INDONESIA. Policy and Opportunity of Industrial Sector in Indonesia. Willem Petrus Riwu

Transcription

1 INDONESIA Policy and Opportunity of Industrial Sector in Indonesia Willem Petrus Riwu Deputy Director for Assessment of Industrial Policy & Business Climate Ministry Of Industry-Republic of Indonesia Seoul, 12 th Oct 2012

2 CONTENTS I VISION OF DEVELOPMENT OF INDUSTRY 3 II ACCELERATED INDUSTRIALIZATION POLICY III PERFORMANCE OF INDUSTRIAL SECTOR 13 IV TRADE & INVESTMENT: INDONESIA & KOREA 21 V EXPECTED COOPERATION IN INDUSTRIAL SECTOR 26

3 Center for Assessment of Industrial Policy and Business Climate 3

4 LONG TERM VISION 2025 to become a strong industrial nation by 2025

5 Facilitate mastery of industrial technology; SHORT TERM VISION Strengthening the competitiveness of sustainable base manufacturing industry and built a pillar of future prospective industry by Strategic Goals

6 Center for Assessment of Industrial Policy and Business Climate 6

7 FOCUSED AREA OF THE ACCELERATION OF INDUSTRIALIZATION Agriculture, Oil, Gas, and Mineral Mining-Based Downstream Industry Palm processing industry Cocoa processing industry Rubber processing industry Furniture industry Petrochemicals industry Fertilizer industry Basic metal industry Sugar cane industry Human Resources and Domestic Market-Based Industry Textile, garment, and footwear industry Fabric equipment/ machine industry Customer electronics and telecommunication tools industry Automotive industry Shipyard industry Small and Medium Industry Fashion Handicraft Multimedia content and animation Center for Assessment of Industrial Policy and Business Climate 7

8 POLICY AND DEVELOPMENT PROGRAM 1. AGRICULTURE, OIL, GAS, AND MINERAL MINING- BASED DOWNSTREAM INDUSTRY Fiscal Policies: Export duty Tax Holiday Tax Allowance Domestic Market Obligation (DMO) for Coal and Mineral Materials. Promotion in Investment Expansion of the Industrial Area Center for Assessment of Industrial Policy and Business Climate 8

9 2. HUMAN RESOURCES AND DOMESTIC MARKET- BASED INDUSTRY Fiscal Policies: BMDTP Tax Holiday Tax Allowance PPN/ PPnBM/ Import duty exemption Restructuring Fabric Machinery Program: Low Carbon Emission Technology Improvement of the industrial human resources quality Improvement consumption of the domestic products (P3DN Program) Promotion in Investment and Industrial Products Marketing

10 3. SMALL AND MEDIUM INDUSTRY (SMI) Nurturing Enterpreneurs on Technology and Innovation-Based Industry Enhancing SMI Institution (Technical Services & Coaching Unit) Restructuring Machinery and Equipment Linkage between SMI and large industry (Supporting Industry) Human Resources Development Program (Shindanshi/ SMI consultant, Management and Technical Trainer) SMI Promotion in Domestic and Foreign Market Micro Financing and Venture Capital Establishment SMI Coaching in the Frontier and Least Developed Areas, especially in Eastern Indonesia.

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12 IMPLEMENTATION OF KEY STRATEGIES THROUGH 6 (SIX) POLICY AREAS Policy Areas 1 Securing Domestic Industry Implementation import duties on imported products; duties on exports of raw materials & energy sources; implementation of standard of industrial products 2 Infrastructure Development 3 Improvement of Bureaucracy Quality 4 Improvement and Harmonization of Regulations construction of power generation infrastructure; increasing the quality of facilities and infrastructure; increasing connectivity between the factory and the market simplification of the licensing process; accelerate the inspection of goods at the port creating legal certainty; clarify procedures to reduce compliance costs; improving consistency of central, regional and interagency regulations 5 Fiscal Policies granting tax deductions and/or subsidies for 6 Development of Industrial Human Resources investment incentives in the industrial sector provision of incentives for industry to develop human resources quality ; involved in the development of HRs quality Center for Assessment of Industrial Policy and Business Climate 12

13 Center for Assessment of Industrial Policy and Business Climate 13

14 A. MACRO ECONOMICS Indonesia has been enjoying a robust macro economy, with average USD income per capita and increasing to USD in 2011, a steadily increasing of upper-middle income as well as young population More than 30 years span of demographic bonus Very conducive investment climate during the past years, is one major contributor factor for this achievement. Indonesia has been awarded The investment grade this year. Center for Assessment of Industrial Policy and Business Climate 14 Source : CMEA, Bappenas, NSA

15 A. MACRO ECONOMICS.. (cont d) GDP Growth In year 2011, non oil & industry growth increased higher than national economic growth, the first time since Center for Assessment of Industrial Policy and Business Climate 15 Source: Central Bureau of Statistic (2012)

16 National GDP Structure A. MACRO ECONOMICS.. (cont d) % Growth Semester I 2012 Agriculture, Livestock, Forestry and Fishery 4,00 Mining and Excavating 2,95 Non-Oil & Gas 6,09 Industry Electricity, Gas and Clean Water 5,56 Construction 7,23 Trade, Hotel and 8,61 Restaurant Transport and Telecommunication Finance, Leasing and Service 10,19 6,68 Services 5,60... Non oil & industry has the biggest contribution to the national GDP during (average)... Mining and Excavating 11.1% Agriculture, livestock, Forestry and Fishery 14.7% Services 10.2% Finance, Leasing & Service s 7.4% Transport & Telecom 6.5% Oil & Gas Industry 4.0% Non-Oil & Gas Industry 22.1% Electricity, Gas & Clean Water 0.8% Trade, Hotel & Resto 13.9% Construction 9.3% Center for Assessment of Industrial Policy and Business Climate 16 Source: Central Bureau of Statistic (2012)

17 GDP Structure of Industrial Sector... Food, Drinks & Tobacco Industry gives biggest contribution relative to other industrial sub sectors during (average).. Basic Metal, Iron and Steel 0.5% Fertilizer, Chemical, and Rubber Articles 2.8% Paper and Printing Articles 1.0% Wood and Textile, Other Forest Leather Products Articles 1.3% and Footwear 2.1% Cement and Non Metal Excavation 0.8% A. MACRO ECONOMICS.. (cont d) Transports, Machineries and Equipment 6.2% Food, Drinks and Tabaco 7.2% Other Articles 0.2% % Growth Semester I Food, Water and Tobacco Textile, Leathers and Foodwear Industry Wood Product and Forestry Industry 7,03 2,86-4,36 Paper and Printing -3,50 Fertilizer, Chemical and Rubber Industry Cement and Mineral Excavating Industry 5,57 6,92 Iron Metal and Steel 3,71 Transportation and 8,98 Parts Other Goods -1,30 Center for Assessment of Industrial Policy and Business Climate 17 Source: Central Bureau of Statistic (2012)

18 B. COMPETITIVENESS WEF Ranks Ease of Doing Business INA CHN RUS BRA IND Overall Construction Permit Protecting Investors Trading Across Border Comparison of Production Factors Indonesia PR China Thailand Malaysia Philippine No Indicators Shenze Kuala Jakarta Batam Beijing Bangkok n Lumpur Manila 1 Min. Wage 147, ,1 234,6 230,6 256,6 295,8 (US$/Mo) 2 Telecomunication (US$/Min) 0,01 0,01 0,03 0,032 0,09 0,012-3 Electricity (US$/Kwh) 0,03-0,34 0,1 0,07 0,1 0,05-0,09 0,07-0,13 0,03-0,34 4 Fuel (US$/liter) 0,5 0,5 0,98 0,89-1,1 0,54 0,94 1,04 5 Diesel (US$/liter) 0,5 0,6 0,97 0,93 0,87 0,51 0,74 Production factors is lower compared to other industrialized country in Asia such as China, Thailand, Malaysia, and Philippines. In terms of Ease of Doing Business, Indonesia is better in Construction Permit, Protecting investors, and Trading Across Border, Compared to BRIC countries. The competitiveness has also increased significantly in WEF rank during the past years. Source : MoI, WEF, IMD, World Bank Center for Assessment of Industrial Policy and Business Climate 18

19 C. POTENCIES 2012: 230 Million of Population Huge Size of Domestic Market Domestic consumption contribute around 56.7% of economic growth Around 60 percent of the population are in the age of productive period in It will be 70 percent of the population in : 320 Million of Population Center for Assessment of Industrial Policy and Business Climate 19

20 National Potential C. POTENCIES (cont.) Region Vast Size of Archipelago Geography 250 Mill. Population Rich of Natural resources Farming Forestry Mining Sea Others Needs for Infrastructure, Roads, and Bridge Human Primary, Secondary, and Tertiary Needs Infrastructure needs of process machinery, and other equipment - Building materials - Construction equipment - Transport equipment - Steel construction -Telecommunications -Satellite & peripherals - Steel construction - Agro - Agricultural equipment - Fertilizer & Other support - Food - Medical devices -Clothing - Educational tool - Electrical equipment - Energy equipment - Services RBPI - Packaging - Transportation - A communication tool - Entertainment gadgets - Supporting tools -Steel construction - Construction equipment - Services RBPI - Transportation - Construction equipment - Electrical equipment - Energy equipment - The machines process - Supporting tools Key Metrics Natural Gas About 165 TCF of reserves at production rate ± 3 TCF pa Thermal Coal Geothermal World second largest exporter Home of 40% of world s resources (the largest in the world) Palm Oil World s largest exporter; >19 mil tons per year Cocoa At 770 thou tons/year, world s 2 nd largest producer Various world s largest natural resources reserves, world-class producers of commodities, huge infrastructure projects are the pull factors for industry to grow and expand more Tin At 65 thou tons/year, world s 2 nd largest producer Nickel Own ± 12% of world s reserves (4 th largest) Bauxite World s 7 th largest reserves; world s 4 th largest production Source : CMEA, MoI Center for Assessment of Industrial Policy and Business Climate 20

21 Center for Assessment of Industrial Policy and Business Climate 21

22 Export Import Indonesia-Korea 2007 June 2012 (US$ Mn.) Jan-Jun Jan-Jun Growth (%) Total Trade , , , , , , ,50 5,42 Export 7.582, , , , , , ,02 12,00 Import 3.196, , , , , , ,48-2,76 Balance 4.386, , , , , , ,54 Total Trade of Industry 4.135, , , , , , ,71-11,23 Export of Industry 2.148, , , , , , ,71-17,72 Import of Industry 1.987, , , , , , ,00-7,52 Balance of Industry 160, , , , , , ,29 Total Export-Import Export Import of Industry Center for Assessment of Industrial Policy and Business Climate 22 Source: Central Bureau of Statistic (2012)

23 Indonesia Top Export To Korea 2007 July 2012 (US$ Mn.) Comodity Jan-Jul Growth (%) Rubber Manufacturing 200,46 298,83 173,76 299,34 564,66 339,80 304,63 (10,35) Textiles 255,66 285,63 325,02 441,54 513,60 331,61 276,17 (16,72) Iron Steel, Machinery and Automotive 166,32 240,75 180,36 238,99 413,75 286,51 149,64 (47,77) Pulp and Paper 266,69 383,61 195,57 396,04 363,68 226,90 192,76 (15,05) Electronics 130,71 185,43 217,45 328,05 323,85 200,02 139,53 (30,24) Basic Chemicals 259,89 177,95 112,67 258,04 253,49 175,74 226,19 28,70 Coconut / Palm Oil Manufacturing 54,98 102,44 62,56 116,04 247,34 154,60 114,84 (25,72) Manufacturing of Copper, Tin, etc.. 228,11 221,84 256,46 306,03 158,67 133,62 85,35 (36,12) Wood Manufacturing 192,79 172,31 147,69 141,40 151,10 88,96 74,72 (16,01) Fertilizer 63,93 122,19 96,37 134,76 109,99 69,91 94,40 35,04 Others 328,51 523,19 476,71 508,36 619,46 374,20 301,48 (19,44) Total export of Industry 2.148, , , , , , ,71 (17,72) Center for Assessment of Industrial Policy and Business Climate 23 Source: Central Bureau of Statistic (2012)

24 Indonesia Top Import From Korea 2007 July 2012 (US$ Mn.) Comodity Jan-Jul Growth (%) Iron Steel, Machinery and Automotive 689, , , , , , ,12 18,88 Textiles 91,59 765,90 655,37 990, ,36 821,18 768,34 (6,44) Basic Chemicals 577,24 891,52 732,12 939, ,38 756,05 442,03 (41,53) Electronics Center for Assessment of Industrial Policy and Business Climate ,81 835,85 595, ,90 924,91 594,34 428,18 (27,96) Manufacturing of Copper, Tin, etc.. 152,70 238,10 125,01 205,08 250,99 144,36 156,53 8,43 Aluminium processing 46,74 74,53 65,96 100,26 134,25 77,20 73,22 (5,15) Electrical tools 47,70 54,07 55,82 79,04 123,91 66,07 48,09 (27,21) Other Chemical Goods 27,70 66,97 65,29 83,79 120,98 70,98 67,19 (5,34) Plastic 20,03 82,13 72,81 96,34 115,79 70,60 57,08 (19,15) Leather, Leather Goods and Shoes / Footwear 19,77 65,46 54,82 73,27 105,83 59,83 57,18 (4,43) Others 168,09 408,15 222,89 362,25 407,89 232,44 242,04 4,13 Total Import of Industry 1.987, , , , , , ,00 (7,52) Source: Central Bureau of Statistic (2012)

25 Foreign Direct Investment (FDI) Foreign Direct Investment Realization from Korea 2006 Sem I 2012 Center for Assessment of Industrial Policy and Business Climate 25 Source: Investment Coordinating Board (2012)

26 Center for Assessment of Industrial Policy and Business Climate 26

27 Greater Investment in Industrial Sector Indonesia needs a lot of investment in some industrial sectors: 1) Downstream of mineral processing industries Potential Conditions Incentives given for Investments Long value added chain Tax Holiday High availability of raw materials and Tax Allowance production Import duties facility Government s policy to maintain and ensure the availability of raw materials: a) Imposition of export duties (PMK 75/2012) b) Provisions on the export of mining products (Permendag 29/2012) c) Tight requirements to export raw materials (Permen ESDM 11/2012) Center for Assessment of Industrial Policy and Business Climate 27

28 Greater Investment in Industrial Sector 2) Food and beverage industry Potential Conditions Stable high growth of F&B industry (7% per year in average) Indonesia large amount population (over 240 Mn. people) is a very attractive and promising market Enormous potency of raw materials: a) Cocoa: 770,000 tons/year, the second largest producer in the world b) Palm Oil: the largest exporter in the world, > 19 million ton/year Incentives given for Investments Tax Holiday Tax Allowance Import duties facility Center for Assessment of Industrial Policy and Business Climate 28

29 If you think about Asia.. think Indonesia If you think about growth... think Indonesia If you think about benefit. think Indonesia If you think about future think Indonesia Ministry of Industry Center for Assessment of Industrial Policy and Business Climate Jl. Gatot Subroto Kav , 19/F Jakarta INDONESIA Phone /fax: [62-21]

30 Value Added of Mineral Commodities BAUXITE Bauxite $ 17/ton 1 Alumina $350/ton 21 Aluminium $2.500/ton 148 NICKEL Ni. Ore $ 25/ton 1 FeNi $2.574/ton 103 Stainless Steel $2.627/ton 105 IRON ORE Iron Ore $ 60/ton 1 Sponge Iron $350/ton 6 Slab/Billet $700/ton 12 COPPER Cu. Ore $80/ton 1 Concentrate $3.000/ton 38 Ingot $8.000/ton 100 Center for Assessment of Industrial Policy and Business Climate 30

31 Value Added of Mineral Commodities Coal 1 Ton, 6000 kcal/ kg Coal At US$ 70 Coal Gasification and Liquefaction Electricity Production > 2X Products Value 3 MWh electricity $150 Total $150 > 6X Fuel and Power Production Products Value MWh electricity $ bbls naphtha $ bbls diesel fuel $ Total $ Chemical Synthesis ~ 6X Products Value 0.6 MT DME $410 John N. Ward JPMorgan Chase & Co. Analyst Briefing November 21, 2006 Revised by Meirios Moechtar, July 2008 Source: SASOL Synfuels International, 2009, Bapennas Fuel, Power & Fertilizer > 7X Prod. Products Value 0.31 MWh electricity $15, bbls naphtha $ bbls diesel fuel $ ammonium nitrate $ Total $ Center for Assessment of Industrial Policy and Business Climate 31

32 Potential availability of Mineral Commodities No. Parameter Unit Commodity Bauxite Nickel Iron Ore Copper 1 Reserve Mn.Ton Production (2011) Mn.Ton 40,7 33,0 13,1 80,0 (3,5 3 Mineral raw material availability (age of mining) concentrate) Year Center for Assessment of Industrial Policy and Business Climate 32

33 Steel Industry Tree On-going Projects The said industry such as : stainless steel products (slab, billet, HRC, plate) special steel, Source: MoI or high quality steel plate or on coil. Center for Assessment of Industrial Policy and Business Climate 33

34 Cocoa Production cocoa pod borer (diseased) Domestic Consumption Exports (Raw Materials) : - Malaysia - USA - Singapore - Brazil - China -Europe ,000 (tons) 200,000 (tons) 570,000 (tons) 130,000 (tons) 440,000 (tons) 42 % 29 % 8 % 7.5% 4.3% 3 % Cocoa Export Structure : C, 20.9% B, 1.0% D, 3.3% E, 1.4% F, 1.1% A, 72.4% A: cocoa beans, C: cocoa butter 93,3 % B. D, E, F: cocoa powder, cocoa paste, others Added Value Cocoa Beans Cocoa Butter Chocolate Bar Center for Assessment of Industrial Policy and Business Climate 34

35 Palm Oil Processing Industry Plantation Area : ± 7 Mil Hectare CPO Production : ± 23 Mil Ton CPKO Production : ± 1.93 Mil ton CPKO Production : ± 1.83 Mio Ton Source: GAPKI 2009 Center for Assessment of Industrial Policy and Business Climate 35

36 Palm Oil Industrial Branches to be Developed Available Not Available Source: MoI Center for Assessment of Industrial Policy and Business Climate 36

37 Tax Holiday Center for Assessment of Industrial Policy and Business Climate 37

38 Tax Allowance Center for Assessment of Industrial Policy and Business Climate 38

39 Import Duties Facility Center for Assessment of Industrial Policy and Business Climate 39