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SBF facilitates dialogue between Singapore business community and Indonesian delegation led by H.E. Ibu Dr Sri Mulyani Indrawati, Coordinating Minister for Economic Affairs and Minister for Finance |
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Singapore, Tuesday 6 January 2009 - The Singapore Business Federation (SBF), Singapore¡¯s apex business chamber, and International Enterprise Singapore¡¯s Network Indonesia today facilitated a high level dialogue session between representatives of the Singapore business community and a 7-member Indonesian delegation led by H.E. Ibu Dr Sri Mulyani Indrawati, Coordinating Minister for Economic Affairs and Minister for Finance.
Minister Mulyani who was in Singapore to attend an official event, requested for an opportunity to meet Singapore business and corporate leaders interested in developing businesses in Indonesia.
The dialogue was chaired by SBF Chairman Tony Chew and the discussion focused on issues including Indonesia's foreign exchange policy and foreign exchange quantum, an update on agricultural sector and fuel subsidy and trade financing support for businesses. Minister Mulyani also explained the reasoning behind the Decree 44 tariff that will be implemented on 1 February 2009. It covers ready-to-wear apparel, footwear, children's toys, electronics and food & beverage items.
Prior to the dialogue session, Minister Mulyani gave an update on the Indonesian economy, the impact of the global financial crisis and the government's fiscal policy response to it. She reiterated her government's commitment of promoting foreign investments into Indonesia and sought the continued participation of Singapore investors and businesses in the Indonesian economy.
For an update of upcoming SBF activities on Indonesia, please contact:
Ms. Sherly, Tel: 6827 6883 of the SBF ASEAN Desk
ANNEXE 1
Market Brief - Indonesia
1. ECONOMY
Land area: approximately 2 million square kilometers.
Domestic market: close to 235 million consumers.
Indonesia's gross domestic product expanded by 6.93% in April-June 2008 period from a year earlier, a positive sign that Indonesia's economy if picking up growth momentum from the Q1 growth rate of 6.32% and topping the 6.1% forecast for Q2.
President Susilo Bambang Yudhoyono had also reaffirmed the positive growth forecast for Indonesia in 2009 at 6.2% while 2008 is projected to achieve between a 6% to 6.4% GDP growth rate.
Singapore's economic relations with Indonesia continue to grow. Trade between Singapore and Indonesia rose by 22.4% in 2007 to hit S$66.4 billion which positions Indonesia as Singapore's 4th largest trading partner in 2007. From Jakarta's perspective Singapore is Indonesia's 2nd largest trading partner.
Indonesia was Singapore's 3rd largest export market in 2007. Key exports from Singapore to Indonesia were refined petroleum products, telecommunications equipment, parts for textile and data processing machines, civil engineering construction equipment parts and electronic components.
Indonesia was Singapore's 6th largest import source in 2007. Main imports from Indonesia include refined petroleum products, oil seeds, parts for office and data processing machines, telecommunications equipment and electrical machineries.
In 2007, Singapore was the largest foreign investor in Indonesia with a total of 124 projects worth US$3.75 billion in terms of realized investments.1
The Indonesia government continues to be committed in its goal of promoting foreign investments into Indonesia. To provide a more conducive foreign investment environment, several measures have been implemented. They include simplification of the application process for investment permits, increasing investment services and facilities, developing more Special Economic areas such as the Integrated Economic Development Zones or KAPET, modernization of customs administration and offering fiscal incentives for investment projects.2
With the new Indonesian investment law that was passed recently, we believe that this will provide a more conducive environment for foreign investors in Indonesia, and hence create more business opportunities between our two countries.
A. INDUSTRIES INDONESIA KEEN TO ATTRACT
Agribusiness - Opportunities exist in the forestry sector, including provision of pulp and paper, joint ventures in establishment of timber estates, consultancy and forestry insurance services. Indonesia is looking to attract new investment in fish processing and palm oil. The Indonesian government also invited foreign companies to participate in egg powder development.
There are also considerable opportunities for the continuing supply of breeder stock, feeder and slaughter cattle; feedlot management; abattoir, meat handling and butchering equipment; and education and training programs. Other opportunities include dairy cattle, beef and poultry, game meats and other meats (offal, mutton, goat and lamb).
1 Singapore's investments in Indonesia are mainly in the manufacturing, trading, real estate, telecommunications and agricultural processing sectors. These are predominantly clustered in Jakarta (Jabotabek) and Kepulauan Riau Province (Batam, Bintan & Karimun islands).
2 PP No. 1/2007
Automotive - Opportunities in the Indonesian automotive industry include in the areas of: automotive industry; automotive components; and provision of alternative fuel technology, tooling design, moulds, training and technology transfer.
Business and Financial Services - Ongoing economic reform is generating opportunities in restructuring, good governance issues (such as due diligence) and forensic accounting.
Construction and Infrastructure - Opportunities exist in airport infrastructure, road maintenance, toll-road construction, toll-road operation, seaport development, and engineering services.
Information and Communication Technology - Opportunities exist in system integration, support systems, training, professional services, outsourcing, and internet services. The telecommunication sector is expected to expand in line with the economic recovery and present opportunities for consultancy, engineering, equipment supply and training.
E-commerce - Opportunities exist in provision of online services and value-added services especially for software and Internet Security. Foreign investors are free to invest in internet-related industries including internet portals, internet service providers, and internet content providers.
Education and Training - Indonesia is a major market for Western education services. Studies undertaken by Indonesian students in Western range from: short courses, university degrees, higher education, vocational education, school education and English language courses.
Environmental Products and Services - Best prospects are in pollution control, including low cost water treatment equipment and spare parts, training and ISO14000 accreditation services. Other opportunities include support systems for sustainable resources management (eg. spatial data), solid waste, urban water and sanitation management. Opportunities exist for composting technology, recycling technology, landfill technology, waste to energy technology and medical waste treatment.
Food & Beverages - New areas of opportunity are expected to include: new lines of processed food and dairy products such as breakfast cereals, biscuits and flavoured milk; ingredients for the food services sector; technology transfer (eg. in packaging and processing); and consultancy services to the dairy industry. Opportunities for small-goods (jams, health food), non-alcoholic beverages, pre-prepared food, transfer of technology and services, and joint venture or licensing arrangements for food products.
Dairy Products - Opportunities exist for products such as milk, butter (retail and bulk) and cheese. Yoghurt and industrial dairy inputs such as milk powder are also supplied to Indonesia. The local dairy industry requires expertise in dairy farming, processing, distribution and marketing, development and management of integrated facilities.
Fresh Produce - Fruit exported to Indonesia include apples, pears, oranges and table grapes, as well as smaller quantities of exotic fruits such as kiwi fruit, plums, nectarine and cherries. Indonesia also requires agricultural equipment (irrigation, nursery, greenhouses).
Health and Medical - Opportunities exist in private hospital development and management; alliances with specialist providers and clinics; private health insurance; hospital staff training; export of medical equipment; and health care treatment.
Mining and Mineral - The Indonesian mining sector presents opportunities for consultancy and engineering services; conveying and stockpiling equipment; coal beneficiation/preparation plants; instrumentation and monitoring; control systems; and servicing existing and new developments.
Oil and Petroleum - In addition to oil and gas extraction there are opportunities for drilling equipment, engineering consultants and other mining equipment and services.
B. STEPS TAKEN BY THE INDONESIA TO ATTRACT FOREIGN INVESTORS
Underscoring the importance of investment to the nation's future, Indonesia is determined to do all it can to accommodate investor needs. The government has introduced significant reforms in the financial sector, including tax and customs reforms, the introduction of Treasury bills, and improved capital market supervision. Indonesia's new investment law, passed in March 2007, seeks to address some of the concerns of foreign and domestic investors.
Bonded Zones are established to encourage exports from Indonesia through the exemption of certain import duties and taxes.
Some of the incentives that may be enjoyed by companies located within Bonded Zones include:
1. Exemption of imported capital requirement and raw materials from import duty, on the condition that at least 66% of the production value of finished goods or at least 50% of the production value of semi-finished products is exported.
2. Exemption of excise tax, value added tax, sales tax on luxury goods and income tax article 22.
Such exemptions are valid for imported capital goods, imported raw materials, incoming taxable goods for processing from other companies, outgoing and returning taxable goods to other companies for subcontracting, outgoing taxable goods to BINTEK3 exemption companies and outgoing and returning machinery to other companies for repair.
3 (BINTEK is a government body under the Ministry of Finance in charge of promotion export through the provision of special facilities. Companies can apply for BINTEK exemption provided certain conditions are met.)
Integrated Economic Development Zones or Kawasan Pembangunan Ekonomi Terpadu (KAPET) are a special zones set up to encourage greater development and investment into a specific locale in Indonesia. Such objectives are achieved through the provision of incentives such as:
1.Less complex procedures for obtaining land titles, building permits, site information and other infrastructure facilities
2.Ability to employ foreign expert personnel as required
3.No requirement for licensing by regional administration
4.Simplified immigration procedures
5.Suspension of import duty, excise duty, luxury tax and value added tax on imported goods
6.Other tax benefits
Companies that operate in Bonded Zones located within KAPET zones enjoy the facilities and incentives of both zones.
Unlike a Bonded Zone, a Free Trade Zone (FTZ) is an area designated for duty-free entry of any non-prohibited goods. Goods may be stored, displayed, used for manufacturing within the zone and re-exported without duties.
Currently there are no official FTZs in Indonesia although Batam, which is classified as a Bonded Zone, has been effectively operating as a FTZ. There is complete exemption from all import duties for goods imported for use in Batam or for processing and export. A firm legal status for Batam as an FTZ is still being debated.
The exchange of high-level visits between Indonesian and Singaporean leaders and the signing of a number of agreements has provided a stronger foundation to the promotion of cooperation in all areas. In connection with this, the establishment of Special Economic Zones in Batam, Bintan and Karimun has moved forward in accordance with the roadmap as agreed by the two countries. Encouraging results have already been seen with the signing of the Memorandum of Understanding covering 20 investment projects with the value of US$1.9 billion on 2 August 2007 in industrial areas.
Ultimately, Indonesia is concentrating efforts on two objectives: first, supporting market conditions which allow entrepreneurs to fully realize their business potential in Indonesia; and secondly, following through on its commitment to help businesses perform well in Indonesia.
2. KEY STATISTICS
Singapore's trade with Indonesia hit SGD$66.40 billion in 2007, 16% growth over the figure for 2006. Overall, the Indonesia was Singapore's 4th largest trading partner in 2007.
In terms of exports, the Indonesia was Singapore's 3rd largest export market in 2007. Key exports were petroleum products refined, telecommunications equipment, parts for office and machines, civil engineering equipment parts and electronic valves.4
In terms of imports, the Indonesia was Singapore's 6th largest import market in 2007. Main imports items were petroleum products refined, oil seeds other flour meals, parts for office and machines, telecommunications equipment and electrical machinery.5
Singapore's Trade with Indonesia
(Value in S$ Thousand)
| Trade |
2005 |
2007 |
| Total Trade |
54,217,173 |
66,388,567 |
| Imports |
17,400,377 |
22,068,342 |
| Exports |
36,816,796 |
44,320,225 |
| Domestic Exports |
16,392,187 |
17,241,390 |
| Re-Exports |
20,424,608 |
27,078,835 |
4 Source: International Enterprise Singapore
5 Source: International Enterprise Singapore
GDP Statistic6
| GDP (purchasing power parity): |
$845.6 billion (2007 est.) |
| GDP (official exchange rate): |
$410.3 billion (2007 est.) |
| GDP - real growth rate: |
6.1% (2007 est.) |
| GDP - per capita (PPP): |
$3,400 (2007 est.) |
| GDP - composition by sector: |
agriculture-12.4%
industry-47.7%
services- 39.9% (2007 est.)
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| Labor force: |
108 million (2007 est.) |
| Labor force - by occupation: |
agriculture: 43.3%
industry: 18%
services: 38.7% (2004 est.)
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| Unemployment rate: |
9.7% (2007 est.) |
6 CIA - The World Factbook
4. SBF ACTIVITIES
2006
Investing in Indonesia - Legal & Regulatory Framework
25 May 06
The Singapore Business Federation in partnership with Rodyk & Davidson of Singapore and Ali Budiardjo, Nugroho, Reksodiputro (ABNR) of Indonesia, two very well-known and long established law practices organized a seminar on the legal & regulatory framework for investing in Indonesia. This seminar was most timely given the positive investment climate and robust growth currently pervading the ASEAN region and Indonesia in particular. At the end of this seminar, participants went away with important insight into the new investment climate that characterises Indonesia currently. More importantly, participants had the regulatory knowledge of what is required when investing in Indonesia. This knowledge gain would assist them in better planning and executing business ventures in Indonesia.
2007
Business Study Mission to Batam and Bintan
30 Mar 07
A total of 13 Singapore companies and 23 participants joined the study mission to the proposed BBK SEZ which was jointly organized by SBF, EDB and SembCorp. The mission members were briefed on the BBK master-plan, visited Wisma BIE, toured factory lots and visited several local companies. This event provided networking opportunities and fact-finding on investment opportunities for our businessmen.
Invest Jakarta 2007
30 Aug 2007
Supported by the Singapore Business Federation, Invest Jakarta 2007 was a forum organized by the Jakarta Investment Board. This event had presented comprehensively the investment potentials of the Jakarta region. Speakers in this event were not only regulators but also successful Jakarta businesses who were looking for opportunities to do tie-ups with foreign direct investors.
This forum had not only provided various and comprehensive information concerning investment opportunities in banking, finance, property, tourism, and public/municipal utilities, but also business matchmaking session for the participants.
Global Entrepolis Singapore (GES)
Business Outlook and Financing Opportunities for Investors in Indonesia - With focus on the Batam, Bintan, and Karimun Special Economic Zone
13 Nov 2007
This seminar was organized by SBF as part of the programme in the annual GES, with the support of the Indonesia's Investment Coordinating Board, DBS Bank Limited, Hanafiah Ponggawa & Partners and Rodyk & Davidson (RODYK).
The primary objective was to help Singapore companies, especially SBF members, to leverage on this unique event to network and gain insight knowledge on how they could enter into Indonesian market and discover the right business opportunities that will make their investment grow faster. At the end of this seminar, participants went away with a better understanding on Singapore-Indonesia Framework Agreement on Economic Cooperation for the islands of Bintan, Batam, and Karimun (SEZ¡¯s), legal and regulatory framework on investment law in Indonesia, especially BBK region, and financing options for businesses venturing into Indonesia.
Bintan Industrial Estate (BIE) Investment Seminar
6 Dec 2007
Jointly organized by SembCorp Parks Management (SPM) and Bintan Inti-Industrial Estate (BIIE), SBF had held this seminar on "Bintan Industrial Estate (BIE) Investment". This seminar had provided the participants with a better understanding on Bintan Industrial Estate and the benefits of operating in the Free Trade Zone.
2008
Business Opportunities & The New Indonesian Investment Law
24 Jan 2008
SBF organized a seminar on ¡®Business Opportunities & the New Indonesian Investment Law.' The objectives of this seminar was to give the participants a better understanding on how they can enter the Indonesian market and discover the right business opportunities that will make their investment grow faster.
At the end of this seminar, participants went away with the regulatory knowledge of what is required when investing and trading in Indonesia. This knowledge will assist them in better planning and executing business ventures in Indonesia.
Business Mission to Batam and Bintan - Special Economic Zone (SEZ)
5 - 6 Mar 2008
In collaboration with the Association of Small and Medium Enterprises (ASME), SembCorp Parks Management and the Investment Coordinating Board of the Republic of Indonesia (Badan Koordinasi Penanaman Modal - BKPM), we organized a business Mission to Batam and Bintan from 5 to 6 March 2008. The Mission was led by Mr. V K Rajan, Senior Consultant of Chesterton and Vice Chairman of SBF IR Committee.
This business mission had provided our participants with deeper insights into the business climate as well as the investment opportunities in the Batam, Bintan and Karimun (BBK). It was a good platform for business communities in Singapore to understand the ongoing progress in the development of the SEZ in BBK. More importantly, this business mission allowed our delegates to further evaluate the investment possibilities in the BBK. A total of 32 representatives from 23 Singapore companies participated in the Mission.
Bintan Industrial Estate (BIE) Investment Seminar
11 Mar 2008
This seminar was jointly organised by SembCorp Parks Management and Bintan Inti-Industrial Estate and was supported by SBF. The main objectives of this seminar were for the participants to have a better understanding on Bintan Industrial Estate and the benefits of operating in the Free Trade Zone.
SBF Post Mission / Networking Session
Indonesia: The Emerging Market - Batam, Bintan and Karimun (SEZ)
20 Jun 2008
The objective of this event is to share the practical business information that our participants need to know. We will share with them our assessment of the manufacturing industries, potential opportunities for investment in Indonesia, the market "know-how" as well as the valuable experiences of companies who have established their operations there and the delegates who have travelled with us on the mission. Furthermore, this event will bring you the opportunities to network with the Indonesian government officials and the well established MNC in Indonesia.
Networking Lunch, Indonesia: Maluku the Hidden Gem in Asia
5 Aug 2008
The objective for this briefing cum networking lunch was to deepen the participants' knowledge on tourism investment opportunities and procedures of doing business in Maluku. This event has also given the participants the opportunities to network with the head of Maluku Provincial Tourism Board and Maluku government officials.
Indonesia: Projects Briefing and Investment Facilitation
17 Sep 2008
The objective of this event was to provide the participants with detailed information on selected Investment Projects in Indonesia. This seminar profiled 15 projects with USD1.1 billion worth of projects in Jakarta, Banten, West and East Java. In addition, participants were briefed on the new Indonesian investment law and how it will provide a more conducive environment for foreign investors, as well as the financing tools available for investing in Indonesia.
The seminar was attended by 35 businessmen from the infrastructure, electrical, info-communication and raw materials industries sectors. At the end of this seminar, participants gained a better understanding of the investment climate and opportunities in Indonesia, as well as useful advice and tips for navigating the Indonesian market and executing their business ventures there.
Business Mission to Indonesia
10 - 14 Nov 2008, Jakarta and Bekasi
SBF organized a Business Mission to Indonesia covering Jakarta and Bekasi in partnership with BKPM. The mission enabled participants to gain a better understanding of the ongoing developments in Jakarta and the business opportunities and projects in Indonesia. One Singapore company concluded a business deal (trading) worth S$50,000 during the trip, whilst others were looking to follow up on potential partnerships.
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About Singapore Business Federation (SBF)
For media queries please contact:
Gerald De Cotta, Tel: 6827 6896
Genette Koh, Tel: 6827 6874
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