Prepared by: Sri Kumala CHANDRA - EU Outreach Manager

Helsinki, 23 January 2018

Doing Businesswith

EIBN is a partnership project between 5 European bilateralchambers of commerce in Indonesia and 2 counterparts inEurope

Initiated and co-funded by the EU

Launched in August 2013

BritCham, EKONID,IFCCI, INA, EuroCham

EUROCHAMBRES CCI Barcelona EEN

Attracting EU businesses into Indonesia and supporting them intheir market entry activities; Increasing EU Business’ leveragetowards the Indonesian Governments.

The projects

Increase and improve export and investment of EU businesses tothe Indonesian market.Objectives

European businesses in Europe, in particular SMEs, with an interestin Indonesian market. Existing European companies in Indonesiawhich need to increase their presence and visibility.

Target group

Joint expertise, knowledge and experience of well-establishedEuropean business support organizations with an extensivenetwork in ASEAN, especially Indonesia and the EU.

Expertise

Availability of more comprehensive information on Indonesian & ASEAN market

More systematic and consolidated business support for companies from all EU28 member

states

Platform for exchange among EU companies increased visibility and leverage towards the

Indonesian and ASEAN governments

Platform for

Knowledge & Information sharing

Best-practiseexchange

Capacity building

EIBN

Infor-mation

Business Support

Pan-European

Thriving on Synergies

Helpdesk Company Directory

Publications Free E-book

• 900 contacts of European and Indonesian companies operating in Indonesia

Events Newsletter

Accessible after registration (free of charge)

Indonesia at Glance

World’s Most Populous Country

4th 17,508islandsBiggest Archipelagic Nation

10thWorld’s Largest Economy

I N D O N E S I A

262millionPopulation (in 2017)

G20 Member State after India and

China

3rd fastest growing 3,25 trillionUSD GDP (PPP)

12,378USD GDP per capita (PPP)

Worlds Largest Archipelago

• 3.1 million km2 of sea

• 1.9 million km2 of land

• Hub for international trade since the 7th century

|Agricultural |Construction |Industry2015: 3,77% 2015: 6,36% 2015: 4,33%

2016: 3,25% 2016: 5,22% 2016: 4,29%

|Mining |Transportation |Electricity & Gas2015: -‐3,42% 2015: 6,68% 2015: 0,90%2016: 1,06% 2016: 7,74% 2016:5,39%

|Finance |ICT |Trade

2015: 8,59% 2015: 9,69% 2015: 2,59%

2016: 8,90% 2016: 8,87% 2016: 5,93%

3

Indonesia Macro Economy Condition

|GDP2015: 4,88%

2016: 5,02%

2017: 5,05%

|Investment2015: 5,01%

2016: 4,48%

|Export2015: -‐1,74%

2016: -2,12%

|Import2015: -‐6,41%

2016: -2,27%

Source: BPS 2016,2017

Structure of the Indonesian economy (2016)

Household Consumption Expenditure

56.5%

Non-profit Institution Serving Household

Consumption Expenditure1.16%

Government Consumption Expenditure 9.45%

Gross Domestic Fixed Capital Formation

32.57%

Change in Inventory1.73%

Exports of Goods and Services19.08%

Imports of Goods and Services18.31%

Large domestic consumer

base =

Locomotive and guarantor of GDP growth

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Contribution to the GDP

… that will grow even further

0

50

100

150

200

250

300

2010 2020 2030

Population development prediction (in million inhabitants)

Consuming class

Below Consumingclass

Consuming class defined as persons with a real net monthly income of US$ 300 or above

135 million people

Macroeconomic data

Economic activity by region

14

Special Economic Zones& Strategic Tourism Areas

Sei MangkeiPalm Oil, Rubber, Fertilizer Industries,Logistics, Tourism

Tanjung Api-apiPalm Oil, Rubber,

Petrochemical Industries

Tanjung LesungTourism

MandalikaTourism

Maloy BatutaPalm Oil, Coal, Mineral

Industries

BitungFishery & Agro

Industries, Logistics

PaluSmelters,Agro Industry,Logistics

MorotaiTourism, ManufacturingIndustry, Logistics

Padang PariamanAgro Industry (Cacao, Rubber, Palm Oli)

LhoksemaweShipyard,

Manufacture

West JavaManufacture

Batu LicinRefinery,

Metal Industry

TarakanManufacture

GarombongRefinery, Logistic,

Petrochemical Taka BonerateTourism (Maritime)

Teluk BintuniFertilizer, Petrochemical

MeraukeFood, Energy

Raja AmpatTourism (Maritime)

SorongFish industry

Existing SEZs

Planned SEZs

Strategic Tourism Areas

Toba Lake

Kelayang

Thousand Islands

Borobudur

Komodo

Wakatobi

Bromo Tengger Semeru

• Since 1998 thriving and stable democracy

• Newly elected President: Joko Widodo

Joko WidodoGovernor of Jakarta 2012 – 2014President 2014-2019

Stable Political environment

Political Party 34%

Professional66%

CABINET

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Growth of the Industry

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Infrastructure development - RPJMN (2015 -2019)

Sector Investment

Water supply and waste water treatment 77,7

Energy production and distribution 70,9

Streets 51,0

Maritime traffic 30,2

Public housing 14,9

Rail transport 13,3

ICT-Infrastructure 12,0

Air traffic 9,9

Public transport in cities 6,9

Total 286,6

Planed investment in Indonesia’s (2015 – 2019) (in billion US$*)

225 infrastructure projects as national strategic projects

2 focus sectors: Water and energy

27 priority projects

*) Exchange rate 1 US$ = 13.500 Rupiah (Rp)

Source: Germany Trade and Invest

Project name Investment Explanation

Refinery Development Master Plan 15.500 Modernization of 5 existing refineries

Tuban Refinery 8.000 Construction of new refinery

Bontang Refinery 5.500 - 10.400 Construction of new refinery

PLTU Batang Power Plant 2.960 2.000 MW power plant in Java

High Voltage Direct Current 2.470 742 km electricity transmission grid

500kV Sumatra Transmission 1.810 1.330 km electricity transmission grid

PLTU Mulut Tambang 1.330 1.200 MW power plant in Sumatra

Indramayu Power Plant 1.480 1.000 MW power plant in Java

Central - West Java 500 kV Transmission 570 565 km electricity transmission grid

Water to Energy Not specified 4 hydro power plants with 147 MW in total

Light Rail Transit Jakarta (LRT) 2.540 Tramway in Jakarta

Soekarno-Hatta Airport Express 1.780 Rapid transit to Jakarta Airport

MRT Jakarta 1.850 Construction of subway section

East Kalimantan Railway 1.850 203 km railway

Light Rail Transit (LRT) Sumatra 530 tramway in Palembang

Makassar-Parepare Rail 470 144 km railway in Sulawesi

8 Section of Trans Sumatra Toll Road 6.000 8 sections of the Trans Sumatra motorway

Balikpapan-Samarinda Toll Road 730 99 km motorway in Kalimantan

Manado-Bitung Toll Road 380 39 km motorway in Sulawesi

Serang-Panimbang Toll Road 800 84 km motorway in Banten

Bitung International Hub Seaport 2.520 Sea port in Sulawesi

Kuala Tanjung Seaport 2.220 Sea ports in Sumatra

Inland Waterways Sikarang-Bekasi - Java Sea 250 Canal

National Capital Integrated Coastal Development 44.400 Construction of dam and new district in Jakarta

Jakarta Sewerage System 600 Sewage network

West Semarang Drinking Water Supply System 90 Drinking water network

Refineries

Energy

Railway

Street

Ports

Water

(in Mio. US$) Source: Germany Trade and Invest

AVIATIONGrowth reaching 8 to 9 percent in 2016

Domestic flights are still in higher demand compared to international flights, sinceIndonesian citizens need to use air travel to get across the archipelago efficiently, withover 80 million domestic passengers and 14 million international ones in 2015

Indonesia is a home to 269 airports, of which 26 are commercial airports in big cities

There are currently 9 airport managementprojects and 5 new airport projects that areoffered to the private sector in Indonesia.

Opportunities: aviation safety and security, air traffic control and ground handling,Maintenance Repair and Overhaul (MRO – only 30% conducted in Indonesia) industry.

Construction

Current value of retail industry = $326bn

10% annual growth

5th on Global Retail Development Index

419,000sqm of retail projects scheduled

Hotel construction value = $1.5bn

Consistent double-digit growth

Currently over 200,000 keys

15,000+ more rooms planned

25,000+ new apartment units planned in Jakarta

Jakarta constructing 500,000sqm office space

annually between 2015-2018

12.5% YoY increase in office space

22,000 completed apartment units in Jakarta in 2016

CLEANTECH

Renewable energy

Waste Management

Green Building

Non-fossil energy Resources (sd) Installed

capacity (kt)

Ratio kt/sd

Hydro75,670 MW 6,848.46 MW 9.05%

Geothermal 29,164 MW 1,341 MW 4,6%

Mini/Micro Hydro 769.69 MW 230 MW 29.9%

Biomass 49,810 MW 1,644.1 MW 3,3%

Solar Energy 4.80 kWh/m2/day 27.23 MW -

Wind Energy 3 – 6 m/s 2.731 MW -

Ocean 49 GW 0.01 MW 0%

Uranium 3000 MW 30 MW 0%

Three biggest priorities: Biomass, Geothermal and Solar PV

National commitmentto reduce carbon emissions by 26% in 2020

• Private companies that offer design “build-operate-transfer” contract(BOT) and turn key solutions are more likely to succeed in the Indonesianmarket.

• Key arrangements: guarantee agreement with the local governmentwhere the landfill is located on waste supply to the facility for the securityof the investors, and a Power Purchase Agreement (PPA) with the state-owned electricity company, PT PLN.

• Growing urban population and increase of people life-style standards rapid construction growth: 7-8%

• Only one pilot green building code applied in Greater Jakarta, more cities are developing to the same goal.

• The highest potential: energy efficiency, water efficiency, indoor air quality, land and waste management

Business opportunitiesRecommended roles for European businesses

• As suppliers

– Technological advanced inputs such as security technology, energy efficient building technology or traffic engineering

– Construction machinery such as excavators or cranes

– Materials such as cement are sufficiently and cheaply produced in Indonesia

• As subcontractors

– Planning (e.g. feasibility and design studies)

– Certification

– Energy efficient building Advantage: European technology has a better reputation than the one

provided by cheaper competitors

Greatest opportunities in the sector of high quality building of all types (hotels, offices, apartments, retail) due to comparative advantage of high quality.

Indonesia is the fastest growing mobile telephone market in the Asia-Pacific region, predicted to reach 391

million mobile accounts in 2015. The market is dominated by three major mobile telecommunication providers,

Telkomsel, Indosat and Xl Axiata; 95% of mobile users are prepaid subscribers.

Key Factors and Major

Trends

Universal Healthcare Programme

Jakarta Online Referral System

Indonesia Broadband

Plan

National Phone

Referral System

Integrated National Data

Repository System

Healthcare IT Solutions

Mobile trunking and backhaul continue to be the biggest segment of the Indonesian satellite communications market. But the second biggest segment, and fastest growing, is demand for satellite communications from the

corporate sector (included Banks).

Current Indonesian satellite operators are: Bank Rakyat Indonesia (BRI), IndosatOoredoo, Media Citra Indostar (MCI), Pasifik Satelit Nusantara and Telkom Indonesia.

Satellite

Additionally: - 3S by Telkom launched in

February 2017- PSN – 6 launched by Pasifik

Satelit Nusantara in March 2017

- Telkom plans to launch Telkom 4 satellite in 2018

Current trend: EO Satellite for power station, marine vessels, aircrafts, monitor volcanos, etc.

Indonesia National Institute of Aeronautics & Space has launched LAPAN A3 on June 2016.

Steps to Market Entry in Indonesia

Visit the Indonesian market yourself

Export products working with local business partners

Appoint an agent to explore the market

Establish a company having in mind your planned business aims

Manufacture in Free Trade Zones in Indonesia

European Pavilion at Food & Hotel Bali (1st – 3rd March 2018)

ProgramDay 1: Information Session with local market players and

related institutions Arrange your visits to local market players,

government, associations, trade fairs and other relevant networking events

Day 2 and Day 3: Arrange B2B meetings with your potential partners in

Indonesia and relevant government departments

= Saving your time + successful trade mission

Medical Trade Mission (23rd – 25th April 2018)

EIBN will provide you:

an overview of Indonesian Market Report Delegation booklet contents your company

information and distribute it to potential partners

More information ?

www.eibn.org

info@eibn.orgkumala@eibn.org

Thank you for your attention!