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Investing in Indonesia: Recent Development

Theopita I. Tampubolon
Deputy Director
Indonesia Investment Promotion Centre (IIPC) London

Madrid, June 2018


OUTLINE
2 4
Investment
Investment
Regulatory
Performance
3 Reform
Investment
Opportunities
1
Introduction

2
INTRODUCTION

Gili Trawangan, Lombok


The Investment Coordinating Board of the Republic of Indonesia
3
Indonesian Economy
2018 GDP Growth Prospect (y/y)
GDP per capita US$ 3,974.10 Unemployment 5.13 %
(2017)
5.17% 5.2%
(Ministry Indonesian
5.3% 5.3%
World Bank Asian
GDP US$ 1.004 Trillion Population
(February, 2018)
261.1 million
of Finance) Central Bank Development
(2017) (2016)
Bank
Source: IMF and Ministry of Finance

Indonesia’ Spatial GDP Growth in 2017


Sumatera Kalimantan
GDP Growth GDP Growth Papua & Maluku
4.30% 4.33% Sulawesi GDP Growth
GDP Growth 4.89%
6.99%

Bali & Nusa Tenggara


Java GDP Growth
GDP Growth 3.73%
5.61%
The Investment Coordinating Board of the Republic of Indonesia
4
The Largest Economy
in Southeast Asia
ASEAN GDP in 2017 (USD Billion)

Indonesia $1,010

Thailand $437

Phillipines $321

Malaysia $309

Singapore $305

Vietnam $215

Myanmar $66

Cambodia $22

Lao PDR $17

Brunei Darussalam $11


The Investment Coordinating Board of the Republic of Indonesia Source: International Monetary Fund (IMF)
5
$- $200 $400 $600 $800 $1,000 $1,200
WEF Global Competitiveness Index (2017 – 2018)
Indonesia Competitiveness Rank
compare to other emerging markets

COUNTRY 2015 2016 2017


Indonesia 37 41 36
India 55 39 40
Brazil 75 81 80
Philippines 47 57 56
Vietnam 56 60 55

“More countries are able to innovate, but they


must do more to spread the benefits. Major
emerging markets such as China, India, and
Indonesia are becoming centers for
innovation, catching up with advanced
economies.”
- The Global Competitiveness Report 2017–2018
The Investment Coordinating Board of the Republic of Indonesia
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World Bank's Doing Business 2018: 72
Indonesia Climbs in Rank 91
Policy Reform 106
114
nd
72
+ TOP REFORMER COUNTRY
37 129
120

Increased from 106 rank in


Doing Business 2016
Deregulations

2013 2014 2015 2016 2017 2018


Starting a business 151 144 7

2017

2018
EODB Indicators

Change
Dealing with construction permit 116 108 8
Registering property 49 38 11
Getting electricity 118 106 12
Paying taxes 62 55 7
Trading across boders 70 43 27
Getting credit 104 114 10
Protecting minority investor 108 112 4
Enforcing contract 166
The Investment Coordinating Board of the Republic of Indonesia
145 21
7
Resolving insolvency 76 38 38
Indonesia Investment Grade Rating (May 2018)
Rating : BBB
Outlook: Stable December 20th 2017

Rating : Baa2
Outlook: Positive April 13th 2018

Rating : BBB-
Outlook: Stable May 19th 2017

Rating : BBB+
Outlook: Stable February 9th 2018
Japan Credit Rating Agency, Ltd.

R&I Rating : BBB


Rating and Investment Information Outlook: Stable
The Investment Coordinating Board of the Republic of Indonesia
March 8th 2018
8
Investment Performance
Indonesia as an investment destination

Mount Bromo, West Java

The Investment Coordinating Board of the Republic of Indonesia


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Indonesia: The 3rd investment
Destination in Asia

Labuan Cermin Lake, East Borneo


Source: The Economist Corporate Network, 2017
Total FDI Realization in 2012-2017:
Based on Top 20 Country of Origin

Source: BKPM, 2018


Top 10 EU Members Investment in Indonesia 2012-2017

Source: BKPM, 2018


Jakarta, the Capital City of
Indonesia

Spain’s Investment in Indonesia


• The number of projects of investment from Spain in
Indonesia have increased rapidly during 2010-2017.

• Between 2010 and 2013, investment value took a


dip, but later regained growth by 2014.
Total FDI Realization in 2010-2017 from Spain: Based on Sector

“During 2010-2017, there are 322 projects from Spain. And more than a half of projects (217 projects) are on the Other
services, Trade and Reparation, and Hotel and Restaurant”
Total FDI Realization in 2010-2017 from Spain: Based on Investment Value
Spain Outward Investment Destination 2008 - April 2018

*USD - millions

Source: www.fdimarkets.com
Spain Outward Investment Based on Industry Sectors 2008 - April 2018

*USD - millions

Source: www.fdimarkets.com
Spain Outward Investment Based on Parent Companies 2008 - April 2018

*USD - millions

Source: www.fdimarkets.com
LISTS OF BUSINESS FIELDS THAT ARE CONDITIONALLY
OPEN FOR INVESTMENT*

Tourism Industry

Energy Related Infrastructures

Agricultures

*) Presidential Regulation Number 44 of 2016 Concerning Lists of Business Fields That Are Closed To Investment and Business Fields
That Are Conditionally Open For Investment
Business Fields That Are Open under Specific Conditions:
Tourism Industry
Foreign Operation of historical and archaeological Foreign Exploitation of natural tourism through
investment: remains, such as temples, Sultan’s palaces, investment: provision of ecotourism facilities,
Max. of 67% inscriptions, ruins, ancient buildings; Max. of 51% activities and services within the forestry
2 star hotels; areas, including water tours, natural
adventure tours, and Spelunking tours.
ASEAN
1 star hotels; countries’
investors:
Non-star hotels; Max. of 70%

Art Galleries;
Art Theatres;

Operation of karaoke;
Operation (exploitation) of coin/card-
operated games;
Operation of natural tourism objects
other than in conservation areas.
Business Fields That Are Open under Specific Conditions:
Tourism Industry

Operation of Museums Domestic Motion picture advertising, advertisements,


investment: posters, stills, photographs,slides, negatives,
Travel bureaus 100% banners, pamphlets, balihos, folders etc.

Catering ASEAN
Foreign
investment: countries’
Max. of 67% Motel investors
Max. of 51%
Billiards houses
ASEAN
countries’ Bowling alleys
investors: Max.
of 70%
Golf courses

Impresario services

Organization of Meeting, Incentive,


Convention, and Exhibition (MICE)
Business Fields That Are Open under Specific Conditions:
Energy Related Infrastructures

Foreign Geothermal power generation with a capacity of ≤


Foreign Oil and gas construction services:
investment: Max. 10 MW;
Spherical tanks;
investment: of 67%
Max. of Oil and gas construction services: Foreign Oil and gas construction services: Platform;
Offshore pipeline installation; investment: Max.
49% of 75% Offshore oil and gas drilling services
Oil and gas, geologic and geophysical
surveying services; Foreign Geothermal operating and maintenance services
investment: Max.
Small-scale power generation (of 1 – 10
of 90%
MW);
Power generation of > 10 MW;
Power construction and installation: Foreign Investment
High / extra-high; Max of 95 %. Power transmission;

Max. of 100% in Power distribution.


Testing and analysis of Electrical
installation: Electrical utility construction case of
and high / extra-high voltage electrical Government-
installation voltage electrical Private Cooperation
installation. during a concession
period)
Business Fields That Are Open under Specific Conditions:
Energy and Mineral Resources

Foreign Geothermal surveying services Domestic Oil and gas construction services: Onshore oil and natural gas
capital: upstream production installation
Investment:
Max. of 95% 100% Oil and gas construction services: Onshore pipeline installation

Geothermal drilling services Oil and gas construction services: Horizontal / vertical tanks,
onshore oil and natural gas storage and marketing installation

Onshore oil and gas drilling services


Power installation consultancy
Oil and gas support services: Well operation and maintenance
services

Oil and gas support services: Oil and gas design and engineering
Power construction and services
installation: Electrical utility
construction Oil and gas support services: Technical inspection services

Operation and maintenance of Power generation of < 1 MW


electrical installation
Testing and analysis of electrical installation: Low / medium
voltage electrical installation
Business Fields That Are Open under Specific Conditions:
Agriculture

GROWING | PERBENIHAN GROWING | BUDIDAYA OTHER BUSINESS FIELD


Foreign Annual fruit crops Foreign Grapes Foreign Manufacture of horticultural
(01139) crops: Post-harvest of fruits and
investment: investment: Tropical fruits investment: vegetables
grapes
Max. of 30% Max. of 30% Max. of 30%
Citrus fruits
Horticultural research and quality
Tropical fruits test laboratories
Apples, pome, stone
Citrus fruits Berries Horticultural agrotourism
activities
Apples, pome, stone Annual fruit (01132)

Leafy vegetables horticultural post-harvest services


Berries
Root vegetables
Retail sale of flower
Annual vegetables Fruit bearing vegetables arrangement/florists/decorators

Perennial vegetables Chili peppers, paprika Horticultural development


consultants
Mushrooms
Drug crops Horticultural landscaping
Ornamental plants
Floriculture crops Horticulture courses services
Non-flower ornamental plants
Business Fields That Are Open under Specific Conditions:
Agriculture
SEEDING (PERBENIHAN) FOOD PLANTATION BREEDING (PERBENIHAN)
CROPS OTHER BUSINESS FIELD AND FARMING (PERKEBUNAN)
Foreign Rice Foreign Research and development on Foreign Jatropha curcas
investment: agricultural genetic resources
Corn investmen sciences and engineering investment: Cashews
Max. of 49% Soybeans t: Max. of Max. of 95% Other sweetener crops

Groundnuts 49% Research and development on


Coconut palms
GMO (Genetically Modified Sugar cane
Green beans Organisms) products sciences The nucleus
Oil palms
Sweet potatoes,
and engineering (genetic is subject to
engineering) sourcing at Tobacco
Cassava
least 20% of Beverage crops (tea, coffee and cocoa)
GROWING (BUDIDAYA) FOOD Specific Breeding and raising of swine its Textile raw materials and and cotton
CROPS locations (pigs) of more than 125 in
number production Rubber and other trees for extraction of
specified by
Foreign Rice the
from the sap
investment: Corn Ministry of plasma/sma Essential oil crops
Max. of 49% Agriculture llholders
Soybeans Peppercorns
Groundnuts Other spice crops

Green beans Medicinal/pharmaceutical crops Other


crops not elsewhere classified
Sweet potatoes, Cloves
Cassava
Business Fields That Are Open under Specific Conditions:
Agriculture

INTEGRATED PLANTATION FARMING


AND PROCESSING MANUFACTURE | INDUSTRY
Foreign investment: Crude vegetable and animal oils (edible oils)
Max. of 95%
Cashews and manufacture of dried
cashew nuts and cashew nut shell
Oil palms and manufacture of palm
oil (CPO)
Foreign
liquid (CNSL) investment: Rude jatropha oil
The nucleus is Peppercorns and manufacture of Coffee and manufacture of coffee Max. of 95% Copra, fiber, coconut shell charcoal, dust, nata de
subject to sourcing dried white peppercorns and dried bean peeling, cleaning and sorting coco
at least 20% of its black peppercorns
production from the
Rubber for sheets, concentrated latex
plasma/smallholder Jatropha and manufacture of Cocoa and manufacture of cocoa Subject to Coconut oil
s jatropha oil bean peeling, cleaning and drying
sourcing at Cotton fiber and cotton seeds
Sugar cane, manufacture of cane Growing of tea and manufacture of least 20% of Palm oil
sugar, sugar cane top and sugar black tea/green tea raw Dried clove buds
cane bagasse
Tobacco and manufacture of dried Cloves and manufacture of dried
materials
Peeling, cleaning, drying, and sorting of plantation
tobacco leaves clove buds from own products (cocoa beans and coffee beans)
farms Peppercorns for dried white peppercorns and dried
Cotton and manufacture of cotton Essential oil crops and manufacture
of essential oil black peppercorns
Cane sugar, sugar cane top and sugar cane bagasse
Coconut palms and manufacture of Rubber and manufacture of sheets,
coconut oil concentrated latex
Cashews for dried cashew nut and cashew nut shell
liquid (CNSL)
Coconut palms and manufacture of Grains other than coffee beans and
copra, fiber, coconut shell charcoal, cocoa beans and manufacture of Black tea/green tea
dust, nata de coco grain peeling and cleaning other Dried tobacco leaves
than coffee beans and cocoa beans
Priority Sectors Mentawai Island, West Sumatra

What and Where to Invest?


The Investment Coordinating Board of the Republic of Indonesia
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Tourism

Mentawai Island, West Sumatra

The Investment Coordinating Board of the Republic of Indonesia


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The Travel & Tourism Competitiveness Index
2008-2017, Overall Rank
Indonesia ranks 42nd (2017) from 136 countries, climbing 38 places since 2008.
Travel & Tourism Competitiveness Index 2017: Indonesia Overall Performance
GLOBAL ACKNOWLEDGEMENT TO INDONESIA’S TOURISM
In 2017, Bali succeeded in reaching the Top in the prestigious Trip Advisor Travelers’ Choice Award named as
the World’s Best Destination 2017. Outranked London, Paris, Rome, New York, Crete, Barcelona, Siam Reap,
Prague and Phuket.

During 2017, Wonderful Indonesia received 27 awards at various events in 13 countries.

Indonesia won Dive Magazine’s Travel Award 2017 (Dive Magazine’s Travel Award, London)

• Best Destination:
• Indonesia (1st Winner for 2 years)
• Best Resort, and Spa
• Siladen, Bunaken (1st Winner)
• Wakatobi (3rd Winner)
14th• Best
UNWTO Live Aboard
Awards for Innovation in Tourism, Spain, 18th January 2018
• Pelagian, Sulawesi (2nd Winner)
• Tourism Inovation Non-Governmental Organizations (NGO);
• TripOnYu (1st Winner)
rd
Ten New Bali: National Tourism Priority Destination
Lake Toba Tanjung Kelayang Borobudur Wakatobi Morotai
Area : 1175 Ha Investment : Area : 324 Ha Area : 309,5 Ha Investment Area : 532 Ha Investment : Area : 300 Ha Investme
USD 1,6 Billion Investment : USD 1.4 Billion : USD 1.5 Billion USD 1,5 Billion USD 2,9 Billion

Labuan Bajo
Tanjung Lesung Kep. Seribu & Kota Tua Bromo Tengger Semeru Mandalika
Area : 400 Ha Investment
Area : 1500 Ha Investment : Area : 1009 Ha Investment : USD Area : 325 Ha Investment : USD Area : 1175 Ha Investment
USD 1,2 Billion
USD 4 Billion 1,5 Billion 1,4 Billion : USD 3 Billion

Tourism Tourism Special Economic National Strategic Tourism


Authority Zone Zone
Growth of Foreign Tourist Arrival 2008-2017
“Foreign tourist arrivals to the country was recorded at 14.04 million in 2017, or 21.88 percent
higher than the figure in the previous year, which was at 11.52 million, or 125 percent higher
than the figure in 2008.”
Source: Indonesia Statistics, 2018
Foreign Tourist Arrival 2008-2017: Based on Nationality
“78 percent of foreign tourist are from Asia Pasific Region. Most foreign tourist during 2008-
2017 originated from Singapore, Malaysia, Australia, Japan, and China.”
Source: Indonesia Statistics, 2018
Infrastructure

Mass Rapid Transportation, Jakarta


35 GW Electricity Program Status
*) Per April 2018

35 GW
Electricity
program

1,584 MW are operating (4%)


17,024 MW are in construction (46%)
12,690 MW have signed PPA (37%) prior to financial close
3,414 MW are in procurement (10%)
1,095 MW are in planning (3%)

Source : Ministry of Energy & Mineral Resources (MEMR)

The Investment Coordinating Board of the Republic of Indonesia


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Independent Power Producer (IPP) Potential Projects (I)

Capacity
No Type Location COD Target Province
(MW)

1 Hydro Power Scattered 400 2025 South Sulawesi

2 Hydro Power Bakaru 2 2x70 2022 South Sulawesi

3 Hydro Power Buttu Batu 2x100 2025 South Sulawesi

4 Hydro Power Poigar 2 30 2023 North Sulawesi

5 Hydro/Mini Hydro Power Scattered 582,2 2021-2025 Aceh

6 Hydro/Mini Hydro Power Scattered 147,7 2021-2025 North Sumatera

7 Hydro/Mini Hydro Power Scattered 21,25 2021-2025 Bengkulu

8 Hydro/Mini Hydro Power Scattered 18 2021-2025 West Sumatera

9 Wind Power Scattered 60 2027 South Sulawesi

10 Gas Gunung Megang (Expansion) 40 2020 South Sumatera

11 Gas/Gas Engine Belitung 1 30 2019/2020 Bangka Belitung Island


Source: PLN, RUPTL 2018-2027

The Investment Coordinating Board of the Republic of Indonesia


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IPP Potential Projects (II)
Capacity
No Type Location COD Target Province
(MW)

12 Combined Cycle Gas Fired Jawa-3 600 2021 East Java


13 Combined Cycle Gas Fired Riau-2 250 2021 Riau
14 Combined Cycle Gas Fired Jawa-3 200 2021 East Java
15 Combined Cycle Gas Fired Senipah (ST) 35 2019 East Kalimantan
16 Wind/Solar Power Scattered 25 2023 Bali
17 Wind/Solar Power Scattered 25 2023 Bali
18 Waste to Energy Power Scattered 85 2022 DKI Jakarta
19 Coal Fired Jawa-5 (FTP2) 1000 2022 Banten
20 Coal Fired Sulbagsel 2x200 2023/24 South Sulawesi
21 Coal Fired Kalbar 2 2x100 2021/22 West Kalimantan
22 Coal Fired Poso Peaker 2x65 2022 South Sulawesi
23 Coal Fired Sulbagut 3 2x50 2023/24 Gorontalo
24 Coal Fired Bau-bau 2x15 2021/22 Southeast Sulawesi
25 Main Mouth Coal Kalselteng 5 100 2027 South Kalimantan
Source: PLN, RUPTL 2018-2027

The Investment Coordinating Board of the Republic of Indonesia


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IPP Potential Projects (III)
Capacity
No Type Location COD Target Province
(MW)

26 Geothermal Wayang Windu (FTP2) 120 2025 West Java

27 Geothermal Rawa Dano (FTP2) 110 2022 Banten


28 Geothermal Scattered 110 2024 Central Java

29 Geothermal Baturaden/Slamet (FTP2) 85 2025 Central Java

30 Geothermal Baturaden/Slamet (FTP2) 85 2025 Central Java

31 Geothermal Dieng (FTP2) 55 2022 Central Java

32 Geothermal Ijen (FTP2) 55 2021 East Java

33 Geothermal Wilis/Ngebel (FTP2) 55 2021 East Java

34 Geothermal Ijen (FTP2) 55 2022 East Java

35 Geothermal Wilis/Ngebel (FTP2) 55 2025 East Java

36 Geothermal Lahendong VII & VIII 2x20 2025 North Sulawesi


37 Geothermal Scattered 40 2025 Central Java
Source: PLN, RUPTL 2018-2027

The Investment Coordinating Board of the Republic of Indonesia


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HOW TO PARTICIPATE IN ELECTRICITY PROJECTS IN INDONESIA
for Foreign Direct Investment (FDI)

ELECTRICITY PROJECTS - INVESTMENT SCHEME


Independent Power Producer Engineering Procurement and Public Private Partnership
Private Power Utility (PPU)
(IPP) Construction (EPC) Contract (PPP) Project
▪ This scheme is implemented Private sector acts as contractor ▪ It is a private initiative or B- ▪ This scheme is used for
on electricity development. / sub-contractor both for to-B projects that mainly government infrastructure
government projects and used for own projects which cooperated
▪ As IPP, private sector roles private’s projects through tender interest/purpose and not with private sector.
as project owner and our process and the project owner guaranteed by the
State Owned Company (PT provides financing. government. ▪ By this scheme, the investor
PLN) as an off-taker. is given a consession time to
operate the project.

▪ After concession period is


completed, the project must
be transfered to the
Government.

Source: BKPM 42
NEGATIVE INVESTMENT LIST

Foreign Capital Ownership for Electricity Project


Sector Maximum Foreign Capital Ownership
< 1 MW Closed for Foreign Investor
1 – 10 MW 49 %
Power Plant ≤ 10 MW 67 % (for Geothermal PP/PLTP)
> 10 MW 95 % (for non PPP scheme) or
100% (for PPP scheme during concession period)
95 % (for non PPP scheme) or
Power Transmission
100% (for PPP scheme during concession period)
95 % (for non PPP scheme) or
Power Distribution
100% (for PPP scheme during concession period)
95%
Power Installation Consultation

95% (for power plant),


Construction and Installation of Electric Power 49% (for power transmission),
Closed for Foreign Investor (for power distribution)
95%
Operation and Maintenance of Electric power Installation

49% (for power plant and power transmission),


Examination and Testing of Electric Power Installation Closed for Foreign Investor (for power distribution)

Source: Presidential Regulation Number 44 Year 2016


Indonesia Investment Coordinating Board 43
Power Tariff by Region (cent/kwh)
National Tariff: 7.4
Regional Tariff: 6.5 – 17.5

Aceh
10.4
North Sumatera East Kalimantan
9.3 10.2
Riau North & Central
10.1 West Kalimantan Sulawesi
12.4 12.1 Papua
13.5
Bangka
West Sumatera 13.7
8.1
South & Central Maluku
South Sumatera Kalimantan 17.3
7.9 9.0
Lampung South Sulawesi
7.8 12.1

Java-Bali
6.5 West Nusa Tenggara East Nusa
13.7 Tenggara
17.5

Source: Ministry of Energy and Mineral Resources Decree No. 1404/2017

The Investment Coordinating Board of the Republic of Indonesia


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IPP BUSSINESS PROCESS SCHEME

Project
Financing Process Procurement
Sponsors
Process
Shareholders
Agreement
Financing Agreement Power Purchase
Agreement
Special Purpose
Lender(s)
Company

O&M Contract

Fuel Supplier EPC Contractor


O&M Contractor
Source: PLN
The Investment Coordinating Board of the Republic of Indonesia
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Stages to Process the IPP Project

Source: PLN

The Investment Coordinating Board of the Republic of Indonesia


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PROCUREMENT PROCESS FOR IPP PROJECT
PROCUREMENT DIRECT ASSIGNMENT
OPEN TENDER DIRECT SELECTION DIRECT APPOINTMENT
SCHEME (TO PLN SUBSIDIARIES – IP/PJB)
REGULATORY • Law (UU) No 30/2009 • Law (UU) No 30/2009
• Gov. Reg. (PP) No. 23/2014 • President Reg. 14 Tahun
• MEMR Reg. No. 01/2006 jo No. 04/2007 2017 (New)
• MEMR Reg. 10/2017 (New)
• MEMR Reg. 19/2017 (New)
Project Criteria By bussiness a) Expansion of the a) IPP with energy from : a) Main Mouth / Non Main
nature, the existing IPP project renewable energy; Mouth CFSPP (PLTU)
project can be in the same grid marginal gas, main b) Open/ Combined Cycle Gas
opened to many system but different mouth coal and another Fired Power Plant
participants location. local energy. (PLTG/PLTGU)
(open b) There are more than b) Excess Power
competition) one interested c) Condition of crisis or
parties. emergency for electricity
provision.
d) Expansion for the same
location.

Source: PLN
The Investment Coordinating Board of the Republic of Indonesia
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DIRECT ASSIGNMENT TO PLN SUBSIDIARIES (IP/PJB)

RUPTL

PLN issues Assignment and also


Project IPP the project document to PLN
Subsidiaries (IP or PJB)

Approval from Ministry of


Partner selection process by IP/PJB Energy and Mineral Resources
(IP/PJB : min. share 51%) (ESDM)

IP/PJB & Selected Partner submit Sign of the Agreement


Price Negotiation
the project proposal to PLN (PPA)

The Investment Coordinating Board of the Republic of Indonesia


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Engagement with PLN Subsidiary for Coal Fired Plant Project
Projects Announcement
Projects Announcement Newspaper media: The Jakarta Post
https://supplier.indonesiapower.co.id/

Letter of Interest (LoI) to:


Letter of Interest (LoI) to: PT PJB Representative Office
Director of Business and Development Cq. Division Head of Business Development, Product
and Marketing
PT.Indonesia Power
PLN Building, 2nd Floor.
Jl. Gatot Subroto, Kav.18
Jalan Gatot Subroto Kav 18, Jakarta

Document reviewed by
Document reviewed by
PT Indonesia Power
Price Waterhouse Coopers (as PJB’s consultant)
(Legal and Financial Aspects) duration 3 weeks

RFP RFP
(Shortlisted) (Shortlisted)

One-on-One Meeting
One-on-One Meeting
Partnership scheme: Partnership scheme:
• PT Indonesia Power (Share 51%); • PT Indonesia Power (Share 51%);
• PT Indonesia Power (Share Equity 10%);
• PT Indonesia Power (Share Equity 10%); • Max 2 entities (Local/Foreign)
• Max 2 entities (Local/Foreign)
Contact:
Contact: Nyoman Ngurah Widyatnya
Henry Asdayoka Kepala Divisi Strategi Bisnis , Produk dan Pemasaran
Kepala Divisi Pengembangan Bisnis HP: +62-8121718108
HP: +811-250-480 The Investment Coordinating Board of the Republic of Indonesia
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PRIVATE POWER UTILITY (PPU)
Procedure on Determining of the Business Area (Penetapan Wilayah Usaha)

Directorate General of Electricity, Ministry of Energy &


OSS - BKPM Local Government Mineral Resources
Investors
Investment Registration
From One Stop Service BKPM Site Visit to the
Business Area

(Due Diligence)
Meeting by MEMR, PLN, and BKPM By Team Directorate
to response the application of certain General of Electricity and
Business Area Local government

2
Recommendation / Official
Report on the Release of
Determination of the Business Area
Business Area

Construction 3 (MEMR Regulation


No. 35/2014)

Establishment of IUPTL
By Local Government / Regional
DPMPTSP
(UU No. 23/2014)
Commercial Operation Date

Source: Ministry of MEMR Regulation No. 28 Year 2012 j.o Ministry of MEMR Regulation No. 7 Year 2016
IndonesiaInvestment Coordinating Board
50
Business Flowchart for Electricity Project
1. Company Establishment
2. Licensing Process
- Investment License
Principle License
- Certificate of incorporation
Location Permit
- NPWP / Tax registration
- TDP / Company registration
Temporary IUPTL
- RPTKA / Employment plan
- IMTA / Working permit Contracts
- APIP / Import identification & Financing
Land Acquisition
- NIK / Customs registration
PPA
- Letter of land availability
Financial Close

4. Commercialization
3. Construction Phase

Certificate of Operation Worthiness (Sertifikat Environment License, Construction Permit


Laik Operasi/SLO) (IMB), and IUPTL should be obtained first
Commercial Operation Date (COD)
Construction

A business license must be granted before an entity can supply electrical power or run an electrical power-supporting business. Business licenses for the supply of electrical power consist
of the following:
a) An IUPTL to supply electricity for public use, which may be issued for a maximum validity period of 30 years and may be extended; and
b) An Izin Operasi to supply electricity for own use (i.e. for PPUs) with electricity capacity of more than 200 kVA, which may be issued for a maximum validity period of ten years and may
be extended
The Investment Coordinating Board of the Republic of Indonesia
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Investment Regulatory Reform
PRO INVESTMENT POLICY

Borobudur Temple, Yogyakarta


The Investment Coordinating Board of the Republic of Indonesia
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BKPM Priority Agenda
Improving Investment Services in Central and Regional

One
place
22 ministries
All integrated
sectors 3-hour
Investment
167 permits Licencing
are delegated
to BKPM
One-Stop
Service
One-Stop
Service 3-hour
Integrated
Industry,
power
generation, (PTSP) at Investment
Licencing
Services
oil &amp;
gas, tourism BKPM Service for
Infrastructure
and mineral
at one place
resources

96% KLIK
Regional PTSP Direct
formed.68%regi Construction
onal PTSP Facility for
implement e- Investment
licensing. project

The Investment Coordinating Board of the Republic of Indonesia


53
ONLINE SINGLE SUBMISSION SYSTEM (NSWI)
2018 Agenda: Single Submission System (NSWi)
NPWP
& KSWP
Transportation License FINANCE Masterlist
INTEGRATED BUSINESS LICENSING TAX
TRANSPORTATION FINANCE
• Single submission of data and information and CUSTOMES

single and synchronous processing of data and LEMSANEG


Digital
Signature
AGRICULTURE
information.
LHK Forestry Permit
MARINE FISHERY

• All licensing data and business requirement


compliance for every ministries /government INSW PERINDUSTRIAN TDP

agency will be in 1 integrated business license


system.
PTSP - DPMPTSP
NIK HOME AFFAIRS PERDAGANGAN INA-TRADE
(ONLINE SINGLE SUBMISSION)
• The operational and the admin of Online Single Deed of KEMKUM
Submission will be performed in 1 (one) building Establishment
Authentication
HAM - AHU
KEMENAKER Foreign Worker
set by the Government.
Mining License BIG
Business License ESDM

AGRARIA Building Permit (IMB)


KOMINFO
E-licensing PPI : Integrated
BPJS PUPERA
: On Process
IUJK : Coordinating
: Un-Integrated Yet

The Investment Coordinating Board of the Republic of Indonesia


54
3-Hour Investment Licensing Service
BKPM
REQUIREMENTS:
Minimum investment of IDR 100 billion (USD 8 million) and/or
employing 1,000 local workers

Exception for investment plan in infrastructure sector (power, • Arrive at BKPM directly from the Wait at the lounge while Obtain eight documents & letter of
transportation, public works and ICT) and oil and gas sector
airport. documents are processed by land availability within three hours
• Consult with Director of BKPM, in-house notary, ministries, to start your business.
Investment Service. & other government institutions.
• Submit the required documents
9 documents obtained & data.
NO TYPE OF SERVICES REGULAR SERVICE
Certainty to start Certainty to import 1. Temporary Business License for Electricity 20 Working Days
a business capital goods 2. Temporary Business License for Oil / Fuel / LPG Storage 32 Working Days
• Investment license
• Certificate of incorporation • APIP / Import identification
• NPWP / Tax registration • NIK / Customs registration
32 Working Days for Processed
• TDP / Company registration
Products
3. Temporary Business License for Storage of Processed Products / CNG ---------
Certainty to work Accurate land
• RTKA / Employment plan
40 Working days
• IMTA / Working permit
information for CNG
• Letter of land availability
4. Temporary Business License for LNG Storage 32 Working Days
5. Temporary Business License for Oil Refinery 32 Working Days

6. Temporary Business License for Processing Oil Residue Industry 32 Working Days
ource: BKPM, 2017
ESDM3J service is given if the company has
3 Hours Investment
fulfilled the checklist of administrative and
Licensing Service For Energy technical requirements as regulated on MEMR 7. Temporary Business License for Natural Gas Processing 32 Working Days
And Mineral Resources Ministerial Decree No. 15 of 2016.
Sector 8. Temporary Business License for General Trade of Oil/Fuel 40 Working Days

Temporary Business License for General Trade of


9. 40 Working Days
Processed Products
The Investment Coordinating Board of the Republic of Indonesia
55
3 HOURS INVESMENT LICENSING SERVICE FOR ENERGY AND MINERAL RESOURCES SECTOR

RECEIVE
BKPM Requested licensing products

9 Type of Licensing
Issued by ESDM3J service

WAITING
In Priority Lounge

• Director ARRIVES at Central OSS.


• SUBMIT required documents. NO TYPE OF SERVICES REGULAR SERVICE

1. Temporary Business License for Electricity 20 Working Days


2. Temporary Business License for Oil / Fuel / LPG Storage 32 Working Days
REQUIREMENTS 3. Temporary Business License for Storage of Processed Products / CNG 32 Working Days for Processed
Products
ESDM3J service is given if the company has fulfiiled the ---------
checklist of administrative and technical requirements 40 Working days
as regulated on MEMR Ministrial Decree No. 15 of 2016 for CNG
as revised in Ministerial Decree No. 13 of 2017.
4. Temporary Business License for LNG Storage 32 Working Days
5. Temporary Business License for Oil Refinery 32 Working Days
6. Temporary Business License for Processing Oil Residue Industry 32 Working Days

7. Temporary Business License for Natural Gas Processing 32 Working Days


8. Temporary Business License for General Trade of Oil/Fuel 40 Working Days

• OSS : One Stop Service (PTSP) 9. Temporary Business License for General Trade of Processed Products 40 Working Days
• MEMR : Minister of Energi and Mineral Resources

The Investment Coordinating Board of the Republic of Indonesia


56
Direct Construction Facility/KLIK

Direct Construction
Investors can directly start their project construction before
No Requirements
• No minimum investments or workers is required.
obtaining construction permits. This service is supported • Available for 47 selected industrial parks in 12 provinces and
by both Central and Regional Governments. 12 existing SEZs.
• Construction permits can be obtained in parallel with construction
process.

Obtain investment licence at One-stop • Start the construction of your project. No


Service (PTSP) at national or regional
• Survey a land within selected industrial parks. other permits are required.
level. • Acquire the land for your industry. • Apply for building construction permit &
environmental permit, in parallel with construction
Set Up Factory in Non- KLIK Area process.
Ready for commercial production (all
Requirements technical permits complete)
preparation of IMB
IMB Application Construction
Land Transaction (10-14 days) (1 – 2 years)

Example: EIA /AMDAL, Environmental Permit


Project that already utilized
(6 months-1,5 year) KLIK (2016-2017): 115
ce: BKPM, 2018
Principle Permit / Investment Permit
Business Permit/IUI Projects, total area 1.322,96
Set Up Factory in Industrial Estate with KLIK Facility Ready for commercial ha, investment value IDR
production (all technical
KLIK permits complete) 130,62 Trillion (10% of
Doing National Investment
Construction
Land Transaction (1 – 2 years) Realization)
By investing in KLIK Industrial Estate,
• IMB
• EIA (AMDAL) investor will efficiently safe time ± 6
• etc. months – 1,5 year
in parallel processing technical permits
The Investment Coordinating Board of the Republic of Indonesia
57
47 Industrial Estates in 12 Provinces for KLIK
➢ Head of BKPM Decree No. 41 of 2018 on the Enactment of Certain IEs for KLIK (Direct Construction Facility).
North Sumatera (1) Riau Islands (5)
Medan IE ▪ Batamindo IE Total Luas :
▪ Bintang Industrial Park II 14.996,85 ha
Riau (2) ▪ Kabil Integrated Industrial Park
▪ Dumai IE di 12 Provinsi
▪ West Point Maritime Industrial Park
▪ Tanjung Buton IE ▪ Bintan Inti IE 25 Kab/Kota
East Kalimantan (1)
KI Kariangau

South Sulawesi (2)


West Sumatera (1) ▪ Bantaeng Indutrial Park
▪ Makassar Industrial Park
▪ Padang Industrial
Park Central Java (5)
▪ Kendal IE
▪ Bukit Semarang Baru IE
▪ Wijayakusuma IE
▪ Jatengland Industrial Park Sayung
▪ Tanjung Emas Export Processing Zones
Banten (4) DKI Jakarta (2) D.I. Yogyakarta (1)
▪ Modern Cikande IE ▪ Kawasan Berikat ▪ Piyungan IE
▪ Wilmar IE
▪ Krakatau IE Cilegon Nusantara/KBN
▪ Millenium IE ▪ Jakarta IE Pulagadung/JIEP West Java (19) East Java (4)
▪ Bekasi Fajar Industrial Estate ▪ Java Integrated Industrial
& Port Estate
▪ Delta Silicon 8 IE ▪ Jababeka Tahap III ▪ Maspion IE
▪ Karawang Internasional Industrial City▪ Kota Bukit Indah Ind. City ▪ Tuban IE
▪ Suryacipta City of Industry ▪ Indotaisei Kota Bukit Indah IE
Phase I ▪ Kawasan Industri & Pergudangan Safe
▪ GT Tech Park ▪ East Jakarta Industrial Park N Lock
Phase II ▪ Artha Industrial Hill ▪ Bekasi International IE
▪ Marunda Center IE ▪ MM 2100 Industrial Town ▪ Lion IE 58
Phase III ▪ Greenland International Industrial ▪ KI TeIDRadu Indonesia China ▪ Rancaekek IE
Center (GIIC)/Deltamas ▪ Kujang Cikampek IE ▪ Cibinong Center IE
Note:
IZ: Industrial Zone
IndonesiaInvestment Coordinating Board
58
58
Fiscal Incentives for Investment

Tax Holiday Tax Allowance Import Duty Facility


(MoF Regulation No. 35/PMK.010/2018) (Government Regulation No.9/2016) (MoF Regulation No.176/PMK.011/2009 juncto. No.
188/PMK.010/2015)

5-20 years tax exemption*


With another 50% tax exemption for
30 % of investment value
Reduction of corporate
net income tax for 6 years,
a. Machinery/equipment import duty
exemption
additional 2 years (transitional period). b. Raw materials for production
5% each year.
*) Based on value of investment threshold.
- 2 years import duty exemption or
17 eligible pioneer industries: - 4 years for companies using locally-

145
1. Basic metal industries; produced machines/equipment
2. Oil refinery industries ; business fields (min.30%).
3. Petrochemical industries from oil, gas, or coal;
4. Basic an-organic chemicals Eligible for tax allowance,
5. Basic an-organic chemicals from agriculture, plantation, or forestry; expanded from 143 segments
6. Basic material industry for pharmaceutical ;
7. Semi-conductor and other computer main component industries; in the previous regulation
8. Main component industry for telecommunication; with additional segment:
9. Main component industry for medical devices; clothing industry. Industries
10. Machinery industries; Which produces goods and/or services,
11. Machinery industries for automotive; including:
12. Main component industry for robotic;
13. Main component industry for marine transportation; 1) Tourism and culture
14. Main component industry for aiIDRlane; Under certain requirements among others: 2) Public transportation
15. Main component industry for railway; 3) Public health services
16. Electric Power Generation industries; investment value or export orientation, manpower 4) Mining
17. Economic infrastructure. absorbtion, local content, and project location 5) Construction
(especially outside Java island). 6) Telecommunication
7) Port

trillion
IDR
0,5
Minimum investment plan
(USD 38 million).
Thank You
THEOPITA I. TAMPUBOLON
DEPUTY DIRECTOR OF IIPC LONDON

Indonesia Investment Promotion Centre (IIPC)


Landmark Barbican, 200 Aldersgate (South)
London EC1A 4HD
United Kingdom

T: +44(0)20 3440 3830


D: +44 (0)20 3440 3831
W: www.investinindonesia.uk