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Reach New Heights

01
2014

INFRASTRUCTURE

Supporting Indonesias Competitiveness and

Future Economic Development

INFRASTRUCTURE PRIORITY
The Iconic Smelter Investment
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www.bkpm.go.id
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PREFACE
In this edition, the preparedness of Indonesias infrastructure in terms of
facing challenges ahead will be elaborated. Given the new elected Government,
the positive euphoria is expected to have a good impact on the increasing public
service performance in every levels of both central and local government as it has
been mandated by the constitution.
Surely, the new established terms of Maritime Shaft and Sea Toll cannot
be separated from Indonesias cultural root which sees sea as the source of
prosperity. The idea of Indonesia as a marine country is also supported by the
reliefs carved magnificently on Borobudur Temple which portrays the shape of
boat.
The theme Infrastructure Investment: Supporting Indonesia Competitiveness
and Future Economic Development is important since it is the essential
base for a country to develop. Infrastructure improvement has been a focus
of development in every era of government. From 2009 to 2014, under the
coordination of Ministry of Finance of the Republic of Indonesia, the government
made an intense effort by establishing Committee of Infrastructure Priorities
Development Acceleration (KPPIP) and also Indonesia Infrastructure Fund (IIF).
Altogether, the whole structures of government from Bappenas with its
Blue Book or Green Book to the Indonesia Investment Coordinating Board
(BKPM) strive to create a friendly climate for the investors working in the national
infrastructure development sector. To improve and develop the quality of
infrastructure is, of course, the toughest job since it needs a focus on key details.
But the study is already made, thick and complete. What needs to be done is to
INDONESIA INVESTMENT COORDINATING BOARD

Publisher:
INDONESIA INVESTMENT COORDINATING
BOARD

Redaction:
Jalan Jend. Gatot Subroto No. 44 Jakarta
12190 Indonesia
Telephone: +6252880410,52880411
www.bkpm.go.id

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execute the study and analysis into the field.

The International World, as well as the citizen itself, is waiting for Indonesia
as The Next Giant in Economy to prove the bright performance in the future.

6 Indonesia Today
AEC 2015
FROM BRIC TO MINT
VISTA

8
12
14

17

Brand
18
27

Indonesian Global Brand

World-Class Brands

32 Success Story
Cigading Habeam
SIEMENS

34
38

Infrastructure
42
44
46
53
54

57 Potentials

6,000 Trillion Rupiahs

All For Infrastructure
Smelter: The Icon of National Investment
A Glance on the Indonesian Infrastructure
Negative List of Investment

Profiles of Infrastructure Projects

Geothermal: The Potential worth Exploring

58
62

Highlights

A Piece of Indonesian Beauty

Maritime Country
Monumental Moment

65

BKPM One Stop Service

Marine Potential

66
67

69 Lifestyle

40

70
72
74

Indonesia Today

On October 20, 2014, after having the frenetic General Election, the newly elected
President Joko Widodo was inaugurated along with his Vice President, Jusuf Kalla. It
was a very historic Monday to be remembered as the day when the world witnessed a
humble man being elected as the leader of a great nation with ethnics, cultures and beliefs
diversity. The pair, well-known for their nickname Jokowi-JK, has a huge mandate to be
the helmsmen of the Republic of Indonesia.
The cultural parade thrown after the inauguration was held until midnight showing the
bubbled up euphoria. Speculations arose as the euphoria continued saying that this
leadership might bring a different nuance. How is it different? At least, in terms of the
usurping authority process, it went smoothly. In historians point of view, that was when
the process revolved without the essence of hostility. Hopefully, this positive energy could
be a strong base for the acceleration of Indonesian development in the future.

Outlook
The fate of Indonesian economy cannot be separated from the world economic
performances. In the global market competitiveness era will be even tighter given the
fact that the enforcement of free market everywhere in the world urges each country to
be ready optimally. The trade competition will reach a phase of Face to Face or Head to
Head usually leading to a win or lose situation.

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With a new government and the challenging homework to improve infrastructure in the
situation where the budget is tight, it is not an easy work to do. However, Indonesia,
well-known for its perseverance, is believed to be able to cope with the challenges by
working...working...working as it was quoted from President Jokowis first speech in his
inauguration. Even Jokowi JK Cabinet is named Working Cabinet (Kabinet Kerja).
Sri Mulyani, one of Indonesias most prominent name in Economy, in the ministrial meeting
of APEC on October 2014 said (The year) 2014 has been a disappointing year. The US
economic recovery is proceeding, and U.K. economic growth is encouraging, but growth
in Europe is still disappointing. The global growth headwind is stronger than i expected,
and policy responses to neutralize the headwind should be much stronger by many
policymakers. Sri Mulyani now works as a Managing Director of World Bank.
In the next upcoming years, with the condition predicted to be tougher than 2014,
Indonesia needs to precisely walk and maneuver in order to anticipate all of the
possibilities. The market, citizen and all Indonesias joints of life optimism are expected to
be the directed and tough foundation for all economic activities.

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AEC 2015
ASEAN (Association of South East Asia

Nations) was established on August 8, 1967

in Bangkok. ASEAN was initiated by 5 (five)
Foreign Affairs Ministers from Southeast
Asia i.e.:
1. Minister of Foreign Affairs of The

3. Minister of Foreign Affairs of Thailand:

Thanat Koman

4. Minister of Foreign Affairs of Philippine:

Narcisco Ramos
5. Minister of Foreign Affairs of Singapore:

Tun Abdul Razak

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2. Vietnam on July 28, 1995

3. Myanmar on July 23, 1997

4. Laos on July 23, 1997
5. Cambodia on December 16, 1998

S. Rajaratnam

Republic of Indonesia: Adam Malik

2. Minister of Foreign Affairs of Malaysia:

1. Brunei Darussalam on January 7, 1984

Another 5 countries in Asia, later, joined

ASEAN CHARTERED

ASEAN:

The year of 2007 has been a historic year

for ASEAN since the territory had a new

equitable economic development and

valuable assets to survive. Learning from

feature. The idea of a more structured and

region fully integrated into the global

EEC unfortunate experience, ASEAN makes

systemized ASEAN was possible. It was even

economy.

some adjustment so that the noble goals of

more visible with the signing of ASEAN

prospering the community will not backfire

Charter as a joint constitution framework

The objectives of AEC 2015 is to preserve

disadvantaging each other. In regards

of ASEAN.

political stability and ASEAN regional

to this matter, Indonesia has a series of

security, improve regional competitiveness

preparation and anticipation.

The success of establishing the charter did

in global market and boost economic

not necessarily depict the solid cooperation

growth, eradicate poverty as well as rise the

AEC is aimed to be a different entity from

among ASEAN members. The challenges

living standard among ASEAN members.

European Economic Community (EEC). It

came from within the organization,

ensures that the decision-making will be

especially in terms of implementing the

The 4 (four) pillars of AEC 2015 ensuring

in the hand of each member country. That

charter in order to create a more integrated

single market and production base is

makes it a different model of integrated

power.

supported by fundamental elements of

economic region than EEC. The integration

free flow of goods, services, investment,

of EEC model is conducted by giving

However, the existence of charter obligating

capital and skilled labor. Given the elements

the decision in the hands of institution

the members to obey the consensus

that allow the flow of imported goods and

designated to handle European economic

decided by ASEAN has inflicted certain

skilled labor, it is expected that ASEAN

problems. Thus, the establishment of such

inconvenience among some parties which

countries, including Indonesia, will be more

institutions will weaken the sovereignty

tend to oppose the consensus. But the

competitive. This can be both opportunity

of each country. On the other hand, AEC

charter itself has been specially designed

and also a challenge for Indonesia.

model places the member countries as the

to be not too strict to those members who

could not obey the agreements.

History Of AEC 2015

decision-makers.
In 2015, ASEAN will be a single market
region of AEC. With the implementation

On ASEAN level, decisions are made

of it, there will be certain implications

based on mutual agreement. Hence, each

on Indonesian economy. What needs

countrys role to be a decision-maker is

In the 9th ASEAN Summit held in Bali

to be anticipated is that when there is a

being preserved. One of the processes

in 2003, the ASEAN leaders agreed to

single market in one community, the one

of implementing AEC is to develop AEC

establish an ASEAN community on the area

providing the best and cheapest products

blueprint.

of political security (ASEAN Political-Security

will be the winner.

Community), Economy (ASEAN Economic

Community) and Social and Cultural

When the European Economic Community

Aec Blueprint

(ASEAN Socio-Culture Community), also

(EEC) was established, the members were

The blueprint contains four fundamental

known as Bali Concord II.

being disadvantaged. The unpreparedness,

pillars, i.e.:

gap, domestic turmoil, leaders and

ASEAN as a single market and production

The community was started with the

business peoples competence of each

base with seven core elements of free flow

implementation of ASEAN Economic

country were in stake. Until now, some of

of goods, services, investment, capital and

Community (AEC). Before, it was agreed

the strongest countries in European Union

skilled labor.

that AEC would be implemented in 2020.

have to struggle of becoming a donor

But in January 2007, it was decided that

country in order to preserve their territory.

ASEAN as a competitive economic region

with six core elements of competition

AEC would be conducted in 2015. There

were 4 (four) pillars of AEC that ensured

Some other countries even have to deal

policy, consumer protection, intellectual

single market and production base;

with the continuous curse of having to be

property rights, infrastructure development,

competitive economic region; region of

assisted. Some have to let go all of their

taxation and e-commerce.

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ASEAN as an equitable economic development with two core elements of SME

development and initiative for ASEAN integration of CMLV (Cambodia, Myanmar, Laos and
Vietnam).
ASEAN as a region fully integrated into the global economy with two core elements of
developing a coherent approach towards external economic relations and enhanced
participation in global supply networks.

ASEAN
ASEAN population is 6% from Worlds total population, while Southeast Asias GDP
contributes 3% to the worlds economy. By 2050, it is estimated that the ASEAN
population will continuously increase 9% of the worlds population.
Indonesias position in ASEAN is very strategic whereas 43% of the ASEAN citizens are
Indonesian (600 million people) and geographically Indonesian territory covers 53% of
ASEAN territory. With these advantages, Indonesia must be able to see and seize AEC with
all of its opportunities and challenges and immediately take necessary actions to utilize the
positive impacts of AEC.
Some of the opportunities that can be utilized are the chance to create new markets. If
not, Indonesia will only be the market of imported products which will have a negative
impact on local products. In the area of financial sector, AEC can be a chance for
Indonesias banking sector to penetrate a new market. This is, of course, not an easy task
since the other ASEAN members might have the same target. The fact that the utilization
of banking services in Indonesia is low makes us vulnerable to be a target of the ASEAN
banks and financial institution.

Indonesian Logistic
Suppressing logistic cost is a challenge faced by Indonesia in order to increase
competitiveness. Our recent inefficient logistic cost will make local products losing the
competition while imported products will keep flowing in. Suppressing the cost needs to
be done from both sides of supply and demand.
The high logistic cost is resulted from inadequate logistics infrastructure. Indonesias logistic
cost is 24% of the nation GDP. The number is considered high comparing to that in
developed country like USA, Singapore and developed countries in Europe which is around
11% of their GDP.

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9 Industrial Sectors
The government has prioritized nine industrial sectors to be developed in order to fill
ASEAN market towards the upcoming AEC. The nine sectors are agribusiness industries
such as CPO, cacao and rubber; fish processing industry: TPT: footwear industry; leather
and leather goods industry; furniture industry; food and beverage industry; fertilizer and
petrochemical industry and basic metal and machinery industry. The reason why those
sectors are being developed is because they have a relatively better competitiveness
compared to those in other countries of the region.
Other than that, to secure domestic market towards the flow of the similar products from
other ASEAN countries, seven other industrial sectors also needs to be developed. Those
seven sectors are automotive industry, electronic industry, cement industry, textile industry,
footwear industry, food and beverage industry and also furniture industry.
A set of programs and policies for those sectors need to be prepared in order to boost
the competitiveness of each sector. Other things that need to be done are optimization
and socialization of AEC to the industrial stakeholders; proposing the acceleration of the
safeguard enactment and anti-dumping policy for imported products; adding facilities
of research laboratory and increasing the human resource competitiveness of the
industry. The establishment of national standard of working competency in each sector;
reinforcement of Small-Medium Enterprises (SME) and development of new industrial
entrepreneurship also need to be done.

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FROM BRIC TO

MINT

Jim ONeill, previously served as CEO Goldman Sachs, has been

considered to be an influential economist in the financial world.

He publishes his analysis on four countries that show a remarkable
economic movement.
Brazil, Russia, India and China are predicted to be the upcoming
giants in global economy. The term BRIC, invented by Jim ONeill
in 2001, has been very well-known and welcomed by international
medias. The fact that now China overlaps USA proves the theory.

The table shown above proves how China grows very strong.
Eventhough Chinas current prices GDP is only at second position,
the GDP based on PPP valuation is overlapping USA. The current IMF
data also brings shocking news placing Indonesia at the ninth position
above United Kingdom in terms of GDP based on PPP valuation.

BRIC
The global astonishment perishes the shrieking plea of countries
which are excluded because of Chinas economic performance. The
dragon has arisen and ready to pulverize the unprepared. A lot of
countries feel intimidated by the greatness of China.
The maneuver of Chinese businessmen is undeniable since they are
fully supported by the government.

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The term BRIC has been phenomenal. Surely, the world will not forget Jim ONeill although
he is no longer serving as Goldman Sachs. Therefore, when Jim ONeill mentioned about
MINT in 2003 as the next giants, the world paid a good attention. MINT is Mexico,
Indonesia, Nigeria and Turkey.

MINT
The advantages of each MINT countries are explained by ONeill as follows: Mexico is
fortunate to be geographically close to USA; Indonesia has the key position in Southeast
Asia as the centre of economic growth in the last couple of years as well as a direct
connectivity with China.
Mexico, Indonesia and Nigeria have strength in natural resources commodities. ONeill
thinks that in the last few years, Mexico and Nigeria had certain concern to reform their
energy market. Indonesia, recently, shares the same concern. In terms of GDP, Mexico and
Turkey reach a point of USD 10 thousand, while Indonesia is around USD 4 thousand and
Nigeria is around USD 1,500.
Compared to Brazil with the GDP of USD 11,300, Russia with the GDP of USD 14 thousand
and China with the GDP of 6,500, Turkey has the chance to have a rapid maneuver
because of its geographical advantages of being close to Europe which is relatively rich and
stable. However, it will be wasted away if Turkey cannot maintain its domestic stability.
Mexico and Nigeria also have the same risky political instability.
Indonesia, on the other hand, is considered to be stable in terms of political and economic
condition. As a country which just claims its place with a mature democracy, Indonesia has
a chance to shine brightly if it can improve the infrastructure condition and work ethic.

Jim ONeill

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VISTA

As the projections of certain economic condition in a country or region become vary,

the newly invented acronyms trigger people to observe certain study. VISTA (Vietnam,
Indonesia, South Africa, Turkey and Argentina) is one of the acronyms that is considered
to be solid aside from BRIC and MINT. As time goes by, Vietnam and South Africa carve
enormous achievement regarding their economy. Here are the overview and a projection of
VISTA:

Such analysis and projections are legit to support a study of the development of a country.
As a reader, those can enrich our data. For the same reason, other acronyms aside from
BRIC, MINT and VISTA that share similar characteristics of a group of countries such as G7,
G20, The Next Eleven, and APEC is worth to be discussed.

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Brand

Indonesian
Global
Brand

Strong brands have strategic roles to win over the market. The more extensive the market
is, a stronger position needs to be occupied. It is not an easy task. A settled brand is a
valuable asset for a company to succeed.
In terms of world trade context, settled brands are no longer dominated by developed
countries. Due to its variety of local brands, developing countries, especially Indonesia, are
started to be recognized.
Various brands from various industrial sectors start to benefit beyond their own profit.
From the customers point of view, the settled local brands have their own identity and
have been branded to differ from their competitors similar products. Thus, the consumers
loyalty can be earned. This is definetly an opportunity for the brand-holders to differentiate
their products and obtain a higher bargaining point.
Of all Indonesian global brands, some of them are often thought to be international brand,
while they are actually local-made. Here are some of the compilation of the national pride
brands:

POLYGON
PT INSERA Sena has been producing bicycles under the name Polygon since 1989 in
Wadungasih Village, Buduran, Sidoarjo, East Java. Their business grows more than 20%
per year. Sixty percent (60%) of the Polygon bicycles are exported to Europe and the
other 40% are for local market. To strengthen its market, Polygon establishes distribution
centres in Muenchen, Germany; California, USA and in 30 places around Southeast Asia.
For the last 4 years, Polygon has been a frequent exhibitor in Eurobike. It is the world
biggest annual exhibition for bicycles manufacturers. Every year, this event attracts 1,280
participants, 45,200 businessmen from 111 countries and 1,883 journalists from 45
countries. this year, the exhibition will be held in Friedericshafen, Germany.

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POLYTRON
Polytron is an electronic brand established in May 16, 1975 in Kudus, Central Java under
the name of PT. Indonesia Electronic & Engineering. Later, in September 18, 1976, the
name was changed into PT. Hartono Istana Electronic. After being merged, the name was
changed into PT. Hartono Istana Teknologi. The company produces various products such
as television, radio, refrigerator, mobile phone and many others. Polytron has 70,000 m2
factory in Kudus and 130,000 m2 factory in Sayung, Semarang with 6,000 workers, 11
branches, 5 authorized dealers and 50 service centres throughout Indonesia. Given the
condition that electronic market is continuously growing, Polytron plays an important role
to support Indonesia to host its own country. In 2013, the electronic market increased
14% from IDR 16.2 trillion. The number reaches IDR 18.5 trillion throughout 2014.

EIGER
PT. Eksonindo Multi Product owned by Ronny Lukito produces bags such as Eiger, Eksport,
Bodypack, Neosack, XTREME and Nordwand. The products which are manufactured in
Bandung, West Java have been sold not only for Indonesian market but also exported
to many countries such as Lebanon, Singapore, Philippine and Japan. Eiger, named after
a Eiger Mountain in Switzerland, was established in 1993. The bags are designed for
outdoor activities such as hiking, camping, climbing and many others. Started with only
two sewing machine, Eiger, now, employs 800 tailors in Soreang, Bandung. Every year, the
factory produces 2,500,000 bags with 8,000 different designs that are expected to rule the
market.

LEA
Although the brand and logo of Lea resemble the flag of USA, it is actually made in
Indonesia. PT Lea Sanent, the manufacturer, was established in 1976. The factory is located
in Tangerang, Banten with 34 outlets around the country, 200 counters in department
stores and 100 local jeans stores. Every month, Lea produces 1 million pair of jeans.
Although it still focuses on domestic market, Lea has already had buyers from Dubai, Korea
and Hong Kong.

J.CO DONUTS & COFFEE

J.Co Donuts & Coffee was established in 2001 by Johnny Andrean who has been well
known for his 209 parlors business. Unsatisfied being the sole holder of Breadtalk Franchise
from Singapore, he established a business of original Indonesian donut. It takes only three
years for the business to grow with more than 40 outlets in Indonesia and around Asia:
Singapore, Malaysia, Philippine and China.

ESSENZA
Many of us probably think that Essenza is a tile brand from Italy, while it is actually made
in Indonesia and exported to many countries, including Italy. Essenza is manufactured by
PT Intikeramik Alamasri Industri Tbk. which is located in Tangerang, Banten. The company
was established in 2003. In 2013, Indonesian tile industry has a capacity of 1.4 million m2/
day and produced 1.32 million m2/day. Eighty five percent (85%) of the total production

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is allocated for domestic market and the other 15% is exported. The sales figure of tile
industry reaches IDR 30 trillion and is projected to reach IDR 34 trillion in 2014. Currently,
there are 35 companies with 80 factories producing wall and floor tiles. Overall, the
industry absorbs 200,000 workers.

OLYMPIC GROUP
Olympic Group is parent company of furniture manufacturer with knock-down features.
Olympic Group has 5 subsidiaries and holds some brands such as Olympic Furniture, Solid
Furniture, Albatros, Procella, Olympia and Jaliteng. The company, headquartered in Bogor,
West Java, has sold its products to more than 100 countries. At the beginning, Indonesian
furniture was only popular among Western European countries such as Greek, United
Kingdom, Spain and Netherland. Recently, the market expands to Eastern Europe, Asia and
South America. This year, its export values reach US$ 1.8 billion, compared to the previous
year which only reach US$ 1.78 billion. By the end of 2014, its export values are predicted
to reach US$ 2 billion.

RADIX GUITAR
Radix Guitar, a local guitar with international quality, was established by Toien Bernadhie.
Known for its quality, Radix guitars are sold in Sweden, Denmark, United Kingdom,
Greek, Switzerland, Canada, Australia, Singapore and Malaysia. Export values of musical
instruments plays a significant number in Indonesia. Based on the data from Directorate
General Export Development, Ministry of Trade, the number of its export reached US$ 489
million in 2013. The biggest exports came from electrical music instruments, followed by
pianos and keyboards.

ABC BATTERY
In the middle of the invasion of foreign branded battery, ABC battery manages to rule
almost half of domestic market. This product, manufactured by PT International Chemical
Industry, has been exported to 50 countries under different brands, except in Australia
and some other countries which still use ABC or Alkaline brand. On its launching in 1980s,
ABC Alkaline has ruled 80% of the battery market in America, Europe and Japan. Based
on AC Nielsen data, ABC Alkaline rules 60.1% of the battery market in Indonesia. The rest
are taken by Duracell and Energizer. The success of leading the market owes to the wide
distribution networks and strategic communication skill.

SRITEX
PT Sri Rejeki Isman (Sritex) is one of the biggest textile companies In Southeast Asia. Sritex
was established in 1966 in Solo by Muhammad Lukminto, who used to be a merchant in
Pasar Klewer, Solo, Central Java. Now, Sritex owns three weaving factories, nine spinning
factories, three printing presses and seven garment factories. Employing 16,000 workers,
Sritex supplies military apparels to 26 countries and to North Atlantic Treaty Organization
(NATO) countries as their official partners.

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GARBARATA AEROBRIDGE
One of the supporting facilities that we often use in an airport is the aerobridge or jetway.
The Garbarata facility built by PT BUKAKA Teknik Utama helps passengers to board
and disembark from aircraft. Almost all airports in ASEAN countries (even in Asia) use
Bukakas aerobridges. PT Bukaka has developed an innovation of the technology since
1980. Nowadays, the aerobridges are also used by seaports to make passengers more
comfortable and ensure their safety.

KEDAUNG
Kedaung International Group (KIG) leads a world-class glassware and tableware line. The
products have been sold to 150 countries placing it to be the biggest glassware factory in
the world. Half of the total production is exported to Asian countries, Middle East, Africa
and Australia with several branches in USA, Canada, Hong Kong, Australia and some other
countries and showrooms in Singapore and Malaysia.

TERRY PALMER
Terry Palmer towels have been manufactured in Tangerang, Banten by PT Indah Jaya since
1962. Located in 40 hectares factory in Tangerang , PT Indah Jaya employs 5,000 workers.
Its export market is focused in Asia especially Singapore, Malaysia and Australia. In 2013,
Terry Palmer penetrated Chinas market and the outcomes were quite good. Before then,
Chinese towels flew into Indonesia. In terms of production capacity, the company can
produce 1,300 ton a month.

THE EXECUTIVE
The Executive (previously known as Executive 99) brand was established in 1974.
In 1985, the ownership was changed and in 2000, the brand was changed into The
Executive. The brand is also available in Malaysia, Singapore and some countries in
Southeast Asia.

PASEO
Paseo is an Indonesian paper tissue manufacturer which exports international standardized
paper tissue to 65 countries in 6 continents. This company was established in 1997.
Made from a 100% virgin pulp without Optical Brightening Agent (OBA), Paseo has a
good reputation in the global market. It is also famous for its interesting packaging with
a animation design such as Hello Kitty, Doraemon and Looney Tunes. Paseo has a bright
future since it is categorized as a pulp and paper industry. Nowadays, only some countries
have the ability and opportunity to develop pulp and paper industry in the world. The
possible competitors are probably coming from Latin America countries. The world paper
demand has reached 349 million ton and it is predicted to reach 490 million ton in 2020.
Based on data from Indonesia Pulp and Paper Association, installed capacity for pulp
industry is 7.9 million ton a year and 12.98 million ton per year for paper industry.

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EDWARD FORRER
Edward Forrer, Indonesian bag and footwear manufacturer, was named after its founder,
Edward Forrer or Edo. Beginning with producing shoes in 1989 in Bandung, now Edward
Forrer owns more than 50 outlets in Indonesia, Australia, Malaysia and Hawaii. The head
office is located on Jalan Veteran 44, Bandung, West Java. The company and other local
footwear manufacturer have contributed to the domestic revenue. Now, Indonesia has
managed to supply 3% of footwear demands in the world. In 2013, the export number of
the industry reached US$ 3.86 billion compared to that in 2012 which only reached US$
3.6 billion. Beside the high export values, the last five years, the surplus of industrial export
reaches US$ 2 billion.

SILVER QUEEN
PT Petra Foods is the manufacturer of chocolate snacks such as Silver Queen, Chunky Bar
and Ceres. In global market, this company competes with M&Ms, American chocolate
manufacturer. The company is managed to export its products to 17 countries such as
Thailand, Japan, Philippine, Hong Kong, Australia and China. In the future, Petra Foods and
similar local manufacturer will have a brighter chance considering that Indonesias target to
be the largest cacao grinding producer in the world by 2015 with the production capacity
of 600 thousand ton per year. The growth of the cacao industry cannot be separated from
governments role. One of the government supports is by imposing an export duty of cacao
seed in 2010. In 2013, cacao contributed US$ 1.1 billion to the national revenue.

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SOPHIE MARTIN
Sophie Martin was established by a French couple, Bruno Hasson and Sophie Martin.
They had an idea to build the fashion business with the brand Sophie Martin when they
were posted in Indonesia. Starting with producing bags, Sophie Martin MLM network has
gathered more than 1 million members and 250 business centres spreading from Aceh and
Papua since its launching in 1995.

MASPION
The company has a strong expertise in marketing and manufacturing a various qualified
household products such as kitchen appliances, glassware and home electricity including
PVC and PE pipes. Maspion a settled and wide distribution network both domestically and
internationally through its distributors, agents, retailers and representative offices in big
cities in Indonesia and other developing countries. Maspion is derived from M = Mengajak
(asking), A = Anda (you), S = selalu (always), P = percaya (trust), I = industri (industry), O =
olahan (products), N = nasional (national) or asking you to always trust national products.
The company employs 13,000 people and utilizes production facilities in four industrial
estates in Sidoarjo and Gresik, East Java and one factory in Jakarta and West Java. It will
also expand to Kendal, Central Java very soon.

HOKA HOKA BENTO

Although Hoka Hoka Bento (Hokben) serves Japanese food, the fastfood restaurant, which
was firstly opened in Kebon Kacang Jakarta, is originated in Indonesia. PT Eka Bogainti
owns Hokben with 147 outlets from Java to Bali. Culinary industry has a strategic role in
contributing domestic revenues and supporting national tourism sector. According to the
data of Ministry of Tourism and Creative Industry, culinary tourism contributed 25% to the
economy in some countries such as USA and Canada. In Indonesia, the sector contributed
IDR 209 trillion to Gross Domestic Regional Product (PDRB) according to the data of 2013.

GT RADIAL
This Southeast Asias giant tire company has gone international. PT Gajah Tunggal Tbk.
through GT Radial has exported more than 110 million tires to more than 90 countries
around the world. To sell its products, Gajah Tunggal establishes 76 distributors in 76
countries. In the future, tire industry has a promising aspect with the rapid growth of
motor vehicle industries every year. According to the data of Ministry of Industry of the
Republic of Indonesia, the growth of tire industry has reached 8% considering it to be
one of the backbones to compete in global market. Every year, the growth of the industry
reaches 7 8 percent. Hopefully, the tire industry investment can boost Indonesias
economic growth. Today, there are 13 national tire manufacturers that can produce 75
million tire of a various type and size of tire for passenger car, truck, bus and heavy duty
vehicle and 55 million tires for motorcycles. In 2014, the industry is slightly declining. PT
Gajah Tunggal Tbk. is the only company having the increase on its sales throughout first
quarter in 2014. It is recorded that the company sales increase to 5.3% from IDR 3.04
trillion to IDR 3.2 trillion.

INVEST 23

AlfaLink
Alfalink, electronic language dictionary device, is considered to be an innovative product
made by Indonesian. It was invented by Shian Yu. Now, he has representative offices in
Singapore, Kuala Lumpur, Hong Kong, Taiwan and Los Angeles.

THE SAK
The Sak is a branded bag made by Delia Murwihartini. She promotes her products through
international exhibitions and uses local contents. Sweden is her first export destination. To
penetrate the USA market, Delia patents her bags under the name The Sak with the help
of her USA partner. Now, The Sak is sold in Fifth Avenue, New York.

PT PAL
Kargo Star 50 is a flagship product from PT PAL, a well-known ship manufacturer. This
giant ship of box shape bulk carrier (double hull) has a weight of 50,000 dead weight
tonnage (DWT). Kargo Star 50 has been sold to German, Hong Kong and Turkey. After
manufacturing Fast Missile Ship for Indonesia, PT PAL will also manufacture Landing
Platform Deck (LPD) ships for Philippines military. Myanmar and Turkey are also interested
to purchase the ships from PT PAL. PT PAL Indonesia, now, manufactures trading, cargo,
passengers, chemical tank and oil tank ships, including fast missile ship and box shape bulk
carrier ship. PT PAL is also planning to build submarines. Other than that, PT PAL Indonesia
also manufactures a US$ 43 million worth of EPCI Gas Compressor.

QUICK TRACTOR
CV. KARYA HIDUP SENTOSA manufactures agricultural appliances such as power tiller
and power thresher under the brand QUICK. Power tiller, especially the type of GT 1000
Boxer, has been used in Namibia and exported to Fiji, Dominican Republic and Timor Leste.
The agricultural appliances industry used to be plunged due to the invasion of imported
products. But with the implementation of Indonesian National Standardization (INS/SNI)

24 INVEST

which is compulsory for all agricultural appliances products, the condition changes. As
a result, according to the data of Ministry of Industry, the demand of tractor machine
reaches 200,000 units per year and the industry manages to fulfill 140,000 units.

EQUIL
Equil is a mineral water purely made in Indonesia under PT Equilindo Lestari owned by
Morgen Sutanto. Equil is produced in Vila DEquilibrium, an Equils packaging factory,
located in the foot of Gunung Salak, Sukabumi, West Java. Morgen started his business
in 1997 due to his concern to the fact that the packaged beverage industry was ruled
by foreign investors, contrary to the fact that Indonesia has abundant qualified water
resource. Due to his hard works, Equil is now available in luxurious restaurant, five star
hotels and important meeting of government officials.
This year, the Indonesia Association of Packaged Beverage (Aspadin), sets a target of 23.9
billion liters or 11% raise of beverage production from 20.3 billion liters in 2013. According
to the data of Aspadin, the production of beverage in Semester I has reached 11.65
billion liters or risen 11% from the same period last year. The highest production value is
on March and April with a rise of 2.1 billion liters each year, only to fall down again to 2
billion liters on June and 1.75 billion liters on July.

COFFEE
Kopi Luwak is a steeping coffee using coffee bean taken from luwak/palm civets remaining
dirt. The bean is believed to have a unique taste after being eaten and taken out through
luwaks digestion system. The bean is the most expensive in the world.

INVEST 25

Steve Jobs

26 INVEST

WORLD-CLASS

BRANDS

INVEST 27

Based on the surveys of Best Global Brands and Interbrand, Apple and Google are the
most expensive brands in the world. Both of them are valued more than US$ 100 billion or
equaled to IDR 1,200 trillion. For two years in a row, Apple outperformed Google as the
most expensive brand in the world. The titles are rewarded to them by Interbrand under
three main criterions.
The assessments are based on the performance of the brands, how they influence
customers choices and whether the products can raise their own prices.
Worth US$ 118.9 billion, Apple raises its companys value to 21% than last year, while
Google, a US$ 107.43 billion worth, rises 15% than 2013.
Meanwhile, Facebook is also one of the brands with a stand out value in this years list. Last
year, Facebook grew with more than 1.32 billion active users rising 14% from the previous
year. In the meantime, Huawei, a Chinese brand, represented the first Chinese company in
the rank.

Global Brand
Apple Inc. is a multinational brand located in Sillicon Valley, Cupertino, California which
design, develop and sell consumers electronic appliances, computer software and
notebook. Apple Inc. was established on April 1, 1976 and being incorporated into Apple
Computer Inc. on January 3, 1977. After the launching of iPhone, the word computer
was omitted on January 9, 2007 to show Apples focus towards consumers electronic
sector.

28 INVEST

Apple is well-known for its line of software products such as OS X and iOS operating
system, iTunes music player and also Safari website and its hardware such as iMac desk
computer, MacBook Pro laptop, iPod music player, and also iPhone mobile phone.
Before establishing Apple, Steve Wozniak was an electronic hacker. In 1975, he worked in
Hewlett-Packard and helped his friend, Steve Jobs to design a video game for Atari. Those
two icons settled a foundation for Apple to be a world-class company until now.

GOOGLE INC
In the gadget proliferated time like today, Google is like a walking dictionary to find
information. This USAs multinational company focuses its business on internet products
and services such as searching engine technology, computer web, software and online
advertisement.
Google was established by Larry Page and Sergey Brin on September 4, 1998 when they
were still PhD students at Stanford University. Googles mission is to gather information
around the world and make it accessible as well as useful for everybody. In 2006,
Googles headquarter was moved to Mountain View, California.
The idea of the name Google came from Googol (numeral 1 with a hundred of zero
number behind it). They thought that that huge number might equal to the amount of
information that Google could provide.

MERCEDES BENZ
Mercedes Benz is an automotive company from German which manufactures various
vehicles such as cars, trucks and bus. As a brand, Mercedes Benz becomes the most
famous and oldest car company in the world until now. The key of its success lays on the
developed and innovative technology with a high safety level.
The idea of Mercedes-Benz came up when Karl Benz invented the first oil-fueled car in the
world which was being patented in January 1886. Mercedes cars were sold for the first
time in 1901 by Daimler Motoren Gessellschaft. The first car using the brand Mercedes
Benz was made in 1926 after Benz Company and Daimler merged into Daimler-Benz
Company.
The interesting part is that Indonesia played an important part in the history of MercedesBenz. There are only 3 countries outside Europe which manufactures GL 500 type of
Mercedes-Benz; India, Indonesia and USA. Mercedes-Benz GL 500 is manufactured in
Wanaherang, Bogor, West Java to fulfill domestic demands.
The reason why Indonesia is chosen to assemble some types of Mercedes-Benz is because
the domestic market is very promising. Other than that, the quality of oil fuel in Indonesia
is good. It becomes one of the considerations because the fuel plays important role in the
quality of the cars. Some of the Mercedes Benz types that are assembled in Indonesia are
ML 400, GL 400, GL 500, E 400 MG and S 400 L Exclusive.

INVEST 29

IKEA
IKEA is a Sweden home-furnished retailer. It was established by Ingvar Kamprad in 1943
when he was 17 years old and now he has become one of the richest people in the world.
IKEA is derived from Ingvar, Kamprad, Elmtaryd (his birth place) and Agunnaryd (the village
he lives in).
At the beginning, IKEA sold various things such as pens, wallets, frames and even
wristwatch. The furniture made it to the list in 1947 and then IKEA started to design the
furniture in 1955.
At first, IKEA only went online and then the first flagship store was opened in Almhult and
continued to be the model store. On March 23, 1963, the first IKEA store outside Sweden
was opened in Asker, near Oslo, Norway.
In winter 2004, there were 202 IKEA stores in 32 countries around the world with another
20 more opened in 2005. On October 15, 2014 Hero Supermarket, the sole holder of IKEA
franchise in Indonesia, opened its first store at Alam Sutera, Tangerang, Banten.
One of IKEA commitments when entering Indonesian market was to work with local
furniture partner in Solo and Yogyakarta. Those local products will be sold to global
market.

McDonald
The most famous brand in the fast-food business until today is McDonalds. People easily
recognize it by its two yellow bows sign that resemble an M alphabet.
Beginning with the first restaurant in 1940 by two brothers, Dick and Mac McDonald, a
series of fast-food restaurants were established serving an authentic set of menu such as
hamburgers, soft-drinks, french fries, chicken fillet and some other local foods based on
the location of each restaurant.
They introduced speedee Service System in 1948, which then became the basic
principle in the modern fast-food restaurants nowadays. It is hard to imagine that in 1940
before the World War, with the age of more than half centuries and its global network,
McDonalds was just an ordinary barbecue restaurant named McDonalds Bar-B-Que at 14th
and E Street, San Bernardino, California State, USA. Its menu is various and it enables the
cars to drive into the parking lot and buy the foods without having to leave the car.
In 1948, McDonalds changed it form into a drive-in restaurant with a simplified menu of
9 items which were hamburgers, cheeseburgers, soft-drinks, milk, coffee, potato chips
and a slice of pie. McDonalds specialty, at that time, was its 15 cents hamburgers. A year
later, they changed the menu from potato chips to french fries and introduced triple thick
milkshakes to the public.
In 1954, a man named Ray Kroc visited McDonalds office intending to sell some multimixers to McDonald brothers, but then, he was interested in working with them after
finding out that the brothers were looking for a franchise agent for USA region. Kroc had a
feeling that he needed to seize the opportunity.

30 INVEST

A year after that (1955), Kroc opened his first McDonalds store in Des Plaines, Illinois
on April 15, 1955 (which later is celebrated as McDonalds anniversary). On the first day,
McDonalds sales reached US$ 316.12. A decade later, 700 McDonald restaurants were
established around USA.
On its silver anniversary, McDonalds was even more successful with the opening of its
6,000th restaurant in Munich, Germany. In 1983, McDonald restaurants were opened in
32 countries around the world. With the heavy utilization of internet, McDonald finally
launched its website named McDonalds.com in 1996. In 2001, a new menu, Big N tasty,
was introduced to the customers. In 2003, the famous tagline Im Lovin It was globally
launched in Munich, Germany.
McDonalds proves that aggressiveness is important in the business. Ray Krocs existence in
the business played important part in its history; from just a small restaurant to hundreds
of them around the world. Seeing the wide coverage of McDonalds business expansion,
it is not surprising that the brand is considered to be the icon of modern globalization and
American lifestyle and cultural agent to the world.

SAP AG
SAP AG is the biggest software company from German in Europe. SAP was established in
1972 in Mannheim, Germany under the name Systemanalise und Programmentwicklung
by 5 IBMs ex-employees. Its headquarter is located in Walldorf, Germany. The company
which employed 35,873 workers in 2005 also rapidly grows in Indonesia.
SAP Business Suite powered by SAP HANA has become one of the fastest growing
software applications in SAPs history. This software helped many companies of various
sectors to run a real-time business process that enabled them to simulate, plan, run,
analyze and predict their crucial and end-to-end business process.
SAP Business Suite
powered by SAP HANA
is a base for business
innovation to help companies
running their rapid transformation
into real-time companies. Those
companies lead their own industries
by redefining their business process and
implementing what they think to be the impossible
business models.

INVEST 31

Success
32 INVEST

Story
INVEST 33

Cigading
Habeam
Triggered by a strong vision to be a leading manufacturer of steel and steel structure

industry in Indonesia, PT Cigading Habeam Centre (CHC) has shown a rapid and stable
growth every year since its establishment in 1983. A lot of big projects have been
accomplished by CHC: bridges, airport terminals, industrial facilities and special products
such as conventional Pumping Unit for Rig platform and Single Transmission pole.
CHC believes that they are able to develop a long-term factory by utilizing their expertise
and being supported by complete facilities and special attention to each products quality.
They offer efficient products and a qualified system with reliable technology.
Heru Pramono
President Director
PT Cigading Habeam

Established on November 10, 1983, CHC which is located at Krakatau Industrial Estate,
Cilegon, Banten manufactures H-Beam steel with various combinations of steel based on
JIS, ASTM, BS, DIN, etc. CHC also manufactures welded H-Beam with various section sizes
to obtain economical and optimum design. CHC also provides shot blast and prime coating
facilities to protect the steel from corrosion.
CHC is also equipped with laboratories that can be used for various steel tests including
H-Beam. From the laboratorys result, it is shown that the welded part gets stronger and
the monolith (single pole) with optimum quality can be obtained. The computerized and
integrated management system ensures the accuracy and speed on the implementation of
planning, controlling, data processing functions, etc.
Since its launching on November 1985 by President Soeharto, Cigading has manufactured
more than 11 million welded H-Beam with various sizes for various purposes. CHC
products have been used to build skyscrapers, offices, bridges, warehouses, crane girders
and many more around Indonesia.

1.Construction Iron
With fabricated capacity of 1,500 metric ton per month.

2.Manufacture Division
A.Built-up Beam or H-Beam Section
We are the leader in built-up beams with an output capacity of 5,000 metric tons per
month. We operate with 7 fully automated lines for sections ranging from H200 mm up to
2,800mm of unlimited thickness.
B.Single Pole Transmission
As an alternative for concrete pole and/or steel pipe pole, CHC manufactures an octagonshape pole, a single electricity transmission pole from various designs and dimensions
according to the purpose.

34 INVEST

3.Service Division
A.Coil Centre
CHC Coil Service Centre serves to cut, recoil and shear from roll to plate with 20,000
metric ton outputs per month. CHCs main client is PT Krakatau Steel and other factories
that need steel plate.
B.Shot Blast and Painting
For shot blasting, CHC uses the sophisticated S360 and G18.
HUMAN RESOURCES
Human resources are important assets for CHC. In order to improve the quality of its
workers, CHC periodically conducts training programs. The workers safety and healthcare
are their main concerns. CHCs commitment is to apply a tight policy to minimize working
accidents in their office, factories and project sites. CHC employs 442 workers.

INVEST 35

FACTORY AREA
1.OPEN SPACE AREA : 28,860 M2
2.INDOOR AREA :
2.1 Production : 22,350 M2
2.2 H-Beam : 14,580 M2
2.3 Shotblasting & painting

: 4,140 M2

2.4 COIL CENTER : 8,700 M2

2.5 ELECTRIC POLE : 2,175 M2
2.6 RECOIL : 4,350 M2
2.7 LINES : 2,175 M2
TOTAL AREA : 87,330 M2
The more growing demand of steel bridges in Indonesia urges CHC to focus on the efforts
to improve the bridge quality based on its production abilities. Due to the fact that it is
a promising prospect, CHC recently introduced a new brand: CHC Bridge Indonesia on
October 10, 2012 which also became the anniversary of its first delivery of double track
railway bridge made by CHC for Northern Part Ganda Jawa project.
CHC started to run the manufacturing business since its first establishment and continued
to penetrate the market all over Indonesia. The projects were followed by the invention of
superior type bridges with various designs such as girder-bridge, truss-bridge, girder-block
bridges, moving-bridges and arch-bridge. Some of the popular bridges in Indonesia such
as Pawan-V bridge, Tanah Grogot bridge and Anggana bridge in Kalimantan are made by
CHC.
The new high-voltage electricity transmission (SUTET) located in East Jakarta Canal (BKT) is
the new innovation. The two single-pole tower was the first tower used to distribute high
voltage electricity in Indonesia. With the diameter of 3 meters, each pole consists of three
segments joined together to form a 72.5 meters pole.

36 INVEST

By building Marina, we can show the world that we can be

proud to be a maritime country

This 500KV high voltage SUTET is located at Jalan Kolonel Soegiono, Bambu Duri, Duren
Sawit Timur, Jakarta. Steel poles number 30A and 30B bear 500 KV of high voltage
transmission cable to distribute to Bekasi Cawang Muara Tawar Cawang Line.
Indonesian Record Museum (MURI) records PT CIGADING HABEAM CENTRE success
placing it to be the first steel mill to produce the biggest pole and the highest steel tower
in Indonesia.
Marine Industry
Caputra Group has pursued the biggest dream in marine industry since the business started
in 1971. Supported by a good management, the business develops and diversifies from a
bridge to dry dock and marine tourism.
We see Indonesia as a maritime country which needs a lot of infrastructures. That is why
we try to do something for this country said Heru Pramono, founder of Caputra Group
and director of Cigading Habeam Centre (CHC).
To help developing the marine industry in Indonesia, CHC works together with other
companies under Caputra Group such as Caputra Mitra Sejati, Batavia Marina, Quicksilver
Day Cruises and Odyssey Submarine Bali.
With the skill in ship design and maritime architecture, Caputra Mitra Sejati is aimed to
expand to other sectors including oil and gas sector. The company has manufactured many
ships for China National Offshore Oil Corporation and PetroChina and barges for Total E &
P Indonesia. Those ships are certified by Lloyd Register.
Caputra Mitra Sejati also builds catamaran for Quicksilver Day Cruises along with Odyssey
Submarine Bali and Batavia Kelautan, Quicksilver Day Cruises. Those achievements show
a different side of Caputra Group passion to build ships and marine tourism. By building
Marina, we can show the world that we can be proud to be a maritime country.

INVEST 37

1855

Siemenss activities in Indonesia could be traced from 1855 when the company installed
10 telegraph systems in Indonesia for the first time for Dutch Colonial Ministry. Siemens
opened its first office in Surabaya, East Java in 1909. Since the beginning of Indonesias
development, Siemens has been a key partner by taking part in Javas electrification and
providing a system to light up the Sultans palace in Yogyakarta. Today, the company is still
the main investor and player in the technical sector such as electronical, biomedical and
manufactures technology in Indonesia.
Siemens Indonesia offers a various solutions and services through its divisions: Power &
Gas, Power Services Generation; Energy Management; Building Technologies; Mobility;
Digital Fabrication; Industrial and Mobility Process; and Healthcare. Siemens employs 1,800
workers in Indonesia.
Siemens has played an integral part in the development of Indonesian technology and
economy for more than 150 years. In the last 20 years, Siemens investment reached 200

Josef Winter

million euro from its expansion and modernization of production capacity and also human
resources development.
Siemens manufactured power plant components in Cilegon, Banten and low and medium
voltage switchgear in Pulomas, Jakarta and also develop a hearing-aid in Batam. Siemens
factories are well-known as the manufacturers of high qualified products not only for
domestic market but also global market. Siemens preserves its commitment to always
improve their technology and human resources.
In 2014, Siemens celebrated its 25th Siemens Cilegon Factory anniversary. At the
beginning, it was built in 1989 as a fixing and maintenance place for steam and gas
turbines. For years, Siemens has invested in technology development proven by its
competitive position in the market. The Cilegon factory kept developing from a fabricated
steel facility to big scaled condenser manufacturer for power plant and turbine assembler.
Siemens turbines have produced more than 5,000 MW in Indonesia. Siemens was also
involved in the modernization of railway network in Java.

38 INVEST

Siemens and Infrastructure

Siemens works together with Cikarang Listrindo (the biggest independent electricity
provider in Indonesia) using Siemens Steam Turbine technology. In order to improve the
electricity performance in Sumatera Islands, National Electricity Company (PT PLN Persero)
works together with Siemens to build 275-KV main station in Padang Sidempuan and
Payakumbuh, Sumatera.
Siemens Remote Services (SRS) develops a diagnostic remote system to sustain an optimum
system with high productivity and lower operational cost. The system has been applied in
more than 100 appliances in some national hospitals, including Siloam hospitals, Ramsey
International hospitals and Gatot Soebroto hospital.
In cement industry, Siemens get projects to upgrade a process controlling system of PT
Indocement Tunggal Prakarsa.

160 Years

In its 160 years presence in Indonesia, Siemens is committed to be one of loyal investors
and will always be there for Indonesia. Siemens is also committed to maintain a high
standard, work ethic and integrity in order to face challenges ahead.

INVEST 39

Infrast
40 INVEST

ructure
INVEST 41

6,000
P
TRILLION RUPIAHS

residential Working Unit on Overseeing & Controlling Development

(UKP4) evaluated that many of Public Private Partnership projects were

I can say that there

are few PPP projects
succeded due to our
governments work ethic
which has not been
adjusted with the needs to
a well-implemented PPP

unsuccesfull.

I can say that there are few PPP projects succeded due to our

governments work ethic which has not been adjusted with the needs
to a well-implemented PPP, said Kuntoro Mangkusubroto, head of
UKP4in Jakarta, Tuesday (7/10/2014).

Some of the challenges faced by PPP are not just the legal certainty problem. Kuntoro also
mentioned about land issues, a main obstacle of the projects, and also the fact that the

process of decision making was often clashed between DPRD and Regional Government.
Kuntoro did not mention specific projects, but he stated that there was only one successful
project out of five. Whereas, the PPP scheme can be a good alternative to support projects
fund.
He estimated that Joko Widodos government with its target of 7percents economic
growth would need IDR 6,000 trillion infrastructure investment for the next 5 years, which
would be impossible to be solely funded by the country.
UKP4 calculated that at least 50% from the budget need obtained from private sectors
under PPP scheme. Kuntoro affirmed that Government held the key to ensure the PPP
projects to be implemented.

42 INVEST

It is a matter of remodelling PPP and making it more effective and also the coordination,
preparation and decision-making, said Kuntoro. The PPP scheme of partnership is a legal
model to build infrastructure projects in Indonesia. The scheme needs to be encouraged by
the government. The scheme has been running in a while, but there is still a loophole to be
fixed.
As a complex organization mandated to fulfill citizens needs, governments agenda to do
its duty and function is being demanded to be real in the field. It takes a lot of resources
in the partnerships management because the scale and complexity of the governments
programs are a lot bigger that private sector.
Different interest is one of the problems in implementing PPP scheme. In the same time,
the private and public sector are demanded to work together to overcome the challenges
emerging from the different interest. Public sector tries to minimize the whole budget and
ensures a high qualified service, while private sector tries to maximize the profits.
Kuntoro Mangkusubroto affirmed that if PPP was not well-managed, the different interest
would trigger a big problem just like what happened in Latin America. Using the same
legal scheme like PPP, the allocated public budget got even swollen because a lot of PPP
schemed projects were renegotiated. In United Kingdom, the PPP initiative was harshly
criticized since it was failed to provide the value that equaled to the budget being flown
into it. Kuntoro said in Jakarta, the (PPP) scheme needs to be well-strengthened and wellmanaged.
Kuntoro continued that the main problem on the implementation was the weak
collaboration inter-institution inside PPP. The issue needs to be fixed through the
development of partnership between government institution in both local-central or interregional government. He said to the potential partner in private sector, government needs
to change paradigm and start to realize that the partnership is a scheme worth to develop,
market and sell to the potential partner in private sector.
Deputy for Infrastructure of Coordinating Ministry for Economy, Luky Eko Wuryanto
admitted that there is a lot of gaps between publics expectation and governments
realization. To cover them, PPP is expected to play a role especially in terms of accessing
fund resource and expertise of big-scaled facilities. There is still a lot of gaps between
publics expectations (towards facilities development) with what government has been
working on.
In PPP scheme, private sectors also need to play roles to develop, control and operate
facility projects under the governments regulation and supervision. Through an effective
management, PPP will create a strong discipline in the overall process beginning from
choosing, preparing, funding, constructing to operating the projects.

INVEST 43

ALL FOR

INFRASTRUCTURE
The soaring name of Indonesia
in 2004 was unfortunately

owing to the national tragedy of

earthquake followed by tsunami
in Sumatera Island. Thousands
of people died and went
missing. The world was stunned
and moved.

44 INVEST

It did not take a long time for the help

For the downward leveraging, SMI invested

infrastructure sector through the

from many countries to flow into Indonesia.

in its subsidiary, PT Indonesia Infrastructure

improvement of PPP credit-worthiness

The damages caused forced Indonesia

Finance (IIF) as a part of government

which resulted on the decreasing cost of

to develop infrastucture programs and

strategy to expedite funding flow. By

fund of the infrastructure projects.

projects. And then the term Infrastructure

investing to the subsidiary, IIF is expected to

Summit came up which was always

attract equity partner.

related with the generated product of

the 2004 Aceh Tragedy until now.

The Objectives of PIIs Establishment:

To increase credit-worthiness on PPP

infrastructure projects by granting

SMI, IIF and PII

Bankings Role In
Infrastructure

In order to reach the acceleration of

Banking sectors tend to choose senior loans

to be more transparent on giving a

national infrastructure development, the

while SMI products are larger than that

collateral for the risk of infrastructur

government works as hard as possible.

covering senior loan, mezzanine, junior loan

projects which is related to the

All study has been done including the

or even equity. Banking sectors cannot fit

governments act or absence of act.

infrastructure funding which is considered

into infrastructur funding given the possible

to be the main obstacle.

situation where a spesific regulation

for PJPK (Ministries, State-owned

collateral on infrastructure risks.

To improve the management process

To facilitate the success of transaction

applied to certain cases. This is when an

Companies, Regional Government)

In a publics point of view, infrastructure

institution like SMI is needed for a financial

through collateral provision for a well-

projects is often described as: expensive,

close, usually through a club-deal scheme.

capital intensive, controversial and prone

Another form of partnership with banking

to fluctuation (related to land acquisition).

sectors is project financing. The procedure

contingency obligation and minimize a

And the most important thing is that

is to wait for SMI to bid on a project and

sudden shock towards National Budget.

using a formula of business theory is very

then when the project is being constructed

inappropriate to conduct in infrastructure

and operated, the contractor starts to do

PII acts as insurer for private sectors to

projects.

the refinancing step through banks.

deal with the risk that might occur due to

structured PPP Projects.

To set a ring-fence of governments

governments acts such as license process

This logic intrigued the government to

After the establishment of SMI and IIF, the

delay, licensing, changes in regulations, the

establish various institutions, entities or

government established PT Penjaminan

absence of tarrif adjustment, the failure of

even companies to have special duties

Infrastruktur Indonesia (Persero) or PII. The

integrated network/facility and other risks

regarding the improvement of national

company was established in response to

allocated or beared in PPP contract.

infrastructure. In 2009, PT Sarana Multi

the need of insurance to the political risk

Infrastruktur (SMI) was established.

attached to infrastructure investment. By

giving the collateral, private sectors are

It has been 5 years since the establishment

expected to play along in the development

and the company has reached capital

of infrastructure especially through PPP

revenues of almost IDR 4 trillion from the

scheme.

government. According to the accounting

report, it has been utilized to fund the

PII was established on December 30,

infrastructures project by December 31,

2009 as one of governments efforts to

2013. It means that the it has been fully

support the acceleration of infrastructure

absorbed. Since there would not be any

development in Indonesia through an

additional fund from the government

accountable, transparent and credible

through government capital inclusion

process of collateral provision. Moreover,

(PMN), SMI was obligated to find its own

the establishment of PII is also expected

resource of fund.

to attract private sectors to fund the

INVEST 45

SMELTER

46 INVESTASI

THE ICON
OF NATIONAL
INVESTMENT

fter the enactment of Mineral and Coal Laws in 2009, the

term SMELTER became very familiar among national business
people. To build a smelter is a must requirement for business
people if they want to invest in mining sector in Indonesia. The
abundant mineral resources needs to be protected and utilized
for the nations greater interest which is to build a prosperous
community around the mining site as well as contribute revenues
for the country from its tax.

Hundreds of national and multinational companies altogether filed for proposals to get
exploitation and management license of mineral resources all over Indonesia. The fact that
to build a smelter needs at least IDR 60 trillion capital, the business requires a big player.
PT Aneka Tambang Tbk. (Indonesia), Mitsubishi Corporation (Japan) and Eramet Group
(France) establish a joint venture company under the name PT Weda Bay Nikel located in
Halmahera-Maluku. The accumulated value of the mine reaches US$ 5 billion or equals to
IDR 60,000 trillion (kurs IDR 12,000/US$).

Smelter
The message of building smelter is to elevate an added value meaning that the value is
being elevated through processing and/or refining activities in order to provide economical,
social and cultural benefits. Added Value is minerals value which increases as a result of
processing and/or refining process.
The processes are done based on the following considerations:
a. To have a big number of resources and Ores reserves;
b. To boost the production capacity of metal production in the country;
c. The processing and/or refining technology is already tested;
d. The end products of the process are used as industrial raw materials for domestic
market;
e. The remaining products of the process are used as raw materials for domestic
chemical and fertilizer industry;
f.

As raw materials for mineral-based strategic industry in the country;

g. To give multiplier effects for the country both economically, socially and culturally;
h. To increase nationals revenues.
The huge amount of money allocated to build smelter requires the involvement of may
institutions. A good coordination between central and local government has to be
improved. The fact that the companies which file for a smelter proposal tend to increase
despite its challenges shows that Indonesian resources potentials are still attractive.

INVEST 47

48 INVEST

MILLION OF
SKILLED WORKERS
IN MINING SECTOR
In terms of the utilization of mineral
resources in Indonesia, we are still lack
in tecnology. Some of mineral products
were exported in a form of ores such as
nickel, bauxite and concentrate and also
copper. Nickel, bauxite and Copper will be
discussed more in this article because they
are the main minerals which smelters are
started to be developed.
The model of the study is based on
Harmonized Commodity Description and
Coding System or Harmonized System (HS).
HS Code, often used in the trace of rules
of origin, is an international standard or
naming and coding system used to classify
trade products or its derivatives owned by
World Customs Organization (WCO).

Copper
Copper resources in Indonesia reaches
4,925 million ton ore. PT Smelting is
the only company processing copper
consentrate into copper catode. The
company is located in Gresik, East Java with
total capacity of 300,000 ton per year.
Copper products are divided into
unwrought copper, copper bar, copper
sheet and other copper forms. Copper
concentrates are exported to three big
countries; Japan, South Korea and India.

Nickel
Indonesian nickel resources are estimated
to reach 2,633 million ton ore with 577
million ton ore reserves located in Sulawesi,
Kalimantan, Maluku and Papua with
nickel substance of 1.45% ton each. The
commodities are grouped into three: nickel
ores, ferronickel and rough nickel which
almost all of them are used to fulfill export
demands.

INVEST 49

Bauxite

absorption in the downstream industry

Indonesian bauxite resources are estimated

and the multiplier effects resulted from

to reach 349.61 million ton ores and

upstream mineral industrial processing in

134.65 million ton metal with 97.40million

Indonesia.

ton reserved ores and 34.88 million ton

Export of Processed and Refined Mining

Products;
c. Finance Ministerial Decree No.6/2014
on Second Amendment of Ministerial
Decree No.75/2912 on Classifications of

reserved metal. The content of AI203 of

As mandated by Chapter 103 and 170 Laws

Export Commodities to be subjected to

each is aroun 27 55 percent. Indonesia

Number 4/2009 on Minerals and Coal, the

Export Tariff and Export Duty.

exports bauxite to China, Japan, Taiwan

holders of IUP and Contract of Work are

and Venezuela.

required to increase the value of minerals

through smelting and refining process in

The Importance Of
Smelter

1. Starting on January 12, 2014, exporting

raw materials/ores abroad is prohibited.

Indonesia.

2. Holders of mining contracts are

To follow up the mandate, particularly in

3. IUP holders are obligated to conduct

required to refine minerals in Indonesia.

In general, the results of the study indicated

terms of processing and refining minerals,

processing and refining activities in

that the potential value-added mineral

the government issued Government

Indonesia.

ores and concentrated should be able to

Regulation No. 1/2014 on Second Revision

be processed inside the country. Added

of Government Regulation No. 23/2010 on

mineral mining and conducting refining

Value can be calculated from the margin

Minerals and Coal Mining Enterprises on

activities may export non ore/raw

between import values of raw materials

January 11, 2014.

materials in limited quantity.

and export values of ores and concentrates.

4. Holders of Contract of Work operating

5. Holders of IUP for Production

The increase of added value derived from

Government Regulation No.1/2014 has

Operations for metal minerals which

mineral products processed in Indonesia

been followed up by the issuance of:

conduct refining operations may export

will certainly increase state revenues from

a. Mining and Natural Resources

the products in limited quantity.

income tax, export tax, local government

Ministerial Decree No. 1/2014 on

retribution and many others. A more

Increasing Added Value of Minerals

refining operations and also the limit

employment opportunities of approximately

through Processing and Smelting in

of refined quantity will be regulated by

2,402,600 people will also resulted from

Indonesia;

Ministerial Decree.

the process. It does not include workforce

50 INVEST

b. Trade Ministerial Decree No. 4/2014 on

6. Further procedures for processing and

PROGRESS OF CONSTRUCTION OF PROCESSING

AND REFGINING FACILIES

Processing
Metal Mineral

NO

PROGRESS (%)

1.

05

Feasibility Study

112

2.

6 10

AMDAL

16

3.

11 - 30

Initial Plant Construction

15

4.

31-50

Progress in Achieving

10

mid-term Construction

Processing
Ores

TOTAL IUP

Progress

Refining
Non-metal
Mineral

ACHIEVEMENT

Progress
5.

51-80

Progress in Achieving

Final Stage of
Construction
6.

81-100

1. Mineral processing is an effort to

Commissioning/

25

Production

improve the quality of minerals and ores

which produce specific physical and
chemical characteristics similar to the
original minerals or ores such as mineral
CONSTRUCTION PLAN FOR PROCESSING AND REFINING

condensate and basted ores.

FACILITY BY COMMODITY (PROGRESS: 6% - 100%)

2. Mineral refining is an effort to

improve metal minerals quality
through extraction process and further

NO

COMMODITY

refining process to produce products

1.

Nickel

29

with different physical and chemical

2.

Bauxite

characteristics from the original minerals

3.

Iron

such as metal and mixed metal.

4.

Manganese

3. The processed metal minerals which can

5.

Zircon

13

be exported are copper concentrates,

6.

Lead and Zinc

iron concentrates, iron ores,

7.

Kaolin and Zeolite

TOTAL

66

manganese, lead concentrate and zinc

TOTAL

concentrate.
4. Tin, nickel, bauxite, gold, silver and
chrome may only be exported after
being refined.
5. Minimum level of processing and

Millions Of Potential
Human Resources

to make sure that the activities will improve

the peoples welfare and, at the same time,

refining are stipulated in ESDM

Based on information above, it can be

minimize the destructive impact to the

Ministerial Decree No.1/2014

concluded that millions of workers can be

environments.

(Attachment 1: metal mining

absorbed by the mining sector. In terms

commodities, Attachment 2: Non-metal

of workforce opportunities, dozens or

minerals; Attachment 3: Rock Mining

even hundreds of potential smelters being

Commodities).

created will certainly create positive effects.

6. KK and IP holders for metal minerals are

Moreover, the smelters will be located in

only allowed to export their products

all areas of the country which means that

after being refined three years after the

each region will have the same potential to

promulgation of the ministerial decree

develop and improve their welfare through

due to the minimum quantity required.

smelters. It is now up to the related parties

INVEST 51

52 INVEST

A Glance
On The Indonesian

Infrastructure

General Information of Infrastructure and

Facilities in Indonesia

The idea, then, was packaged into a form of Maritime Shaft

inspired by the background of Indonesian culture which was
strongly related to the ocean. Maritime Country was the basis

Road Networks
Railway Track

: 437,759 km of which 258,744 km has

to develop Maritime Shaft. The great idea is reasonable due to

Indonesias strategic geographical position between two continents

Airports

been concreted

: 5,042 km of which 565 km is supported

by power grid

: 684 airports, 13 international

and two oceans.

64 helipads

Indonesia consists of thousand of islands across the equator

and is located between Pacific and Indian oceans with a large

Maritime

: 21,579 navigable water lane

sea territory of 2.7 million km2 or around 70% of total area of

Piping Line

: 8,183 km of natural gas

Indonesia while the land territory is only 1.9 million km2. The

7,429 km of crude oil

sea territory under Indonesian jurisdiction is increased by the

1,329 km of other refinery products

Indonesian Exclusive Economic Zone from 3.1 km2 to 5.8 million

km2.

The information mentioned above indicates trillions of Rupiah

worth investment opportunities. The opportunities are there; now,

Many articles indicate that Indonesia lost its marine potentials up

it is up to the government and related parties to respond in order

to trillion of Rupiahs due to illegal fishing. Illegal fishing committed

to improve the infrastructure.

by sophisticated trawlers from several foreign countries have

exploited the Indonesian sea. Therefore, the idea of Maritime Shaft

Maritime Shaft
Before the General Election 2014 and being promoted by one

needs to be supported and strived for by the entire nation in order

to guard the vast area of the sea.

of the presidential candidates, the term Sea Toll was already

familiar. Many people picture it to be a toll road built above the
sea connecting one island to another. But then the campaigning
team of the candidate (now President of Republic of Indonesia)
explained that the concept of Sea Toll is to optimize the
improvement of sea harbors to enable any size of ships to moor. If
the capacity is improved, the cost can automatically be reduced as
well as the economic cost that is hard to avoid nowadays.

INVEST 53

Negative
List

of Investment

In the effort to increase investment in

the business, reserved for Small and Medium Enterprises and

Indonesia and to execute the ASEAN

Cooperatives, required partnerships, and business fields that are

Economic Community (AEC), the

specific location and specific licensing and Business fields open for

Government of Indonesia had done

investment.

amendments to the provision list of

The regulation stipulates that investment in the business fields open

business fields closed and open with certain

with the requirements must fulfill the location requirements as

required certain conditions, such as the ownership of capital,

stipulated in spatial and environmental regulations.

requirements in the field of investment

(Investment Negative List /DNI). These

As stated in Article 4 Clause 2 of the Presidential Regulation, in

amendments are stipulated in Presidential

requirements if they want to expand their business outside the

Decree (Perpres) No. 39 in 2014 on List of

location mentioned in the license.

Business Fields Closed and Business Fields

To fulfill the requirements, the investors are not required to

Open with Conditions to Investment, that

establish a new company or obtain a new license.

was signed by President Susilo Bambang

It is stated in Article 5 that the regulation does not apply to

Yudhoyono on April 23, 2014.

indirect investor or portfolio of which the transactions are done

terms of investment licenses, the investors have to fulfill location

through domestic stock market.

Quoted from Cabinet Secretary Website on May 2014, the

According to the regulation, the presidential decree does

government divides businesses into three categories in the

not reduce investors obligation to obey the regulations and

Presidential Decree; Business Fields Closed and Business Fields

requirements for business activities issued by: a. Ministerial/

Open with Conditions to Investment: Business fields closed

non-ministerial institution that have technical authority in capital

for investment; Business fields open with the requirements of

investment and b. regional governments.

54 INVESTASI

The regulation is effective on the date of issuance that is on April

6. Air Traffic Control Operations;

24, 2014.

7. Motor Vehicle Testing;

Closed Business For Investment

8. Management and Operations of Spectrum Monitoring System

for Radio Frequency and Satellite Orbits;

Presidential Decree No. 39/2014 stipulates types of business that

9. National Museums;

are closed for capital investments:

10. Historical heritage and ancient inscriptions (temple, palace,

1. Chemical material industry as regulated in the Attachment

1 of Law No,9/2008 on Utilization of Chemical as Chemical

ancient structures) and;

11. Gambling/casino.

Weapon;
2. Alcoholic Drinks

According to the attachment 1 of Presidential Decree No. 39/2014,

3. Operations of Land Transportation Terminals;

closed business investments are utilized for non-commercial

4. Operations of Motor Vehicles Scaling Facilities;

purposes such as research and development after obtaining

5. Telecommunications/Navigational Equipment;

approvals from the institutions responsible for the area.

PERSPECTIVES ON NEGATIVE LIST OF INVESTMENT

General Perspective

certainty for investors since it was not regulated in the

Zaldy Ilham Masita, Chairman of the Indonesian Logistics

previous decree.

Association: the latest DNI reflects the fact that the

government wants to protect the logistic sector more by

Sofyan Wanandi, Chairman of Indonesia Employers

cutting the maximum foreign investment from 100% to 33%

Association (APINDO): the revision of DNI is related to national

for business services such as warehouse, distributors, and cold

interest. There are 11 sectors of business are included in the

storage. With this condition, local players should improve their

revision with the addition or subtraction of the foreign capital

ability to fund and their human resources in order to develop

ownership.

national logistics business volumes including infrastructure

development of its logistics.

The revised DNI balances the interests of both national and

foreign investors. However, national interest should be the

Yukki Nugrahawan Hanafi, Chairman of Indonesia Forwarder

main concern. With a lot of sectors being included, the

& Logistics Association (ALFI): The issuance of Presidential

revision is considered to be a complete version including trade

Decree No. 39/2014 can support the further development

sector.

of the logistic business in the country. We strongly support

this since it aims to protect national entrepreneurs. Most of

Fitra Faisal, Research Manager FE UI: The sector is the right

the logistics businesses in the country are controlled by local

choice. To see how crowded Tanjung Priok Port is, the

entrepreneurs.

transportation sector is the right choice. The transportation

of goods grows by 25% per year. The unbinding investment

Setijadi, Chairman of Indonesian Supply Chain (SCI): The

in transportation sector will create a conducive as well as

issuance of the negative list of investment will strengthen the

certain investment. We have 15,000 units of ships while we

logistics connectivity. DNI also regulates the investment in

have 16,000 islands. Singapore has 80,000 ships with cost per

transportation sector which is closely related to the mobility

container of US$ 400 compared to Indonesia of US$ 615. The

of the logistics services sector. DNI sets the maximum foreign

transportations connectivity as well as seaports, airports and

investor ownership of 49% while ASEAN sets the number

stations need to be upgraded to ensure the flow of goods and

of 60%. The new regulation on the sector provides a legal

services.

INVESTASI 55

56 INVESTASI

Potentials
INVESTASI 57

Profiles of
Infrastructure Projects

FOURTEEN
PROSPECTIVE
PROJECTS
1) Elevated railway track connecting
Manggarai and Soekarno Hatta
International Airport 33.6 km long with
investment value of US$ 2.57 billion.
Traffics in Jakarta, including to the airports,
continue to increase and create enormous
traffic jams and slow down the economic
activities.
2) Multifunction Terminal Gedebage. The
municipality government of Bandung, West
Java, is preparing a project worth US$ 133
million to transform container terminal
Gedebage into multi-function terminal that
will support an integrated transportation
system in Eastern Part of Bandung. The
terminal will be a combination of two

58 INVEST

terminals (Leuwipanjang and Cicaheum).

the economic landmark of Aceh and the

Gedebage Multifunction Terminal will

most attractive tourism destination. The

consist of terminals for city transport,

municipality government will revitalize the

containers and train. In the initial stage,

business centre area Peunayong, develop

Gedebage terminal will accommodate up

Keudah Terminal and build sanitation and

to 40,700 passengers. The project offers

fix the drainage system to overcome flood.

investment profit of 30%.

The project is worth US$ 1.6 million and

offers a return of investment of 15.25%.

3) Revitalization of Tugu Railway Station

in Yogyakarta and Malioboros sidewalks,

5) Sunda Strait Bridge to connect Java

known as the centre of Javanese culture

island with Sumatera Island, two major

and tourism. The number of tourists both

islands with the highest economic growth

domestic and foreign visiting Yogyakarta

contributing up to 80% to the national

increases and causes traffic jams in some

GDP. Economic growth in Banten and

spots. The projects are worth between US$

Lampung provinces, as the entrance of

732.78 and 828.63 million and offer a

both islands, is also high. The activities in

profit margin up to 14.5%.

both Merak and Bakaheuni Seaports have

also reached maximum capacity. Due to the

4) Development of Banda Aceh City.

limited availability of the area, increasing

The local government has planned to

the capacity of the ports seems to be

develop and expand Banda Aceh City as

impossible. Therefore, building a bridge

over Sunda Strait is very important and

been designed to overcome the insufficient

and under construction in Sulawesi reached

necessary. The bridge of 29 km will be built

drinking water facilities in Bekasi. The

1,317.4 MW while the region requires to

in five stages and will cost up to US$ 25

company utilizing the facility is only

increase 1,164.6 MW. PT PLN, therefore,

billion.

managed to provide 25% of the entire

plans to build the Karama hydropower plant

household and serve only 1% of Pondok

with capacity of 4 x 112.50 MW in West

6) Manado Bitung Toll Road in North

Gede area. The project will utilize water

Sulawesi. The project costs around US$

Sulawesi. The regional government wants

source from West Tarum canal. The project

1.335 billion.

to develop the metropolitan area of

requires US$ 20 million.

Bimindo (Bitung-Minahasa-Manado) to
become a strategic area for trades and

11) Drinking Water Project in Southeast

overcome traffic congestion in the future.

Bali. The district government of Klungkung

The project is worth US$ 353 million and

plans to increase the supply of drinking

offers a return of investment of 26.86%.

water for Denpasar-Gianyar-Klungkung

(Sarbagiku) areas. Bali and Badung are

THIRTEEN
POTENTIAL
PROJECTS

7) Tanjung Priok Toll Road in Jakarta. The

the main priorities since they are the main

1) Development of Maloy International

project will connect Jakarta Outer Ring

tourist destinations and very populated. It

Port of East Kalimantan with an investment

Road (JORR) with Tanjung Priok Harbor.

will exploit the Tukad Unda, Tukad Penet

value of US$ 1.7 billion. East Kalimantan

The project is considered to be vital for

and Tukad Penatu water resources. The

has many potential natural resources that

economic and industrial activities and will

project will cost US$ 218.84 million with

can be exploited to improve the welfare of

become an integrated part of Jakarta Toll

return of investment of 12%.

the people. East Kalimantan is also a part of

international trade (Indonesian Archipelago

Road projects to connect Jakarta with

the western regions. The project will cost

12) Waste Management/Processing, Bogor

Sea Line Channel II); therefore a marine

around US$ 612.5 million and offer a return

City, Bogor District and Depok City. Right

trading centre needs to be built in the area.

of investment of approximately 38%.

now, the government of Bogor City and

Maloy, Sangkulirang and East Kutai District

Bogor District have worked together

are the best areas for economic and marine

8) Balikpapan-Samarinda Toll Road in East

to manage the Final Dumping Ground

development in East Kalimantan.

Kalimantan. In order to increase trades

in Galuga. The collaboration has been

and tourism, the regional government of

extended several times and will end in

2) Expansion of Tanjung Priok Port,

East Kalimantan plans to build a 99.02

2015. The provincial government of West

Cilamaya, Karawang with investment value

km toll road corridor from Balikpapan to

Java now plans to develop and operate

of US$ 1.1 billion. The industries conducted

Samarinda. The project will pass through

Temporary Dumping Ground in Nambo,

in West Java are heavily dependent on the

forests and agricultural estates. The project

Kelapanunggal sub disctrict in Bogor District

import of raw materials through Tanjung

will cost up to US$ 1.2 billion with return of

with area of 56 hectares. The project will

Priok. Since the port is unavailable for the

investment of 19.19%.

cost up to US$ 40 million with return of

expansion, the provincial government of

investment of 41.94%.

West Java wants to build a new port with

international standard.

9) A 111.69 km Kayu Agung-Palembang

Toll Road in South Sumatera. Supply

13) Waste Disposal Ground in Surakarta,

and demand of transportation in South

Central Java. The final dumping ground in

3) Expansion of Tanjung Sauh Harbor in

Sumatera is imbalance, especially during

Mojosongo, Surakarta has been overloaded.

Batam with estimated investment of US$

religious holidays. Trans-Sumatera Highway

The local government finds it difficult to

805.8 million. The port can handle direct

has not been optimal to support Sumatras

find new locations due to limited budget.

shipment through Malacca Strait without

economic activities. In contrary, PT Sriwijaya

In the meantime, public demand for waste

having to pass Singapore and eventually

Makmur Persada took the initiative to

disposal keeps increasing. The project costs

will cut the cost. Tanjung Sauh Harbor will

build toll road connecting Kayu Agung,

up to US$ 30 million.

support Batu Ampar port which is being

expanded right now.

Palembang with Betung (Kapal Betung)

in South Sumatera. The project will cost

14) Hydroelectric Generator in Sulawesi.

around US$ 836.15 million with return of

The potentials for hydroelectric in Indonesia

4) Development of Bali Airport (estimated

investment of 28.96%.

is around 75,000 MW with only 2.5%

investment of US$ 510 million). Passenger

being utilized. Water resources in Sulawesi

traffics in Ngurah Rai international airport

10) Drinking Water Project in Pondok

have the potential to produce power. Total

has been increasing fast, along with the

Gede, Bekasi, West Java. The project has

capacity of power generators, both built

improving reputation of Bali in the world.

INVEST 59

Building a new airport will overcome the

tourist destination for foreign and domestic

congestion and traffic jams in Denpasar City

tourists. Therefore, to anticipate the future,

and Nusa Dua in the future.

the municipally government has chose to

build monorail transportation system.

5) International Airport Kulon Progo

(estimated investment of US$ 500 million).

10) Cisumdawu Toll Road, West Java

Adisucipto Airport in Yogyakarta cannot be

(estimated investment: US$ 1 billion). The

expanded as it cannot fulfill international

project will connect Cileunyi-Sumedang-

requirements and local obstacles. In the

Cirebon (Cisumdawu). Sumedang district is

meantime, Adisucipto Airport is estimated

also experiencing economic growth as it is

to reach its maximum capacity by 2015.

affected by the economic growths in two

Hence, a new airport is seriously needed

nearby cities, i.e Bandung metropolitan and

to accommodate the future of air travel

Cirebon. Economic growth in Sumedang

services.

may also influence economic growth in

central part of West Java.

6) Mining train Baai Island-Muara Enim

(estimated investment of US$ 3 billion).

11) Toll Road Pandaan-Malang (estimated

Indonesia is the biggest coal producer

investment: US$ 420 million). The route

in Asia Pacific with 7 billion tons of coal.

Malang-Pandaan has become dense and

Bengkulu and South Sumatera have huge

creates traffic jams in certain parts of the

coal deposits but limited transportation

area. The Toll Road Malang-Pandaan, 37.62

infrastructure, therefore 230 kilometers

kilometers long, will pass through Pasuruan

railway track connecting coal resources in

area.

Bengkulu and Muara Enim with coal harbor

terminal in Baai Islands will be built.

12) Toll Road Pasir Koja-Soreang in

Bandung (estimated investement: US$

7) Monorail in South Sumatera (estimated

210 million). Economic growth in South

investment of US$ 550 million). This is

Bandung has been increasing significantly,

part of a mass transportation project in

especially in Soreang, the capital city of

the area with medium load capacity. At

Bandung District and also in a number of

present, human traffics in Palembang city is

sub districts like Margaasih, Margahay,

increasing significantly.

Ketapang, Banjaran and Soreang sub

districts. The number of motor vehicles

8) MRT Surabaya (estimated investment at

is also increasing and a lot of land has

US$1.1 billion). Surabaya is a city with a

been transformed in line with the growing

population of around 3 (three) million or

trade and industry such as shops, mall and

second to Jakarta. Traffic congestion has

garment industry. Traffic congestions also

become a major issues in Surabaya. The

occur in a number of routes. A toll road

growing number of car population is higher

project of 10 kilometers long is expected to

than the capacity of the existing roads. MRT

become the best solution.

will therefore become an ideal solution for

Surabaya.

13) Jakarta waste disposal (estimated

investment US$ 173.5 million). In reality,

9) Bandung Monorail (estimated investment

Jakarta environment has become worse,

of US$ 2.8 billion). As the capital city of

particularly in relation to water and

West Java Province, the city grows into

sanitation as the result of poor handling of

a metropolitan city. At the same time,

waste. The provincial government of Jakarta

the population in Bandung Municipal is

therefore desires to develop an adequate

increasing which often leads to traffic

waste disposal project.

congestion in certain areas. During the

holiday season, the city has become a

60 INVEST

OTHERS PROJECTS
1) Railway Tanjung Enim Tanjung Siapiapi (single track) for transport coal in
Palembang, South Sumatera, along 295
kilometers. PT. Mega Guna Ganda Semesta
(PT MGGS) chosen to be the initiators
of the construction the project. Projects
undertaken through System Build Own
Operate Transfer (BOOT) with a concession
period of 50 years. PT. MGGS holding
company of China CNR Corporation Limited
and The Third Railway Survey and Design
Institute Group Corporation (TDSI) to work
this project.
2) Steam Power Plant Project (Power
plant) in Tebo, Jambi with capacity 2 x
7 MW. Cooperation has been marked
with the signing of the Memorandum of
Understanding (MoU) between the Province
of Jambi and a consortium of Indonesia and

South Korea. The power plant will use fuels

ground breaking will begin in 2015. The

II with the estimated cost of around Rp 26

from coal, condition availability of electricity

operation the two ports are expected can

trillion for the period 2007 to 2020. The

in Japan.

cut international shipping logistics into

expansion project includes the construction

Indonesia from abroad can directly enter

of the terminal four and a third runway.

those ports.

This project will increase the capacity of

3) Project Toll Road Trans-Sumatra.

Construction of the 2,700-kilometer toll

Soekarno Hatta to 100 million passengers

expected to be launched next year. PT

5) Jatigede Dam, Sumedang, West Java.

per year. This year, the airport located in

Hutama Karya (HK) is selected as the body

This dam can immediately serve as flood

Tangerang, Banten, this would serve 72

businesses that run the project road this

control in an area of 4891.13 ha which

million passengers. In 2020, estimates of

toll. Toll Road Project Trans-Sumatera is

includes five districts or 26 (twenty six)

the number of passengers at the Airport

expected to cost around Rp 150 trillion.

villages.

Soekarno Hatta could reach 100 million

With the existence of this highway later,

passengers.

the life on the island of Sumatera believed

6) International Airport Kertajati,

better productivity then Java.

Majalengka, West Java, covering an area

8) Toll Road Balikpapan-Samarinda. Along

of 5000 hectares. The airport was built

the 100 kilometer project has the central

4) Port Development Project Bitung (North

to replace Kertajati International Husein

government has recently unveiled. The

Sulawesi) and Kuala Tanjung (North

Sastranegara, but also serves the area

project is entering the second phase of

Sumatera), used as a port world-class

around Cirebon. The project is estimated to

construction, which is very important for

international logistics, and targeted for

cost Rp 25.4 trillion.

the sustainability accelerated development

operation in 2018. Two of these ports are

in Kalimantan, particularly in East Kalimantan

expected to be eastern gate of marine

7) Development of Airport Soekarno-Hatta

logistics and western Indonesia. Process

International. Built by PT. Angkasa Pura (AP)

9) Toll-Parigi Palu, Central Sulawesi. This

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project is the life blood of distribution

12) Line Railroad, the Jakarta-Bandung

logistics by road which connects western

super-express of West Java project along

and eastern regions of Central Sulawesi.

144 kilometers is supported by Japanese

Government. The super-express train,

10) Toll Road Manado-Bitung, round 39

will only takes 30 minutes from Jakarta

kilometers, connecting the city of Manado

to Bandung, compared now to 3 hours.

and development centers Special Economic

The feasibility study will take 2 years. The

Zones (KEK) Bitung. Manado could become

project is estimated to cost Rp 60 trillion.

a new growth center Asia-Pacific region. In

Masterplan Acceleration and Expansion of

13) Line Railroad Coal, West Kutai-

Indonesia Economy (MP3EI) 2011-20015

Balikpapan, East Kalimantan. A Project

Bitung is an alternative International Port

worth US$ 2.4 billion will be supported by

and Industrial Center as well as part of the

Russian Railways. The rail line along the 240

Special Economic Zones (KEK) Bitung.

kilometer.

11) Toll Road Cibitung-Cilincing, along 40

14) Line Railroad Coal, Muara Wahau-

kilometers, immediately built on second

Bengalon, East Kalimantan. A projects

quarter of 2015. This project will built

worth of US$ 1 billion is supported by

by a Malaysian company PT MTD CTP

investors from the United Arab Emirates

Expressway which controls 90% concession.

and the MEC Holdings.

The government only has 10% concession.

Construction of toll roads is part of the toll
road project JORR W2 and targeted for
completion in within two years.

GEOTHERMAL
THE POTENTIALS WORTH EXPLORING

t is recorded that there are at least 250 geothermal locations lining up along volcanic
path from Sumatera, Java, Nusa Tenggara and Sulawesi up to Maluku. With total
potential of 27 GWe, Indonesia has the highest geothermal potentials in the World.
As a renewable and environmentally-friendly energy resource, contributions from
geothermal needs to be increased to fulfill domestic demand which will further

reduce Indonesias dependency on the fossil energy.

In terms of geothermal development in Indonesia, the establishment of Law No. 27/2003
on Geothermal Energy is expected to have a legal certainty. In order to accelerate
geothermal investment, information on the development of geothermal Mining Working
Areas (WKP) needs to be prepared. In addition to the established 33 WKPs, another 28

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proposed geothermal WKP with total potentials of 13,000 MW

of which 3% (807 Mwe) has been utilized as an electricity energy

have been prepared. The great potentials are expected to fulfill the

contributing 2% to the national power consumption.

target of geothermal development of 6,000 Mwe by 2020.

Around 80% of geothermal locations in indonesia are associated
The potentials of geothermal energy that reaches 27 Gwe are very

with active vulcanic system such as in Sumatera (81 locations), Java

related to Indonesias position surrounded by the worlds tectonic

(71 locations), Bali and Nusa Tenggara (27 locations), Maluku (15

belt. Indonesia lies in the intersection of three active plates making

locations) and North Sulawesi (7 locations). The other 20% are in

it possible for geothermal energy from deep within transfered to

non-vulcanic areas such as Sulawesi (43 locations), Bangka Belitung

the surface through cracking system. This strategic position places

(3 locations), Kalimantan (3 locations) and Papua (2 locations). From

Indonesia as the richest country with geothermal energy resources

the 252 existing locations, only 31% of geothermal locations were

using hydrothermal system spreaded throughout vulcanic bow.

surveyed in detail and known for its deposits.

Hence, most of geothermal resources in Indonesia are considered

to contain high enthalpy.

Nowadays, utilization of geothermal energy is limited to geothermal

power plant (PLTP) producing 807 Mwe electricity power of which

Compared to fossil energy, geothermal is a new, renewable and

97% is still concentrated in Java Island. Seven geothermal yards

environmentally-friendly energy. It does not require a wide surface

utilized for PLTP are located in West Java (Gunung Salak 330 Mwe,

for the exploration and exploitation and it also suitable to fulfill the

Wayang Windu 110 Mwe, Kamojang 140 Mwe, and Darajat 145

domestic needs since it cannot be exported.

Mwe), Central Java (Dieng 60 Mwe), North Sumatera (Sibayak 2

Mwe) and North Sulawesi (Lahendong 20 Mwe).

In 2004, 252 geothermal fields have been inventarized and

explored. Most of them were located in non-vulcanic areas, areas
with sediment and metamorf rocks. The areas contain 27,357 Mwe

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64 INVEST

Highlight
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BKPM

ONE STOPSERVICE

t was a rare opportunity to see the President of the Republic

then handle the provincial, district and municipality levels. Ita has to

of Indonesia visited Indonesia Investment Coordinating

be implemented in those levels.

Board (BKPM) office in the afternoon without any strict

guards. On October 28, 2014, President Joko Widodo paid
a visit to BKPM office.
Without many spotlights, President Joko Widodo inspected

every angles from the physical features of the building, office

supplies and facilities and the condition of provided public services.
The president also interacted with some of the investors in the front
office.
To the press which was not aware of the visit, President Joko
Widodo gave a statement: we would like to build a national
scale of one stop service for licensing. I want the investors to
come only to BKPM whenever they want to submit an investment
application.
To apply this policy, President Joko Widodo felt it necessary to visit
BKPM and see how the services are being conducted for both local
and foreign investors. I personally asked some of the applicants.
Joko Widodo considered that the physical condition of BKPM
building as well as the facilities and online system were already
good. However, he continued, the duration of the service needs to
be shortened. According to President Jokowi, the integrated system
of investment licensing in BKPM was necessary since the existing
system has been implemented very well. He targeted to complete
the integration within 3 6 months. He stated, handling this
licensing issue is our serious concern. When it is completed, we will

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Online System
Since the beginning of the digital information era, BKPM has
established a solid integrated information system. Almost all
information related to investment procedures can be accessed and
downloaded from BKPM official website (www.bkpm.go.id).
The website has received feedbacks from visitors saying that the
information given has been comprehensive enough since the
question and answer forms in the site have been able to provide
adequate information on investment procedures.
In some cases where investors are not well-informed, the process
can be very slow due to the incomplete requirements given by the
applicants. However, to compile required documents is not an easy
task. This problem can be minimized by involving related technical
institutions aside from BKPM. Internal re-organization will be
conducted in order to establish BKPM as the only one stop service
institution.

MARINE POTENSIALS

President Joko Widodo gave a brief

Indonesia is gifted with a great sea

trillion or 7.5% has been utilized. The huge

presentation entitled Maritime

of abundant fishery resources within.

potentials of marine and fishery sectors

Restoration in a National Seminar on

Indonesia is the largest archipelago country

play important roles in economic growth.

Marine Sector and the launching of

in the world with enormous big ocean

The natural resources and potentials value

Nusantara Day 2014. Nusantara

and number of islands. The length of

within the marine and fishery sectors are

Day was back to back with the World

Indonesias coastline reaches 95,181 km

projected to reach US$ 171 billion per year.

Maritime Day and held in Merdeka Building,

(World Resources Institute, 1998) with total

The potential natural resources include

Bandung.

territory of 7.1 million km2. The potentials

fishery, marine tourism, renewable energy,

place Indonesia as a country gifted with

deep water mineral, oil and gas, seafaring,

In his speech, Jokowi said that Indonesia

an enormous marine resources including

maritime industry and maritime services.

lost up to IDR 300 trillion per year due

diverse biological and non-biological

to illegal fishing committed by foreign

resources.

fishermen. While our revenue from marine

sector is only IDR 65 trillion per year.

In details, the potentials value include

fishery (US$ 32 billion), coastal area (US$

Indonesia owns fishery resources such

56 billion), biotechnology (US$ 40 billion),

as fishing area of 54 million hectares

marine tourism (US$ 2 billion), oil (US$

One of the solutions to prevent this is by

producing 0.9 million tons per year. Sea

21 billion) and sea transportation (US$ 20

expanding our sea patrol fleet. According to

resources consist of fish catching (tuna,

billion) as indicated by government study

Jokowi, the sea-guard management is very

grouper and gobies), mollusk commodities

presented in the event of Marine and

weak and vulnerable to illegal fishing.

(shellfish, pearl and sea cucumber),

Fisheries Expo and Conference (MFEC)

seaweed farming and coastal ponds which

2014.

However, in terms of implementation, the

development potential reaches 913,000

supervision management has to be through

hectares.

sea patrols. With a proper sea security

control, we can save potential IDR 300

Indonesian fishery potentials reach 3,000

trillion, said President Jokowi.

trillion per year with only around 225

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BATAVIA MARINA
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Lifestyle
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A PIECE OF
INDONESIAN
BEAUTY
Batavia Marina, Jakarta
We might not aware of the fact that there is an exclusive spot at the northern part of
Jakarta. Not far from the site of Kota Tua lies Batavia Marina Sunda Kelapa where we can
watch the sea in a comfortable atmosphere while enjoying the beautiful lines of luxurious
yacht.
Caputra Group conducted reclamation of the shore at the eastern area of the Fish Market
to be developed as a port for yachts and executive clubs. Various events were held in this
place such as International Yacht Show on June 2014. The second round of the event
indicates that peoples interest in owning yachts is promising.

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Alila Uluwatu, Bali

An hour drive from Seminyak lies Alila
Uluwatu. This exotic destination has been
very popular in the world as it is often used
by socialites to hold their private events.
Many people say that the place is heaven
on earth.
The simple minimalist design of the
location has been applied to many places
in the world. However, the geographical
condition and contour as well as its exotic
environment make this location memorable.

Tanjung Lesung, Banten

The beautiful beach of Tanjung Lesung is located in Banten, about five hours drive to the
west of Jakarta. The beauty is equivalent to some of the most beautiful beaches in the
world. Tanjung Lesung promises an atmosphere that cannot be found anywhere else. The
nuance of the beach and exclusive cottage is indulging.
The location is very attractive that it became a centre of attention in the annual event of
Indonesian Infrastructure and Exhibition (IIICE)in 2012. Located not very far from Jakarta,
the location is definetly a relaxation destination.

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MARITIME COUNTRY
In the last few months, the public is reminded of the historical background of Indonesia as
a maritime country. The maritime sector has been in the nations blood since the golden
era of national kingdoms.
One of the evidences that depict Indonesian archipelago as a maritime country is the reliefs
of Borobudur Temple. There are two reliefs that spesifically portrays the form of ships. The
ship is categorized as a vehicle used by fishermen and traders to sail across the sea and
ocean.
The temple, assigned as one of the worlds heritages, was built by followers of Buddha in
800 AD during the era of King Syailendra. Borobudur is the biggest Buddhist temple in the
world as well as the biggest monument in the world.
The temple consists of six levels of rectangle terraces which are ornamented with 2,672
relief panels and 504 Buddha statues. Borobudur owns the highest number and most
complete collection of Buddha reliefs. The largest dome is located in the middle acted as
the crown of the monument surrounded by circle of 27 smaller domes. In the main dome,
there is a statue of Buddha sitting with legs crossed in a perfect lotus pose and hand
position of mudra.
The temple architecture represents the idea of universe and was constructed as a holy
monument to honor Buddha and, at the same time, as a pilgrimage location to guide

72 INVEST

people to meditate from worldly desire

conducted in 1975 and 1982 by UNESCO

of lokativus. It is literally translated as in

towards enlightment and wisdom. Pilgrims

and the Government of the Republic of

waters. Eva is translated as our glory.

enter through the east side to start

Indonesia followed by its assignment to be

Literally, it means Our Glory at sea.

the rituals at the bottom of the temple

the World Heritage Site.

by circling clockwise the holy site and

The tagline is heavily mentioned since the

keep climbing over the three stages on

Today, Borobudur remains as a religious

new government promotes the grand

Buddhas cosmology. The three stages are

pilgrimage destination; every year, Buddhist

design of Indonesia as a maritime shaft.

Kamadhatu or desires, rupadhatu or

followers from all over the world gather

It is not an impossible dream considering

being and Arupadhatu or non existence.

in this temple to commemorate Trisuci

Indonesias historical background where the

The pilgrims will get the chance to see

Waisak. It is also one of the most visited

country achieved its glory at sea.

1,460 relief panels during the pilgrimage.

tourism destinations in Indonesia.

According to the historical records,

JALESVEVA
JAYAMAHE

Borobudur was abandoned in the 14th

century as a result of the weakening of
Hindu and Buddha Kingdoms in Java and
the emergence of Moslem influence. The
world began to realized the existence of
the temple when it was discovered by Sir
Thomas Stamford Raffles, British Governor
General in Java at that time. Since then,
Borobudur has undergone a series of
restorations. The biggest restoration was

Jalesveva Jayamahe is a sanskrit phrase

and a tagline used by Indonesian Naval
Army which means Our Glory at Sea.
The phrase can be analyzed as follows: jales
veva consist of two parts: jales.u and eva.
Jales.u derives from the word jala which
means water and jales.u is the plural form

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PEMOEDA PEMOEDI 1928

MONUMENTAL MOMENT

MINISTERS 2014
86 years past, a number of young men and women from various regions and ethnic have come together to discuss the future of the nation
86 years ago, no one ever imagined that the journey would be so colourful
86 years ago, there was only flames of strength and desires to be independent...and hopeful..hopeful and hopeful
86 years have passed, the young people declared Soempah Pemoeda
69 years have passed, Indonesia is independent
69 years have passed, Indonesia developed inpendently
69 years have passed, cabinet over cabinet worked...worked and works
69 years Indonesia, but the flames of strength and hope have not been vanished, to be better

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INDONESIA INVESTMENT COORDINATING BOARD

76 INVEST

INVEST

Punggung

2014

01

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