2015 - TCF - Sector Propositions - Electronics and Electronic Components

Investing in Indonesia’s
Electronics and Components

sector
An overview of opportunities, capabilities
and provisions
Version: December 2015
© 2015 by Indonesia Investment Coordinating Board (‘BKPM’). All rights reserved

Contents
 An introduction 3
 Why Indonesia? 4
 Market opportunities 5
 Existing and future capabilities 13
 Government provisions and support 29
 6 good reasons to invest in Indonesia’s electronics sector 37
The Investment Coordinating Board of the Republic of Indonesia

2
An introduction
As a top 20 global economy and the 4th most populous country worldwide, Indonesia is as
an obvious potential investment location for any company seeking to enter a new fast-
growing market and/or to expand its activities/exports in ASEAN’s booming market.
Indonesian consumers keenly spend their growing personal earnings on electronics and
home appliances, striving for levels of personal comfort and entertainment that
characterize a more comfortable lifestyle. The driving force behind this consumer trend,
aside from the general increase in living standards, is urbanisation and the booming
residential property market in Indonesia's emerging economy.
Through new regulations to protect a key sector, the Government is showing its
commitment to fully supporting foreign investors looking to enter Indonesia’s electronics
industry.
*Association of Southeast Asian Nations

3
Why Indonesia?
MARKET EXISTING & FUTURE GOVERNMENT
OPPORTUNITIES CAPABILITIES PROVISIONS & SUPPORT
 Indonesia is home to the  Indonesia has become an  Tax holiday for up to 20 years
largest and fastest-growing electronic manufacturing hub for investors in industries such
client base in South-East Asia. with more than 250 companies as electronics and telecoms.
currently in the sector 1.
 Indonesia eyes a growth of  38 export and import licenses
10% in the electronics industry  Competitive labour costs which were removed in 2015
over the next four years. are among the lowest in Asia,
with an average of US$113 per  Investment One-Stop-Service,
 Electronic components are in month. 3-hour licensing service and
huge demand as Indonesia’s other initiatives designed to
home appliances  Indonesia’s favourable speed up and streamline
manufacturing sector has business environment has establishing a business
expanded greatly over the last attracted large corporates such
decade. as Toshiba, Panasonic and  Compelling investment location
Sony – all exporting worldwide. options through Indonesia’s
industrial parks and Free Trade
Zones
1 Ministry of Industry
4
Market opportunities
© 2014 by Indonesian Investment Coordinating Board. All rights reserved

Growing population, growing incomes, evolving tastes and
rising consumer confidence
Indonesia’s middle-income group is nearing 150 million* and along with the high-
income group, they represent an increasingly discerning consumer base in high demand.
Key indicators such as population, GDP, and manufacturing growth reflect Indonesia’s appealing image
as a large and growing market, supported by a sound and sustainable economy.
Real GDP1 : Population1 :

 2014 value (US$): 943 billion  2014 value (US$): 250 million
 2014 growth: 5.02%  2014 growth: 1.4%
 Forecasted CAGR3 2015-2019: 5.7%  Forecast 2020: 274 million
GDP per capita, PPP1: Non-O&G manufacturing industries2 :

 2014 value (US$): 10,641  2014 value (US$): 120 billion
 2014 growth: 5.1%  2014 growth: 5.3%
 Forecasted CAGR3 2015-2019: 6%  CAGR3 2010-2014: 5.9%
ASEAN1 :
 GDP per capita, PPP (US$): 9,614 1 Based on figures from the World Economic Outlook (IMF, 2014)
 2014 growth: 4.5% 2 Based on BPS figures
 Forecasted GDP CAGR3 2015-2019: 4.8% 3 CAGR : Compound Annual Growth Rate

6
A growing contributor to Indonesia’s national wealth
Indonesia’s domestic market for electronics has been showing a broad upward trend for
the past decade in line with improved per capita purchasing power and greater consumer
sophistication.
Metal Goods Industry; Computers, Electronics, Optics; and Electrical The broad electronics sector grew
Equipment contribution to Real GDP, base Year 2010 (Rp. billions)
200,000
at a fast pace of 6.4% annually
between 2010 and 2014, reaching
180,000
US$13 billion in 2014.
160,000
140,000
This growth should continue over
120,000 the coming years thanks to a
100,000 growing consumer base with
CAGR: 6.4%
80,000 increasing purchasing power.
60,000
40,000 GDP per capita (PPP) was

20,000
US$10,641 in 2014 and is forecast
to reach US$15,177 by 2020 (IMF).
-
2010 2011 2012 2013 2014
Source: BPS (Indonesia’s Bureau of Statistics)

7
The increasing international attractiveness of Indonesia’s
electronics market
Indonesia’s electronics industry (incl. metals and machinery) has been increasingly
attractive for investors, with more than USD 2.5 billion and 690 FDI projects
implemented in 2014 – representing a yearly average increase of 43% in value since
2010.
Realised FDI projects in
FDI inflows in metal, machinery &
Metal, Machinery & Electronics Industry electronics sectors, in USD
800
700
600
500
2.5
Source: BKPM
billion
of inward
FDI in 2014
400
300
200
100
-
2010 2011 2012 2013 2014
Source: BKPM

8
Home appliances ownership on the rise
Within a period of 5 years, Indonesian households have increasingly shown their
interest in acquiring home appliances from brown to white goods* as well as their
eagerness to upgrade to more advanced technologies – as reflected by VCD player’s
decreasing penetration rate.
Home appliances and smartphone penetration rates

June 2009 June 2014
TV set 94% 98%
Refrigerator 38% 68%
VCD player 59% 47%
Blender/food processor/juice extractor 26% 42%
Microwave 1% 2%
Smart Phone 5% (2011) 30%

Source: BKPM presentation on Electronics, June 2015
*Brown goods refer to TV sets, Hi-fi system and white goods to washing machines, refrigerators etc.
9
Televisions leading the way…
Television sets dominate the domestic market sales (46% share or US$ 505 million in
2012) and are a major contributor of export sales along with video recording (3rd
exporter worldwide), batteries (6th exporter worldwide), television receivers (16th
exporter worldwide)…
Domestic sales of TVs have being driven by a rising purchasing power, combined with
an increase in broadcast offers of international sporting events and the wider
availability of digital television (IPTV), leading people to replace their terrestrial
television sets.
Product Exported value
(USD thousand)
Video recording or reproducing apparatus 1,156,249
Parts and accessories of video, magnetic recorder 1,052,682
Primary cells and primary batteries 569,609
Shavers and hair clippers, with selfcontained electric motor 538,098
Electrical capacitors, fixed, variable or adjustable (pre-set) 509,173
Thermionic,cold cathode valves&tube (e.g. tv camera tubes) 487,358
Reception app for radio-telephony/radio-broadcastg 455,912
Electric filament or discharge lamps 452,071
Television receivers (incl video monitors & video projectors) 441,781
Microphones & stand; loudspeaker; headphone/earphone; sound amplifier set 379,264
The Investment Coordinating Board of the Republic of Indonesia Source: ITC based on BPS figures, 2014
10
Followed by some other home appliances
As for television sets, increasing incomes are supporting the demand for home
appliances. To respond to the fast-growing domestic demand, numerous
international brands (Toshiba, LG etc.) and domestic groups (Polytron) are
expanding their production capacities
Based on the value and growth of home appliance imports (US $94 billion;
CAGR:+8% between 2010-2014*), there are still great opportunities to be seized
in this sector.
Air conditioners, refrigerators and

washing machines combined
represented a 40% share of total
sales.
This was followed by refrigerators at
22.4%, air conditioning units at
15.5% and washing machines at 13
% (EMC & Indonesia Electronics
Producers Association, (Gabel)).
* International Trade Centre (ITC) based on BPS figures

11
Electronic components sector to support the overall
industry boom
The Indonesian Chamber of Commerce & Industry (KADIN) estimates that half of
locally assembled electronic products are made of foreign components. This,
combined with the rising demand for electronics components (estimated to continue
to grow by 10% annually), opens up lucrative opportunities for JVs and technology
partnerships with local component producers.
Below are the top 10 electrical and electronic products exported to Indonesia, which
represent 7% of the US$ 180 billion imported by the overall sector.
Imported value
Product
(USD thousand)
Electric app for line telephony incl curr line system 4,855,425
Electronic integrated circuits and microassemblies 1,572,507
Part suitable for use solely/princ with televisions, recpt app 1,182,396
Electrical app for switchg (ex fuse,switche,etc) not exceedg 1000 volt 1,086,565
Insulated wire/cable 869,091
Electric generating sets and rotary converters 780,727
Electric transformer,static converter (for example rectifiers) 612,151
Board & panels, equipped with two/more switches, fuses 481,588
Diodes/transistors&sim semiconductor devices; etc 478,941
Electric motors and generators (excluding generating sets) 438,855
Source: ITC based on BPS figures, 2014
12
Existing and future capabilities

The corporate landscape – Electronic appliances
Indonesia is seen as an ideal base for accessing ASEAN-wide demand for electronic
products. Consequently, the country has become a major manufacturing base to
serve the large domestic demand and to export regionally and internationally.
Indonesia is home to 250 electronics manufacturers, according to the Ministry of
Industry. Both international and domestic groups have shown great success in a
booming domestic and regional market.
International brands often operate Indonesian electronics brands are

through joint ventures with local highly competitive in the domestic
manufacturers which mainly import the market. Local brands have been able to
components and then assemble the compete effectively by having a clear
products in Indonesia (LCD televisions, segmented market strategy based on
air conditioning units, refrigerators for each brand’s core strengths and
both the local market and export). Major research and development. This has
international brands (Toshiba, LG, generated innovative home appliances
Sony, Panasonic and Samsung) are which specifically suit the needs of the
well established throughout the country Indonesian lifestyle and purchasing
with distribution networks via both power of the mass market.
modern and traditional retail networks.

14
The corporate landscape – foreign groups
Many major electronics manufacturers have made Indonesia their
production base to supply the domestic as well as the international
demand.

15
The corporate landscape – Domestic groups
Small domestic companies have become large groups investing

heavily in their expansion plans to meet the fast-growing demand.

16
What have investors and electronics sector leaders been
saying?
"A key emerging market for Philips, Indonesia’s economic growth presents
a great opportunity to provide innovative solutions in healthcare, lighting
and consumer products”
Harjit Gil, Chief Executive Officer,

Philips ASEAN & Pacific
“The centre re-enforces existing relationships with local partners by

providing a greater range of diversified services at even closer proximity”
Tan Teck Lee,

President Asia, Gemalto
"The modern electronics retail industry in Indonesia is still very young, and
it is my vision for Electronic Solution to take a leading role in driving its
continued development”
Mr Dick Chandra Adrianus, President Director,

Electronic Solution

17
What have investors and electronics sector leaders been
saying?
“Most of the products in our marketplace are the result
of assembling (assembly). While there is also manufacturing, most
components are still imported (…) for example, television (TV) with
application of advanced technologies are also still dependent supply of
imported components up to 70-80 percent.”
Rachmat Gobel
Chairman, Indonesia Electronic Producers Association (Gabel)
““Maspion Group currently exports to international markets but the global

economic slowdown means that we are focusing on the Indonesian
market as it offers a lot of potential for further growth.”
Mr Alim Markus
President Director, Maspion Group
“There is huge demand for this sector's products in Indonesia due to the
size of the population; we still have not reached many people that need
our appliances and electronic goods”
Mr Siauw Tjung Ming

President Director, Tecstar
18
Investor case studies:
Sharp
Sharp through PT Sharp Electronics Indonesia (SEID)
opened a new factory in the Karawang International
Industrial City (KIIC) in Karawang, West Java in
February 2014.
The factory is Sharp's world largest factory
producing electronic home appliances.
Standing on a 31-hectare plot of land, the factory
produces twin tub washing machines and small to
medium refrigerators with a maximum capacity of 300
litres. The factory has the capacity to produce 220,000
refrigerator units and 140,000 washing machine units
per month. These production figures are twice the
capacity of Sharp's first Indonesian factory in
Pulogadung, East Jakarta.
Sharp focuses on refrigerators and washing machines
to meet the ever increasing demands as well as
complementing Sharp's other products, including TVs
and air conditioners.
19
Investor case studies:
Expansion plan: Part of Panasonic's global production
strategy for optical pickups
Global electronics producer Panasonic has expanded

production at its Indonesian fluorescent light facility, to which it
has recently added a light emitting diode (LED) production line.
The plant was established in 2008, the new investment (2010)
is a result of Panasonic’s transferal of LED production to
Indonesia after the closure of its plant in Takatsuki, Japan. All
output of the Indonesian plant will be exported to Japan initially
and additional investment to mass produce environmentally
friendly fixtures at the plant is estimated to be tens of millions
of yen.
The production was 24 million units/year, the company
increased production capacity fourfold in 2 years.
• Location: Gobel Industrial Complex, Cibitung, Bekasi.
• Start of production: June 2008
• Production scale: Optical pickups for DVD recording: Approx. 3.0 million units per month
(2009)
• Number of employees: Approx. 8,600 people (as of Dec. 31, 2009)
• Site area: 80,048 m2
• Floor space: 41,616 m2 The Investment Coordinating Board of the Republic of Indonesia
20
Associations, institutes and centres of excellence
Organisations supporting Indonesia’s electronics sector are growing in

prominence, as are academic centres of excellence

21
Indonesian Electric Manufacturers

Association (APPI)
APPI is the official body representing the electric
equipment industry in Indonesia. Members
consist of State-Owned Enterprises, Foreign and
Domestic Investment Capital representing an
investment of more than 1 trillion and a
workforce of 35,000 workers.
www.appi-electric.co.id
The Indonesian Electrical Lighting Industry

Association
https://aperlindonesia.wordpress.com
Federasi Gabel
Gedung Sasana Krida Lantai 2, JL Ulin Elok,
Jakarta, DKI Jakarta, 13560
Email: gabtronik@cbn.net.id
22
APTIKOM (Informatics and Computer Science University Association)

APTIKOM is an association of colleges and universities in Indonesia that
offer educational programs in computing, information systems and
technology. Out of 2,750 higher education institutions in the country,
approximately 750 of them are the members of APTIKOM, with a collective
student body of 600,000 people.
www.aptikom.or.id
The Electronic Engineering Polytechnic Institute of Surabaya (EEPIS)

EEPIS was officially opened in 1988. EEPIS offers degrees in Electronics
Engineering, Telecommunications Engineering, Industrial Electrical
Engineering, Informatics Engineering, Multimedia Broadcasting.
Indonesia ICT Institute (IDICTI)

IDICTI is a think-tank dedicated to promoting ICT in Indonesia through
research, empowerment and stakeholder discussions. For the latter, IDICTI
has established a number of forums, including a machine-to-machine
(M2M) forum and a digital payment forum.
www.idicti.com
23
Universitas Indonesia – Faculty of Engineering - Department of

Electrical Engineering
The Faculty of Engineering is one of the largest faculties at Universitas
Indonesia with more than sixty percent of its academic staff graduating from
recognized universities with Ph.D. and Master degree. The faculty has been
running undergraduate programs since 1964 and also offers postgraduate
programs. The Faculty of Engineering consists of seven Departments and
twelve Study Programs.
www.ee.ui.ac.id
Bandung Institute of Technology (ITB)

ITB’s ICT-related research and activities are conducted by the Information
Technology Research Group within the School of Electrical Engineering &
Informatics (SEEI). The Informatics Program provides education in the
areas of Computer Science and Software Engineering. Computer Science
spans a wide range, from its theoretical and algorithmic foundations to
cutting-edge developments in robotics, computer vision, intelligent systems
and bio-informatics.
http://ip.stei.itb.ac.id
24
How do operational costs in electronics compare?
Consumer electronics manufacturing
The chart below presents the Financial Times’ analysis of the average total annual
operational costs for a consumer electronics manufacturing plant. The costs are
based on a head count of 500 across 11 different job functions*.
Indonesia has the 2nd

lowest total operational
costs of all the 5 locations
at US$2.24 million per
annum. Indonesia is
therefore 21% lower than
the ASEAN-5 average of
US$2.83 million per annum.
Source: fDi Benchmark (Financial Times)

* Based on the following breakdown of a total headcount of 500 – 20 Engineers, 2 Facilities/Office Services Specialists, 1
Head of Manufacturing, 1 Production Manager, Production Operatives (40 Highly Skilled, 170 Skilled, 200 Unskilled), 1
Quality Control Manager, 10 Quality Control Specialists, 15 Senior Warehouse Operators, 40 Warehouse and Distribution
Operatives
25
Electronics R&D centre
labour costs for an electronics R&D centre. The costs are based on a head count of 50
across 11 different job functions*.
Indonesia has the 3rd

lowest total labour of all the
5 locations at US$887
million per annum.
Indonesia is therefore 12%
lower than the ASEAN-5
average of US$1.01 million
per annum.

* Based on the following breakdown of a total headcount of 50 – 20 Engineers, 5 Assistant Engineers, 1Head of R&D, 1
R&D Manager, 4 R&D Team Leaders, 6 Senior Engineers, 3 Software Development Engineer, 1 Software Development
Manager, 2 Technology Engineering Specialists, 2 Trainee/Apprentice Engineers.
26
Electronic components manufacturing
operational costs* for an electronic components manufacturing plant.
Indonesia has the lowest

operating costs of all the
ASEAN-5 locations at
US$775k per annum.
Indonesia is therefore 22%
lower than the study
average of US$995k per
annum.
Out of the 5 locations,
Indonesia has the 3rd lowest
labour costs and the 2nd
lowest utility costs.
* Utility costs based on core expenditure of 27,600 Kilowatt hours Electricity and 189,600 m³ Industrial gas per annum.
Staff costs based on the following breakdown of a total headcount of 110 – 14 Engineers, 1 Head of Manufacturing, 1
Production Manager, 87 Production Operatives (12 Highly Skilled, 30 Skilled, 45 Unskilled, 1Quality Control Manager, 6
Quality Control Specialist.
27
Telecoms manufacturing
operational costs* for a telecoms manufacturing plant.
Indonesia has the 2nd

lowest operating costs of all
the 5 locations at $1.11
million per annum. Indonesia
is therefore 23% lower than
the study average of $1.43
million per annum.
Out of 5 locations in this
study, Indonesia has the 2nd
lowest labour costs and the
2nd lowest utility costs.
* Utility costs based on core expenditure of: 24,000 kWh for electricity and 168,600m3 industrial gas. Staff costs based on
the following breakdown of a total headcount of 150 – 125 production operatives (40 highly-skilled, 55 skilled and 30
unskilled), 18 technology engineering specialists, 4 quality control specialists, 1 quality control manager, 1 head of
manufacturing and 1 production manager
28
Government provisions and support

A priority sector - government initiatives and regulations
Electronics is a key priority development industry for the Government.

Consequently, the Government continuously supports the industry by improving
the business climate through tariff and taxation incentives as well as safeguards
for companies operating domestically in the electronics industry.
Investors are showing increasing enthusiasm as a result of significant efforts from
the Government to offer incentives such as tax breaks, e.g. up to 20 years for
investors in industries such as electronics.
• Electronic manufacturers in the country are obliged to apply the national
industrial standard (SNI) in televisions, clothes, irons, washing machines and
air conditioners – among other products.
• The Government has appointed an independent Product Certification
Institution (LSP) to issue the certificates.

30
Foreign direct investment conditions and restrictions
The vast majority of business areas in electronics are open to FDI, although FDI
in certain types of electronics activities have certain conditions or restrictions.
Key areas relevant to the electronics sector are detailed below. BKPM can
provide further details and answer your questions
FDI CONDITIONS: CLOSED TO FDI:

Smartphone manufacturing industry: Electronics retail trade (100% local
the Indonesian Government has capital)
announced a 30% minimum local
content requirement for the Telecommunications / aids to shipping
manufacturing of 4G LTE smartphones. navigation and vessel traffic
information system (VTIS)
The regulation is set to come into force
on 1st January 2017.

31
A wide range of incentives are available
BKPM will provide advice on which incentive is applicable for the electronic and
components sectors
TAX TAX IMPORT DUTY
ALLOWANCE HOLIDAY FACILITY
Government Regulation Ministry of Finance Regulation Ministry of Finance Regulation
No.18/2015 No. 159/PMK.010/2015 No.176/PMK.011/2009
A variety of sectors are covered in On machines and materials used

30% of investment value
this Regulation. for production purpose
2-year import duty exemption or 4

Reduction of corporate net income Period of tax holiday: 5 -20 years
years for companies using locally-
tax for 6 years, at 5% each year. (Previously it was for 10 years)
produced machines (min. 30%).
143 business segments, including

electronic goods
Minimum amount of investment is:
Specific requirements are: IDR 1 Trillion
Industries that produce goods
• Minimum amount of investment
and/or services.
value Reduction of tax holiday from 10%
• Minimum number of workforce to 100%
• Specific project locations,
especially outside of Java
Source: BKPM (2015)

32
Indonesia’s geography and location
Indonesia lies at the intersection of the Pacific Ocean and the Indian Ocean. Over
half of all international shipping goes through Indonesia water.
Indonesia is one of the most populated countries in the world (currently, 235 million
people). Indonesian accounts 40% of total ASEAN population.
As the largest archipelagic country in the

ASEAN
world, Indonesia composed of more than
17,500 island spread on nearly 6,500km from
east to west.
Indonesia’s Java island alone is as big as
England and home to 125 million inhabitants,
including its capital Jakarta, which can be
reached via direct flights from:
Singapore: 1h40min Kuala Lumpur: 2h50min
INDONESIA Bangkok: 3h30min Hong-Kong: 5hrs
Sydney: 6h50min Tokyo: 7hrs
Seoul: 7hrs Dubai: 7h50min

Sumatra Java Kalimantan Sulawesi Nusa Tenggara Papua
Beijing: 7h20min Amsterdam: 14h20min

33
Projected Indonesia’s Manufacturing Industry
hotspots (2014 – 2019)
The government has projected targets of investment in the manufacturing sector for 2014 and 2019 as per the
locations shown below:
West Malaysia
Singapore East Malaysia

IDR 223.8trillion IDR 67.8trillion
IDR 22.4trillion
IDR 25trillion
IDR 1,517.3trillion
IDR 1trillion
Australia
Source: BKPM (2014)
34
Industrial Estates/Parks in Indonesia
BKPM will be able to advise on the availability of parks for specific sectors
EAST KALIMANTAN SOUTH SULAWESI
58. Kaltim Industrial Estate 60. Makasar Industrial Area
North Sumatera 59. Kariangau Industrial Area
Bintan
Riau Batam East Kalimantan CENTRAL SULAWESI
61. Palu Industrial Area
West Sumatera
NORTH SUMATERA (3) Central Sulawesi
1. Medan Industrial Area
2. Medanstar Industrial Estate
3. Pulahan Seruai Industrial
Estate
South Sulawesi
Jakarta
Central Java
WEST SUMATERA (1) West Java
4. Padang Industrial Park East Java
WEST JAVA – PURWAKARTA (2)
JAKARTA (3) 42. Lion Industrial Area
RIAU (2) 43. Kota Bukit Indah Industrial City
5. Kawasan Industri Dumai 16. Cilandak Commercial Estate WEST JAVA – SUMEDANG (1)
6. Kawasan Industri Tanjung 17. Pulogadung Industrial Area 28. Rancaekek Industrial Area
Buton 18. Nusantara Bonded Zone WEST JAVA – BEKASI (11)
WEST JAVA – KARAWANG (6)
44. Bekasi International Industrial Estate
BANTEN – CILEGON (2) 29. Bukit Indah Industrial Park
BATAM (8) 45. East Jakarta Industrial Estate
19. Cilegon Industrial Area 30. Kujang Industrial Area
7. Batamindo Industrial Park 46. Greenland International Industrial Centre
20. Jababeka Industrial Estate 31. International Industrial City Area
8. Bintang Industrial Park 47. Jababeka Industrial Estate
BANTEN – SERANG (2) 32. Mitrakarawang Industrial Area
9. Kabil Integrated Industrial 48. Gobel Industrial Area
21. MGM Cikande Integrated Industrial 33. Suryacipta City of Industry
Estate 49. Indonesia China Integrated Industrial Area
Park 34. Daya Kencanasia Industrial Park
10. Panbil Industrial Estate 50. Lippo Cikarang Industrial Park
11. Puri Industrial Park 2000 22. Modern Cikande Industrial Estate 51. Marunda Center
12. Tunas Industrial Park CENTRAL JAVA (7) 52. MM2100 Industrial Town – BFIE
BANTEN – TANGERANG (3) 35. Candi Industrial Area 53. MM2100 Industrial Town – MMID
13. Union Industrial Park
23. Cikupamas Industrial Area & 36. Tugu Wijaya Kusuma Industrial Area 54. Patria Manunggal Industrial Estate
14. West Point Maritime
Warehousing 37. Terboyo Semarang Industrial Area
Industrial Park
24. Millenium Industrial Estate 38. Wonogiri Industrial Area
25. Bumi Serpong Damai Techno Park 39. Bugangan Baru Semarang Small Industry EAST JAVA (3)
Community 55. Gresik Industrial Area
BINTAN (1) WEST JAVA – BOGOR (2) 40. Bukit Semarang Baru Industrial Park 56. Ngoro Industrial Park
15. Bintan Industrial Estate 26. Cibinong Center Industrial Estate 41. Tanjung Emas Export Processing Zone 57. Surabaya Industrial Estate Rungkut
27. Sentul Industrial Area
Source: Indonesia Industrial Estates Association (2012) via BKPM
Presentation (2015)
35
15 New Industrial Parks
The Government’s development of new industrial parks offers some highly

attractive location solutions for electronics manufacturing and assembly. Among
these are Sayung and Java Integrated Industrial and Port Estate (JIIPE)

Source: Bappenas, 2015 36
4 Free Trade Zones (FTZ)
Four FTZ in Indonesia offer compelling location solutions to potential investors

in electronics manufacturing and assembly

37
Key organisations:
Ministry of Communications and Information Technology
(MCIT)
Depkominfo is the ministry which undertakes government duties
to assist the President in performing the government's affairs in
the fields of communications and informatics. The ministry is
spearheading a number of high profile ICT initiatives, including
the Palapa Ring Program and Community Access Point (CAP).
The government has also set a target to increase the ratio of
students to computers to 1:20. With the current student
population at 53 million, this will require 2.5 million computers.
www.kominfo.go.id
Ministry of Industry
www.kemenperin.go.id
Indonesian Chamber of Commerce (KADIN)

www.bsd-kadin.org

38
General Process - Investment One-Stop-Service at BKPM
PREPARATION Establishing foreign investment company (PMA)
• Obtaining principal license BKPM
• Establishing of Limited Liability Company Ministry of Law and
• Researching about the sectors open for investment under the Negative Human Rights (with the
Investment List help of notary)
PRE-OPERATION Obtaining Facilities and necessary permits

• Obtaining import identification number (API-P) for manufacturing BKPM
companies, if needed
• Submitting investment activities report (LKPM) every 3 months BKPM
• Obtaining facilities such as machinery import duty exemption and DG of Taxation,
approval of tax facilities Ministry of Finance
• Obtaining licenses from local government such as building, permit, Local government
domicile certificate
• Obtaining permits from relevant sectoral ministries, such as plantation Sectoral ministries
permits
COMMERCIAL OPERATION Securing business licenses

• Obtaining business licence (IU) before the start of commercial BKPM
operation
• Obtaining general import identification number (API-U) and material BKPM
import duty exemption, if needed
• Submitting investment activities report (LKPM) every 3 months BKPM
• Obtaining periodic operational permits, such as construction services Sectoral ministries
permit
39
6 good reasons to invest in Indonesia’s electronics sector
Economies of scale
Great opportunities in
easily reachable by
Joint Ventures and
A new regional hub for tapping into the huge
Partnerships with local
electronics domestic demand as
companies looking for
manufacturers well as regional and
capital and knowledge
international markets
transfer
Among emerging Implementation of

Highly competitive countries, Indonesia is recent favourable
labour and utility costs the 1st supplier of regulations to foster
for various electronics engineering, the manufacturing of
projects in ASEAN manufacturing and electronics in
construction graduates* Indonesia
Source: Financial Times *World Economic Forum 2015

40
BKPM international representative offices
(Investment Promotion Centre):
Invest in...
For further information, contact us at:
Kantor Representatif EU DESK di This presentation has been developed with the
BADAN KOORDINASI PENANAMAN MODAL (BKPM) support of:
REPUBLIK INDONESIA The European Union (EU) Desk at BKPM, part
Jl. Jend. Gatot Subroto No. 44, Jakarta 12190, Indonesia of EU-Indonesia Trade Cooperation Facility
P : +62 21 5274 803 (TCF) projects.
E : eu.tcf@bkpm.go.id
eudesk.bkpm@euind-tcf.com
W : www.bkpm.go.id
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© 2015 by Indonesia Investment Coordinating Board (‘BKPM’). All rights reserved

2015 - TCF - Sector Propositions - Electronics and Electronic Components

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2015 - TCF - Sector Propositions - Electronics and Electronic Components

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Investing in Indonesia’s

Electronics and Components

Version: December 2015

© 2015 by Indonesia Investment Coordinating Board (‘BKPM’). All rights reserved

 Existing and future capabilities 13

 Government provisions and support 29

 6 good reasons to invest in Indonesia’s electronics sector 37

The Investment Coordinating Board of the Republic of Indonesia

The Investment Coordinating Board of the Republic of Indonesia

© 2014 by Indonesian Investment Coordinating Board. All rights reserved

Real GDP1 : Population1 :

GDP per capita, PPP1: Non-O&G manufacturing industries2 :

The Investment Coordinating Board of the Republic of Indonesia

40,000 GDP per capita (PPP) was

The Investment Coordinating Board of the Republic of Indonesia

The Investment Coordinating Board of the Republic of Indonesia

Home appliances and smartphone penetration rates

TV set 94% 98%

Refrigerator 38% 68%

VCD player 59% 47%

Blender/food processor/juice extractor 26% 42%

Smart Phone 5% (2011) 30%

Air conditioners, refrigerators and

* International Trade Centre (ITC) based on BPS figures

© 2014 by Indonesian Investment Coordinating Board. All rights reserved

International brands often operate Indonesian electronics brands are

The Investment Coordinating Board of the Republic of Indonesia

The Investment Coordinating Board of the Republic of Indonesia

Small domestic companies have become large groups investing

The Investment Coordinating Board of the Republic of Indonesia

Harjit Gil, Chief Executive Officer,

“The centre re-enforces existing relationships with local partners by

Tan Teck Lee,

Mr Dick Chandra Adrianus, President Director,

The Investment Coordinating Board of the Republic of Indonesia

““Maspion Group currently exports to international markets but the global

Mr Siauw Tjung Ming

Global electronics producer Panasonic has expanded

Organisations supporting Indonesia’s electronics sector are growing in

The Investment Coordinating Board of the Republic of Indonesia

Indonesian Electric Manufacturers

The Indonesian Electrical Lighting Industry

APTIKOM (Informatics and Computer Science University Association)

The Electronic Engineering Polytechnic Institute of Surabaya (EEPIS)

Indonesia ICT Institute (IDICTI)

Universitas Indonesia – Faculty of Engineering - Department of

Bandung Institute of Technology (ITB)

Indonesia has the 2nd

Source: fDi Benchmark (Financial Times)

Indonesia has the 3rd

Source: fDi Benchmark (Financial Times)

Indonesia has the lowest

Indonesia has the 2nd

© 2014 by Indonesian Investment Coordinating Board. All rights reserved

Electronics is a key priority development industry for the Government.

The Investment Coordinating Board of the Republic of Indonesia

FDI CONDITIONS: CLOSED TO FDI:

The Investment Coordinating Board of the Republic of Indonesia

A variety of sectors are covered in On machines and materials used

2-year import duty exemption or 4

143 business segments, including

Source: BKPM (2015)

As the largest archipelagic country in the