Plan (RPTKA)/ Working Visa Recommendation (TA.01) • PTSP PDPPM/PDKPM • Government of Province/Regency : • Location Permit • Land Title Certificates • Building Construction Permit (IMB) • Nuisance Act Permit (HO/UUG) FOREIGN DIRECT INVESTMENT Construction Stage • Approval of Capital Goods Importation Facilities • Approval of Raw/Auxiliary Materials Importation Facilities • Corporate Income Tax (PPh) Facilities Recommendation Commercial Stage Business License PTSP PDPPM : Province PTSP PDKPM : Regency/Municipal - 13 -

  14. Business Field which does NOT REQUIRE Fiscal Facilities Investment Registration at BKPM Notary Investment Registration at BKPM Ministry of Law and Human Rights Approval Stage Investment Registration at BKPM • Producer Importer Identification Number (API-P) • Foreign Manpower Usage Plan (RPTKA)/ Working Visa Recommendation (TA.01) FOREIGN DIRECT INVESTMENT • PTSP PDPPM/PDKPM • Government of Province/Regency : • Location Permit • Land Title Certificates • Building Construction Permit (IMB) • Nuisance Act Permit (HO/UUG) Construction Stage Commercial Stage Business License PTSP PDPPM : Province PTSP PDKPM : Regency/Municipal - 14 -

  15. INVESTMENT INCENTIVES • Investment tax allowance for certain industry (certain location/region) • Import duties reduction for machineries & equipments • Import duties reduction for raw materials and supporting materials for the first two years • Accelerated depreciation • Tax deductible • Loss compensation and carry-forward loss - 15 -

  16. INVESTMENT ALLOWANCE (IA)(GOVERNMENT REGULATION NO. 62/2008) • 30% Corporate Income Tax deduction granted for 6 years (5% deduction p.a.) • Illustration: • Company X • - Investment realization : US$. 1billion • - IA p.a. : 5% x US$. 1 billion = US$. 50 million • - IA is constantly given for 6 years : 6 x US$. 50 million = US$. 300 million • 10 years losses carry forward • Accelerated depreciation - 16 -

  17. GOVERNMENT REGULATION NO. 62/2008 Certain business fields and/or regions which are entitled to Income Tax Facility as stated in Government Regulation No. 62/2008 as follows: CERTAIN BUSINESS FIELDS: 23 fields CERTAIN BUSINESS FIELDS AND CERTAIN REGIONS: 15 fields - 17 -

  18. Thank You and Invest in Remarkable Indonesia THE INDONESIAN INVESTMENT PROMOTION CENTRE (IIPC) St. Martin’s House, 16 St. Martin’s le Grand, London EC1A 4EN T: +44 (0) 207 397 8564; F: +44 (0) 207 397 8565 www.bkpm.go.id Contact Person: Guyub S. Wiroso (guyub@bkpm.go.id) Reza Mawasthama (reza.m@bkpm.go.id) Rangga Iman (rangga.iman@indonesiainvestment.org)

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