SWISS CHAM “Benefit and Incentive for Investment in Special Economic Zone”

www.kendalindustrialpark.co.id Words of Wishdom “ Every year visit a place you have not been before, and do something you have not done before.” - Dalai Lama- Benefits & Incentive in Special Economic Zones & Brief in KEK Kendal

1. What is Special Economic Zone (SEZ) 2. Benefits & Incentives of SEZ 3. Short Brief of KEK Kendal 4. Video of KEK Kendal What is Special Economic Zone (SEZ) (Kawasan Ekonomi Khusus)

• A SEZ is an area in which business and trade laws are different from the rest of the country • It is located within a country’s national borders and their aims include increased trade balance, employment, increased investment, job creation • Attract both foreign direct investment (FDI) and local investments SPECIAL ECONOMIC ZONE IN INDONESIA

15 SEZ as of Nov 30, 2020 5 INCENTIVES IN SPECIAL ECONOMIC ZONE COMPETITIVENESS INVESTMENT INCENTIVES INSEZ

CORPORATE INCOME TAX (CIT)

Categories Applied in all SEZ Remarks

• 10 years zero CIT for minimum investment of Tax Holidays USD6.9 million (IDR100 billion) • 15 years zero CIT for minimum investment of Corporate USD34.5 million (IDR500 billion) For Income Tax Business • 20 years zero CIT for minimum investment of Investors (CIT) USD67 million (IDR1 trillion)

6 INVESTMENT INCENTIVES INSEZ

VALUE ADDED TAX

Categories Applied in all SEZ Remarks

• Delivery from domestic territory: For Expat only From • VAT not collected for: outside SEZ • delivery of taxable goods • delivery of taxable services: For domestic sales constructions, contract manufacturing, VAT is still and repairs (during development stage) applicable

8 INVESTMENT INCENTIVES INSEZ

IMPORT DUTIES

Categories Applied in all SEZ Remarks

Capital goods: • Exemption of import duty For Business • VAT import not collected Investors

Imported Goods Raw materials: • Deferred import duty For Business • VAT import not collected Industries • Luxury tax not collected • Import income tax not collected

9 INVESTMENT INCENTIVES INSEZ

NON-FISCAL INCENTIVES

Categories Applied in all SEZ Remarks

Applied for all None Export obligation industries

Foreign Full foreign ownership is allowed (negative list are Applied for all ownership not applied in SEZ) industries

Domestic Zero percent duty for products with at least Applied for all market sales 40% local content industries

Applied for all Limitation of goods Limitation of goods not applied to enter SEZ industries

All services and One Stop Service Provided by the SEZAdministrator business licences

10 INVESTMENT INCENTIVES INSEZ

NON-FISCAL INCENTIVES

Categories Applied in all SEZ Remarks

Special treatment for foreign workers • VOA users could be extended up to 5times Immigration • Temporary resident status for foreign workers and their families • Permanent resident status for Property holder and senior foreigner

11 Park By The Bay A Cost-Competitive Location for Global Market Strongly Supported by Indonesia and Singapore Governments

Indonesia ▪ The government established KIP as one of the National Strategic Projects. ▪ The Indonesian government accelerates the development of macro and micro infrastructure. ▪ The Coordinating Ministry for Economic Affairs, monitor and evaluate the implementation of National Strategic Project and report to the President at the minimum once time every six month.

Singapore ▪ High level JV between two most prominent Industrial Developers in South East Asia ▪ Quarterly Meetings by both Governments Bodies to accelerate macro infrastructure ▪ IE Singapore has setup a special Agency to assist KIP called ISBC

NOVEMBER 2016 SEPTEMBER 2017 OCTOBER 2018 OCTOBER 2019 The government focuses on KIP was officially launched. Kendal Furniture In the development of accelerating the Prime Minister Lee Hsien Polytechnic was the KIP, Prime Minister development of KIP, whose Loong delivered a speech at established. This is a fully- Lee Hsien Loong asked status will rise to Special the opening ceremony and funded scholarship President Joko Economic Zones (SEZ). said that this project is a program by Ministry of Widodo to facilitate win-win result for both Industry of Republic financial incentives DECEMBER 2019 parties. “Our economy is Indonesia. The main such as tax holidays. closely linked. If Indonesia objective is to supply The government has does a good job, Singapore manpower to the furniture officially designated KIP, as will do well. This is why industry across Central a new Special Economic Singapore wants Indonesia Java. Zone (SEZ) regulated with to succeed.” PP No. 85/2019 . ABOUT KIK SHAREHOLDERS

KIK Shareholders Structure

PARK BY THE BAY

Sembcorp Industries A Temasek-linked Company

Sembcorp Urban Development OUR REGIONAL PRESENCE

China ▪Wuxi-Singapore Industrial Park 330Ha Myanmar ▪Sino-Singapore Nanjing Eco Hi-Tech Island 1500Ha ▪Myanmar Singapore Industrial Park ▪Singapore-Sichuan Hi-Tech Innovation Park 1000Ha (MSIP JVCo) 436Ha ▪China-Singapore Suzhou Industrial Park*

Vietnam ▪Vietnam Singapore Industrial Park (VSIP) 500Ha Indonesia ▪VSIP Binh Duong Integrated Township & Industrial Park 2045Ha ▪ Kendal Industrial Park 2200Ha ▪VSIP Bac Ninh Integrated Township & Industrial Park 700Ha ▪ Karimun Marine ▪VSIP Hai Phong Integrated Township & Industrial Park 1600Ha & Industrial Complex* ▪VSIP Quang Ngai Integrated Township & Industrial Park 1120Ha ▪VSIP Hai Duong Integrated Township & Industrial Park 150Ha ▪VSIP Nghe An Integrated Township & Industrial Park 750Ha ▪VSIP Binh Dinh Township &Industrial Park 1000 Ha *Projects not managed by SCD

PT. JABABEKA TBK Established in 1989 and listed in Stock Exchange (1994)

• Over 1800 Tenants * 1.9 Million Population • Over 700.000 Workers * Over 770 MW Capacity INDONESIA

PricewaterhouseCoopers (PwC) Total Area : 1,919,440 km2 & 17,508 islands research has expressed optimism that Total Population : 264 Million (in 2017) Indonesia will become the world’s 5th GDP per Capita : USD 4,130 (in 2017) largest economy by 2030 Economic Growth GDP, annual average : 5% (since 2010) *Source www.kemenperin.go.id COMPETITIVE ADVANTAGES OF

POPULATION &

CENTRAL JAVA DEMOGRAPHICS

Total Population In Central Java 34.25 million

Youth 378 Population Universities 17.3 ~253K >20 million Total Graduates 1,568 Per Year th Vocational 5 Most Developed School City in Indonesia

JAVA ISLAND – CENTRAL JAVA

1 hour 5 hours From Jakarta From Jakarta to To Kendal 1 hour 3 hours From From Tanjung Priok Surabaya To Semarang To Kendal 7 Mio TEU /annum 470 km to Jakarta Tanjung Mas 800 Thousand TEUs/annum Jakarta 300 km to Surabaya

West Java Tanjung Perak KENDAL 3.2 Mio TEU /annum Central Java

Yogyakarta Surabaya East Java

POPULATION & KENDAL DEMOGRAPHICS

Total Population In Kendal 500,188 478,484 + 11 49 ~14,232 978,672 Universities Vocational Total Graduates School Per Year Youth Population 523,539 GDP Central Java Kendal >20 GROWTH ~5.32% ~5.60% (2018) Strategic Location Excellent Connectivity to Major Infrastructure & Amenities

Tanjung Mas, Total Land Area : 2,200 Ha Phase one 1,000 Ha International Sea Port 25 Km

Semarang 21 Km

Ahmad Yani, Kendal International Airport 20 Km

DESTINATION TIME VEHICLE Jakarta - Semarang 1 Hr

Jakarta - Kendal 5 Hr

Jakarta - Kendal 10 Hr KENDAL INDUSTRIAL PARK

BIRDVIEW MASTER PLANNING Phase 1 : 1000 HA

CUSTOMER UPDATE KENDAL INDUSTRIAL PARK Total To Date: (63 Confirmed Tenants)

1% 1%1% 2% 1% 2% 1% 5% 7%

12%

Packaging 18% 2% 18% Electronic Taiwan 47% 5% Logistic & Warehouse Indonesia

4% 32% 27% 10% China Food & Beverage Fashion Industry

INDUSTRIAL LAND “Infra Condition & Land Ready Hand Over” OUR ADVANTAGES 1. MACRO INFRASTRUCTURE PLANNING TO SUPPORTING GROWTH OF INDUSTRIAL PARK IN CENTRAL JAVA (KENDAL CORRIDOR - SEMARANG AND SURROUNDING AREA) Kendal Internationnal Seaport (to be done in 2022) Toll road (Completed in 2018)

Railway (to be done in 2021)

Ring Road to Tg MAS 1 Managing (to be done in 2021) ROB 6 Recondition Pantura 3 Abrasion Soil 5 High 4 Connectivity Pejagan - Semarang Toll Road Macro Infrastructure Priority = 1. Container Port Kendal 2 Waduk Cening High amount 2. Cening Reservoir BSB 3. Outer Ring Road KIK – Kawasan Industri Kendal – Kendal Industrial Park of visitors 4. Interchange KIW – Kawasan Industri Wijaya Kusuma – Wijaya Kusuma Industrial Park 5. Railway BSB – Kawasan Industri Bukit Semarang Baru – Bukit Semarang Baru Industrial 6. Managing ROB and Recondition Abrasion Park Soil KIC – Kawasan Industri Candi – Candi Industrial Park

1.1 NEW KENDAL INTERNATIONAL SEAPORT

2. Competitive Manpower - Kendal Comparison of Industrial cities in Indonesia – UMK 2020

Region UMK 2020 (IDR) UMK 2020 (RMB) UMK 2020 (USD) UMK 2020 (KRW)

WEST JAVA 1. Jakarta 4,267,349 2,134 305 356,071 2. Bekasi 4,589,708 2,295 328 382,968 3. Karawang 4,594,708 2,297 328 383,386 4. Purwakarta Regency 4,039,067 2,020 289 337,023 5. Regency 3,139,275 1,570 224 261,943

CENTRAL JAVA 1. Semarang 2,715,000 1,358 194 226,542 2. 2,432,000 1,216 174 202,928 3. Kendal Regency 2,261,775 1,131 162 188,724

EAST JAVA 1. Surabaya 4,200,479 2,100 300 350,491 2. Gresik Regency 4,197,030 2,099 300 350,203 3. Sidoarjo Regency 4,193,581 2,097 300 349,915 4. Pasuruan Regency 4,190,133 2,095 299 349,628 5. Mojokerto Regency 4,179,787 2,090 299 348,764 3. Huge Availability of Skilled Human Resources

LINK & MATCH Availability based on education sector in Central Java province

UNIVERSITY VOCATIONAL SCHOOL

378 1.568 Universities Universities 111.038 150.000 Graduates Per Year Graduates Per Year Graduates of vocational school based on our targeted industry GOVERNMENT INDUSTRY Total Graduates Program of Study Male Female Total Food 594 3,001 3,595 1st realization of LINK & MATCH program with Fashion & textile 513 8,438 8,951 KIP on 8th Sept. 15 KIK’s tenants signed Furniture 760 145 905 Cooperation Agreement with Central Java 75,796 2,135 77,931 Government. It ranges from fashion, medical Automotive 1,268 462 1,730 equipment, toys, fiber optic, galvalume, Electronics electronic, food, industries, and so on. Pharmacy 644 5,977 6,621 TOTAL 79,575 20,158 99,733

4. One Stop Solution

5. Infrastructure 6.SPECIAL ECONOMIC ZONE Fiscal Benefit in Special Economic Zone 1. Income Tax Allowance 2. Value Added Tax (VAT) → Exempted for taxable goods. → Will be given depending on Investment Value including Land Cost, Building Cost, and any costs related to physical assets procurement Capital Goods *) Detail: Amount of Tax Holiday Allowance refer to next slide 0% VAT

3. Import Duties EXPORT ORIENTED Raw Materials → Postponement for import goods Finish Goods 0% VAT 40% LOCAL CONTENT

10% VAT 0% IMPORT DUTIES LOCAL MARKET 4. Excise → Exempted for raw direct materials and supporting EXPORT ORIENTED LOCAL MARKET materials for production purposes.

Tax Holiday Incentive (USD)

Incentive Rate: Tax Holiday : 100% (for selected focus industries) Tax Allowance : Reduction in net income by 30% of the amount of investment, pro-rata at 5% for 6 ALL INDUSTRIES IN SEZ WILL GET CORPORATE TAX INCENTIVES, IN THE FORM OF TAX HOLIDAY OR TAX ALLOWANCE

Year Investment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 USD 6.8 Mio – 34.4 Mio Incentive Rate (%) 100 100 100 100 100 100 100 100 100 100 50 50 USD 34.4 Mio – 68.9 Mio Tax Holiday Incentive Rate (%) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50 50 > USD 68.9 mio Incentive Rate (%) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50 50

1. Reduction in net income by 30% of the amount invested, pro-rata at 5% for six years of the commercial production 2. Reduction in net income by maximum 60% of the amount invested, pro-rata at 10% for six years of the commercial production (only eligible for labour intensive industries)

Investment Value

Note : 1 USD = IDR 14,500 Thank You…