NORTH SUMATRA INVESTMENT BOOK About Us Our Mission
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Quarter 3 – 2019 edition A definitive guide on macroeconomic condition, data & information, key contacts, and potential investment projects in North Sumatra NORTH SUMATRA INVESTMENT BOOK About Us Our Mission Providing Providing Investors with the necessary data and information North Sumatra Invest (NSI) is a dedicated task force comprised of all North Sumatra’s policy makers, including the Government of North Sumatra and Bank Promoting Promoting the right investment Indonesia, with full cooperation of Kamar Dagang dan opportunities and projects Industri Indonesia (KADIN). Connecting Our mission is to attract Foreign Direct Investment (FDI) Connecting investors with the right business contacts in North Sumatra to foster economic growth. Indonesia’s Strong Performance 01 Indonesia is one of the fastest growing economy in the world. Find how CONTENT we perform relative to our peers. Main informations you will find Why North Sumatra? 02 North Sumatra isn’t only a great market for your products, but also a perfect place for production base. Potential Projects & Tourism Potential 03 Our handpicked potential projects for you, guaranteed by the government. In addition, We also specifically collect the potential tourism site in North Sumatra. Licensing in Indonesia 04 A quick guide on getting business license in Indonesia. It’s never been easier to do business here. Key Contacts 05 Who to contact if you want to invest and grow your business in North Sumatra? INDONESIA’S STRONG 1PERFORMANCE Indonesia’s Strong GDP Growth Solid national economic growth | % year-on year & % quarter-to-quarter The national economy expanded 5.05% (yoy) in the second quarter of 2019. The QoQ YoY latest economic developments were 7.0 influenced by increasing domestic demand 5.27 5.12 5.17 5.18 5.19 5.17 5.18 5.07 4.94 4.93 5.05 4.92 5.01 4.94 5.01 5.01 5.06 5.06 5.05 4.82 4.74 4.77 against a declining external sector. 5.0 4.01 4.21 4.20 3.83 4.01 3.74 3.27 3.31 3.19 3.14 3.09 Institutions 2019 Growth (YoY) 3.0 2019 Budget 5.3 1.0 Bank Indonesia 5.0-5.4 0.04 (0.16) (0.36) (0.30) (0.41) IMF (WEO Oct 2019) 5.0 -1.0 (0.52) (1.69) (1.73) (1.81) (1.70) World Bank 5.2 (2.07) -3.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 ADB 5.2 2014 2015 2016 2017 2018 2019 Consensus Forecast 5.0 (October 2019) 5 Our concern to Business Ease of Doing Business | Index, The Higher The Better Business has never been easier in 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Indonesia. In recent years, our 0 government has put significant effort to boost business climate 20 and we’re happy to tell you that 40 our ease of doing business rank 60 72 73 has improved significantly. 73 80 Our efforts to cut licenses gave an 91 impact to the business player. And 100 we plan to make it even easier. 120 There is no better time than now 140 to invest in Indonesia. 160 Indonesia India Philippines Bulgaria Colombia Investment grade approved! BBB / Stable March 2019, Rating Affirmed at BBB/Stable The decision was supported by favorable GDP growth outlook on the back of resilient domestic demand and a small government debt burden compared with its peers. Indonesia’s sovereign credit fundamentals should be resilient to substantial exchange rate volatility. BBB / Stable May 2019, Rating Upgraded at BBB/Stable “We raised the ratings to reflect Indonesia’s strong economic growth prospects and supportive policy dynamics, which we expect to remain following the re-election of President Joko Widodo recently.” Baa2 / Stable Apr 2018, Baa2, Rating Upgraded “The upgrade to Baa2 is underpinned by an increasingly credible and effective policy framework conducive to macroeconomic stability. Together with a build-up of financial buffers, prudent fiscal and monetary policy strengthens Moody’s confidence that the sovereign’s resilience and capacity to respond to shocks has improved.” BBB / Stable BBB / Positive April 2019, Rating Affirmed at BBB, Outlook Revised to Positive April 2019, Rating Affirmed at BBB/Stable “The ratings mainly reflect Indonesia’s solid economic growth underpinned by domestic “Indonesia’s economy is growing at a solid pace. The fiscal deficit to GDP ratio consumption, restrained level of budget deficit and public debt, and resilience to external narrowed from a year earlier, and the government debt to GDP ratio remains low. shocks stemming from flexible exchange rate policies and accumulation of foreign exchange While the CAD somewhat widened, foreign reserves are ample relative to short-term reserves. The administration led by President Joko Widodo has formulated a large-scale external debts. Its economic resilience to external shocks is maintained, supported by infrastructure development plan and is vigorously promoting it to eliminate the infrastructure the government and central bank’s policies emphasizing macroeconomic stability.” shortage. In addition, it has succeeded in expanding infrastructure expenditures and expenditures on human capital, and has been curbing the budget deficit by reducing fuel subsidies.” Investors are flocking to Indonesia The Economist: Indonesia rounds out the top five of Asian economies that can 2 look forward to increased investment spending. (January 2019) 1 Indonesia Enjoys Large Investments Relative to Peers within the Region 40 China 58.3 India 48.7 35 Indonesia 48.1 30 Vietnam 39.8 Singapore 39.2 25 Thailand 38.5 20 Japan 36.4 Australia 36.4 15 Malaysia 34.2 10 Hong Kong 32.1 Philippines 31.9 (%)InvestmentGDPTotal/ 5 31.27 31.78 34.47 34.52 34.55 23.61 22.48 23.14 26.94 27.21 29.56 24.99 24.95 25.31 26.57 26.34 26.26 South Korea 26.3 31.31 0 Taiwan 25.2 India Indonesia Malaysia Philippines Thailand Vietnam Myanmar 22.5 2018 2019e 2020e 0 10 20 30 40 50 60 70 UNCTAD: Indonesia is listed in the top 20 host economies based on FDI inflows, JBIC: Among ASEAN countries, Indonesia is the most preferred place for business 2017 and 2018 (June 2019)3 investment (November 2018)4 300 China 52.2 250 India 46.2 2018 2017 Thailand 37.1 200 Vietnam 33.9 Indonesia 30.4 150 US 28.8 (x) = 2017 ranking Mexico BillionUSD 100 13.7 Philippines 10.0 50 Myanmar 8.6 Malaysia 8.4 0 Germany 5.8 Brazil 5.6 Korea 5.1 Taiwan 4.4 % of surveyed who consider each country has promising prospects Russia 3.7 0.0 10.0 20.0 30.0 40.0 50.0 60.0 1. Source: The Economist – Asia Business Outlook Survey 2018 3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2019 2. Source: IMF World Economic Outlook, Database April 2019 4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (30th Annual Survey) WHY 2NORTH SUMATRA? Governor : Edy Rahmayadi Vice Governor : Musa Rajecksah Capital City : Medan City Regencies/Cities : 25 Regencies and 8 Cities PROFILE North Sumatra Province is GRDP HDI geographically positioned between 2018 %share to national 2018 1° - 4° North and 98° - 100° East. 5% 71.18% Top 7 biggest province Categorized as high Geographic Advantages by economic comparison Located in the vast and prosperous area of Sumatra EXPORT POPULATION island, with total area of 73.000 %share to national 2018 km² 4.49% 14.42m It is strategically positioned along the Malacca Strait and has long Jan – Sep 2019 The 4th most populous Province in Indonesia been a major trade center in west Indonesia. INFLATION A MILLENIAL %yoy PROVINCE ROOM FOR NEW BUSINESS Half of North Sumatra With 71% employment rate, North Sumatra will 2.84% population is under 25 years support new business with adequate human Oktober 2019 old. resources Source : Central Bureau of Statistics, 2019 Vigorous Economic Growth EXPENDITURE In third Quarter of 2019, North Sumatra economic growth slightly declined to 5.11 % (yoy). However North Sumatra economic growth was still stronger than Sumatra and Indonesia. North Sumatra Household Government Investment Export Import growth was supported by strong Consumption (51%) Consumption (8%) (31%) (40%) (32%) 4.41 4.92 18.50 11.39 6.76 6.26 -3.52 -4.03 -3.56 -4.33 household consumption. Q2’19 Q3’19 Q2’19 Q3’19 Q2’19 Q3’19 Q2’19 Q3’19 Q2’19 Q3’19 NoteNote : : amounts amounts inin parentheses parentheses indicateindicate sectorssectors distributions distributions ofof GRDP GRDP at at constant constant market market priceprice in in thethe firstthird quarter quarter of of 2019 2019 Economic Growth of All Provinces in Sumatra National, Sumatra, and North Sumatra Economic Growth (%,yoy) 5.80 Aceh (5%) 5.60 Riau (22%) 5.25 3.76% Kep. Riau (8%) 5.40 2.74% 5.11 4.89% 5.20 North Sumatra (23%) 5.00 5.11% Jambi (6%) 4.80 5.05 5.02 4.31% 4.60 West Sumatra (7%) 4.49 5.16% Bangka Belitung (2%) 4.40 4.62 Bengkulu (2%) 3,05% 4.20 4.95% 4.00 Lampung (11%) South Sumatra (14%) I II III IV I II III IV I II III IV I II III 5.16% 5.67% 2016 2017 2018 2019 National Sumatra North Sumatra Growing Investment Realization INVESTMENT REALIZATION 2019 TARGET INVESTMENT REALIZATION BY LOCATION AND SECTOR (JAN - SEP 2019) ( JAN – SEP 2019) FDI/DDI : FDI/DDI : TOP 5 SECTORS BASED ON FDI VALUE TOP 5 LOCATIONS BASED ON FDI VALUE Rp.