Dendy Apriandi司长在演讲中
印尼投资与下游产业部政策监管司长出席京师律所开业仪式
Dendy Apriandi：
新政府实现8%经济增长关键在投资
未来8%的年增长率靠什么实现？
VERBATIM
Director of Investment Deregulation
Ministry of Investment and Downstream Industry/BKPM
Jingsh Law Firm Indonesia Jakarta Cooperative Office Opening Ceremony 2024
Jakarta, 18 of November 2024
______________________________
Good morning,
Distinguished Guest, Ladies and Gentlemen
A very good day.
Allow me to begin by expressing our appreciation and congratulations to the Jingsh Law Firm for the Opening Ceremony of the Jingsh Law Firm Jakarta Cooperative Office and inviting us to be part of it. My name is Dendy Apriandi, Director of Investment Deregulation at the Ministry of Investment and Downstream Industry/Investment Coordinating Board.
Today, I will be discussing the investment climate in Indonesia and the policies that are in place to support economic growth. I will also be providing insights into the investment opportunities in Indonesia. I hope that my presentation will be informative and helpful to you all. Some of you may have already know about Indonesia or maybe have already conducted a business in Indonesia. So, for those who haven’t, please allow me to tell you why Indonesia is a very attractive country for investment.
[SLIDE 2]
I will begin my presentation by providing an overview of Indonesia's investment target and realization, highlighting key trends and developments.
[SLIDE 3]
Our newly inaugurated President Prabowo has set an ambitious target for economic growth, aiming for an impressive 8% annual growth rate from 2025 to 2029. The target is a significant jump from the current 5.2% growth rate. To achieve this, a substantial investment of IDR 13.528 trillion is needed over the next five years. A key driver of this growth will be increased investment, averaging a robust 16.75% per year. This growth is expected to create significant job opportunities, absorbing an average of 3.47 million workers per year. Overall, this infographic paints a picture of a dynamic and ambitious economic plan for Indonesia. By increasing investment and creating jobs, the country aims to achieve substantial economic growth and improve the lives of its citizens.
[SLIDE 4]
I am delighted to share with you that in the past ten years, we have witnessed a significant surge in investment realization. This is a testament to the conducive business environment fostered by successive governments, coupled with the immense potential of the Indonesian market. As you can see on this slide, Indonesia’s investment realization has shown a significant upward trend, with a total of Rp 9,117.4 trillion invested from 2014 to 2024. The continuous growth, especially during the 'Kabinet Indonesia Maju' period, indicates a strong investment climate and the government's commitment to economic development. As we look ahead, the future of Indonesia's investment landscape is brimming with opportunities. We are committed to further streamlining regulations, enhancing infrastructure, and fostering innovation to attract even more investment.
[SLIDE 5]
Now I'd like to draw your attention to the growing influence of China in Indonesia's investment landscape. As you can see from this slide, China has solidified its position as one of the top five countries of origin for investment realization in Indonesia, with a substantial US$5.78 billion invested from January to September 2024. This surge in Chinese investment is a testament to the increasing economic ties between our two nations. It underscores China's confidence in Indonesia's potential and its strategic importance as a key market. We believe that this trend will continue to strengthen, driving economic growth and creating new opportunities for both countries.
[SLIDE 6]
Moving on to the next slide, this data shows that we've achieved a significant milestone with a total investment realization of Rp 1,261.43 trillion. This represents a remarkable year-on-year growth of 19.78%. This achievement is further underscored by the positive trend in labor absorption, with 1,875,214 people gaining employment. Additionally, we're witnessing a balanced distribution of investment across regions. While Java remains a significant contributor, we're seeing a notable increase in investment outside of Java, accounting for 50.34% of the total.
Furthermore, the mix of Foreign Direct Investment (FDI) and Domestic Direct Investment (DDI) demonstrates a strong and balanced approach. FDI contributes 51.88% while DDI contributes 48.12%. These promising figures reflect the positive business climate, strong economic fundamentals, and the government's commitment to fostering investment.
[SLIDE 7]
Let's delve deeper into the sectoral breakdown of investment realization for the period of January to September 2024. As you can see, the Metal, Metal Goods, Except Machinery, and Equipment Industry emerges as the top subsector, attracting a significant investment of Rp 178.04 trillion, accounting for 14.11% of the total. This sector's strong performance underscores its crucial role in driving industrial growth and economic development. Following closely behind is the Transportation, Warehouse, and Telecommunication subsector, with an investment of Rp 147.25 Trillion (11.67%). This highlights the increasing emphasis on improving infrastructure and connectivity.
The Mining sector secures the third position with Rp 132.53 Trillion (10.51%), reflecting the continued importance of natural resources in our economy. The Housing, Industrial Estate and Office Building subsector and Other Services subsector follow, contributing 7.26% and 6.87% respectively. These figures demonstrate a diversified investment landscape, with various sectors contributing to the overall growth and development of our nation.
[SLIDE 8]
Nowlet's delve deeper into the trends of Chinese investment in Indonesia over the past five years. The Metal-Based Processing Industry has been the primary sector attracting Chinese investment, accounting for a significant 42% of the total. This highlights the growing importance of Indonesia as a manufacturing hub for China. The Transportation, Warehouse, and Telecommunications sector follows closely, with 25% of the investment. This underscores China's interest in improving Indonesia's infrastructure and connectivity. Other key sectors attracting Chinese investment include Chemical, Pharmaceutical Industry, Electricity, Gas and Water, and Residential, Industrial, and Office Areas.
In terms of location, Central Sulawesi has emerged as the top destination for Chinese investment, capturing 35% of the total. This is likely due to the region's rich natural resources and strategic location. Other provinces such as West Java, North Maluku, Jakarta Capital Territory, and Banten have also attracted substantial Chinese investment, demonstrating the spread of interest across various regions in Indonesia. These insights highlight the growing economic partnership between China and Indonesia. By understanding these trends, we can further capitalize on opportunities and strengthen our economic ties.
[SLIDE 9]
Moving to the next part of my presentation, we will explore about update on investment policies in Indonesia, from the formulation of Omnibus Law on Job Creation to tax incentives for investors in attracting investors to invest in Indonesia.
[SLIDE 10]
The Indonesian government, has introduced the Omnibus Law on Job Creation to streamline the business environment and attract greater investment. This comprehensive legislation simplifies an array of regulations, revising 79 previously complex laws into a single, more accessible law. By doing so, the Omnibus Law aims to expedite business licensing, facilitate land acquisition, and foster a more supportive environment for research and innovation. Additionally, it seeks to enhance cooperation with MSMEs, expand economic zones, and strengthen government administration, ultimately creating a more conducive atmosphere for businesses to thrive.
[SLIDE 11]
As a significant reform under the Job Creation Law, the Indonesian government has introduced an upgraded version of the one-stop service for business licensing through the Online Single Submission (OSS) system. This integrated platform streamlines the process for obtaining business permits across 16 sectors, encompassing the involvement of 18 ministries and institutions. By centralizing the authority to issue business licenses and investment facilities with the Ministry of Investment/BKPM, the government aims to expedite the establishment of businesses and foster a more conducive investment climate in Indonesia.
[SLIDE 12]
As illustrated from the previous slide, the Indonesian government has implemented a Risk-Based Online Single Submission (OSS) system to streamline the business licensing process. This system is accessible through computers or laptops, with a simplified version for low-risk micro, small, and medium enterprises (MSMEs) available on smartphones and tablets. The OSS centralizes the issuance of business licenses and investment facilities under the Ministry of Investment, reducing bureaucratic hurdles. This integrated platform covers 16 sectors, involving 18 ministries and institutions, and extends to 34 provinces, 416 districts, and 98 cities. Furthermore, the OSS facilitates the processing of business licensing and fiscal incentives, such as tax holidays, allowances, and import duty exemptions, through collaboration with relevant ministries and institutions.
[SLIDE 13]
Further, along with the improvement of OSS system, the Indonesian government also introduced a Risk-Based Business Licensing under the Job Creation Law, where it shifted the paradigm from license-based to risk-based, where business with low risk could operate with easier requirements. This system categorizes businesses into low, medium, and high-risk levels based on their activities. To streamline the process, the government has simplified basic and sectoral business licensing requirements, as well as investment procedures. This reform aligns with the Indonesian Standard Classification of Business Fields (KBLI) and replaces traditional permits like Location Permit and Environmental Permit with new requirements such as Land Use Activity Suitability and Environmental Approval. This approach aims to create a more efficient and conducive business environment in Indonesia. Apart from that, the risk-based licensing mechanism also accommodates the Business Licensing to Support Business Activities, known as PBUMKU, which makes the system become the one stop shop solution for the investor.
[SLIDE 14]
In terms of investment incentives for the investor, Indonesia offers a robust package of tax incentives to stimulate investment and economic growth. Key incentives include Tax Holidays, providing full corporate income tax relief for significant investments over 5-20 years, and Tax Allowances, granting tax reductions on specific business activities. Additionally, Import Duty Exemptions are available for machinery and raw materials, while Super Tax Deductions incentivize education, labor-intensive industries, and research and development. Incentive for Import Duty and/or Handover of 4 Wheels EV offers import duty exemptions and VAT exemptions for electric vehicles, promoting sustainable transportation and reducing carbon emissions. These fiscal measures aim to attract foreign and domestic investment, bolster industrialization, and enhance technological capabilities.
[SLIDE 15]
In this slide, you can see the detailed explanation about tax holiday in terms of requirements, how to get it, what sectors does it covers, and the duration of the facility which you might want to look at from this presentation.
[SLIDE 16]
Furthermore, the government also has implemented an investment business field arrangement aimed at creating a more competitive and investor-friendly environment through the President Regulation No. 10 of 2021 jo. 49 of 2021. This regulation streamlined and simplified investment regulations, reducing bureaucracy and making it easier for businesses to operate in Indonesia. The government has identified key priority sectors and provided incentives to encourage investment in these areas, such as tax holidays, tax allowances, and investment allowances. The government has clearly defined the business fields that are open for investment, subject to certain conditions, and those that are closed or restricted. This provides greater clarity and certainty for investors. These reforms demonstrate the government's commitment to attracting foreign and domestic investment, creating jobs, and driving economic growth. By providing a more conducive investment environment, we aim to position Indonesia as a leading destination for global businesses.
[SLIDE 17]
This section will demonstrate the process of how to invest in Indonesia, from the point of establishing a company to the obtaining relevant licenses to the company’s business fields.
[SLIDE 18]
Before diving into the specifics of investing in Indonesia, it's crucial to understand some fundamental regulations. First, you need to determine whether the business sector you're interested in is open, closed, or requires specific Foreign Direct Investment (FDI) requirements. Presidential Regulation No. 49/2021 provides a clear categorization of business sectors. Secondly, understanding the available incentives is vital. The BKPM Regulation No. 4/2021 outlines the incentives applicable to various business sectors, including tax holidays, tax allowances, and other benefits. Furthermore, depending on the business sector and scale, there are specific minimum paid-up capital requirements. For example, the BKPM Regulation No. 4/2021 stipulates a minimum of IDR10 billion, but some sectors may have higher requirements. For foreign investment entities, a minimum investment value of IDR10 billion is typically required, excluding land and building costs. By carefully considering these factors, you can ensure compliance with Indonesian regulations and maximize the potential of your investment.
[SLIDE 19]
This infographic outlines the steps involved in establishing a Foreign Direct Investment (FDI) company in Indonesia. The process is divided into two main steps. The first step is Establishing the Company, which requires Acquiring the Decree of the Ministry of Law. The second step is Obtaining Licenses and Permits, which allows you to acquire Company Tax ID, OSS Access Right, Business Identification Number (NIB) and Standard Certificate or Business License. By following these steps and complying with the relevant regulations, foreign investors can successfully establish and operate their businesses in Indonesia.
[SLIDE 20]
This slide illustrates the Risk-Based Licensing Approach in Indonesia. It outlines the different licensing requirements based on the risk level of a business activity, which are Low, Lower Middle, Upper Middle, and High Risk. This risk-based approach aims to streamline the licensing process for low-risk businesses while ensuring stricter regulations for high-risk activities.
[SLIDE 21]
Moving to the last part of my presentation, we will explore the vast investment opportunities in Indonesia that investor might consider for investing in the country.
[SLIDE 22]
Indonesia offers a compelling investment proposition. We possess political, legal, and policy stability. Our nation is home to the largest population in ASEAN and is rich in natural resources. In 2019, our middle class expanded to a substantial 57.3 million people. With a vast land area of 1.9 million square kilometers and an even larger marine territory of 6.4 million square kilometers, Indonesia stands as a geographical powerhouse. As the world's largest archipelago, we boast 17,504 islands and a staggering 108,000 kilometers of coastline across a total area of 8.3 million square kilometers. Coupled with our immense potential in renewable energy, these attributes make Indonesia an exceptionally attractive investment destination.
[SLIDE 23]
Indonesia is embarking on a strategic shift from an economy primarily reliant on natural resources to a value-added economy. To achieve this, we have implemented an export ban on raw goods, including nickel, bauxite, copper, and tin. By focusing on these abundant natural resources, we aim to leverage our competitive advantage and drive the development of downstream industries. This transformation will create new jobs, enhance technological capabilities, and generate higher economic value within our borders.
[SLIDE 24]
To give some context on the government’s program on value-added economy, this slide illustrates the impact of our nickel downstreaming strategy on Indonesia's economic growth. In 2017, nickel derivative product exports totaled a modest USD 3.3 billion. However, with the implementation of the nickel export ban in 2020, we have witnessed a transformative shift. Fast forward to 2022 nickel derivative product exports have surged to USD 33.8 billion. This represents 11.4 times increase compared to nickel sulphate, 19.4 times increase compared to precursor, and a substantial 67.7 times increase compared to battery cells. The progression from nickel ore to battery cells signifies the successful development of our value-added nickel derivative products, driving economic prosperity and securing Indonesia's position as a global leader in the electric vehicle battery supply chain
[SLIDE 25]
Following that explanation, Indonesia boasts the world's largest nickel ore reserves, accounting for a substantial 23.7% of the global total. This strategic advantage positions us as a key player in the electric vehicle (EV) industry. Electric cars rely heavily on nickel, with batteries constituting 35% of their total cost. The two primary types of batteries widely used in EVs are Nickel-Cobalt-Aluminum (NCA) and Nickel-Manganese-Cobalt (NMC811). Both compositions feature a high nickel content, emphasizing the critical role of our abundant resource. By leveraging our nickel reserves, Indonesia can significantly contribute to the global shift towards sustainable transportation and solidify its position as a leading supplier of essential materials for the EV revolution.
[SLIDE 26]
Ladies and gentlemen, this slide presents our Strategic Investment Downstream Roadmap, a comprehensive plan to transform Indonesia's economy. As we aim to move beyond being a mere exporter of raw materials and embark on a journey towards value-added industries, we have identified key sectors for development, including minerals, coal, petroleum, natural gas, plantation, marine, fishery, and forestry. Our target is to attract a total investment of USD 618 billion by 2040, which will contribute to a GDP increase of USD 235.9 billion and generate 3,016,179 new jobs. Additionally, exports are projected to reach USD 857.9 billion
[SLIDE 27]
This map presents the strategic distribution of investment opportunities for downstream industries across Indonesia. As you can see, we have identified key commodities and their respective provinces for potential development. These include Silica sand, Manganese, Cobalt, Rare-earth and else.
[SLIDE 28-29]
The last two slides highlights 81 investment projects across Indonesia, with a total indicative investment value of IDR 244 trillion. These projects are spread across six priority sectors: Agro Industry, Industry, Economic Zone and Real Estate, Infrastructure, Renewable Energy, and Tourism. The government through Ministry of Investment also provide the investor the so-called investment project ready to offer or IPRO, which contains 47 projects with pre-feasibility study in 2022 and additional 22 projects in 2023. This IPRO covers several sector/clusters including plantation, farm, fisheries, and energy. For those wo wants to know the detail about this IPRO can access such information through our website regionalinvestment(dot)bkpm(dot)go(dot)id.
[SLIDE 30]
Lastly, I believe that concludes my session. I hope we could come up with a very fruitful and productive discussion in this distinguished forum.
Thank you.
