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STUDY ON THE FEASIBILITY OF A KANEPACKAGE INVESTMENT IN INDONESIA

Dennis R. Tapay March 2011

Table of Contents
Executive Summary General Information The Indonesian Economy Feasibility Components Marketing Methods of Incorporation Business Structure Minimum Capital Requirement Normal Length of setting up a Company Employment Tax, Taxpayers and Taxable Income Accounting Rules and Regulations Type of Company and Requirement for Directors and Officers Environmental Human resources Land price, Office Rents Car Rental Cost and Toll fees Utilities, Power, Water, Communications and Internet Apartments and Accommodation Business Models Available Business Models Recommended Business Model References

Executive Summary
In all our feasibility studies we give high priority to a thorough analysis of the market and the development of a provisional marketing and sales strategy. Local circumstances, business environment, consumer culture and product appreciation are as vital as the volume of the market, pricing, margins and mark-ups and analysis of the competition. For Kanepackage, this study is a pre-requisite for a more intensive detailing of the feasibility of a business investment in Indonesia, that this study is geared, primarily, on scanning for possible points of market, supply chain and the possibility of success. There are some areas stated in this document that required first-hand experience, some, through interviews, while some, through the documents referred to by authorized government agencies and/or experienced business entities in Indonesia This document is divided into four major sections: (1) General Information, which introduces Indonesia, in general, and the selected locations of study, in particular; (2) The Indonesian Economy, which covers a birds eye view of the current economic indications of the country, in general, and the selected locations of study, in particular; (3) Feasibility Components, that ranges from the cost of operating to cost of living, with particular limitations on the selected locations of study, the amount of persons/agencies/companies interviewed and the documents referred to; and (4) Business Model, that aims to present ideas for business in Indonesia in a way that costs, location, supply, demand, ease of doing business, among others, are taken into consideration. Some of the elements presented in this document may require further examination, as there is a qualified difference between a general estimation and exact quotation, or between a current and a past estimation. However, this study on the feasibility of a business investment measures not only the tangible financial qualification, but also the intangible benefit of future success, if at all, feasible.

Introduction
The country is rich in natural resources. While 90% of the population is engaged in agriculture, oil and gas contribute 70% of total export earnings and 60% of the government revenues. However, fluctuations in world prices of traditional export commodities have led to a change in recent years in the structure of the economy. Tourism is gaining a more important sector as a foreign exchange earner. To production and growth in the industry, the government has formulated new policies and improved facilities. Significant progress has been made in communications and transportation and since 1976, Indonesia has had its own communications satellite system which has enabled rapid expansion of telephone, television and broadcast facilities to all 27 provinces. Air and sea ports are being extended to cater to the growing traffic on both domestic and international sectors, of passengers as well as freight. Besides oil and liquefied natural gas (LNG), forestry products, rubber, coffee, tea, tin, nickel, coper, palm products and fish make important contributions to export earnings. In recent years a number of steps have been taken to promote and stimulate non-oil exports which include handicrafts, textiles, precious metals, tea, tobacco, cement, fertilizers as well as manufactured goods. EENI -The Global Business School

General Information INDONESIA


Indonesia is a nation of islands. According to the country's Naval Hydro-Oceanographic Office, it contains some 17,508 islands, although only about 6,000 are inhabited. In fact, the country's island identity is part of its name. "Indonesia" has its roots in two Greek words: Indos meaning "Indian" and Nesos which means "islands." Across the country, the land is generally covered by thick tropical rain forests, where fertile soil is continuously replenished by volcanic eruptions like those on the island of Java . But Indonesia is also mountainous, with some 400 volcanoes, of which 100 are still active.

Climate Tropical climate with Dry season (Jun-Sep) and Rainy season (Dec-Mar). Indonesia 's monsoon-type climate changes approximately every six months, although, in recent years, global warming has somewhat disrupted weather patterns. The dry season for the west part of Indonesia is from May to October and the wet season is from November to April. The dry and wet seasons in eastern Indonesia are the opposite. Due to the large number of islands and mountains in the country, temperatures vary. Along the coastal plains, the average is 28C (82F); for inland and mountain areas, it is 26C (79F); and, in the higher mountain areas, the average is around 23C (73F). Like other tropical countries, Indonesia has a high average relative humidity, usually between 73 and 87 percent. Language There are more than 700 languages and dialects spoken in the archipelago. They normally belong to the different ethnic groups of the population. Some of the distinctly different local languages are: Acehnese, Batak, Sundanese, Javanese, Sasak, Tetum of Timor, Dayak, Minahasa, Toraja, Buginese, Halmahera, Ambonese, Ceramese, and several Irianese languages. To make the picture even more colorful, these languages are also spoken in different dialects. Bahasa Indonesia is the national language. It is similar to Malay and written in Roman script based on European orthography. English is the most prevalent foreign language. Also, some Dutch is still spoken and understood in the bigger cities and French increasing in its popularity at the better hotels and restaurants. Government Policy Under President Susilo Bambang Yudhoyono, the Government of Indonesia has adopted a "Pro-growth, pro-poor, pro-employment" economy policy. The plan involves a number of specific initiatives, including a vigorous "100-Day Agenda," reforming the country's regulatory framework, attracting continued foreign investment, tackling corruption, and removing artificial

economic distortions like the recently rescinded oil subsidy. Currency The official currency of Indonesia is Rupiah (Rp). The currency in the country is issued and controlled by the Bank of Indonesia. The ISO 4217 currency code for the currency of the nation is IDR and the symbol on all the bank notes and coins of Indonesia is Rp. Religion Islam (88.6%), Protestant (5.8%), Catholic (3.1%), Hindu (1.7%), Buddhism (0.6%), Confucianism (0.1%), Others (0.1%) (Statistics from Central Bureau of Statistics, Indonesia) Culture Indonesia's active history has encouraged the growth of many unique cultures. On Java, the Javanese of Central and East Java are known for having several layers of formality in their language. In Javanese, to speak to a boss and then to a child is like speaking two different languages. The Toraja of Sulawesi are famous for their elaborate funeral ceremonies. Often several days long, these ceremonies bring the whole village together in a feast, a procession, and a hillside burial. And the Minangkabau of Sumatra still maintain a matrilineal society. Everything from houses to animals is inherited from mother to daughter.

General Information JAKARTA


Jakarta is located on the northwest coast of Java, at the mouth of the Ciliwung River on Jakarta Bay, which is an inlet of the Java Sea. Officially, the area of the Jakarta Special District is 662 km2 of land area and 6,977 km2 of sea area. Jakarta lies in a low, flat basin, averaging 7 metres. (23 ft) above sea level;40% of Jakarta, particularly the northern areas, is below sea level, while the southern parts are comparatively hilly. Rivers flow from the Puncak highlands to the south of the city, across the city northwards towards the Java Sea; the most important is the Ciliwung River, which divides the city into the western and eastern principalities. Other rivers include the Pesanggrahan, and Sunter.

Area & Location: Lies on the northwest coast of the island of Java, Jakarta is located at 6.1333 Latitude North and 106.75 Longitude East. The city, which covers a total area of 661.52 sq. km, has a population of 8,792,000 making it the ninth densest city in the world. Climate : Jakarta has a hot and humid tropical wet and dry climate (Aw) according to the Kppen climate classification system. Despite being located relatively close to the equator, the city has distinct wet and dry seasons. Wet seasons in Jakarta cover the majority of the year, running from November through June. The remaining four months forms the citys dry season. Located in the western-part of Indonesia, Jakarta's wet season rainfall peak is January with average monthly rainfall of 385 millimetres (15.2 in), and its dry season low point is July with a monthly average of 31 millimetres (1.2 in).
ECONOMY: Jakarta's economy depends heavily on financial service, trade, and manufacturing. Industry includes electronics, automotive, chemicals, mechanical engineering and biomedical sciences manufacturing. In 2009, 13% of the population had an income per capita in excess of US$ 10,000 (Rp 108,000,000).

Transportation : Jakarta is strained by transportation problems. The city still suffers a lack of urban public transport services due to the prioritized development of road networks, which mostly accommodate private vehicles. Most trips, however, are undertaken by non-motorized transportation (particularly

walking) and numerous modes of public or demand-responsive transportation services.


Bright orange and noisy ... easily describes a bajaj. These traditional transportation vehicles became popular in India where they were developed with Vespa and later imported to and built in Indonesia. Similar vehicles are known as rickshaw in Africa, Tuk-Tuk in Thailand and MotoTaxi in Peru. With an estimated 20,000 bajaj in Jakarta.

Air: Soekarno-Hatta International Airport (CGK) is the main airport serving the greater
Jakarta area. The airport is named after the first President of Indonesia, Soekarno, and the

first vice-president, Mohammad Hatta. The airport is often called Cengkareng by Indonesians. The airport's IATA code, CGK, originates from the name of the Cengkareng locality, a district situated to the northwest of the city. It is Indonesia's busiest airport handling nearly 40 million passengers annually. A second airport, Halim Perdanakusuma International Airport (HLP) serves mostly private and VIP/presidential flights. Other airports in the Jabotabek metropolitan area include Pondok Cabe Airport and an airfield on Pulau Panjang, part of the Thousand Island archipelago.

Sea : Jakarta's main seaport Tanjung Priok serves many ferry connections to different parts
of Indonesia. Major Industries : It is the country's administrative, commercial, industrial, and transportation center, with food-processing plants, ironworks, automobile-assembly plants, textile mills, chemical factories, tanneries, sawmills, electronics plants, and printing establishments. GDP per Capita: $3,800 Major Exports: Textile, Apparel, Fuels, Electrical Appliances, Pulp, Paper & Plywood Major Foreign Exchange Counters: American Express & Standard Chartered Major Industrial Areas: Cilandak, Pulogadung, Jababeka & Cakung-Cilincing Major Business Hubs: Jakarta Stock Exchange, Bidakara Convention Centre, Jakarta International Exhibition Center, Balai Sidang Jakarta Convention Center, Kartika Expo Center, Jakarta World Trade Center, Semanggi Flyover, Jenderal Sudirman & MH Thamrin Streets, Jenderal Gatot Subroto, Letjen S. Parman Streets & Kuningan Complex

The Indonesian Economy


The Economy of Indonesia is the largest economy in Southeast Asia, is one of the emerging market economies of the world, and also the member of G-20 major economies. It has a market economy in which the government plays a significant role by owning more than 164 state-owned enterprises and administers prices on several basic goods, including fuel, rice, and electricity. In the aftermath of the financial and economic crisis that began in mid-1997, the government took custody of a significant portion of private sector assets through acquisition of nonperforming bank loans and corporate assets through the debt restructuring process. Since 2004, the national economy has recovered and undergone another period of rapid economic growth. There are different factors affecting the Indonesian economy recently. These are, but not limited to: Political instability The rising cost of labor

The general inefficiency of public administration The judicial costs of doing business in the country The uncertainty in rules, responsibilities, and resources of the sub-national governments caused by decentralization

Indonesia Economic Structure: Major Sectors


The major economic sectors of Indonesia are as follows: Primary Sector: While being the biggest employment sector of the country, agriculture includes three types of farming. These include smallholder farming, irrigated rice terraces and smallholder cash cropping. Some of the major produce of Indonesia includes rice, tea, coffee, cocoa, spices, rubber, copra, peanuts, eggs, pork, poultry and palm oil. Some crops are cultivated mainly due to the even distribution of rainfall and consistent monsoon climate in Indonesia. The country is the fourth largest producer of rice and coffee in the world. It exported 271,000 tons of coffee in 2007. Secondary Sector : The manufacturing sector of Indonesia contributes 27.9% to the countrys GDP. The industrial production rate in the country stood at 2% as of 2009. Tertiary Sector : With 38.5% contribution to the countrys GDP, the services sector remains a Pillar of Indonesias economy. The value of the countrys banking system stood at $220-billion As of 2008. The growing IT services sector was impacted to some extent by the global economic downturn in the late 2000s. However, there are expectations of about 15% compound annual growth rate (CAGR) during the period of 2010-2014, The countrys hospitality industry is a big booster of the economy. According to the Tourism and Culture Ministry, there were 493,799 tourist visits in September 2009 alone, despite the recession.
IMPORTS-EXPORTS:

Foreign Trade Indicators Imports of Goods (million USD) Exports of Goods (million USD) Imports of Services (million USD) Exports of Services (million USD)
Source: WTO - World Trade Organization

2005 2006 2007 75,533 80,346 92,777 86,996 103,527 118,013 21,836 21,175 24,075 12,571 11,093 12,074

2008 2009 126,950 91,749 139,606 119,481 27,994 27,626 14,731 13,242

Major Exports: Animal & vegetables oils , Electrical Appliances , Plywood, Textiles, Rubber , Foodstuffs & live animals, Beverages & tobacco, Raw materials, inedible , Minerals fuels, lubricants & related materials, Chemicals. Major Imports : Machinery & Equipment, Chemicals, Fuels, Foodstuffs & live animals, Beverages & tobacco, Raw materials, inedible, Minerals fuels, lubricants & related

Materials, Animal & vegetable oils & fats.

Feasibility Components
1) Marketing

Customers in Cikarang Bekasi (Jakarta Province) Biggest Targets : PT Indonesia Epson Industry PT Toshiba Consumer Prod. Ind. PT Shindengen Indonesia PT Panasonic Shikoku Electronics East Jakarta Industrial Park (EJIP) (Japanese Manufacturing ) - PT Fuji Presisi-Tool Indonesia - PT Japan AE Power Systems - PT Katolec Indonesia - PT Kyowa Indonesia - PT Muramoto Eletronika Indonesia - PT Omron MFG of Indonesia - PT Sansyu Electronics Indonesia - PT Sanyo Indonesia - PT SMEP Pacific - PT SMT Indonesia - PT Space Indonesia - PT Standard Indonesia Industry - PT Sumitronics Indonesia - PT Tsukasa Manufacturing of Indonesia - PT Yamani Spring Indonesia MM2100 Industrial Town - PT Enomoto Srikandi - PT Asahi Best Base Indonesia - PT Denso Indonesia - PT M.A.S. Indonesia - PT NOK Indonesia - PT Yutaka Manufacturing Indonesia - PT Progress Toyo (Indonesia) - PT Higashifuji Indonesia - PT Shimei Electric Indonesia - PT Bando Electronics - PT Astra Honda Motor - PT Yutaka Manufacturing Indonesia

PT Yamaha Music Manufacturing Asia PT Asmo Indonesia PT J.S.T. Indonesia PT Yamaha Indonesia Motor Manufacturing PT Shinsei Denshi Indonesia

Suppliers in Jakarta Global Print (Printing Company/Percentakan) Offset Printing and packaging Otani Paper Kertas Fax Offset Printing Percentakan Murah Packaging and Offset Printing Pura Packaging Packaging Bukit Agung Printing & Packaging Offset and Packaging PT. Guru Indonesia Offset Printing , Styrofoam and Packaging Hari Suya Mandiri Printing Offset Printing and Packaging Balicitra Inti, PT Offset Printing and Packaging Tigamutiara Grafikapratama, PT Offset Printing, Laminating and Packaging Tiki Kencana Sakti, PT Offset Printing and Packaging Delta Utama Boxindo, PT Packaging , Corrugated carton boxes Pancasari, PT (Jakarta Branch) Corrugated boxes , paper and board , packaging and printing PT D&D Packaging Indonesia Packaging PT Crestec Indonesia Offset and Packaging PT Oriental Asahi JP Carton Box Manufacturing of High Quality Corrugated carton boxes
2) Incorporation method

The Investment Coordinating Board (BKPM), the government body which processes and handles FDI companies, issued an important deregulation package on PMA (Penanaman Modal Asing) in May 1994 referred to as PP-20/1994. It was seen as a very significant step toward a much more conducive and attractive investment environment in Indonesia. The regulation: 1. Allows 100% FDI investment in selected areas of business 2. Limits foreign direct investment to 95%, with a minimum of 5% ownership by an Indonesian 3. Allows FDI investment with certain conditions 4. Stipulates the sectors which are closed to FDI investment 5. Registration of company address with local council (domicile) 6. IRD registration (NPWP + PKP) 7. Registration with the Department of Industry and Trade (TDP)
Manufacturing and other sector Foreign direct investment in the manufacturing, industrial or non-financial services sector is licensed by BKPM. The Investment Coordinating Board (BKPM) is responsible for promoting foreign and domestic investment and approving most project proposals in Indonesia.

Investment in the areas of banking, insurance, general mining, oil and natural exploration, production and related activities are licensed by other regulatory bodies. 3) Business Structure A. Companies (Limited Liability Company or Perusahaan Terbatas (PT) - Limited Liability under Indonesian Law is a legal person with a fixed capital divided into shares and with the liability of each shareholder limited to the extent of the par value of the shares held.
A.1. GOVERNING DOCUMENTS A.2. DIRECTORS A.3. AUDIT REQUIREMENTS AND PRACTICES A.4. SHAREHOLDINGS BY NON-RESIDENTS A.5. FORMING A COMPANY

BKPM is an investment service agency of the Indonesian Government created with the purpose to effectively implement the enactment of law on foreign as well as domestic investment. At the time, BKPM, chaired by Head of BKPM, is a non-departmental government agency serving under and directly responsible to the President of the Republic of Indonesia. An approval in investment stage can be categorized in two main types: approval for domestic investment and approval for foreign investment. Below is the flow chart of approval in investment stage.

B. Foreign Companies and Branches The investment law requires that a foreign owned enterprise operating wholly or mostly in Indonesia as a separate business unit must be organized under Indonesian law and domiciled in Indonesia. Branches are not normally permitted, except for foreign banks and oil and gas companies. B1.Starting a Business in Indonesia It requires 9 procedures, takes 47 days , and costs 22.34% GNI per capita to start a business in Indonesia ( 593.99 total costs in USD).

B2.The steps to building a warehouse in Indonesia It requires 14 days procedures, takes 160 days, and costs 173.27 % GNI per capita to build a warehouse in Indonesia (USD4,686.73 total costs). C. Partnerships There is a collection of recognized legal entities for setting up a business in Indonesia : a. Persekutuan Perdata (PP) b. Firma (Fa) c. Persekutuan Komanditer ( Commanditaire Vennootschap CV ) D. Types of business organizations in Indonesia Perseroan Terbatas (PT) Limited Liability Companies (PT) can include, and are classified as private and public companies. They are governed by the 1996 Corporation Law. PTs are managed by a Board of Directors. NonIndonesian citizens may not be directors or foreign investment commissioners in a PT. Representative Offices Foreign representative offices are typically formed to facilitate transactions between local and foreign buyers and suppliers. A Representative Office facilitates making such transactions easier but a Representative Office cannot perform operating activities characterized by a PT. Joint Ventures Foreign direct investment companies may be in the form of Joint Ventures between foreign and domestic capital owned by Indonesian citizens or organizations, or through straight investment. Badan Usaha Milik Negara (BUMN) These are companies owned by the government. Perusahaan Dagang (PD) These entities are known as private trading companies, most of which are sole proprietorships. Limited Liability Partnerships (CV) This legal designation only applies to the silent partners in a given partnership. Firma These are unlimited liability partnerships, more commonly known as disclosed partnerships. General Rule Approval/Clearances Required for New Projects Representative Office from Ministry of Industry & Trade - for bilateral trade Representative Office from Ministry of Public Work - for consultant or

contractor Representative Office from Ministry of Mining - for mining activities Representative Office from Ministry of Finance - for banking Representative Office from Investment Board (BKPM) - regional representative

To establish a Representative Office with permission from the Ministry of Industry and Trade, the company's head office needs to issue three letters:

Letter of Intent - stating the intention of the company to establish a representative office Letter of Appointment - stating the appointment of the chief representative Letter of Statement - stating that the Chief Representative will follow Indonesian regulations.
4) Requirement of minimum capital BKPM has not set a minimum amount of total investment, capital or equity necessary for a foreign investment project to be approved. BKPM will consider the likely capital requirements for investments in the business sector applied for in determining whether a proposed investment is adequately capitalized. Generally, investments in the service sectors are approved at much lower levels of investment than investments in manufacturing or other industries with high equipment needs. 5) Normal length of setting up a company Between 2 to 4 months upon completion of application documents at the Ministry of Commerce, depending on the complexity of manufacturing process and environmental compliance. 6) Employment Minimum number of employees The ideal number is 10, so that protection from law is at maximum. Less than 10 can be approved, depending on the presented business plan to the FDI Approval Board via Automatic Route. Average wages and salary (basic) Operations: Legal minimum wage : USD121.5 (RP 1,118,009/month) 1. Unskilled RP 1,045,000 (USD 113.53),-up to RP 1,110,000 (USD 120.58) per month 2. Skilled RP 1,200,650 (USD 130.43),-up to RP 1,947,000 (USD211.52 ) per month 3. Clerical Staff RP 1,200,650 (USD 130.43),-up to RP 1,947,000 (USD 211.52 ) per month 4. Supervisor RP 1,947,000 (USD211.52),-up to RP4,543,000(USD 493.53) per month 5. Senior English RP1,947,000 (USD211.52),-up to RP3,894,000(USD 423.03) per month Speaking Secretary 6. Senior RP 7,788,000 (USD846.06),-up to RP20,768,000(USD 2,256) per month Manager 7. Production RP 11,682,000 (USD1269),-up to RP15,576,000(USD 1,692) per month Manager

Probationary period and regular employment Probation period is normally three (3) months. Contractual period may be three (3) to six (6) months, depending on the nature of work. Regularization is automatic after the release of evaluation and the end of the probation period. Everything should be done in paper, because every employee is a member of the trade union automatically. Labor Mandates Trade Unions necessary (at the start of the companys operations) Working hours 8 hours per day (maximum of 40 hrs per week) Overtime limited to 50 hours per quarter Overtime Pay twice the regular pay Paid Leaves National Holidays, Festival Holidays, Annual Leave Provident Fund employers contribution is 12% of salary Gratuity Pay equivalent to 15 days for every year of service Effective Salary Amount Since there are a number of mandatory benefits that are needed to be given to the employees, the actual and effective salary is around 20%-22% more of the basic salary stated above. In comparison, the Philippines has around 22%-23% effective salary rate, while Vietnam has between 15%-17%, depending on the industry standard. 7) Tax, Taxpayers and Taxable income General Tax Income tax : The financial year for the purpose of income tax is from 1st April st to 31 March each year. Any shortfall of tax should be settled by the 25th day of the third month following the end of the book year. Overpayments of tax may be recovered, but only after a tax audit has been completed.The monthly tax period is similar as monthly calendar. The monthly tax is due on the 10th day of the following month of the monthly tax period for most types of taxes, and on the 15th of the following month of the monthly tax period for Value Added Tax. While monthly tax returns must be filed by the 20th of month following the monthly tax period.

Taxpayers
The tax law defines a tax subject to include: a. an individual b. an undivided estate as a unit c. a corporation, including a limited liability corporation, a limited partnership, other forms of limited liability entity, a state-owned or regional enterprise in whatever name and form, a partnership, an association, a firm ,a cooperative, a foundation or similar organization, an institution, a pension fund and other forms of business entity d. a permanent establishment is any establishment that is regularly used to carry on business in Indonesia by an organization not set up or domiciled in Indonesia.

Taxable income
Taxable income is calculated after allowable deductions. For individuals there are income tax

exclusions which are set at relatively low income levels. Individuals are broadly liable to income tax on cash income. Benefits in kind provided by employers to employees are not taxable to individuals but are non-deductible against corporate taxable income. Employers are required to withhold income tax from employees and deposit each month with the State Treasury. On the average, VAT for consumer products, services and other necessities range from 1% to 12.5%. There are other goods and services, however, which are taxed from 20% to 33%. Importation Tax Since different states have different tax code, we used the average import tax on: Paper (rolls, boards, etc.) 24% Plastics (olefins, polymers, styrene) 25.5% 8) Accounting rules and regulation The overall standard used in recording is International Standard. Definitive Indian Standards are as follow: Income tax : The financial year for the purpose of income tax is from 1 st April to 31 March each year. Sales tax : Both Central Sales Tax Registration number as well as the Local Sales Tax Registration number must be obtained. Profession tax : Such payments are one-time payments to be made on or before a specified date. An application must be made to obtain the Profession Tax Registration Number.
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9) Type of Company and Requirement for a director and number of officers General Rule Minimum of two (2) directors Both foreigners as directors is legal. Registration to Foreign Regional Registration Office (for stay more than 6 months) Joint-Venture Company A Deed of Partnership in writing paper must be made that clearly specifies the name of the partnership firm, the names of the partners, the capital to be contributed by each partner, the profit or loss sharing ratio between partners, the duties, rights, powers and obligations of each partner and other relevant details. The maximum number of partners which are permissible in the company is 20. A partnership firm must be registered with the Registrar of Firms. Corporation A private limited company can be formed with a minimum of 2 members.

A private limited company can have a maximum of 50 members excluding employee-members. A Memorandum of Association and Articles of Association have to be filed with the Registrar of Companies in order to incorporate a company. Members can become directors; outsiders can be appointed as directors. The funding may be provided by the investor-members and the management may be in the hands of the promoter-members.

10) Environmental Environmental Laws Act Regarding Waste Management 2008 Environmental Management, Law Concerning (Law No.23,1997) Law No. 41/1999 on Forestry 11) Human Resources Workers Social Security Program JAMSOSTEK (JAMINAN SOSIAL TENAGAKERJA) / Indonesian Worker Social Security Employees Social Security means the protection for the employee in the form of cash benefits, for partial replacement of the loss or the reduction of income and services, as a results of circumstances suffered by the employee due to employment accident , sickness, maternity, childbirth , old age and death. Jamsostek (Workers Social Security Program) have 4 programs besides member prosperity improvement fund, are: a. Employment Accident Insurance assurance must be paid ranging from 0.24% - 1.74%. (Refer to Government Regulation, Peraturan Pemerintah (PP) no 64 years 2005. Employment Accident Benefit : The cost of transportation : *Land (RP400,000) USD 43.45 *Sea (RP750,000) USD 81.47 * Air (RP 1,500,000) USD 162.95 The cost of medical examination, treatment and/or hospital car max of RP 12,000,000 (USD1303.63) The cost of rehabilitation, max of RP 2,000,000 (USD217.27) Cash allowance consist of : *Temporary disability allowance * Permanent-partial disability allowance * Permanent total disability allowance * Disability allowance (Refer to Government Regulation, Peraturan Pemerintah (PP) No.76 year 2007 b. Death Insurance - The employee who died not as a result of employment accident ,

his/her family is entitled the death benefits. The company must pay death for worker 0.3% and payment maximum RP 12,000,000 (USD1303.63) consisting of RP10,000,000 (USD1086.36),- death endowment and RP12,000,000 (USD1303.63)-funeral expenses and regular endowment. c. Retirement Insurance amount payable for the program is mentioned in the following : Paid by company Paid by worker Withholding Tax retirement benefits is payable in lump-sum, or periodical, or partly lump-sum and periodical, to the employee in cases of: Attaining the age of 55 years old Total and permanent disability establishment by medical doctor Able to pay after 5 years of membership and 1(one) grace period. d. Health Care Insurance company is required to provide every worker with health insurance by marital status : Single employees : 3% from wage (maximum RP 1,000,000 (USD108.6) ) Married employees : 6% from wage (maximum RP 1,000,000 (USD108.6) ) The employees, the spouse ,and three children are entitled to the health care benefits. The Health Care Benefits include : Outpatient primary care Outpatient specialist care Inpatient hospital care Maternity and delivery care Diagnostic support Special care Emergency care 12) Land price, office rents, etc. Store / Showroom rent in the city center the monthly per sq.meter is between USD60.8 (RP560,000) to USD71.7 (660,000). Facility : Grand Indonesia , maintenance fee included, tax not included 13) Car Rental cost and Toll fees Car Rental (with driver and fuel not included) Per Day (8 hours) USD 39.55 (plus USD 3.8 / 1 hour overtime ) Per Month from USD 988.75 to USD 1186.5 (depending on the car) Toll Fee (minimum-average) Truck USD 3 to USD 5 Car USD 1 to USD 3 Transport Companies
Continental Duta International, PT.- Grand Pluit Mall Blok B-6, Jl.Raya Pluit Selatan No.1

Jakarta 14440, Indonesia SBA Transport PT-Gading Kirana Timur Blk A10 No. 25 Kelapa Gading, Jakarta Indonesia PT.Alantik Multitrans Utama - 6th Floor, Plaza Summarecon, JLN. Perintis Kemerdekaan, NO. 42 ,Jakarta 13210 Indonesia Gantara Freight & Logistics - Jl.Kwitang Raya 35-36 Jakarta , 10420 Indonesia Angkutan Container Wishnulintas -Jl. Ende No. 42 Tanjung Priok Jakarta, 14310 Indonesia Indo Honey Well Indo PT.-JL.Mangga Besar 4R/no.12 Jakarta barat, Jakarta barat 11160 Indonesia

14) Utilities (Power, Water, Communications, Internet) Electricity - basic monthly charge is USD3.2 (RP29,500) and rate per kWh is USD0.05(RP475) for Business use. - basic monthly charge between USD0.53 to 2.73(RP30,500) rate per kWh between USD0.03 to 0.34 (RP530) for General use. Source : PLN(charges based on current regulations) Tax not included, over 20kVA Water - basic monthly charge is USD12.2 (RP112,065) and rate per cu.m USD01.4 (RP12,550) for Business use. Source : water authority (charges based on current regulations) Tax not included Group 4B , Basic monthly charges charge: for 1.5-inch meter category, meter maintenance charge of RP22,000 plus fixed charge RP90,065. Charge per cu.m is morethan 20cu.m - basic monthly charge is USD 1.1(RP10,440) and rate per cu.m is USD1.1 (RP9,800) for General use. Source : water authority (charges based on current regulations) Tax not included Group 4A , Basic monthly charges for 0.5-inch meter category, meter maintenance charge of RP3,800 plus fixed charge RP6,640. Charge per cu.m is morethan 20cu.m Communications - basic monthly charge is USD6.3(RP57,600) and call charge per min .is USD0.01 (RP125) for Business use. - basic monthly charge is USD3.5(RP32,600) and call charge per min .is USD0.01 (RP125) for General use. Source : Telecom ,Basic charges is 10 % , VAT not included , Toll per minute is Charge for call up to 20km 9:00am-3:00pm( toll per 2 min.converted to toll per min.) Internet Connection fee ( Broadband) is USD32 (RP295,000) Source : Fastnet 768 kbps , Initial contract charge of RP430000(USD46.71) (RP100,000 (USD10.86) installation charge , RP330,000 (USD35.85) modem charge, tax included) required separately, 10% VAT not included ,Basic charges is 10 % , VAT not included . 15) Apartments/Accommodations in Jakarta BetweenUSD1,800 to 3,675 RP16,569,000 to 33,828,375
Area : Sudirman, Pondok Indah Condominium with swimming pool 150-220 sq.m Maintenance fee included, tax not included