MAGAZINE

Invest NOW Vol 1/2020

iTALKS iENERGY iOUTLOOK Let’s Do Business More Than Just Finding the Right in Indonesia! an Energizer Bunny Formula

ESTABLISHING A BUSINESS-FRIENDLY COUNTRY iCONTENTS iWORDS FACTS ABOUT THE OSS

Started Operating July 9, 2018 24 hours every day

25 ministries/ The concept: one national portal, Supported by systems in institutions, 34 one Business Identiication the Directorate General of provinces, 514 / Number (Nomor Induk General Law Administration regencies, 13 special Berusaha/NIB), and one business (Ditjen AHU), Directorate economic zones, license form (business license/ General of Population and 4 free-trade zones, and Izin Usaha and commercial Civil Registration (Ditjen 111 industrial parks or operational license/Izin Dukcapil), Directorate were involved. Komersial or Operasional). General of Taxes (Ditjen Pajak), Directorate General of Customs and Excise (Ditjen Bea & Cukai), Indonesian Investment The OSS consultation service is conducted in a Coordinating Board one-stop service center (PTSP) at the Indonesia (BKPM), Ministry of Trade Investment Coordinating Board (BKPM) and the (Kemendag), National Investment and One Stop Integrated Services Ofice Single Window (LNSW), (DPMPTSP) in every province//. Ministry of Agriculture (Kementan), Ministry of Public Works and Public Housing (Kemen PUPR), and so on. Indonesia Free Trade Zone procedures for both indicators will Dear Investors, Authority (BP ) and Bank be massively cut. DBS Indonesia. https://oss.go.id Indonesia’s investment remains We note the pandemic greatly on track amid the COVID-19 During the quarter of 2020, challenged FDI realization pandemic, which has plagued the performance of domestic in the irst quarter of 2020, the global economy since direct investment (DDI) and we continue to oversee A business license for early 2020. We are fortunate offset decreasing foreign investment projects and facilitate every sector is mandatorily investment realization during direct investment (FDI). DDI debottlenecking. We have issued through the OSS, the irst quarter (January to contributed Rp 112.7 trillion, launched a command center except for the minerals March 2020) rose 8 percent up 29.3 percent from Rp 87.2 for monitoring investment and coal, oil and gas, compared to the same period trillion, while FDI in the same progress and realization on and inance (banking, last year, and we have worked period decreased 9.2 percent a daily basis, and the Online insurance) sectors. with other ministries and to Rp 98.0 trillion from Rp 107.9 Single Submission (OSS) system institutions to assist in solving trillion. has shown a rise in the number investment-related obstacles of upcoming business permit in the midst of the pandemic. The Indonesian Investment proposals. To increase investment for Coordinating Board (BKPM) has economic growth, we have been formulating policies to We hope all domestic and also signed memorandums increase Indonesia’s World Bank foreign companies will survive of understanding with the Ease of Doing Business ranking. the pandemic with no worker Indonesian , We are focusing on two indicators: dismissals, and we are optimistic the Ministry of State-Owned starting a business, and dealing the pandemic will end soon and Enterprises (SOE), the Batam with construction permits. Overall the economy will rebound. 

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iWORDS iMOMENTS iENERGY iTOURISM

03 06RI, UAE Ink 12 The Best for the East 30 More than Just an Energizer Bunny US$200m IBOSS System Indonesia aims to become a global hub in the Message from Investment Deals 13 electric vehicle industry supply chain. The Chairman to Go Ahead Welcoming 07 East Finally Indonesia’s investment European Partners 14 remains on track amid the Ready as Industrial COVID-19 pandemic, which Working Hand Center has plagued the global 08 in Hand economy since early 2020 Licensing Command 52 th 15 4 Collaboration Center Launched 5 Places to Go 09 with EuroCham Synergy to Speed Government polishes Solving Issues 16 up Investment investment promotion in 10 ive super priority tourism 11 Reassurance on destinations. Safety

iCALENDAR iTALK 60

iACTUAL 22 62 iBUILD iGROW Ease of Doing Let’s Do Business Business… Guaranteed! in Indonesia! iOUTLOOK 38 44 Indonesia’s comprehensive 66 iHIGHLIGHT Go Smoothly with In Seaweed reform for better 2021 ease of Indonesia’s Green Gems 18 doing business standing. Electric Vehicles We Trust Finding the Right Indonesia is ready to Indonesia’s glistening iKNOW Formula accelerate its electric vehicle seaweed prospects in local 70 iDIGITAL BKPM has determined three program for all. and global industries. Going Online big prioritized sectors: electric vehicles, services 26 and regions, and natural Consultant : resources. Indonesia’s Digital Economy Firing on All Cylinders Published by Directorate of Exhibition and Promotion Media, BKPM Digital sector still alluring for investors, given huge Editor’s address opportunities provided by Badan Koordinasi Penanaman Modal ’s fastest- (BKPM) Jl. Jend. Gatot Subroto No. 44, E-mail: growing internet economy. 12190 P.O. Box 3186, Indonesia [email protected] Scan to download

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RI, UAE Ink US$200 Million Investment Deals

Indonesia and the United Arab Emirates (UAE) signed a US$200 million Welcoming European Partners agreement for investment cooperation on renewable energy, technology and the retail industry in Abu Dhabi in January, 2020. RI boosts European investment at World Economic Forum.

THREE LARGE UAE Zayed Al-Nahyan and President CORPORATIONS - Masdar, . Also attending INDONESIA ENCOURAGED the Ministry of Communication Emirates Global Aluminium were Minister of State-Owned European corporations to and Informatics, the ministries (EGA) and Lulu Group – have Enterprises (SOE) Erick invest in the nation during the of trade, industry, tourism and agreed to work with Indonesia Thohir, Minister of Trade Agus World Economic Forum (WEF) creative economy, and state- in the three sectors. Masdar Suparmanto, Vice Minister of in Davos, Switzerland in late owned enterprises, and also the has invested US$129 million State-Owned Enterprises Budi January. BKPM worked with Indonesian Representative in investment projects and in a joint venture with PJB Gunadi Sadikin, and Indonesian related ministries in setting Switzerland. collaborate to find solutions. Investasi to build a floating solar Ambassador to the UAE Husin up the Indonesian Pavilion “Now, Indonesia handles photovoltaic (PV) plant in Cirata Bagis. as the center for investment BKPM chair Bahlil Lahadalia investment in better, quicker lake, . EGA has put information, including the spoke at the pavilion and and more certain ways,” he said. US$71 million into optimizing The Masdar power plant will government’s efforts to met with WEF founder Klaus smelter technology with PT become the world’s second accelerate the ease of doing Schwab. On the sidelines of BKPM invited financial Inalum (Persero), and Lulu largest floating solar plant business, as stipulated in the forum, Bahlil held one- institutions from the European Group agreed to employ 1,500 (BKPM) during a meeting with with 145 MW capacity. It Presidential Instruction No. 7 on-one meetings with eight Union to join the nation’s Indonesian workers for three the companies, along with BRS marks an important milestone Year 2019. global companies: Jumeirah sovereign wealth fund to planned stores in West Java. Ventures and representatives in deepening economic ties Hotel, Amazon, Grab, Traveloka, facilitate their investment from the UAE. between the two countries. The pavilion was open January Japan Bank for International projects in Indonesia. It also “I really appreciate the 21-24, initiated by BKPM with Corporation (JBIC), Mizuho, Yili suggested European investors interest of Masdar to invest in After the signing ceremony, the The three agreements are support from the Coordinating Group and Siemens Group. establish business entities Indonesia,” said Bahlil Lahadalia, companies’ CEOs exchanged among 11 new business deals Ministry for Maritime Affairs and in areas outside Java Island Chairman of the Indonesia the agreement in front of His worth US$22.8 billion from Investment, the Coordinating He reiterated Indonesia’s that have seen improving Investment Coordinating Board Highness Sheikh Mohamed bin foreign investors for Indonesia.  Ministry for Economic Affairs, commitment to assist all infrastructure and facilities. 

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“Thereby, investors know the government’s attempts for increasing the investment climate in Indonesia. We understand what investors th require: certainty, speed and Working Hand in Hand 4 Collaboration with EuroCham eficiency,” he said. BKPM, EuroCham team up in Indonesia Economic BKPM, BEI agree on real and portfolio investment integration. Indonesian EuroCham and Investment Outlook 2020. Chairman Corine Tap said European businesses were BKPM AND THE INDONESIAN developing and enlarging their on launching initial public supporting the government’s STOCK EXCHANGE (BEI) have businesses through funding offerings (IPO), and share data BKPM AND THE EUROPEAN President Director/Taxation reform efforts for facilitating agreed to integrate real and alternatives from the stock and information on companies BUSINESS CHAMBER OF Head Ay Tjhing Phan and BASF business setups in the country. portfolio investments as part market. This will create more that have invested outside COMMERCE IN INDONESIA Indonesia President Director of efforts to facilitate national job opportunities and social the country. Djajadi said the (EUROCHAM) teamed up for Agus Ciputra. “In addition to business investment growth through welfare,” he said. agreement would serve as the the Indonesia Economic and certainty, investors also need alternative public funding. basis for policy and service Investment Outlook 2020 to BKPM Chairman Bahlil the government’s assistance for BEI will provide counseling establishments in capital highlight the government’s Lahadalia said the cooperation continuous business growth. A memorandum of for irms registered at BKPM investment.  ongoing efforts on business between the two would serve The forum hopes to create understanding (MoU) PR No: facilitation. as an effective communication harmony between investors 008/BEI.SPR/01-2020 was forum between policymakers and the government as the signed in Jakarta on January 28 The event was the fourth and investors. regulator,” Corine said.  by BKPM chair Bahlil Lahadalia collaboration between the and BEI President Director two and took place at BKPM Inarno Djajadi. headquarters in on February 17. Also in The agreement targets all attendance were Minister of companies trading at the BEI Finance Indrawati, planning business expansion Coordinating Ministry for and development. Bahlil Economic Affairs Deputy said BKPM would assist the for Commerce and Industry companies obtaining business Bambang Adi Winarso, permits and investment facilities. Ministry of Finance Director General of Taxation Suryo “We hope the cooperation will Utomo, EU Ambassador to drive a lot of business players Indonesia Vincent Piket, PwC

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Solving Issues President Widodo urges all stakeholders to Reassurance on Safety focus on solving investment problems. National Police provides assistance in investment problem solving.

PRESIDENT JOKO WIDODO Harmonization for Investment pushed all stakeholders at Equal Distribution. BKPM CHAIR Bahlil Lahadalia action against individuals who investment problems worth the central government and and National Police Chief blackmail investors in the ield. Rp 189 trillion out of a total Rp regional administration level “Thus far, about seven million Gen. Idham Azis have inked a 708 trillion due to problematic to focus on solutions for are unemployed, memorandum of understanding BKPM Secretary General Andi investment regulations. investment problems at the while between two and three (MoU) on Security and Maulana said the MoU was National Coordination Meeting million are added into the Investment Problem Solution part of the agency’s efforts to “Therefore, (the MoU) will give held on February 20 in Jakarta. workforce every year. There’s Assistance. The MoU serves solve investment problems in ease, certainty and safety for The President brought up no other way than increasing as a legal basis for protecting the regions. BKPM saw stalled investors,” he said.  complaints from investors investment,” he said. investors and government on permits or regulations at oficials who provide business regional levels, and said Rp 708 President Widodo agreed to permit services. trillion in potential investment provide a special allocation fund license dealings in relation to has stalled due to problematic for the One Stop Service (PTSP) that ministry and institution. The MoU also states the Police’s investment regulations. to improve system management commitment to giving legal aid for accelerating public service. This means investors will not for investors and government One day before the meeting, BKPM expects the move will need to visit ministries and oficials who manage business BKPM Chairman Bahlil support Presidential Instruction institutions for administrative license dealings. Both agencies Lahadalia brought together No.7 Year 2019 on Ease of purposes, including iscal signed the MoU on the sidelines regional heads of the Capital Doing Business, under which incentives such as tax of the National Coordination Investment and One Stop the government places oficials holidays and tax allowances, Meeting in February in Jakarta. Service (DPMPTSP) in a meeting from ministries and institutions after obtaining a Business The government expects the on Central and Regional Policy at the BKPM to assist business Identiication Number (NIB).  MoU to help the Police take

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“Don’t focus on the investment scale but consider one that absorbs many employees for creating multiplier effects,” he said.

Bahlil attended the opening of the High-Level Meeting on Green Investment Blueprint for and on February 26 and 27 in The Best for the East Sorong. Also present were BKPM notes eight investment Coordinating Minister for Maritime Affairs and Investment problems in West Papua. Luhut Binsar Pandjaitan, Minister of Agriculture Syahrul Yasin IBOSS System to Go Ahead Limpo, Minister of Cooperatives THERE ARE EIGHT investment problems, palm oil moratorium and Small and Medium-sized BP Batam and Batam City Administration will apply a new Online problems for investors in West and interruptions from Enterprises Teten Masduki, West Single Submission (OSS) platform, the Indonesia-Batam Online Single Papua, according to BKPM international and local non- Papua Governor Dominggus Submission (IBOSS), for accelerating processes for doing business. Investment Communication and government organizations. Mandacan, Papua Deputy Information Committee member Governor Klemen Tinal, and Rizal Calvary Marimbo. They BKPM Chairman Bahlil Deputy Minister of Tourism are overlapping land, lack of Lahadalia said he hoped and Creative Economy Angela THE BATAM INDONESIA FREE IBOSS allows incoming consumption goods quotas set local human resources for palm meetings during a visit to the Tanoesoedibjo. TRADE ZONE AUTHORITY businesses processing their by BP Batam. It records data on oil land, lack of infrastructure province in February would (BP BATAM), the Batam City business establishment dealings foreign direct investment and access for plantations, lack of synergize business players and The forum provided insights Administration and BKPM online, from registration to domestic investment, and small local involvement, lack of local the regional administration into green investment prospects signed a memorandum of Operational/Commercial and medium-sized enterprises administration accompaniment, for mutual cooperation and for businesses and locals, understanding (MoU) on the License (IOK) completion. in the Batam Free Trade Zone.  layered taxation and regulation transparency. highlighting the vital role of launch of the platform on March middle- to lower-class farmers 9, at BKPM ofices in South “The integration of the two on coffee, nutmeg and cocoa Jakarta. systems (IBOSS and OSS) marks plantation management. one strategic effort from the Batam, as a Free Trade and government to speed up the The ministers and top oficials Port Zone Authority (KPBPB), business permit process in also visited the special as a center for imports and Indonesia,” BKPM Chairman economic zone in Sorong exports, requires IBOSS, the Bahlil Lahadalia said. to check its preparations for sub-system integrated with the welcoming investors.  national OSS system. IBOSS releases an IOK based on

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trillion) dominated investment Finally Ready in 2019. Licensing Command Center Launched as Industrial Center The central government issued BKPM launches command center for daily license proposal monitoring. Presidential Regulation No. 80 East Java is on the right track as industrial center Year 2019 naming East Java of eastern of Indonesia. a special economic zone. The BKPM CHAIRMAN Bahlil license proposals via OSS, Regional Investment Potential regulation stipulates economic Lahadalia oficiated over the regional potential investment, BKPM website, www. development acceleration in launch of the BKPM Command tracking a company’s license regionalinvestment.bkpm.go.id. Gresik-Bangkalan-Mojokerto- Center on March 23 at its ofices status, ongoing permit BKPM can regularly compare EAST JAVA HAS BECOME the “East Java looks beautiful -Sidoarjo – Lamongan, in South Jakarta. monitoring by other ministries the potential investment industrial center for eastern already for investors,” he Kawasan Bromo – Tengger – or institutions and investment data with data on investment Indonesia due to accelerated said. “The administration has Semeru, and the Selingkar Wilis “The command center allows realization. OSS recorded a 17.6 realization in Indonesia through business license procedures improved a lot, from permit and South Route areas.  me to directly observe license percent increase in incoming the center, and also monitor and an improved business processing handling to existing proposals via OSS (Online permit proposals to 240,178 data on investment realization climate for ease of doing potential investment promotion. Single Submission) on a daily from March 2 to March 18. value at national to provincial/ business and investor services. For sure, investors will steal a basis,” said Bahlil during the regional/city levels. glance at it.” event. The center displays The command center can BKPM Chairman Bahlil information, such as social showcase data on potential The data can further be Lahadalia, during a working East Java contributed the fourth media and digital media investment per region, processed as investment data visit to the province on March largest investment realization sentiment, daily statistics on which is included in the per sector, country origin and 14 and 15, met with the Gresik in 2019 at Rp 58.5 trillion (7.22 business location. BKPM oficials Regent and visited the Java percent) of the overall national can also utilize the center Integrated Industrial and total. Between 2018 and 2019, for video teleconferences Port Estate (JIIPE), to support investment in the province was with BKPM representatives provincial efforts on investment mostly in Surabaya City, Gresik overseas and investment and growth. JIIPE serves as a Regency and Pasuruan Regency. one stop integrated services potential area for expanding the Construction (Rp 9.88 trillion) ofices (DPMPTSP) across the industrial center. and the food industry (Rp 9.5 archipelago. 

14 | Magazine Magazine | 15 iMOMENTS WE ARE Synergy to Speed up Investment DOING GREAT

WE NEED TO REMAIN POSITIVE ON OUR 2020 INVESTMENT TARGET.

12.0% Rp809.6 US$5.9 trillion million Indonesia’s overall Investment The top leading is still investment realization in Q4 realization sectors in 2019 the biggest origin 2019 grew 12.0 percent in January- for FDI were country for FDI compared to the same period December 2019 electricity, (US$6.5 million), in 2018, both direct domestic was Rp809.6 gas, and water followed by investment (DDI) and foreign trillion, 102.2 supply at China and Hong direct investment (FDI) percent of the US$5.9 million. Kong. realization rose in Q4 2019. target.

Indonesia’s Q1 2020 Investment Realization BKPM, SOE ministry synergize to speed up Remains Positive Amid COVID-19 investment projects. Investment realization Q1 2020 rose Compared to the same by 8.0 percent compared to Q1 2019 period of 2019, DDI for BKPM AND THE MINISTRY OF matters including information at Rp210.7 trillion, contributing 23.8 this quarter increased by STATE-OWNED ENTERPRISES and data sharing for boosting 8.0% percent to overall targeted investment 22.6 percent, while FDI (SOE) have agreed to work investment realization, business realization of Rp886.1 trillion in 2020. decreased by 9.2 percent. together on accelerating license acceleration, and joint investment activities to boost promotion and investment an optimistic business climate facilitation for companies under “Various elements within the in light of the COVID-19 the Ministry. government, including state- pandemic. owned enterprises, will work Managing Director of the on minimizing the economic A memorandum of International Monetary Fund impact (of the pandemic). One understanding (MoU) between (IMF) Kristalina Georgieva said of which is by utilizing license the two agencies was signed on March 27 the COVID-19 facilitation and investment data by BKPM Chairman Bahlil pandemic was pushing the at the BKPM,” he said. Lahadalia and SOE Minister global economy into recession. Erick Thohir at the ministry in BKPM has been effectively Rp49.3 trillion Rp24.5 trillion Rp18.0 trillion on March 30. Thohir said the government managing business license The leading sectors in DDI 2nd top sectors 3rd top sectors was taking immediate action, processing in all ministries and and FDI realization (Rp 24.5 trillion): (Rp 18.0 trillion): The MoU is the irst-ever including the MoU, to minimize other institutions as stipulated (Rp 49.3 trillion): Basic metals Electricity agreement between the the negative impact of in Presidential Instruction No. Transportation Metal-based goods Gas BKPM and the SOE ministry. It COVID-19 on public health and 7 Year 2019 on Ease of Doing Warehouses Non-machinery and Water supply. stipulates mutual assistance on the national economy. Business Acceleration.  Telecommunications. equipment industry.

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discuss potential projects . The development export commodity. Business in the capital that could be of this sector is motivated development in this sector is executed together through the by the fact that Indonesia to attract Chinese investors Finding the Right Formula cooperation of E&C companies. has a high availability of raw to relocate their factories as a Jakarta contributes 20 percent materials for furniture, but has result of the US-China trade war. BKPM has determined three big prioritized sectors: electric vehicles, of the country’s gross domestic not yet provided great added Central Java was chosen as the services and regions, and natural resources. product (GDP), and the three value. Timber and timber hub for the cluster because it provinces combined contribute products are one of Indonesia’s already has a furniture industry 35 percent. mainstay commodities - its ecosystem, including a special 10th largest non-oil and gas furniture polytechnic. BKPM remains positive over successfully absorbed 263,109 BUSINESS DEVELOPMENT The second program was its 2020 investment target Indonesian workers. PROGRAM the formation of the of Rp 817.2 trillion - 92.2 In 2019, seven business Business Council, as part percent of the initial target of BKPM’s Deputy for Investment developments were offered. of efforts to drive Cilegon’s Rp 886.0 trillion. Investment Promotion has formulated First, engineering and investment climate and realization for the second innovative strategies for construction (E&C) in Jakarta. potential, and support it as quarter of 2020 slowed by introducing the country’s With the projection the a modern and industrial city. 4.3 percent compared to the investment potential to net country’s economy will mostly The council will bring together same period in 2019 (Rp 200.5 promising and high-quality grow in Jakarta, and industries and enterprises, trillion). Investment realization investment, with a series West Java, BKPM initiated a and facilitate communication in this period contributed of business development meeting with the provincial between business players and 49.3 percent of the 2020 activities to offer the potential government of DKI Jakarta government and related parties. target at Rp 817.2 trillion, and sectors to investors. and E&C companies to The third is the export-based furniture industry cluster in

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the east region, is SERVICES AND REGIONS Investment promotion of ive super prioritized tourism proposed as a potential location destinations, known as Indonesia Tourism Development because South is the (ITDP) Phase III - Lake Toba, , Mandalika, Labuan largest seaweed producer Bajo and Likupang in Indonesia, and it also has available supporting 01 infrastructure.

The sixth program is 03 the development of Prioritized Sectors affordable housing, Developed for as the growth of Investment in 2020 Indonesia’s population 3 MANUFACTURING NATURAL continues to increase, Electric vehicles, RESOURCES and it is estimated that 81 electric vehicle Export-based million Indonesians of the batteries and semi- seaweed industry hub millennial generation do conductors development not own a house. This is also 02 to support the government’s One Million Houses program. BKPM has coordinated with local partner candidates and 20th Century Fox World in and conducted promotional areas is roads dominated , Madame Tussauds activities to target countries increasing, by goods distribution and Cartoon Network Amazone such as Japan (IIDA group), with the income per capita vehicles. The location for the Waterpark in Thailand. In China and . on Java growing 10 percent development of this sector 2019, meetings were held with annually from 2010-2016; the is the 1,167 km Trans Java potential partners including Last, but not least, is the completion of construction Toll Road, which connects Mas, Sentul City, MAJ, development of rest areas and of the Trans Java Toll Road Merak and Pasuruan. In 2019, Lido MNC Management premium outlets. This based on opens vast potential for it coordinated with potential Area, Tanjung Lesung Area, the fact that the income level developing rest areas; low local partners and will continue Mandalika. of the middle class in urban toll road utilization with toll matchmaking in 2020. 

The ifth is the development of a seaweed cluster. Following-up on Presidential Regulation Number 33 Year The fourth development is park sector will provide a 2019 regarding the National an international scale theme domino effect for other tourism Seaweed Development Guide park. Indonesia’s growing sector investments such as Map, BKPM proposed the middle class is driving an hotels, restaurants and other establishment of a seaweed increasing need for theme infrastructure. cluster as a hub for the parks. An international theme development of a large-scale park is an important attraction Indonesia does not yet have an export-oriented seaweed to signiicantly improve international scale theme park, industry, proposing it have at the tourism industry and unlike neighboring ASEAN least three locations as seaweed other business ields. The countries such as Universal industry hubs in , Java development of the theme Studios in Singapore, Legoland and Eastern Indonesia. For

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Let’s Do Business in Indonesia! Indonesia’s comprehensive reform for better 2021 ease of doing business standing.

INVEST MAGAZINE sat with Ir Yuliot, MM, property, getting electricity, paying taxes, BKPM’s acting deputy for Investment Climate getting credit, protecting minority investors, Development during a seminar on “Improving trading across borders, enforcing contracts and Indonesia’s Ranking on Ease of Doing Business” resolving insolvency. (EoDB 2021) on May 2-3, 2020. Here are some of his pivotal insights. What did the government do to follow up Presidential Instruction No. 7/2019 on Why does ease of doing business play an Ease of Doing Business Improvement in important role for investment? Indonesia? Every year, the World Bank Group surveys 190 The government released ive regulations countries to assess their business policies. regarding starting a business; three on dealing Indonesia ranked 73 in the 2020 Ease of with construction permits, four about registering Doing Business Index. We are now eyeing no property and two on getting electricity. 60 by 2021. It also introduced two rules on paying taxes, The World Bank’s EoDB ranking provides one on getting credit, another on protecting perspectives on government efforts to create a minority investors, four about trading across favourable business climate for investors. The borders, three relating to enforcing contracts, ranking gives insights regarding the business one regulation each for resolving insolvency climate in a certain country. Usually, countries and contracting with the government. It with a better rank are more likely to attract more released a total of 27 regulations on the 10 investment, since the ranking is used as one indicators and one new indicator - contracting reference by investors. with the government.

The World Bank sets 10 indicators for assessing Presidential Instruction No.7/2019 also whether or not a nation is working on a mandated line ministries/institutions to delegate positive business climate for both global and authority for business licensing and investment local investors. BKPM compiles a list of reform facilities to the BKPM Chairman. This will be efforts on the 10 aspects: starting a business, fully implemented through the online single dealing with construction permits, registering submission (OSS) system.

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What are the challenges faced implemented by regional BKPM has taken several In response to economic By the end of 2024 the by BKPM to fix ease of doing and local governments, so measures to expedite conditions during the business in Indonesia? the people beneit from the investment realization: pandemic, the government government target remains Nationally, there are investment improvements in public services. has implemented both iscal the same: to rank 40th. If problems that persist year 1. Coordinating the and non-iscal policies. Fiscal after year, such as land-related On the international side, the improvement of doing policy includes tax allowances Indonesia achieves this, issues, and regulations and country’s investment is affected business in Indonesia and holidays, import tax investors, business players permits at central and regional by global politics and economic 2. Evaluating the reduction facilities and the levels that hamper investment conditions. The problems implementation of business proposal of new business and the public in general realization. Breakthroughs include the US-China trade war, licensing and granting of ields eligible to obtain tax will feel a signiicant on both the regulation and Latin America instability and investment facilities carried incentives. Non-iscal policy license sides are thus required. slowing economic growth in out and provided by line includes improvement of the improvement in business Reform implementation is India and China. ministries/institutions licensing system through OSS, processes and procedures. also a challenge, as there 3. Facilitating and providing acceleration of investment is a gap regarding the COVID-19 has placed services to business players/ consultation and reporting, capability and capacity of each signiicant pressure on the investors in processing improvement of investment regional government. Strong global economy. In the irst business licenses and facility services through Has the government adjusted What are the current coordination is crucial to ensure quarter of 2020, ’s providing investment facilities advance conirmation of tax its ease of doing business strategies regarding the the policy reform set by the economy is predicted to grow 4. Developing norms, standards, holidays, and the acceleration target in 2021? ease of doing business in central government 1.3 percent, the US 0.3 procedures, and criteria (NSPK) of certiication and distribution By the end of 2024 the relation to the pandemic? is well percent, the EU -2.7 of business licensing and permits for medical equipment government target remains the We have managed several percent, China investment facilities delegated related to COVID-19. same: to rank 40th. If Indonesia meetings with line ministries -6.8 percent by line ministries/institutions achieves this, investors, and institutions to support and Indonesia 5. Line ministries/institutions As for MSMEs, the government business players and the public them conducting regulatory 2.97 percent, to delegate authority for has implemented recovery in general will feel a signiicant reform. There is enough according to business licensing and policies, expecting the economy improvement in business time for them to conduct World Bank provision of investment to grow steadily in Q2 and Q3: processes and procedures. public campaigns. We projections. facilities to head of BKPM. also optimized aid from What are BKPM’s strategies international institutiions 1. Relaxing implementation of for attaining reasonable - Prospera and the World business activities in PSBB investment during today’s new Bank - to review each of by social distancing and normal/transition period? the indicators. By doing so, the obligation to use masks First is pushing accelerated we hope the line ministries for business actors and reformative efforts on ease and institutions mentioned customers of doing business. Second, can use their budgets for 2. Postponing loan principal we will facilitate existing Covid-19 response handling. payments companies to achieve their 3. Facilitating the supply of raw revenue or sales targets. Third, The ministries and institutions materials facilitation of existing projects need to analyze the impact of 4. Eliminating VAT during that haven’t fulilled their the pandemic on the services COVID-19 recovery. objectives. Fourth, incentives mentioned in the ease of 5. Encouraging large business will be available for existing doing business indicators. partnerships with PMA and irms that plan to expand their They need to formulate PMDN businesses. Lastly, we will take procedures in line with health 6. Postponing payment proactive measures to attract protocols to keep business as obligations. new investors. usual. 

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micro, small and medium-sized enterprises (MSMEs). Impacts of COVID-19 pandemic on the online purchase behavior among consumers in Indonesia as of May 2020 “Our digital economy must Online purchase behavior during COVID-19 pandemic in Indonesia 2020 encourage domestic production I purchase and improve sales of local more online products,” he said. 60%

DIGITAL DEMAND 50% The economic impact of 40% No impact COVID-19 in Indonesia is evident through falls in the 30% I purchase I do not 20% less online make online Composite Index (IHSG) and the purchase 10% rupiah. The government slashed its GDP growth projection to 0% between 0.4 and 2.3 percent this year, signiicantly lower than its initial estimate of 5.3 percent. Under the implementing of Note: Indonesia, May 7 to 30, 2020, 15 years and older, 5,623 respondents; among 2,627 social distancing and work from female and 2,996 male respondents home policies, the pandemic Source(s) Rakuten Insight has caused many changes to business activities as businesses Another survey by Rakuten there are growing opportunities turn to online platforms to Insight found 55 percent in the digital sector, despite the INDONESIA’S DIGITAL ECONOMY survive. of respondents said they global crisis. purchased more online during FIRING ON ALL CYLINDERS In terms of consumer behavior, the pandemic in Indonesia as The pandemic should also a recent McKinsey survey on of May 2020. In contrast, only 9 be used as momentum for Digital sector still alluring for investors, given huge opportunities post-COVID-19 discretionary percent said they did not make Indonesians to push for change, provided by Southeast Asia’s fastest-growing internet economy. spending in major countries online purchases. particularly in the country’s in Asia, including Indonesia approach to managing supply shows consumers plan to Despite the challenging chains. By doing so, in the event IN THE LAST FIVE YEARS, the A joint study by Google and billion by 2025, accounting for reduce spending this year as circumstances and disruption of another pandemic Indonesia digital world has grown rapidly, Temasek Holdings shows $4 of every $10 spent in the they delay or forego purchases caused by COVID-19, Southeast would be less reliant on other and the digital ecosystem the Indonesian “digital region. of bigger-ticket items and seek Asia has high consumer countries. The challenge is to continues to change daily archipelago” is iring on all better value. They also expect conidence, a growing middle improve its supply chain and activities and affect the economic cylinders. Supported by the Earlier this year, President to recover income or savings class and increasing digitally logistics, and also digital access, system, including manpower largest internet user base in Widodo said Indonesia should lost during the lockdown by the savvy shoppers. There is a huge because its strength is in the issues. With the fourth largest the region (150 million users not rest on its laurels as a end of the year. The survey also opportunity for companies local market. population in the world, in 2018), it has the largest major market and consumer highlighted that the pandemic to conceive a more proactive Indonesia is a highly attractive ($27 billion in 2018) and in the technology sector, but has naturally shifted consumers e-commerce strategy, as SUPPORTING MSMES market, and its digital ecosystem fastest growing (49 percent must also reap the beneits of toward digital shopping technology-enabled solutions THROUGH THE DIGITAL is no exception. Continuous compound annual growth rate technology to encourage digital and engagement channels, are more and more preferred. ECONOMY internet penetration, supported 2015-2018) internet economy economic growth. He hoped with multi-category online With businesses pivoting to Micro, small and medium- by infrastructure expansion, in the region. With huge the development of the digital marketplaces poised to gain digital platforms to sustain their sized enterprises (MSMEs) are makes Indonesia’s digital market headroom across all sectors, economy would also increase the most momentum in the operations, and consumers urged to take advantage of the even more attractive. it is poised to grow to $100 the prospects of Indonesia’s coming months. turning to online shopping, momentum to increase their

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market penetration, as there Tokopedia has over seven The government is pursuing has been a substantial shift million digitized microbusinesses partnerships with a number of in the market’s consumption operating across its platform. private tech irms to accelerate pattern from conventional to Some 86.5 percent are irst-time the digitization of MSMEs. digital platforms. entrepreneurs, and no matter One of the latest initiatives is a the location across the vast project with online ride-hailing Indonesia’s young, growing archipelago, the marketplace is company Grab Indonesia on an domestic trade which reach Indonesian Each business classiication is and digitally savvy population no longer conined to their desa app for business management. a certain transaction value or required to obtain a license has among the world’s highest (). Other partnerships established amount of trafic and access startups are to conduct business through social media and mobile- by the government are with within 12 months. This is considered as one of electronic system activities. usage growth rates, which are Government initiatives to digitize e-commerce companies Blibli. part of government efforts However, ISPs in particular critical drivers of e-commerce MSMEs are well underway, com, Shopee Indonesia, to create fairness and a level the liveliest among are exempted as long as they adoption. Underpinning this aiming to have 10 million go Tokopedia and Bukalapak – playing ield for all businesses, other Southeast Asian are not directly involved in growth are the MSMEs, which digital by the end of the year, the last two are among the both domestic and foreign, countries. an e-commerce contractual are crucial to the economy, helping them ease the inancial country’s so-called unicorns, or conventional and digital. relationship with the parties and are also comprised of burden of the pandemic. There start-up irms valued at more involved, or they are not virtually all online sellers. are around eight million than US$1 billion. Under this regulation, digital direct beneiciaries of the They have helped improve MSMEs with an online selling products such as music and Terms of Business Licensing, e-commerce transaction. socio-economic outcomes for platform, either through E-COMMERCE REGULATIONS movie streaming services, Advertising, Coaching, and millions of Indonesians and e-commerce or social media. UPDATE digital applications and games, Supervising Business Actors in At a time when consumers are created new markets both This represents 13 percent of As part of efforts to offset and other online services from Trade through the Electronic becoming increasingly reliant domestically and abroad. all MSMEs in the country. the economic impact of the abroad that have a signiicant System (MoT Regulation 50) as on e-commerce services, pandemic, the government economic presence and have the implementing regulation of MoT Regulation 50 serves to has accelerated planned taken economic beneits from Government Regulation No. 80 bring more legal certainty tax reforms, including the Indonesia through their trade of 2019 on Trade through the to consumers by requiring introduction of taxes on transactions, will be treated Electronic System (GR 80). e-commerce businesses to transactions involving offshore equally as conventional products obtain appropriate licenses e-commerce platforms. or similar digital products from MoT Regulation 50 sets and regulate consumer within the country. out the legal guidelines for protection and advertising. The government announced, domestic and international Further foundations have starting July 1, 2020, it will Anticipating rapid e-commerce businesses engaging in been laid for foreign collect 10 percent of value growth and to provide room for trade through electronic e-commerce players to added tax (VAT) for purchases the continuous development systems (e-commerce). It also disclose information about of digital products and services of electronic-based trading classiies business actors into their presence and sales from traders or providers activities in Indonesia, on May three groups: merchants, here, giving the Indonesian of trade through electronic 19, 2020, the Ministry of Trade e-commerce service providers government greater systems (PMSE). The tax enacted Minister of Trade (ESP), and intermediary service ability to monitor taxable applies to both foreign and Regulation No. 50 of 2020 on providers (ISP). transactions. 

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INDONESIA BOASTS a rich 2019 starting in January. As a government measures to supply of mineral resources top exporter of nickel ore, the promote and accelerate the needed by the electric vehicle policy has had a signii cant implementation of electric (EV) industry, with 25 percent impact on the global vehicle battery (EVB) programs of the world’s nickel reserves, market. The government in Indonesia. plus other metals such as also recently approved cobalt. These are crucial in the environmental impact studies PR 55/2019 sets out i ve main production of EV batteries and for the completion of factories directives to accelerate EVB for the entire EV supply chain. designed to produce battery- programs in Indonesia: (i) grade nickel chemicals. accelerating the development Indonesia also has ready of the domestic EVB access to markets in China and On August 18, 2019, industry; (ii) the provision of Japan. To support its plan to President Joko Widodo incentives; (iii) the provision become a leading player in enacted Presidential of charging stations and the EV supply chain, it halted Regulation (Perpres/ PR) No. regulating electricity tariffs for the export of unprocessed 55 Year 2019 regarding the charging electric vehicles; (iv) nickel ore through Ministry of Acceleration of Electric Vehicle satisfaction of EV technical Energy and Mineral Resources Battery Programs for Road requirements; and (v) (ESDM) Regulation No. 11 Year Transportation. This outlines environmental protection.

MORE THAN JUST AN ENERGIZER BUNNY Indonesia aims to become a global hub in the electric vehicle industry supply chain.

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NICKEL’S ROLE IN EVB INDUSTRY DEVELOPMENT Data from the Indonesian Geology Resources Centre shows that in 2018, Indonesia had 3,073,812,087 tons of nickel minerals and 13,800,00 tons of cobalt minerals in Sulawesi, and Papua, with the ability to produce 36,988,021 tons of nickel metal.

Nickel, cobalt and lithium are much needed with the growing use of electric vehicles. The Ministry of Industry’s roadmap for two and four-wheeled electric vehicles targets two million units by 2025 (20 percent of car production), which will require 54,000 tons of nickel and 16,000 tons of cobalt, assuming one electric car needs 27 kg of nickel and 8 kg of cobalt. This will grow to 108,000 kg of nickel and 32,000 of cobalt in 2035.

PROJECTION OF NICKEL AND COBALT NEEDS FOR ELECTRIC CARS IN INDONESIA

YEAR 2020 2025 2030 2035

Electric car production (unit) 1,500,000 2,000,000 3,000,000 4,000,000

Nickel requirement (ton) 40,500 54,000 81,000 108,000

Cobalt requirement (ton) 12,000 16,000 24,000 32,000

Source: Development of Mineral Investment Development Report for Cell Battery Raw Materials (Nickel, Cobalt, and Lithium) in 2019, Directorate of Agribusiness and other Natural Resources Industry Planning

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The government is developing nickel will be 395,000 metric raw materials for the cell battery tons, from 233,000 metric tons industry as parts of efforts to in 2018. Some 1,130,000 tons utilize Indonesia’s abundance will come from battery demand. of nickel and cobalt. Batteries cover 3 percent-4 percent of Unlike nickel and cobalt, the total global nickel consumption potential for lithium in Indonesia for all purposes, and signii cant is limited, as it will import nickel demand for batteries, lithium compound for batteries especially for electric vehicles, from producers such as is expected. Increased nickel Australia and Chile. A recycling consumption for batteries plant for used batteries is being depends on factors such as built in the Morowali industrial selected battery technology. region. Industry is set to produce lithium compound as a By 2040, global demand for cell battery raw material.

TECHNOLOGY The cathode and anode are has yet set up processing ADVANCEMENT then combined for an electric for creating the manganese Raw Material Availability The use of the right technology vehicle battery. Processing compound as a battery raw ensures the aforementioned technology for nickel ore has material. Indonesia data on nickel, cobalt and lithium. materials will become the best been commercially proven NUMBER OF DATA NO. COMMODITY ORE RESOURCES METAL RESOURCES ORE STOCK METAL STOCK materials for electric vehicles. inside and outside Indonesia, Speed is demanded by the SPOTS PT Vale Indonesia Tbk uses with PT Halmahera Persada, PT government. Establishing a 9,311,061,312 tons 1 Nickel 256 29,417,009 tons 3,571,561,596 tons 6,721,757 tons set of supportive regulations @ 0.23-2.67% the pyrometallurgy process Vale Indonesia Tbk, PT Adhikara 3,193,831,660 tons for producing nickel matte. Cipta Mulia, PT Smelter Nikel is crucial to providing an 2. Cobalt 63 21,715,059 tons 691, 599,694 tons 689,072 tons @0.04%-0.16% Manganese ores through Indonesia, PT QMB Bahodopi incentive for the industry and to 3. Lithium 4 - - - - leaching and rei nery processes and PT Huayue Bahadopi encourage domestic demand. result in manganese sulphate. utilizing the technology. Otherwise, EV companies Nickel sulphate, cobalt sulphate, and related industries, such manganese sulphate and lithium Indonesia will import the lithium as batteries, could seek other carbonate as precursors will ore from producers, such as locations for their industrial be calcinated as the cathode, Australia and Chile. National base. This will be a major loss and the pyrometallurgy manganese ore processing for Indonesia, and its large method through graphite technology has been effectively nickel reserves could become Source: Armin Tampubolon, Geological Institute, Ministry of Energy and Mineral Resources, at FGD of Study on the Development of Investment in Cell Battery Industry Raw Materials (Nickel, Cobalt, and Lithium), Investment Coordinating Board in Jakarta, August 21, 2019 mining produces the anode. proven, but no local company worthless.

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INCENTIVES ARE AVAILABLE

The government will provide i scal and non-i scal incentives to companies to promote the acceleration of electric battery vehicles, as set out in Article 17(3) of PR 55/2019.

Rp FISCAL INCENTIVES include tax or NON-FISCAL INCENTIVES include import customs relief, discounts on exemptions from limitations on the use of vehicle charging fees, i nancial support certain roads, the granting of production for research and the construction rights for technologies whose patents are of vehicle charging facilities, and held by the government, and maintenance certii cation for resources and products of the safety and security of those areas related to the industry. where the EVB industry operates.

ACCELERATING a manufacturing facility here. It should be noted there percent (depending on the knocked down or completely DEVELOPMENT OF They can construct the facilities is a local content (Tingkat type of EVB) as of 2019, which knocked down basis (as DOMESTIC EVB INDUSTRY themselves, or through a Komponen Dalam Negeri) will be raised to a maximum of applicable). The Indonesian government has production partnership with requirement for the EVB 80 percent by 2026 or 2030, issued regulations on domestic another industry company. industry under PR 55/2019, depending on the type of The government will also component usage, i scal and PR 55/2019 also seeks to as set out in Article 8 of vehicle. If companies cannot control the distribution of non-i scal, and the electric promote partnerships between the regulation. PR 55/2019 produce the EVB components fossil fuel-based vehicles in vehicle acceleration program. the government and private stipulates minimum local domestically, they can be accordance with the national PR 55/2019 emphasizes EVB entities to conduct research, content of 35 percent/40 imported on an incompletely motor vehicle industry or EVB component companies development and innovation in development roadmap set out wishing to engage in the EVB technology. by the Ministry of Industry.  EVB industry in Indonesia must obtain the appropriate business licenses and build

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budget for the petroleum- technological mastery and based fuel subsidy. In the 2019 vehicle design. The government state budget, the government also expects domestic electric set Rp 224.3 trillion for the vehicles to be the nation’s subsidy, with Rp 100.65 trillion production and export base for for petroleum-based fuel, and motor vehicles. an electric subsidy of Rp 59.32 trillion. ELECTRIC VEHICLE DEVELOPMENT Electric vehicles offer a more Electric vehicles are growing energy eficient method in popularity and are sought of transport compared to after at domestic and global conventional transportation, levels. Globally, the number of and will produce better energy EVs is growing 5 percent per conservation in the sector. year according to McKinsey & Company. The International On the environmental side, EVs Energy Agency (IEA) predicts improve air quality as they use there will be 125 million EVs friendlier and cleaner energy, by 2030. With lowering battery providing a better environment prices, the use of electric for the public. On the global vehicles will continue to grow, scale, electric vehicles highlight providing countries formulate the country’s commitment policies making it easier for to lower greenhouse gas people to use them. emissions. transport provides easy The growing global demand and affordable movement, For national technological for electric vehicles provides with people using cars and development, electric a positive outlook for the GO SMOOTHLY motorbikes whatever the vehicles drive local industrial Indonesian government to purpose of their travel.

WITH ELECTRIC VEHICLE Despite the convenience, transportation contributes to Indonesia is ready to accelerate its electric vehicle program for all. damaging pollution, especially in big cities. A lack of balance between growing fossil-based THE INDONESIAN all domestically manufactured being rolled out including transport and environment GOVERNMENT is very vehicles by 2025. The use of on tax and imports, plus the maintenance causes pollution that supportive of pushing forward electric-based vehicles will development of lithium battery leads to health problems, trafic the electric vehicle (EV) agenda. help combat air pollution, with manufacturing and charging jams and environmental issues. Ministries are promoting strong support from ministries station infrastructure. electronic car development and the automotive industry to EVs offer a great solution. and related infrastructure collectively push this clean air ADVANTAGES OF ELECTRIC When fully implemented, they as part of the nation’s low initiative. VEHICLES will reduce consumption of carbon emission vehicle Fossil-based transportation has petroleum-based fuel, mostly (LCEV) program, whereby the The groundwork to spur the long had a dominant presence, imported from other countries. government wants LCEV to domestic EV industry has both in private and mass This will, in turn, decrease contribute at least one ifth of already begun, with incentives transportation. Conventional the allocation from the state

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increasingly support this mode 17 fast charging facilities, REGULATIONS FOR ELECTRIC of transport and educate commonly known as SPKLU. VEHICLE INDUSTRY the public on its beneits. The EV charging facilities assist To create a comprehensive Presidential Regulation owners to ensure their electric electric vehicle ecosystem, the (Perpres/PR) No. 22 of 2017 cars and motorcycles run well. government has formulated regarding the General Planning several regulations stemming for National Energy states that The government is also from Law No. 30 Year 2007 by 2025 there should be 2,200 establishing Jakarta and on Energy. In 2017, it issued electric and hybrid cars, and 2.1 as two model cities for electric Presidential Regulation No. 22 million electric motorbikes. vehicle implementation. Jakarta Year 2017 on General Planning is the country’s capital with the for National Energy, stipulating On the national scale, the fastest growing population as policies on EV development. government is promoting it is the center of business and the GESIT national electric administration, while Bali is the It also released Presidential motorcycle. Local taxi company country’s most-beloved tourism Decree No. 55 Year 2019 on Bluebird utilizes electric vehicles destination attracting local and Acceleration on electric vehicle in its fleet, which can travel up international tourists. The two battery (EVB) Program for Road to 400 km per charge. cities are crowded by visitors, Transportation. This outlines the including those from overseas, measures to be taken by the By 2019, state-owned electricity making them a good place to government to promote and company PT. Perusahaan Listrik try electric vehicles as a mode accelerate the implementation Negara (PLN) had provided of mass transportation. of electric vehicle battery (EVB)

programs in Indonesia. It sets vehicles; and environmental installations for electric vehicles out five main directives to protection. such as charging facilities. accelerate these programs: accelerating the development The Ministry of Energy and MEMR and the National of the domestic EVB industry; Mineral Resources (MEMR) then Standardization Agency have the provision of incentives; the introduced Regulation of MEMR formulated and determined the provision of charging stations No. 28/2016 on Electricity Tariff national standard on SPKLU and and regulating electricity tariffs by PLN, as amended by MEMR batteries, with reference to the for charging electric vehicles; Regulation No. 41/2017. This International Electrotechnical satisfying the technical regulation stipulates a tariff Commission and the requirements of electric in rupiah per kWH to support International Organization for Standardization (ISO).

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friendly vehicles, and sport companies. A series of iscal EV cars starting at Soekarno- utility vehicles (SUV). Lastly, incentives are also available, Hatta International Airport. there is also a need to build from tax allowances and Mitsubishi’s Outlander plug-in an ecosystem for the EV holidays to super deductible hybrid electric vehicle launched industry, starting with the tax. There will also be green in 2019, and had a massive lead ability to manufacture electric lanes on public roads. in the sector with 83.3 percent motorcycles, then develop of total EV sales that year. electric cars based on the LATEST INVESTMENT German carmaker BMW has inevitable adoption of EVs in DEVELOPMENTS already pledged its readiness the future. Government research institute to overhaul Mitsubishi’s market BPPT launched two fast- dominance with its own INVESTMENT INCENTIVE charging stations in Jakarta and electric-powered cars. The OPPORTUNITIES Serpong, South , at industry has also been attracting The government provides the end of 2018, and continues top international automotive investment incentive to look for other possible players. PT Electric Circle opportunities for incoming projects in developing the Optimum, a Hong-Kong based investors in the sector. They will country’s capacity to adopt firm, is investing in the sector, experience a simpler vehicle EVs. Ride-hailing company including for two-wheeled, testing process, and easier Grab launched its first fleet three-wheeled, four-wheeled methods for obtaining licenses of electric vehicles in early and more, and has set up a for foreign workers for their 2020, with a pilot service of 50 factory in Surabaya, West Java.

PROSPECTS OF BATTERY- BASED ELECTRIC VEHICLES Battery-based electric vehicles are set to grow and become an attractive segment for making the country the center for production on the regional and global scales. There are several reasons that support this goal. Indonesia is the world’s largest car market and one of the biggest automotive powers in ASEAN, and the government has prioritized the automotive industry. The government also provides upgraded incentives, prepares supporting industries and develops the export market to make the sector more lucrative of raw materials and important platforms. There should and attractive for investors. components through adopted also be collaboration with technology and infrastructure world original equipment Strategies to build the industry development. This is done manufacturers (OEM) to include increasing local through the construction of increase exports, focusing on production, raising the volume integrated industrial zones multi-purpose vehicles (MPV), and eficiency of production and more eficient logistics low-cost environmentally

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In Seaweed We Trust

Indonesia’s glistening seaweed prospects in local and global industries.

DEVELOPING THE SEAWEED industry is vital for building Indonesia’s agroindustry, which is expected to greatly contribute for the overall economy. The Ministry of Maritime Affairs and Fisheries reported the increased contribution from the isheries sector to overall gross domestic product in the second quarter of 2019 at Rp 62.24 trillion, from Rp 58.58 trillion in the same quarter of 2018.

According to the ministry, the country’s export of seaweed reached US$324.84 million in 2019, growing 11.31 percent from US$291.83 million in 2018. Between 2014 and 2019, the national’s average seaweed exports rose 6.5 percent per year.

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Indonesia recorded US$236.4 export value to China rose beneit the pharmaceutical, the performance in the industry. of people who live in coastal prices due to the high demand million in maritime and ishery 17.25 percent compared to the cosmetic and textile industries. First, Indonesia is the largest areas, especially seaweed for seaweed. The seaweed commodity exports between same period in 2017. The rise archipelago in the world, with farmers. processing industry also has quarter I and III of 2019, rising was the highest percentage BOOSTING SEAWEED’S very large potential areas for not optimally utilized installed 10.73 percent from US$213.5 compared to the average VALUE seaweed industry development. Despite the huge potential capacity. million in the same period in increase of exports to China at In 2015, President Joko Out of the nation’s millions of and supporting policies, the 2018. The rise was due to the 11.31 percent in the last ive “Jokowi” Widodo decided to hectares, seaweed cultivation national seaweed industry still DOMESTIC SEAWEED added value of seaweed-based years (2015-2019). Indonesian boost the seaweed processing only takes 350,000 hectares. faces big problems. There are INDUSTRY derivative products, such as seaweed is also exported to industry to provide a captive at least four challenges that Seaweed is a strategic carrageenan, contributing to the the United States, South Korea, market for farmers’ production Second, there are more than hamper it from growing fully commodity thanks to the enhanced value despite lower Chile and Vietnam. of seaweed, calling for the 500 types of seaweed in and reaping the utmost value relatively large domestic export volume. development of the industry to Indonesia, but, it only cultivates from the downstream and potential in Indonesia and Seaweed is a versatile process all seaweed. “We have three types: Gracilaria (for upstream sectors. its vital role for propelling In the past ive years, China product, with nutritional to develop the downstream jelly, cultivated in brackish economic activities in the has been the top export value that makes it a potential industry so it is able to export water), Eucheuma cottonii, The irst problem is the coastal regions. It has more destination in terms of export commodity for development. inished goods. We must not and Eucheuma spinosum (for low quality of seaweed raw than 500 derivative products value and volume, taking 70 It can be processed into food continue to be a supplier of carrageenan, cultivated in material. Domestic ishermen for large downstream seaweed- percent of Indonesia’s total ingredients, such as jelly, raw materials,” he said. coastal areas). and industry players also based products. In 2017, seaweed exports both in vegetables and cakes. It can ind the logistic costs for the Indonesia contributed 328,000 value and volume. In the third produce ingredients for algin, There are at least three reasons Third, improvement of the raw material too expensive. tons of dry seaweed, the largest quarter of 2018, seaweed carrageenan and fulcelaran that the government needs to boost industry will increase the welfare Another problem is fluctuating in the world.

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Map of Seaweed Potential Cultivation Area EXTRA VALUE OF SEAWEED PROCESSED PRODUCTS

The government has pushed (ATC) with a soaking level To date, 52 companies process downstream seaweed- of 25 percent, semi reined seaweed domestically, with based products due to the Carrageenan (SRC) with a 32 working on Euchema signiicantly higher prices soaking level of 20 percent sp (carrageenan) and the compared to raw seaweed. and reined Carrageenan remaining 20 on Gracillaria sp For example, Eucheuma sp. (RC) with a soaking level of (jelly) with installed capacity is used for processed items 15 percent. Below is the price of 66,000 tons and 55 percent such as Alkali treated Cottonii gap: utilization.

Additional Value of Processed Euchema Sp. Products as At full capacity, the domestic Carrageenan industry can absorb 248,318 tons of dry seaweed. However, Processed Products Description Raw Material currently there is only 136,575 ATC SRC RC tons of dry seaweed available, leaving 111,743 tons unmet. Weight (Kg) 1 0.25 0.20 0.15 Indonesia exported 201,162 tons of dry seaweed in the Price (IDR/Kg)* 13,500 90,000 120,000 180,000 same year, making it the largest Added Value 0 1.67 1.78 2.00 commodity exporter in the Notes: Indonesia has 1,510,223 hectares of potential seaweed cultivation area. As of Source: Ministry of Maritime Affairs and Fisheries (Multiplication) world. 2016, only 271,336 hectares (17.97 percent) of the total area had been utilized. * The price in the table is the ideal one. According to the Industry Ministry per August 2019, the price of Euchema cottonii reaches IDR24-25,000 per kg thereby causes the The opportunities for cultivating centers, and several provinces According to the Ministry of price of RC amounting IDR200,000 per kg. seaweed are spread across cultivate seaweed and develop Maritime Affairs and Fisheries, most of Indonesia, due to it as an export commodity. A the country’s seaweed can be geographical conditions that number of provinces spread classiied into three groups based allow almost all types of seaweed across eastern Indonesia are on colloids content: Agarophyte, to be cultivated in all regions. the focus of the development the raw material for some jelly Some 23 provinces serve as of the seaweed industry being types, such as Gracilaria, Gelidium seaweed cultivation production promoted by the government. and Gelidiella; Carrageenophyte, a seaweed type that contains Carrageenan polysaccharides, one of which is Eucheuma; and Alginophyte, which is part of the brown algae (Phaeophyceae) that produces alginate.

Indonesian seaweed is believed to be of better quality than that of other seaweed producers. This quality is due to better and more proper cultivation methods and a geographical climate that includes sunlight, streams, pressure, water quality and salt levels.

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GOVERNMENT POLICIES ON SEAWEED

In 2019, the government issued independent, competitive and and 2017. The second, third and Presidential Regulation No. 33 sustainable. the fourth stages ran from 2018 Year 2019 on the Road Map of to 2021. The government also Bombana Regency, Buton The national seaweed industry Seaweed Industry Development The regulation stipulates four developed seaweed seed Regency and Central Buton needs to continue diversifying 2018-2021. The regulation phases of national seaweed The regulation targets the plantations in 71 regencies/ Regency in 2016 and 2017. processed seaweed products encapsulates the country’s industry development. The following export performance cities in 19 provinces in 2016, to offer a variety of high- strategy for creating a domestic first phase included seaweed- on seaweed processed and improved seaweed The government also provides quality items for domestic seaweed industry that is related activities between 2011 products: cultivation centers in nine iscal and non-iscal incentives. and international consumers. cultivation sites in outermost Fiscal incentives include tax Lastly, more research and joint and bordered areas. allowances and import customs studies on seaweed processed Detail Product 2018 2019 2020 2021 relief. Non-iscal incentives product development between Carrageenan 5,825 5,444 5,607 5,775 For the seaweed industry, include a one map policy to local and global institutions is Export volume (ton) the government revitalized prevent overlapping land needed. Jelly 1,003 1,034 1.065 1,097 seaweed factories in , use. To accelerate this policy, Carrageenan 30,758 31,681 32,631 33,610 Ternate and Tarakan in 2016. various government ministries With more investment in the Export value (000 US$) Jelly 9,451 9,734 10,026 10,327 It set up six new seaweed are working together to sector, huge opportunities will companies/processing irms resolve overlapping problems, flow from the development Carrageenan 399,855 411,851 424,206 436,933 Export value (million Rp) in Bone Regency, East Luwu including in the seaweed of a healthy, sustainable and Jelly 122,860 126,545 130,342 134,252 Regency, Jeneponto Regency, industry. globally competitive industry. 

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Investment Profile of the Super Priority Tourism Destinations

PROJECTION 2020

NO. DESTINATION INVESTMENT NUMBER OF FOREIGN EXCHANGE (MILLION US$) DOMESTIC TOURIST (MILLION US$) 1 Toba Lake 1,600 1,000,000 1,000 Places 2 Borobudur 1,500 2,000,000 2,000 3 Mandalika 3,000 2,000,000 2,000 4 Labuan Bajo 1,200 500,000 500 to Go 5 Likupang 500 100,000 200 5 TOTAL 7,800 5,600,000 5,700 Source: BKPM Government polishes investment promotion in ive super priority tourism destinations.

THE INDONESIAN in collaboration with the World GOVERNMENT is preparing Bank. The government is facilities and infrastructure utilizing the state budget and a in ive super priority tourism World Bank loan to inance the destinations, to welcome three ITDP phases that include tourists once the COVID-19 the ive destinations and Bromo- pandemic concludes. President Tengger-Semeru and Wakatobi. Joko Widodo said he was The investment target has been upbeat the country’s tourism set at US$421,200,000 by 2023. sector would boom starting early next year. Investment Realization in the Five Super Priority Tourism 1. BOROBUDUR monumental and magniicent - Central Java and the Destinations in 2019* Borobudur temple is situated are just a few of the words that Special Region of . The ive destinations are Toba in Magelang Regency, Central will stick in one’s mind after Joglosemar is an abbreviation Lake, Borobudur, Labuan Bajo, Java. Not only it is the world’s visiting the temple. of Yogyakarta, Solo () Mandalika and Likupang. The Number of biggest Buddhist archeological and , the three big government is making use Destination Province Investment (Rp) Workers site, it also showcases the UNESCO named the temple a cities in the provinces. of investment to set up new country’s charms of remarkable World Heritage Site in 1991 Toba Lake North Sumatera 394.95 billion 370 facilities and infrastructure, ancient architecture, religious The Borobudur Authority and create new attractions Special Region of Yogyakarta 698 billion 228 tolerance, Buddha’s enduring The Joglosemar Concept Body has been tasked to Borobudur inside and around each of the Central Java 563.7 billion 923 wisdom and the value of For the super priority tourism manage over 309 hectares destinations. local culture. Long before the plan, the government has of land around the temple in Mandalika 2,312 billion 2,413 government named it one of completed the temple with Purworejo. It will complete The ive destinations are Likupang 44.94 billion 228 the destinations, Borobudur attractions surrounding it, the Joglosemar attraction by included in the third phase Labuan Bajo 2,170 billion 2,413 has captivated the hearts called Joglosemar, which building infrastructure, facilities, Source: BKPM Source:

of the Indonesia Tourism Note: (*) Domestic and foreign investment values for hotels and restaurants, of local and international encompasses a large area maximize natural attractions and Development Program (ITDP) January to December 2019 tourists for decades. Sacred, stretching across two provinces create entertainment sites.

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Tier 1: Borobudur Authority Zone Development in Purworejo Tier 2 Developing Areas around Borobudur Authority Zone Area 309 hectares (Yogyakarta, Magelang, Muntilan and Purworejo) • Eco-Tourism which covers glamorous camping, eco resort, • Developing international supporting tourism facilities restaurant and Meeting, Incentive, Convention and Exhibition (MICE) • Hotel, Amusement Park, Cultural Theme Park, Restaurant, Shopping Center, Shop, and others. • Developing facilities in the regency under the supervision of the Borobudur Authority Board Location: Magelang Regency, Central Java

Easy Access Potential Investment • Adisucipto International Airport • Kalibening waterpark Yogyakarta (2 hours to Borobudur) • Grabag hotspring • Adisumarmo International The Development • Mertoyudan agrotourism Airport Solo • Sawangan agrotourism • Achmad Yani International Airport Project of the Temple • MICE Resort Semarang and the Surrounding • Exclusive villa Land: Total Area of 100 hectares • Boutique hotel (authoritative zone: 309 hectares) • Luxury resort and spa

Tourist Attraction • Borobudur temple • Kai Langgeng park • Diponegoro museum • Sudirman museum • Punthuk Setumbu sunrise spot • Umbul temple • Silawe waterfall • Sekar Langit waterfall

Development of Utilities and railway and bus route setups, The natural disasters led to Attraction visitors in the 1980s. The name Infrastructures water processing and supply, plenty of historical records on The lake offers tourists changed to the Lake Toba The body has so far improved waste management, recycled human evolution, flora and fauna. abundant fun and a variety Festival in 2011, with the aim roads in Semarang-Magelang- waste handling and improving There are 45 geological sites in of family-bonding activities. of making the forest and lake Yogyakarta to facilitate a electricity distribution. four geo areas: Porsea Caldera, Outdoor lovers can enjoy cleaner, while also showcasing smooth journey to the temple Haranggaol Caldera, Sibandang mountain hiking, swimming its history and the geopark that and its surroundings. The new 2. LAKE TOBA Caldera and Samosir Caldera. and water-based sports such covers geo, bio and culture. Kulon Progo Airport has been Lake Toba is the world’s largest as speed boating, water skiing, operational since March 20, volcanic lake and the second Accessibility and Hotels canoeing and kayaking. For Culinary fans will find special 2020, to make it easier for largest lake after Lake Victoria There are two airports for quieter activities, there is golf, delicacies around the lake would-be visitors to reach the in Africa. Situated in Tapanuli would-be visitors: Kualanamu fishing or simply savoring the including distinctive fish dishes, temple, although it has not Regency, North Sumatera, the International Airport, mesmerizing sunsets around especially “Naniura” which been oficially opened due to lake is around 113,000 hectares approximately four hours the lake. is known as Bataknese sushi, COVID-19. in size. The Lake Authority Body away, and Silangit Domestic consisting of raw fishes with manages approximately 500 Airport, just 20 minutes from Lake Toba Festival welcomes spices and seasoning. In addition, it has been hectares for development. the lake. Some 829 hotels tourists to witness sport events improving Semarang Cruise are available for comfortable and experience local tourism The Lake Toba Tourism Area Port to accommodate potential facilities, it has been working The lake was formed by three stays, according to 2015 data flavors. The festival originated Authority Board has been tourists coming via sea. To on important supporting big explosions about 900,000, from North Sumatera’s Central from the Lake Toba Party that developing the Flower Garden, boost the ease of access and infrastructure projects, such as 500,000, and 75,000 years ago. Statistics Agency. began entertaining locals and Asia’s largest flower park. The

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with influencers on tourism Wonders named it as one of the hotels, restaurants, water activities there. temporary winners alongside tourism facilities for diving, boat the Amazon Forest, Halong Bay, accommodation, amusement 4. LABUAN BAJO Iguazu Waterfall, Jeju Island, parks, and shopping centers. Labuan Bajo is one of three Table Mountain and Puerto KTAs on Island, along Princesa Underwater River. 5. LIKUPANG with Waerebo and Kelimutu. Likupang was named a Super The Labuan Bajo Integrated Infrastructure and Facility Priority Tourism Destination Tourism Master Plan covers Development during a Limited Meeting on Labuan Bajo and Flores. Developing the destinations July 15, 2019. The government will ensure additional economic issued Government Labuan Bajo is the capital of value for locals. Improving Regulation No. 84/2019 on Komodo District and the West attractions outside the park plays the naming of Likupang as a Manggarai Regency, East Nusa a vital role in creating sustainable special economy zone. The Tenggara. tourism activities in Labuan Bajo regulation was legitimized and the surrounding areas with on December 6, 2019, and It is the gateway for Komodo limited capacity. announced one day later. and Rinca islands, home of the rare Komodo dragons. The two The Labuan Bajo Tourism Likupang belongs to the islands are part of the Komodo Authority Board has been North Minahasa Regency, National Park and Padar island. improving infrastructure, North Sulawesi, and is a vast In 1991, the Komodo National including expanding the airport, 197.4 hectares in size. It was Park was named a UNESCO repairing roads, managing proposed by PT Minahasa World Heritage Site. On waste. Required amenities Permai Resort Development, November 11, 2011, New Seven include international-scale a subsidiary of Sintesa Group. garden is part of the lake’s designed it as an ecotourism Senggigi consists of sub-KTA tourism development area, and destination, combining clean Gili Tramena and sub-KTA one of the projects improved solar cell energy, a water Senggigi. KTA South Beach - under the Belt and Road desalination factory and green sub-KTA Sekotong, sub-KTA Initiative. space utilization. The green Praya Mandalika and sub-KTA space will make up more Pink Beach. The third and fourth To further polish the lake’s than 51 percent of the overall NOKTA hold potential tourism tourism potential, the tourism destination. It will greet visitors for further development on authority plans to set up with international-scale hotels, KTA Rinjani Mountain and KTA hotels, resorts, restaurants and restaurants and interesting . amusement parks. attractions. BKPM has a role in improving 3. MANDALIKA Nature and culture are two investment in Mandalika The Indonesian government core elements that will serve as through the Lombok tourism issued Government major tourism pull factors for investment forum, tourism Regulation No. 52 Year 2014 developing Mandalika, with the investment package formulation on Mandalika’s status as a vision of making it a sustainable, and tourism investment special tourism economy zone. resilient and inclusive tourism roadshow. Branding for It is located on the south of experience for all tourists. Mandalika can be created Lombok Island, West Nusa through promotional Tenggara, covers a vast 1,175 Key Tourism Areas ilm production, hosting hectares and faces the Indian Mandalika has four key tourism international events, global ad Ocean. The government areas (KTAs). KTA 1 Gili- promotions and collaborating

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Likupang is located near The Business Plan constructing theme parks, three INVESTMENT INCENTIVE FACILITIES IN INDONESIA imported goods and materials Sam Ratulangi International Likupang will be completed by or more star hotels, restaurants, Tax Holidays for production for two years Airport and Bitung Port. The premium and mid-range resorts, bars, cafes, sports centers, during initial production (or Likupang Special Economy residential blocks and hotels. itness, tennis, football and In November 2018, the Ministry of Finance issued regulation four years for companies using Zone is predicted to attract There will be a cultural village swimming pools. No.150/PMK.010/2018 on tax holidays for pioneer industries. locally-produced machines Rp 5 trillion in investment and housing a tourism village and with a minimum 30 percent of absorb 65,300 workers up to commercial area. It also has Museum and historical site the total value of machines for 2040. Investment for the area’s Tanjung Pulisan Tourism Special management, travel bureaus, The concession production). development from PT Minahasa Economic Zone which consists catering, one to two-star hotels, Permai Resort Development will of the Wallacea Conservation non-star hotels, motels, billiards, period for tax facility: Strengthening synergy reach Rp 1.17 trillion, with Rp 6 Center, yacht marina, bowling, golf courses, art between the central Category Investment (Rp) Tax holiday Period trillion from business players. accommodation and national galleries and theatres, singing government and regional tourism strategic area (Lembe rooms/karaoke, natural tourist Mini Tax Holiday 100 – 500 billion 5 years – 50% administrations is a challenge. Likupang offers resort and Island, Bunaken and Tandano attractions, MICE, and art Tax Holiday I 500 billion – 1 trillion 5 years – 100 % To address this, the cultural tourism, is surrounded Lake). The Wallacea center and impresario services are open Tax Holiday II 1 trillion – 5 trillion 7 years – 100% government held coordinating by beaches and is close to yacht marina are outside the for up to 67 percent foreign meetings with related regional Tax Holiday III 5 trillion – 15 trillion 10 years – 100% the Wallacea Conservation proposed special economic zone. direct investment, and local joint administrations, ministries Center. The Likupang Special venture partners are required. Tax Holiday IV 15 trillion – 30 trillion 15 years – 100% and institutions to work on Economic Zone will work on INVESTMENT SCHEME land-related matters. Further premium class resorts and mid- Business ields in the tourism Spa services are open 51 partnerships are required to range resorts, culture and the industry open for 100 percent percent for foreign direct ensure preparatory efforts Wallacea center. foreign ownership are investment. A mini tax holiday is given to Import Duty on the Integrated Tourism investors with investment of Rp BKPM also offers import duty Masterplan by the National 100 to Rp 500 billion. The mini exemption on imported capital Development Planning Agency tax holiday allows investors to goods (machines) for two (Bappenas). This is expected pay 50 percent less than the years during the construction to achieve good partnerships actual tax holiday for ive years. period. There is also an import between central government duty exemption offered on and regional administrations.  Tax Allowances Through government regulation No. 78/2019, the government has increased the number of recipient sectors for tax allowances to 166 sectors, including the tourism industry: ive star hotels, four star hotels, golf courses, theme parks and amusement parks. Investors who are granted the tax allowance can enjoy 30 percent of the investment value from the reduction of corporate net income tax for six years, or 5 percent each year. The government has made the procedure to obtain the tax allowance are faster and simpler.

58 | Magazine Magazine | 59 iCALENDER and iEVENT

JANUARY FEBRUARY MARCH APRIL MAY JUNE • President Jokowi state visit to United • EuroCham-BKPM Forum • Launch of Command Center • BKPM accelerates medical equipment • Webinar on Maintaining Investment • BKPM reopens in-person Arab Emirates (see page 6) on Indonesia Economic & (Pusat Kopi BKPM) (see page 15) business licensing (Decree of Chairman Momentum: Post-COVID-19 consultation services Investment Outlook 2020 • Chairman of BKPM visit to East Java (see page 14) of BKPM No 86/2020) (see page 65) Investment Improvement Strategy by • Indonesia Pavilion and Indonesia (see page 9) Ministry of Foreign Affairs • President Jokowi inspects Batang Night at the World Economic Forum • MoU signing with: • MoU signing between BKPM and PT Integrated Industrial Zone and the Davos 2020 (see page 7) • National Coordination a. Ministry of State-Owned Enterprises (SOE) Justika Siar Publika (Hukumonline. • President Jokowi issues Government relocation of foreign investment to Meeting (Rakornas) 2020 (see page 16) com) regarding cooperation to Regulation (PP) No. 23/2020 Indonesia • MoU signing between BKPM and the (see page 10) promote socialization and public concerning the Implementation of the (IDX) b. Batam Indonesia Free Trade Zone Authority consultation online relating to National Economic Recovery Program • Announcement No. 8 of 2020 on (BP Batam) (see page 13) (see page 8) • MoU signing between BKPM investment law information (PEN) in the Context of Supporting Publication of Foreign Investor and National Police (see c. DBS State Financial Policies for Handling Representative and/or Expert Foreign Market sounding of public-private • Investment Realization Quarter IV page 11) • the COVID-19 Pandemic. Worker Visit Supporting Letter Flow 2019 press release (see page 17) • Rating and Investment Information, Inc. (R&I) partnership (PPP) project: six toll upgrades Indonesia’s sovereign credit rating during COVID-19 (see page 65) Chairman of BKPM visit to roads and bridges • from BBB/stable outlook to BBB+/stable Papua (see page 12) outlook (investment grade) • Investment Realization Quarter I 2020 • BKPM temporarily closes In-person consultation press release (see page 17) services due to COVID-19

JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER • Press conference on Investment to • Independence Day • 53rd ASEAN ministerial meeting • Indonesia Infrastructure Week 2020 • 37th ASEAN Summit and related • APKASI (Association of Regency Support Economic Recovery and related meetings (October 21-23, 2020) summits Administrations in Indonesia) • Road to Indonesia • Market sounding of Angkasa Pura II Otonomi Expo 2020 projects Investment Day (IID) 2020 • The 3rd Indonesia Investment Day (December 15-17, 2020) (August 11-October 20, (IID) Driving the Role of Industry 4.0 • The Indonesia-Australia 2020) Towards Sustainable Investment in Comprehensive Economic Partnership Indonesia (October 27, 2020) Agreement (IA-CEPA), came into effect (July 5, 2020) • Investment Realization Quarter III • Investment Realization Quarter II 2020 Press Release 2020 press release

EVENTS UPDATE HANNOVER MESSE the “Making Indonesia 4.0” this year due to the pandemic. ields of medicine and science. Health Organization (WHO) campaign highlighting the rapid According to a press statement, Dubai Expo is the largest declared COVID-19 a global Hannover Messe, the world’s transformation toward the fourth the Dubai Expo will now run event in the Arab region. It is pandemic. The event was THE WIDESPREAD impact leading trade show for industrial industrial revolution which it from October 1, 2021 to set to greet 190 participating due to take place between of COVID-19 has caused technology, was called off until needs to become the world’s March 31, 2022. It remains countries and millions of September 30 and October the cancellation of global the next event in April 2021. As 10th largest economy by 2030. committed to hosting an event visitors from around the world. 4, 2020, at the Indonesia investment and business a partner country for Hannover that will gather multilateral Convention Exhibition (ICE) events, as part of efforts to Messe 2020, Indonesia was EXPO 2020 DUBAI organizations, businesses and TRADE EXPO INDONESIA BSD, Tangerang, Banten. Last avoid possible further infection due to feature more than 170 educational establishments year, TEI booked transactions in the global population. Events exhibitors, demonstrating the The organizer of Expo 2020 on creativity, culture and Indonesia’s Ministry of Trade of US$10.96 billion (Rp 153.38 BKPM was due to participate in country’s industrial capability. Dubai announced the global innovation, including major canceled the 35th Trade Expo trillion), a rise of 29.04 percent 2020 were: Last year, Indonesia launched mega event was cancelled for technological advances in the Indonesia (TEI) when the World from 2018.

60 | Magazine Magazine | 61 iACTUAL iACTUAL

Delegating… Done! Several ministries and government institutions already delegate business license and investment facility authority to the BKPM chair.

TAX HOLIDAY

The tax holiday has been renewed. On February 17, 2020, Minister of Finance Sri Mulyani Indrawati announced 18 sectors eligible to apply for tax holidays directly to BKPM.

1 2 3 Oil and gas reining or Petrochemicals based on oil, Upstream base metals Ease of Doing Business… reining industry gas and coal

GUARANTEED! 4 Organic basic chemicals sourced 5 6 Main pharmaceutical raw from agricultural, plantation or Basic inorganic chemicals materials Government introduces pro-investment regulations forestry products to keep business climate positive.

Makers of major components of 7 Industrial manufacturing of 8 9 Machine manufacturing and electronic/telematics equipment such irradiated, electro medical and main engine components; as semiconductor wafers, backlights TO BOOST INVESTMENT, required for increasing the Under the Inpres, ministries electrotherapy equipment for LCD, electrical drivers and displays support economic growth country’s ease of doing and government institutions are and create job opportunities, business ranking. It empowers tasked with actively “identifying 10 Industrial robotics manufacturing 11 Industrial manufacturing of 12 Motor vehicle manufacturing President Joko Widodo signed BKPM to evaluate business and assessing” regulations components supporting main components of electric and major components of Presidential Instruction (Inpres) license implementation and seen as “disruptive toward the manufacturing machinery making power generators motor vehicles No. 7/2019 on Accelerating investment facilities from ease of doing business,” and Ease of Doing Business on ministries and government report them to BKPM. They 13 14 15 November 22, 2019, becoming institutions deemed are also tasked with reducing Main ship components Main components of railroad Makers of aircraft components and effective immediately. unfavorable to investors. On the number of regulations, manufacturing manufacturing aerospace support activities completion, recommendations simplifying procedures and The regulation mandates from the evaluation results requirements, and accelerating the Indonesia Investment are submitted to the relevant business license issuance 16 Processing industries based on 17 18 Digital economy including data Economic infrastructure Coordinating Board (BKPM) ministries and government through regulatory revisions or agricultural, plantation and forestry processing, hosting, producing pulp and related activities. to coordinate all efforts institutions. revocations. 

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assistance services. The decree BKPM to Issue Letters of Support to BKPM in the event of a visit COPING WITH came into force on April 1, from a representative of the 2020, and will continue until the for Visiting Foreign Representatives company and/or foreign experts COVID-19 pandemic’s emergency response and Experts from abroad. After fulilling status is ended, based on the the requirements, BKPM will BKPM accelerates medical equipment decree of the Head of National BKPM issued Announcement Liability Company (PT PMA) verify and then issue a letter business licensing to cope with COVID-19. Disaster Management Agency. Number 8 of 2020 on Representatives and/or Foreign of support and submit it to the Submission Flow of the Issuance Experts during COVID-19, on relevant agencies. The company All licenses related to medical of Letter of Support for the Visit June 11. A PT PMA in Indonesia can also collect the letter from TO SUPPORT government (Decree 86/2020). equipment can be completed of Foreign Investment Limited now can submit an application BKPM administrative unit.  policy on the COVID-19 in one day. This facility will pandemic in Indonesia, BKPM Under the decree, business be given to companies Chairman Bahlil Lahadalia has ields related to the pandemic, through OSS, using business issued Decree of the Chairman including the medical device identiication number (NIB), of Indonesia Investment and pharmaceuticals industries, industrial business license, Company/applicant Coordinating Board (BKPM) are granted ease of business commercial or operational Prepared application documents addressed to BKPM Chairman Number 86 of 2020 on licensing in the form of: license. The requests are then Providing of Ease of Business reduction and/or facilitation of processed in the Ministry of Licensing for Certain Business business licensing requirements, Health (Kemenkes) system for Fields Related to Handling acceleration of the business production certiication and BKPM Administrative Office of the COVID-19 Outbreak licensing process, and special distribution licenses. Registration and veriication of application documents

NO. BUSINESS FIELD KBLI DESCRIPTION

Protective clothing, face 1 shields, shoe covers, and 32904 Manufacture of protective safety equipment BKPM Chairman non-surgical masks Administrative Office Manufacture of medical and dental instruments 2 Surgical masks 32509 Disposition by BKPM Chairman and supplies BKPM Manufacture of soap and detergent, cleaning Hand sanitizer and SUPPORTING 3 20231 and polishing preparations, perfume and toilet disinfectant LETTER preparations BKPM Evaluation team 1. Drafting of supporting letter 4 Rubber boots 15203 Manufacture of footwear 2. Signing of supporting letter 5 Rubber gloves 22199 Manufacture of other rubber products

21011 Manufacture of pharmaceuticals, medicinal 6 Pharmacies 21012 chemicals and botanical products • Application should be signed by highest ranking company oficer (president director/chairman/director/CEO) Manufacture of measuring, testing, navigating and 7 Thermometers 26511 Contact details of person responsible for application document (cellphone number) control equipment • • Statement of visit purpose of company representative and/or expert foreign worker during COVID-19 Manufacture of irradiation, electromedical and 8 Ventilators 26602 • Details of implementation of investment activities (total investment, project location) electrotherapeutic equipment • Plans for employing Indonesian workers Manufacture of measuring, testing, navigating and • Credentials of company representative and/or expert foreign worker: name, passport number, citizenship, position and/ 9 Electronic thermometers 26513 control equipment or department according to applicable laws • Agreement to comply with COVID-19 health protocols. Manufacture of medical and dental instruments 10 Goggles 32503 and supplies

64 | Magazine Magazine | 65 iHIGHLIGHT iHIGHLIGHT Indonesia’s Green Gems BKPM encourages investors to invest in places outside Java.

launched at the High-Level preparing to improve ive areas Meeting on Green Investment to attract more investment: skilled for Papua and West Papua human resources, infrastructure in February 2020. There is and logistic development to potential revenue of up to leverage business proitability; US$200 million per year from security; and aligning the scheme, and it will improve investments and low carbon the livelihoods of 60,000 development initiatives. families across both provinces, while simultaneously adhering The two provinces offer to the principles of inclusive and four types of commodities sustainable development. to investors: fast track commodities (cocoa, arabica Under the scheme, the private coffee and nutmeg); high sector is expected to invest in potential commodities low carbon and deforestation- (seaweed, vanilla and robusta free development involving coffee); isheries; and locally-established value ecotourism. chains that will beneit the local AS AN ARCHIPELAGO country PAPUA AND WEST PAPUA April 4, 2019, the two provinces Yayasan IDS, developed a green economy. BKPM Chairman Bahil Lahadalia of more than 17,000 islands, a made a joint commitment to growth plan (GGP) and green said investment in the two large young population, and Capitalizing on nature’s protect their forests, as only 33 investment blueprint (GIBP) “This is the untapped potential provinces is not only about abundant natural resources, advantages through green percent of the total 2.7 million for both provinces. The GIBP that needs to be realized to large-scale investment, but also Indonesia continues to offer investment. hectares (ha) of land outside the contains information about the increase economic growth about medium and low-scale vast investment opportunities. forest area had been utilized commodities being cultivated in and community welfare, while investment. With most businesses located Protecting the forests and for land-based commodity the two areas with good market maintaining the preservation of on Java Island, the Investment coastal areas of Papua and development, with 2.09 million potential that are culturally forests and land in West Papua,” “It is hoped that with an Coordinating Board (BKPM) West Papua from degradation ha of land available to be used appropriate and acceptable for said West Papua Governor environmentally friendly encourages investment is crucial, as nature plays a for green investment. local communities. Dominggus Mandacan. investment pattern, the focus outside Java to ensure quality vital role in people’s welfare, will be on nutmeg, cocoa, and investment spread throughout socioeconomic equality and The governments of Papua To support this plan, a green Papua Deputy Governor Klemen isheries which are hereditary the nation. sustainable development. On and West Papua, together with investment scheme was Tinal added that the province is sectors,” he said.

66 | Magazine Magazine | 67 iHIGHLIGHT iHIGHLIGHT

SOUTH SULAWESI No. 33 Year 2019. The Perpres is a guide to increase the Recognizing its potential, production of seaweed value the national government added products, and more has made seaweed broadly foster the development strategic to its economy. of a reliable, competitive and sustainable seaweed industry, As an archipelago, Indonesia so its great potential can be has the second-longest expanded further. coastline in the world. Its marine area is around three times has proven itself larger than its landmass, so the to be an innovative, award- potential production of isheries Seaweed contributes a seaweed production, and the winning province in regard to and aquaculture, including considerable amount to South development of consumable investment bureaucracy. Since seaweed, is enormous. Sulawesi’s exports. In 2019, seaweed businesses from micro it opened a one stop integrated Papua and West Papua provide blended inance, technical the export value of 130 tons of to industrial scale. licensing service (PTSP) in 2013, great opportunities for the assistance, and locally Seaweed presents a signiicant seaweed from the province was the province has won many development of ecotourism, established value chain task economic opportunity. It can US$138 million. Demand keeps Indonesia has made signiicant awards, including “The Best thanks to their rich and unique forces. To accelerate investment boost the economy, improve rising every year, primarily from efforts in cultivating more Operator of PTSP” from BKPM in cultures, marine wildlife and projects, the local and central the livelihoods of coastal China, Chile, the Philippines, seaweed and expanding 2016, Indonesia Attractiveness terrestrial beauty. Tourists can governments have committed communities, and be managed Hong Kong, Vietnam, Japan, its global market, including Index (IAI) Award for the enjoy natural attractions such to establish a conducive in a more sustainable manner. Korea and Brazil. creating the Tropical Seaweed category of “Attractive Province as birdwatching, river cruises investment climate, particularly Innovation Network (www. for Investors” in 2015, and “The and cave exploration, while by completing roads to Papua Indonesia accounts for more The production of seaweed in seaweednetwork.id) digital Big Four of Best Investment gaining new insights into highlands and improving than a third of global seaweed South Sulawesi has increased platform to connect all Manager” in Indonesia from local culture. As for marine communication capacity to production, with Sulawesi at signiicantly over time, stakeholders. The platform BKPM in 2014. attractions, Raja Ampat Islands all commodity-producing the center of production as reaching around 4 million tons facilitates networking, promotes offer an amazing underwater communities, strengthening South Sulawesi is the highest in 2018. According to Deloitte, cooperation and synergy, and To streamline bureaucracy, experience for divers. the environmental agenda, seaweed producing province, the province alone contributes encourages innovation. the province developed a and creating awareness and primarily in the regencies 18 percent of global red regional investment potential Executing the blueprint acceptance for selected of Pangkep, Maros, Takalar, seaweed production and The government also set information system (SIPID) as a requires private investment, commodities among local Jeneponto, Bulukumba, Sinjai supports the livelihoods of up the 2018-2021 National management tool for potential catalyzed by 10 years of communities. and Selayar. 40,000 households. But, the Seaweed Industry Development investment information, investor vast majority of red seaweed Roadmap, stipulated in complaints, and website-based is not processed or reined in Presidential Regulation (Perpres) regional regulations.  Indicative Pipeline 2021 – 2030 South Sulawesi. Instead, it is sent elsewhere for processing, limiting Indonesia’s role in the seaweed global value chain. Cocoa Arabica Nutmeg Vanilla Seawed Robusta Ecotourism TOTAL Strategies are underway LOW- INTEREST $92.1M $13.9M $6.8M $10.9M $41.2M $28.2M $12.1M $205.1M to develop the seaweed LOANS industry, including a focus TECHNICAL on increasing productivity $5.8M $0.8M $1.9M $2.2M $1.9M $3.1M $5.4M $21.1M ASSISTANCE and the quality of seaweed, developing the processing TOTAL $97.9M $14.8M $8.7M $13.1M $43.0M $31.3M $16.7M $226.2 industry for semi-reined

seaweed near the centers of

TOTAL $97.9M $14.8M $8.7M $13.1M $43.0M $31.3M $16.7M $226.2

68 | Magazine Magazine | 69

ASSISTANCE

$5.8M $0.8M $1.9M $2.2M $1.9M $3.1M $5.4M $21.1M

TECHNICAL LOANS iKNOW iKNOW

Provides a cover letter once the commitments have The new, improved Only provided a pre-requisite list of commitments been fulilled by a business actor. This cover letter will with regard to the IOK. conirm the business actor is eligible to apply for the Going Online Single IOK based on the relevant ministries Submission Validation process: system for a better (i) Customs Registration Numbers (Nomor Induk Kepabeanan), investment climate. (ii) General Legal Administration (Administrasi Hukum Umum) deeds, NLINE (iii) Tax Identiication Numbers (Nomor Pokok Wajib Pajak) of Adds the Special Economic Zone (Kawasan Ekonomi a company, a shareholder, and a spouse (if applicable), Khusus), and the company’s deed into the validation THE INDONESIA INVESTMENT COORDINATING different database designs in line with business (iv) Detailed Spatial Plans (Rancangan Detil Tata Ruang), process. (v) The Negative Investment List (Daftar Negatif Investasi), BOARD (BKPM) launched its Online Single process changes. Some features have been added (vi) Indonesia Standard Business Classiications Code Submission (OSS) Version 1.1 (OSS V1.1) on to accommodate various business types and (Klasiikasi Baku Lapangan Usaha Indonesia or KBLI), January 1, 2020. The OSS V1.1 contains more requirements. The new version was built by BKPM (vii) Tax holiday. detailed, user-friendly and comprehensive features based on an evaluation of the insuficiency and that correspond to changing business processes. limitations of the old version, and the development Representative and Branch Ofices: a Foreign Company Includes a Foreign Company Representative Ofice Trade Representative Ofice (Kantor Perwakilan Perusahaan (Kantor Perwakilan Perusahaan Perdagangan Asing or In the new format, incoming investors will view of the new database and validation processes.  Perdagangan Asing or KP3A), a Construction Service Business KPPA) in the types of foreign representatives. Entity (Badan Usaha Jasa Konstruksi Asing or BUJKA), a Foreign Franchise Registration Certiicate (Surat Tanda Allows the business actors to register a branch ofice Pendaftaran Waralaba or STPW). for companies. Below is a summary of the differences between the updated version and the former OSS system. The revocation of a license can be done by way of The revocation of a license can be done only by way of liquidation and non-liquidation (ie, only revoking FORMER VERSION UPDATED VERSION liquidation (ie, the winding up of such company). the business license or the project while the entity continues to exist). The total investment value will be calculated based on all two The total investment value will be calculated based on The types of business actors (non-individuals, individuals, or Explains the deinitions of each type of business actor. digits of the KBLI codes. all ive digits of the KBLI codes. representatives) provided without any further explanation. Provides a new feature on the validation process for The stages of business licensing were combined in a cycle, Cannot asses the fulillment of commitments if the location the investment commitments which allows regional The stages of business licensing are divided based on project is located in the same district. governments to issue an approval notiication per which comprised of ive steps: the output of such stages, which consist of: location project. (i) Notarial deed(s), (i) Legality of the data, (ii) Data completeness, No ilter for a distributor company (KBLI code 46) to not be able to Provides a ilter for a distributor company (KBLI code 46) (ii) Business Identiication Number (NIB), (iii) Business licenses, also sell goods to consumers in retail nor engage in any retailer to not be able to also sell goods to consumers in retail nor (iii) Business licenses, (iv) Business and commercial license commitments, activities (KBLI code 47). engage in any retailer activities (KBLI code 47). (iv) Operational or commercial licenses (IOK). (v) Output. Available for various business entities (ie, limited Only provided one single format for the legality of data entry - partnerships, irms, etc) and legal entities (ie, PTs, a limited liability company (PT). cooperatives). DID YOU KNOW? The government separated BKPM Accommodates business actors to differentiate 2001 No distinction between the main activity(ies) History of BKPM The from the Ministry between two groups, with different requirements for of a business and the supporting activity(ies). government of State-Owned

main and supporting activities. 1988 merged BKPM Enterprises with the State and made it an Only accommodated an application for Also includes land, water, and forest area location permits. Ministry for independent The government a land location permit. The Investment. BKPM became institution. released Law No. 2007 government BKPM joined the State 25 Year 2007 as 1998

Provides a list of requirements or infrastructure permits The Indonesian 1973 set up BKPM the Ministry The Investment The government the investment Business licenses were only classiied based on their status: which have not been fulilled for the relevant business government to take over 1982 for Domestic government Ministry and set up the regulation on

effective or ineffective licenses. The list will be updated automatically once the 1967 established the tasks of Product released a the Head of National Single equal services required documents have been uploaded. the Foreign the Technical Utilization regulation on the Investment Window for for both Investment Investment Enhancement the Negative Coordinating Investment domestic and Provide new features which cover merger business Affairs. No feature for merger business licenses. Advisory Agency. Committee. Investment List. Board. (NSWi). global investors. licenses.

70 | Magazine Magazine | 71 iKNOW EASY OSS TO SECURE LICENSESiKNOW Launched on July 2018, the Online Single Submission (OSS) “The New” BKPM integrates all business license processes. Indonesia is reinforcing BKPM’s strategic function on investment. 7 EASY STEPS TO APPLY IN OSS

IN JANUARY 2020, the allows the BKPM to have ive accomplish six key performance government issued Presidential new expert staff members indicators (KPI) of the BKPM. Regulation (Perpres) No. 24 and ive new specialized staff The KPI are: improve ease USER REGISTRATION Year 2020 on the Second members on top of six deputies. of doing business (EoDB), The user registration process requires an identiication Amendment on the Presidential execute realizations of large number (NIK/KTP number for Indonesian citizens, and 1 Regulation No. 90 Year 2007 on The expert staff are expected investments, boost investment passports number foreign citizens). the Investment Coordinating to provide insightful partnering with MSMEs, Board. The regulation is a recommendations to the ensure the spread of quality LEGAL REGISTRATION government attempt to facilitate chairman according to their investment throughout The legal registration requires a legal certiicate of doing business in Indonesia, expertise, which could help to Indonesia, investment business entity from the Ministry of Law and Human Rights 2 increase competitiveness promotion focused on targeted (Kemenkumham) or a decree from the government. among regional peers and sectors and countries, and encourage investment, increase domestic direct job and economic investment (DDI), BUSINESS IDENTIFICATION NUMBER (NIB) Provide other data/information needed, such as company growth. The new especially the Expert Staff on proile, shareholders, capital distribution, and investment regulation Information MSMEs. 3 5 Specialized Staffs  value, to create a business identiication number. Technology and Deputy Chairman System Integration Expert Staff on Priority for Investment Sector Investment BUSINESS LICENSING Controlling and Development Implementation Provide information about business activities/projects. OSS will then issue business licenses and other licenses needed 4 for locations, environment, and infrastructure/building. Deputy Chairman for Investment Services Expert Staff on Institutional Relations New BKPM COMMERCIAL AND OPERATIONAL LICENSING The required commercial or operational license for the 5 Organization business is issued based on commitment. Deputy Chairman for Investment Cooperation Structure Expert Staff on SUBMISSION OF FACILITIES Macroeconomics Such as tax holidays, tax allowances, and exemption from import duties and other facilities (for eligible business entities). 6

Deputy Chairman Expert Staff for Investment on Investment REVOCATION Promotion Competitiveness Deputy Chairman for Deputy Chairman for Business closure, either partial (non-liquidation) 7 Investment Climate Investment Planning or full (liquidation).

Access OSS from your Desktop, Android and IOS 72 | Magazine https://oss.go.id/portal/ Magazine | 73 INDONESIA INVESTMENT PROMOTION CENTRE (IIPC)

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