Investment Book
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investment book 1st Quarter - June 2020 Edition A definitive guide on macroeconomic condition, data & information, key contacts, and potential investment projects in North Sumatra Strengthen Synergy for Sustainable Growth 1 About Us Our Mission Providing Investors with the necessary data and information PROVIDING Providing the necessary data and information North Sumatra Invest (NSI) is a dedicated task force comprised of all North Sumatra’s policy Promoting the rightPROMOTING investment makers, including the Government of North Promotingopportunities the right and investment projects opportunities and projects Sumatra and Bank Indonesia, with full cooperation of Kamar Dagang dan Industri Indonesia (KADIN). CONNECTING Connecting investors with the Connecting investors with the right business contacts right business contacts Our mission is to attract Foreign Direct Investment Connecting investors with the right business contacts (FDI) in North Sumatra to foster economic growth. 2 01 Indonesia’s Strong Performance 02 Why North Sumatra? 03 Investment Projects & Opportunities 04 Tourism Site 05 Licensing in Indonesia 06 Key Contacts 3 About Page About Page About Us and Our Mission 2 Vigorous Economic Growth 18 Content 3 Growing Investment Realization 19 Table of Content 4 Infrastructure Acceleration 20 1. Indonesia’s Strong Performance 6 3. Investment Project and Opportunities 21 Conductive Environment Underpinning Strong Growth 7 Special Economic Zone Sei Mangkei 22 Fundamentals Indonesia’s GDP Growth Momentum Moderated 8 Kuala Tanjung Industrial Estate 29 Ease of Doing Business 9 Toba Caldera Resort 34 Investment Grade Approved 10 Siantar – Parapat Railway 50 External Balance Supported by Adequate Reserves 11 Mixed Use Rental Apartments in Sei Mangkei SEZ 52 Exchange Rate and Inflation Rate 12 Sports Center 57 Simultaneous Growth All Over Regions 13 4. Tourism Site 62 Economic Policies Taken in Tackling COVID-19 Pandemic 14 Priorities Tourism Sites 63 Covid-19 Risk Mitigation 15 Lake Toba 64 2. Why North Sumatra? 16 North Sumatra Profile 17 Tangkahan 65 4 About Page About Page Bukit Lawang 66 5. Licensing in Indonesia 79 Berastagi 67 FDI Procedures 80 Mursala Island 68 3 Hours Investment Licensing Service 81 Poncan Island 69 Investment Incentives 82 Muara Opu Beach 70 6. Key Contacts 83 Silahi Sabungan 71 Our Team 84 Maimoon Palace 72 Simalem Resort Garden 73 Tourists are Very Welcome 74 Small Medium Enterprise 75 Woven Fabric 76 Coffee 77 Others 78 5 1 Indonesia’s Strong Performance Indonesia is one of the fastest growing economy in the world. Find out our performance! Tax base to be 4th Most Populous Budget reform as a Largest Economy in broadened from one country in the World; part of larger South East Asia reduce dependency 64% in productive age economic reform initiative on commodities Large and Stable Fuel subsidies Rising Middle Class Consistent significantly reduced Manageable Economy Prudent debt Inflation Rate and Affluent Budget Reform and spending redirected management Customers to more productive allocation Reform-Oriented Administration From commodity-based to manufacturing Three main sources of financing for and service sectors via infrastructure investment needs: State and regional budget, State Owned Enterprises andPPP development New Economic High Structure Infrastructure Continuing from 2015 policy, infrastructure From consumption-led to investment-led Investments will be higher than fuel subsidy growth via a stronger manufacturing sector and more investment initiatives Infrastructure spending focused on basic infrastructure projects Policies to maintain purchasing power to stimulate domestic economy in the midst of Fiscal and non-fiscal incentives to attract weakening macroeconomic conditions infrastructure investment and promote PPP 7 • Despite global economic moderation, resilient national economic growth has been maintained in Indonesia. For the year 2019, solid economic growth was recorded at 5.02%, albeit slightly declined from 5.17% in 2018. The main driver of economic growth in 2019 was domestic demand, as export performance declined. In the fourth quarter of 2019, economic growth stood at 4.97% (yoy), down slightly from 5.18% (yoy) in the previous period. • Furthermore, the general election held in 2019 edged up consumption by non-profit institutions serving households (NPISH) to 10.62% from 9.10% in 2018. Domestic demand was also buoyed by strong investment performance, building investment in particular which grew 5.37% in the reporting period, similar to the 5.41% recorded in 2018. Services in the tertiary sector were the main locomotive of economic growth in 2019, led by communications and information, financial services and insurance as well as other services. • While in 2020 for quarter 1 Indonesia’s economic growth was 2.97% (yoy). It was getting slightly declined from 2019 5.07% at the same period. It occurred because of COVID-19 to overcome this pandemic issue. Institutions 2020 GDP growth (%YoY) 2020 Budget 5.3 Bank Indonesia around 2,3 IMF (WEO April 2020) 0.5 World Bank (GEP April2020) 2.1 ADB (ADO April 2020) 2.5 ConsensusForecast (April 2020) 2.1 8 Our concern to Business Business has never been easier in Indonesia. In recent years, our government has put significant effort to boost business climate and we’re happy to tell you that we could maintain our performance since 2017. Our efforts to trim the licensing period gave an impact to the business player. And we plan to make it even easier. There is no better time to invest in Indonesia. 9 BBB / Stable January 2020, Rating Affirmed at BBB/Stable Indonesia's rating balances a favourable medium-term growth outlook and a small government debt burden compared with 'BBB’ category peers against challenges that include a strong dependence on external financing, low government revenue, and lagging structural indicators such as governance indicators and GDP per capita. BBB / Negative April 2020, Rating Affirmed at BBB, Outlook Revised from Stable to Negative “The affirmation reflects Indonesia’s stable institutional settings, strong growth prospects, and historically prudent fiscal policy settings. The negative outlook reflects S&P expectation that Indonesia faces additional fiscal and external risks related to the COVID-19 pandemic in the next 24 months .” Baa2 / Stable Feb 2020, Rating Affirmed at Baa2/Stable “The affirmation of the ratings is underpinned by a number of credit strengths – including Indonesia’s robust and stable growth rates and a low government debt burden, preserved by consistent fiscal discipline and emphasis on macroeconomic stability – as well as persistent creditchallenges.” BBB+ / Stable BBB+ / Stable March 2020, Rating Upgraded at BBB+/Stable January 2020, Rating Upgraded at BBB+/Stable “Indonesia's President Joko Widodo is firmly implementing policies to strengthen economic growth “The ratings mainly reflect the country’s solid domestic consumption-led economic growth, restrained potential, on the back of a political foundation solidified in his second term. budget deficit and public debt, and resilience to external shocks supported by flexible exchange rate Supported by such policy efforts, the economy is expected to continue stable growth over the medium and credible monetary policies and accumulation of foreign exchange reserves. Since its previous rating term. Keeping fiscal deficits in check, the government maintains its debt ratio at a low level. Foreign review, JCR has been paying particular attention to the continuing reform initiatives pushed by the reserves are ample relative to short-term external debts. The country's economic resilience to external administration of President Joko Widodo and the content and progress of the economic policy taken by shocks is retained under a policy stance that emphasizes macroeconomic stability and fiscal discipline.” his second administration which took office in October 2019. Among the reform agenda, infrastructure development has continued to progress faster than JCR had expected.”. 10 Current Account Deficit | USD/IDR Balance of Payment | USDbn US$bn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 2017 2018 2019* 2020** Current Account Capital & Financial Account Trade Balance | USDbn FX Reserves | USDbn 11 • • % 12 5.23 5.39 5.67 3.73 4.57 4.63 4.5 4.61 2.49 3.25 I II III IV I I II III IV I 2019 2020 2019 2020 5.65 5.59 5.51 5.34 3.42 5.34 5.52 4.59 4.77 I II III IV I 0.94 2019 2020 I II III IV I 2019 2020 13 • Government’s policy related to COVID-19 pandemic comprises of four safety nets. • Latest Update 22/4: Expansion of business classificationcoverage for Fiscal Incentives. • The economic safety net and national economic recovery measures, along with other economic stimulus that focus on maintaining purchasing power and ensuring business continuity (minimizing layoffs), will minimize the spill-over effect of the COVID-19 pandemic hence limiting the impact to the banking system. Economic SafetyNet National EconomicRecovery Health SafetyNet Social SafetyNet Measures Budget Support: Rp75 T Budget Support: Rp110 T Budget Support: Rp70,1 T Budget Support: Rp150 T • BPJS contributionsubsidies • Program KeluargaHarapan • Fiscal Incentives (Elimination • Government Regulation in Lieuof of Income Taxes & Imported • Medical Personnel Incentives • Staple Products Law No. 1 Tahun 2020 Goods Taxes, Corporate Tax • Pre-employment Card • Local Currency Settlement (LCS) • Death Compensationfor Reduction and the Health