UPDATE ON INVESTMENT POLICY AND OPPORTUNITY IN INDONESIA

1. UPDATE ON INVESTMENT POLICY AND OPPORTUNITY IN INDONESIA BY ACHMAD KURNIADI DEPUTY CHAIRMAN FOR INVESTMENT COOPERATION THE INVESTMENT COORDINATING BOARD ( B K P M )

2. Distinguished Guests, Ladies and Gentlemen, I am greatly pleased and honored to be here today in The Business Forum Seminar, Economic and Trade Mission of the Ministry of Fishery and Maritime to Taiwan. First of all, I would like to convey the message of our Chairman of the Indonesian Investment Coordinating Board that he would like to send his sincerest gratitude to Indonesia’s closest business partner, Taiwan, today. However, I would also like to address my sincerest appreciation of the organizing committee, particularly the Indonesian Economic and Trade Office to Taipei, through this effort, the cooperation between Indonesia and Taiwan may regain a higher value of what we have been pursuing for many years.

3. Ladies and Gentlemen, Indonesia and Taiwan have enjoyed regional relationship and cooperation for many years – such strategic partnerships. Many progress and development were made. Positive measures are taken by the cooperation stakeholders. The scope of cooperation have been conducted in a broader ways of development dimensions in which, we consider and realize the imperative and importance of Foreign Direct Investment (FDI) flows into the countries.

4. Distinguished Participants, I may touch a bit of Indonesian economy progress and tracks as the key issues of proper example of how a pluralistic country develop its economy in lieu of investment as the economic engine of development growth. With respect to the archipelagic country-characteristics of which a 240 million people with more than 300 languages and dialect, inhabited not many of the all 17,500 islands spreading over the 5.8 million sq.km, the macroeconomic indicators development achieve a promising condition, if I may present you several - recorded by more than 4.5% GDP growth for the last 2009, foreign reserve of more than US$ 60 billion, Central Bank interest rate at a level of 5%, the inflation rate was maintained below two digits. The robust investment plan of both foreign and domestic spurring the country is facilitated by a better investment climate created by the pro-business, pro growth, pro job creation and pro poor government attitude as well. In addition, our committed government was due to the zero tolerance of corruption battle and perpetual reform of government bureaucracies may arise strong momentum of economic revival.

5. Ladies and Gentlemen, I may brief you on the Taiwanese investment performance for the period of 1 January 2005 – 31 December 2009 that Taiwan investment (PMA) implemented in Indonesia was 171 projects with the value of US$ 682.3 million. The leading business sectors of these investments comprise of Trade & reparation (US$ 20.9 million, 58 projects) non metal mineral industry; basic metal, metal goods, machinery & electronics (US$ 53.9 million, 25 projects); Textile industry (US$ 26.3 million, 17 projects), Transportation & vehicles (US$ 28.4 million, 14 projects) and Food Industry (US$ 26.9 million, 9 projects) are the 5 biggest leading sectors. The favorable regions depict West Java province, East Java province, Banten province, DKI Jakarta province and East Kalimantan Province as the leading location of Taiwanese investment.

6. Ladies and Gentlemen, I would like to brief you about several progress of the Government of Indonesia measures in creating a better investment climate, as follows: the New Investment Law No. 25 Year 2007 that is enacted on last May 2007. The features of this law are among others: equal treatment between foreign and domestic shareholdings, no minimum capital requirement, free to repatriate investment & profit, legal guarantee, dispute settlement choices, improved investment services. To support the value of our New Investment Law, the Government provides incentives facilities like exemptions or deduction of income tax (fiscal incentives), 95 years for cultivation rights, 80 years for building rights, 70 years of land usage rights and immigration facilities as well.

7. Under the Government Regulation No. 1 Year 2007 jo 62 Year 2008, the investors may also enjoy income tax facilities for certain business sectors and or certain locations. Investors may apply for significant incentives as they urgently need to be more competitive through a strictly evaluation by related interdepartmental assessment team. This government regulation is followed by Ministry of Finance Decree No. 16/PMK.03/2007 concerning the technical guidance of PP No. 1 Year 2007; and the Facilities granted procedures by Directorate General Taxation regulation No. PER-67/PJ./2007.

8. In addition, Special Economic Zones (Kawasan Ekonomi Khusus/KEK) policy and regulation was launched presently to attract many more investment in several regions. The Zones will provide maximum incentives schemes in addition to the prevailing incentives scheme provided before (PP No. 1 Year 2007/PP No. 62 Year 2008). Furthermore, PERKA BKPM no 11, 12, 13 Year 2010 would reinstate the strong willingness of the Government of Indonesia to facilitate investors need and services.

9. The balance of public interests versus private sectors or even wider scope of development dimension is stately incorporated into the recent Government Regulation No. 77 Year 2007 jo. No. 111 Year 2007 concerning the Negative List for Investment. The list restricts several sectors such as the defense equipments, pollution/environmental damages, broadcasting, transportation and natural resources. Nonetheless, the list is dedicated not only to protect the public interests and state, but also to properly manage the investment in pursuit of prosperity to all development stakeholders.

10. Thus, all the key issues I have mentioned in developing stronger framework of economic engine namely direct investment or even, FDI in particular, may be expected to have a substantial impact upon the national development within the near future as the momentum of socio-political stability is steady set along with the improved democratic state systems. In addition, to facilitate more foreign investment, the government has been developing infrastructure facilities throughout Indonesia provinces. The accelerated project developments are among others: electricity capacity development, toll roads, sea and airports construction. The progress of these projects may gain its momentum since this 2010 and ahead.

11. Ladies and Gentlemen, Since Taiwan and Indonesia have been doing much together, I just like to remind the business investment opportunities in accordance with our economic resources and conditions, namely; refinery and petrochemical, primary commodities (including fishery & maritime products), iron, steel and specialized steel, telecommunication, agro-based manufacturing industry such as crude palm oil processing, cocoa, metal-based processing, automotives and vehicle & its supporting industries, electronics, and tourisms.

12. Ladies and Gentlemen, In respect to boost the economic cooperation of Indonesia-Taiwan, I am confident to recommend greater business and investment flows between Indonesia- Taiwan, be enhanced by increasing frequencies of business-investment mission of which, shall be facilitated and supported by both sides. The more we or the economic stakeholders meet, the more business alliances could be arranged and the more positive impacts may provide promising prosperity of our nations’ region. Globalization of production process and liberalization schemes in many areas of economy, are a matter of tools that how we have to take advantages for mutual business ties and greater development contributions.

13. Last but not least, We look forward to having an implementation phases soon as you have committed to investing in Indonesia, and we would like to help and facilitate all the services you need. We welcome you to Indonesia.

14. Thank you