Professor Jorma Larimo
Indonesia as an Investment Target
Country: Finnish Viewpoint
and Evidence
Seminar on "Cooperation and Business Opportunities
Between Southeast Asia and Finland"
at the University of Vaasa, Nissi auditorium, Tritonia
25.9.2014
GOAL OF THE PRESENTATION
• To give a short overview of some key issues related to the
investment environment in Indonesia as well as of
the investment behavior of Finnish and other Nordic
firms in the country
1.10.2014 2
COUNTRY FACTS AND OVERVIEW
(INVESTING IN INDONESIA 2013)
1.10.2014 3
INVESTMENT ATTRACTIVENESS/CLIMATE IN
INDONESIA
• Overall performance
• Competitiveness
• Country risk/political risk
• Easiness of doing business
• FDI restrictions
• Acquisition freedom
• Investment incentives
• Geographic distance
• Cultural distance
1.10.2014 4
INDONESIA – OVERALL PERFORMANCE
(IMD WORLD COMPETITIVENESS ONLINE 2014)
1.10.2014 5
COMPETITIVENESS LANDSCAPE OF INDONESIA
(IMD WORLD COMPETITIVENESS ONLINE 2014)
1.10.2014 6
COUNTRY RISK 2010 & 2005:
(EUROMOMEY)
RANK COUNTRY 2010
1 Norway 93,33
2 Switzerland 90,22
3 Sweden 88,93
4 Denmark 88,80
5 Finland 88,55
6 Luxembourg 88,27
7 Canada 88,26
8 Netherlands 88,20
9 Hong Kong 87,18
10 Australia 86,18
61 Indonesia 58,75
7
RANK COUNTRY 2005
1 Norway 99,45
2 Switzerland 99,15
3 Luxembourg 99,10
4 USA 96,93
5 Denmark 95,63
6 Sweden 94,58
7 UK 93,55
8 Finland 93,52
9 Austria 93,43
10 Ireland 93,26
85 Indonesia 41,88
EASE OF DOING BUSINESS 2012:
(IMD WORLD COMPETITIVENESS YEARBOOK 2012)
• How doing of business is hindered by regulations or supported by regulations
RANK COUNTRY Score
TOP 5 COUNTRIES
1 Honk Kong 8,53
2 Singapore 8,36
3 Switzerland 7,44
4 United Arab Emirates 7,41
5 Malaysia 7,16
NORDIC 7 Sweden 6,95
10 Finland 6,68
14 Denmark 6,19
18 Norway 5,97
32 Indonesia 4,78 8
FDI RESTRICTIVENESS INDEX (0=Open, 1=Closed)
(OECD INVESTMENT DIVISION)
1.10.2014 9
ACQUISITION FREEDOM 2012:
(IMD WORLD COMPETITIVENESS YEARBOOK 2012)
• How free are foreign firms to acquire control in domestic companies
RANK COUNTRY Score
TOP 5 COUNTRIES
1 UK 9,25
2 Ireland 9,23
3 Chile 9,20
4 Sweden 9,12
5 Belgium 9,00
NORDIC 11 Finland 8,56
12 Denmark 8,55
22 Norway 8,10
36 Indonesia 6,80
10
INVESTMENT INCENTIVES
(Ali Budiarbjo, Nugroho, Reksodiputro: Guide to Doing Business in Indonesia)
• Incentives are regulated in Law No. 25 of 2007.
• Investments that are eligible for incentives:
– labor intensive
– highly prioritized investments
– infrastructure construction
– involve technology transfers
– in a pioneer industry
– located in a remote area, a less-developed area, a contigous area, or another area deemed needy
– keep the environment sustainable
– involve research, development, and innovation activities
– in partnership with micro, small and medium enterprises or cooperatives
– In an industry that uses domestically-produced capital goods or machinery and equipment.
Reduction of net income tax and import duty excepmtion
1.10.2014 11
FINLAND & INDONESIA ON THE WORLD MAP
1.10.2014 12
CULTURAL DIMENSION VALUES BY HOFSTEDE
HOFSTEDE
POWER DISTANCE
INDIVIDUALISM MASCULINITY UNCERTAINTY AVOIDANCE
LONG-TERM ORIENTATION
INDULGENCE VS. RESTRAINT*
FINLAND 33 63 26 59 38 57
SWEDEN 31 71 5 29 53 78
GERMANY 35 67 66 65 83 40
MALAYSIA 104 26 50 36 41 57
THAILAND 64 20 34 64 32 45
INDONESIA 78 14 46 48 62 38
SINGAPORE 74 20 48 8 72 46
S-KOREA 60 18 39 85 100 29
CHINA 80 20 66 30 87 24
1.10.2014 13
*Indulgence/Restraint = Tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun
FDI INFLOWS IN INDONESIA
(BANK OF INDONESIA)
1.10.2014 14
FDI LIBERALIZATION IN INDONESIA
(OECD 2011)
1.10.2014 15
DIRECT INVESTMENT STOCK IN INDONESIA 2010
(IMD WORLD COMPETITIVENESS YEARBOOK 2012)
RANKING COUNTRY US§ billions
1 USA 3451,41
2 Honk Kong 1097,62
3 UK 1086,14
4 France 1008,38
5 Germany 674,22
6 Belgium 670,01
7 Spain 614,47
8 Netherlands 589,83
9 China 578,82
10 Canada 561,11
11 Switzerland 538,95
12 Australia 508,12
13 Singapore 483,02
14 Brazil 472,58
15 Russia 423,15
16 Sweden 348,67
24 Norway 171,83
27 Denmark 139,21
38 Finland 82,71 1.10.2014 16
DIRECT INVESTMENT FLOWS IN INDONESIA 2011
(IMD WORLD COMPETITIVENESS YEARBOOK 2012)
RANKING COUNTRY US§ billions
1 USA 227,87
2 China 185,08
3 Belgium 91,84
4 Hong Kong 83,18
5 Brazil 66,66
6 Singapore 64,00
7 UK 54,26
8 Russia 52,88
9 France 42,88
10 Canada 41,15
11 Germany 40,29
12 Italy 32,62
13 Australia 30,58
14 Spain 26,56
15 India 26,19
22 Denmark 15,17
29 Sweden 12,28
30 Norway 11,75
56 Finland -0,03 1.10.2014 17
FINNISH DIRECT INVESTMENT FLOWS ABROAD, EUR million
(BANK OF FINLAND)
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
TOTAL 26,082 9,354 7,832 -2,020 -869 3,395 3,830 5,263 6,347 4,089 7,677 3,605 5,871 3,039
ASIA
of which 346 462 174 150 555 309 6 296 265 1,092 2,196 -1,115 -555 -421
China 34 170 -103 315 450 90 39 572 -53 845 1,481 -1,479 -581 -186
Hong Kong -200 18 58 -71 1 25 -27 -65 19 24 10 -3 -30 22
India -7 28 18 6 11 20 119 93 222 243 157 185 -31 -469
Indonesia 1 -4 -5 -7 6 29 28 -82 41 33 -38 5 -7 -8
Japan 70 59 -15 -105 32 41 -28 -12 -23 -55 38 -9 -9 68
Malaysia 9 8 7 -16 12 25 25 -8 -27 -1 33 15 -5 -5
Philippines 3 4 4 -11 2 0 0 -3 0 1 3 -2 0 2
Singapore 260 62 61 -81 72 40 132 10 87 210 419 75 129 16
South Korea 189 86 -8 113 -16 14 -138 -129 27 -151 21 34 -13 19
Thailand 34 26 26 8 11 -41 -40 -22 -16 -17 0 -1 3 -3
18
FINNISH MANUFACTURING INVESTORS IN
INDONESIA
- Only some 10 Finnish companies including e.g. Kone, Metra and Outokumpu have made manufacturinf investments in Indonesia
- Some of the firms do not have the units anymore
1.10.2014 19
INVESTMENT STRATEGIES AND PERFORMANCE OF FINNISH
FIRMS IN INDONESIA
• Timing of the investments
– Most in the 1990s, very few in the 2000s
• Ownership strategies
- Majority joint ventures (minority, 50-50-owned and majority owned),
- Some wholly-owned units (some changed original IJVs later on to WOSs)
• Establishment mode strategies
- Greenfield investment the main mode, only few acquisitions
• Performance
- Several divestments of units later on
- Some of the units have been sold to other foreign units
- In some cases the Finnish parent firm or business sector has been sold
1.10.2014 20
INVESTMENT STRATEGIES AND PERFORMANCE
COMPARED TO THE OTHER NORDIC COUNTRIES
• Amount of investments
- Very few manufacturing investments also by other Nordic firms
- Examles: ABB (swiss-swedish); Sandvik, SKF, Dyno Industrier, Jotun, Ecco, Grundfors
• Timing of investment
- As well mainly in the 1990s – only few in 2000s
• Ownership strategies
- Majority joint ventures, less WOSs at entry
• Establishment mode strategies
- Majority greenfield investments
• Investment performance
- Several divestments especially by Norwegian firms
1.10.2014 21
EVENTS IN 2012-2014
• Joint Finnish – Estonian minister and business delegation visited Indonesia discussing investment agreements and potential projects in 2012 & roundtables discussion in 2013
• Wärtsilä corporation has several project in Indonesia
– delivery of 155 MW gas engine based power plant (16Wärtsilä 34SG engines) located in Bangkanai in Central Kalimantan
– delivery of 184 MW gas engine based power plant (19Wärtsilä 34SG engines running on liquefied natural gas) to be located in Lhokseumawe (in Aceh Special District) in northern Sumatra
1.10.2014 22
EVENTS IN 2012-2014
• Kone corporation has also received projects like
– high speed elevator deliveries to 38-storey 5-star Mulia Hotel and 50-storey Wisma Mulia office building in Jakarta
• New investment with Finnfund participation/financing : SaraRasa
Bioindo Pte. Ltd /Dovre Group
– pellet production from biomass (first pellet prodcution unit in Indonesia, located in Riau Province in Sumatra; estimated production 100 million tonnes per year; uses agricultural biowaste)
1.10.2014 23
SWEDISH FIRMS IN INDONESIA 2014
• Swedish Ambassador to Indonesia Ewa Polano: a wide range of business had made
firm commitments to do business in Indonesia estimated to reach at least US$400 million within the next few years.
• Power transmission and industrial automation technology group ABB, furniture chain IKEA, retail store H&M and electric car maker Clean Motion AB have expressed a keen interest in investing in Indonesia
• ABB will soon build two new power plants in Tangerang and Cibitung with a total
investment of $25 million each
• Clean Motion AB will produce bajaj-like electric car ZBee in a few months
with a total investment of up to $100 million, Polano said.
• IKEA will open three stores in Indonesia with a total investment of $300 million
over the next few years. The first store, worth about $125 million, will open in Alam Sutera in Tangerang, Banten, in July 2014
• H&M has committed to opening two stores in September at Gandaria City and
Pondok Indah in Jakarta with an unspecified amount of investment.
• In 2013 Swedish investment totaled only $5.2 million in 11 projects, according to Investment Coordinating Board (BKPM) data.
1.10.2014 24
FUTURE POTENTIAL - DEVELOPMENT
• No great changes to be expected in the flows and amount of investments
• Future depens on the development in world economy
– in several key markets by Finnish firms
• What happens with the investment legislation and corruption
• Starting of ASEAN economic community in 2015
• Best potential in energy, paper & pulp, machinery & equipment and construction related industries
• However, good market attractiveness also in consumer goods sectors : economic size, growth and population
- est. 141 mill. middle class with affluent consumers by 2020
thus also consumer goods manufacturers should evaluate more the possibilities
1.10.2014 25
1.10.2014 26
Thank you for your attention!
1.10.2014 Vaasan yliopisto | Yksikkö | Kalvosarjan nimi 27
1.10.2014 Vaasan yliopisto | Yksikkö | Kalvosarjan nimi 28
1.10.2014 Vaasan yliopisto | Yksikkö | Kalvosarjan nimi 29
LIST OF BUSINESS FIELDS THAT ARE CLOSED TO BUSINESS INVESTMENTS
(INVESTING IN INDONESIA, 2013 / President regulations N.36/2010, Investment Negative List)
1.10.2014 30
INDONESIA FDI REALIZATION BY COUNTRY OF ORIGIN
(INVESTING IN INDONESIA, 2013 / INDONESIA INVESTMENT COORDINATING BOARD)
31
FOREIGN DIRECT INVESTMENT 2005-2011
(INVESTING IN INDONESIA, 2013 / WORLD BANK)
1.10.2014 32
FINNSIH INVESTMENTS IN INDONESIA
Year of the investment
Name of Finnish Parent
Name of the Unit Divestment Year of divestment
Finnish ownership in
the unit originally
Ownership later
Partner(s) Establish-ment mode
Product
1987 Enso-Gutzeit Imprex Products Pte.Ltd Yes <1997 50 50 Bumi Raya Utama Group
GR laminates
1991 Finvest P.T. Evox, Muka Kuning, Batami No . 59,5 85 Seo Ryong Electronics Ind.
Co. Ltd. & Finnfund
GR film condensators
1991 Raisio P.T. Budi Raisio International, Jakarta Yes 2004 18 18 Finnfund
GR starch
1994 Kone P.T. Kone Indo Elevator, Surabaya No . 46 46 Indo Elevator
GR elevators
1995 Huhtamäki Packaging factory No . . . .
GR food packaging
1995 Tampella PT Prok Indonesia, Cilegon Yes 1997 70 70 .
GR lifting components
>1996 Porkka . No . . . .
. refrigerators
1997 Metra . No . 100 100 .
GR motors
1997 UPM-Kymmene Riaupulp Yes 1999 30 30 April
GR fine paper
1997 Raisio PT Intercipta Kimia Pratama, Jakarta Yes 2004 50 50 .
ACQ hydro clues
2000 Evox Rifa PT Evox Rifa Indonesia, Batam No . 100 100 .
GR electronic components
2001 Outokumpu Avesta X, Jakarta Yes 2005 100 100 .
ACQ electrodes
2002 Raisio Latexia factory (Rhodia) Yes 2004 100 100 .
ACQ paper latex
1.10.2014 33
GLOBE SOCIETY/CULTURE CLUSTERS
ANGLO • Australia • Canada • England • Ireland • New Zealand • South Africa (white sample) • United States
LATIN EUROPE • France • Israel • Italy • Portugal • Spain • Switzerland (French)
NORDIC EUROPE • Denmark • Finland • Sweden
GERMANIC EUROPE • Austria • Germany • Netherlands • Switzerland (German)
EASTERN EUROPE • Albania • Georgia • Greece • Hungary • Kazakhstan • Poland • Russia • Slovenia
LATIN AMERICA • Argentina • Bolivia • Brazil • Colombia • Costa Rica • Ecuador • El Salvador • Guatemala • Mexico • Venezuela
SUB-SAHARAN AFRICA • Namibia • Nigeria • South Africa (black sample) • Zambia • Zimbabwe
MIDDLE EAST • Egypt • Kuwait • Morocco • Qatar • Turkey
SOUTHERN ASIA • India • Indonesia • Iran • Malaysia • Philippines • Thailand
CONFUCIAN ASIA • China • Hong Kong • Japan • Singapore • South Korea • Taiwan
1.10.2014 34
CULTURAL DISTANCE BETWEEN FINLAND AND
INDONESIA BASED ON HOFSTEDE DIMENSIONS
• Short distance :
- Uncertainty avoidance
• Medium distance
- Masculinity vs. feminity
- Indulgence vs. restraint (2010 added dimension)
- Long term orientation
• High distance
- Power distance
- Individualism (highest distance)
1.10.2014 35
CULTURAL DIMENSION VALUES BY GLOBE
GLOBE (Practices)
GLOBE (Values)
PDI UAI HUM SOC INST
SOC INGR
ASSE GEN EGAL
FUT PERF PDI UAI HUM SOC INST
SOC INGR
ASSE GEN EGAL
FUT PERF
FINLAND 4.89 5.02 3.96 4.63 4.07 3.81 3.35 4.24 3.81 2.19 3.85 5.81 4.11 5.42 3.68 4.24 5.07 6.11
SWEDEN 4.85 5.32 4.10 5.22 3.66 3.38 3.84 4.39 3.72 2.70 3.60 5.65 3.94 6.04 3.61 5.15 4.89 5.80
GERMANY 5.25 5.22 3.18 3.79 4.02 4.55 3.10 4.27 4.25 2.54 3.32 5.46 4.82 5.18 3.09 4.89 4.85 6.01
MALAYSIA 5.17 4.78 4.87 4.61 5.51 3.87 3.51 4.58 4.34 2.97 4.88 5.51 4.87 5.85 4.81 3.78 5.89 6.04
THAILAND 5.63 3.93 4.81 4.03 5.70 3.64 3.35 3.43 3.93 2.86 5.61 5.01 5.10 5.76 3.48 4.16 6.20 5.74
INDONESIA 5.18 4.17 4.69 4.54 5.68 3.86 3.26 3.86 4.41 2.69 5.23 5.16 5.18 5.67 4.72 3.89 5.70 5.73
SINGAPORE 4.99 5.31 3.49 4.90 5.64 4.17 3.70 5.07 4.90 3.04 4.22 5.79 4.55 5.50 4.41 4.51 5.51 5.72
S-KOREA 5.61 3.55 3.81 5.20 5.54 4.40 2.50 3.97 4.55 2.55 4.67 5.60 3.90 5.41 3.75 4.22 5.69 5.25
CHINA 5.04 4.94 4.36 4.77 5.80 3.76 3.05 3.75 4.45 3.10 5.28 5.32 4.56 5.09 5.44 3.68 4.73 5.67
1.10.2014 36
PDI: Power distance UAI: Uncertainty avoidance HUM: Humane orientation SOC INST: Societal institutional collectivism SOC INGR: Societal in-group collectivism ASSE: Assertiveness GEN EGAL: Gender egalitarianism FUT: Future orientation PERF: Performance orientation
INVESTMENT ATTRACTIVENESS/CLIMATE IN
INDONESIA
• Population Big
• Market size
• Market growth
• Investment restrictions Quite many
• Country risk/political risk
• Easiness of doing business
• Corruption index
• Acquisition freedom
1.10.2014 37
POTENTIAL INVESTMENT RISKS
Corruption
• This index indicates the level of political corruption in a given country. Currently Indonesia's ranks number 118 (out a total of 176 countries) but its performance has shown a steady improvement since the start of Susilo Bambang Yudhoyono's administration in 2004.
Infrastructure
• Lack of sufficient quality and quantity of infrastructure in Indonesia has been barring economic and social development to reach its full potential. The country's recent macroeconomic growth in fact proves to be a burden on its infrastructure as it needs to absorb significantly increased economic activity.
Governance
• Apart from the issue of political corruption, there are other factors that negatively influence the effectiveness and performance of (good) governance in Indonesia. It is obvious that governing such an immense archipelago, containing almost 240 million people with different cultural and religious backgrounds, does not come without problems.
1.10.2014 38
POTENTIAL INVESTMENT RISKS
Natural Disasters
• Earthquakes, tsunamis, volcano eruptions and floods are all phenomenons that occasionally make news headlines in Indonesia and take both human lives and damage the infrastructure. This vast country is located on the Pacific Ring of Fire, while most of its geographical space consists of water. These two circumstances make the country vulnerable to natural disasters; a situation which is worsened by the weak state of some of its infrastructure.
Ethnic and Religious Violence
• Indonesia has witnessed sustained and structural outbursts of violence throughout its history, but it seems justifiable to pose that the demise of the strong New Order government in the late 1990s has enabled both ethnic and religious violence to flare up in the regions because of the reduced role of the army in Indonesian society.
Radical Islam
• Although the majority of Indonesia's Muslim community can be regarded as moderate, tolerant and highly supportive of pluralism, democratic values and the secular state, there has always been radicalization on the fringes of the Islamic spectrum. These radicals aim for a larger role of Islam in Indonesian society, in particular in the domain of politics.
1.10.2014 39
EVENTS IN 2012-2014
• Joint Finnish – Estonian minister and business delegation visited Indonesia discussing investment agreements and potential projects in 2012 & roundtables discussion in 2013
• Wärtsilä corporation has several project in Indonesia
– delivery of 155 MW gas engine based power plant (16Wärtsilä 34SG engines) located in Bangkanai in Central Kalimantan
– delivery of 184 MW gas engine based power plant (19Wärtsilä 34SG engines running on liquefied natural gas) to be located in Lhokseumawe (in Aceh Special District) in northern Sumatra
• Kone corporation has also received projects like
– high speed elevator deliveries to 38-storey 5-star Mulia Hotel and 50-storey Wisma Mulia office building in Jakarta
• New investment with Finfund participation/financing : SaraRasa
– pellet production from biomass (first pellet prodcution unit in Indonesia, located in Riau Province in Sumatra; estimated production 100 million tonnes per year; uses agricultural biowaste)
1.10.2014 40
WÄRTSILÄ
• PT. Wärtsilä Indonesia is a fully-owned subsidiary of Wärtsilä Corporation
• The offices of Wärtsilä in Indonesia are located in Jababeka Industrial Estate, Cikarang and in Graha Surya Internusa Building, Central Jakarta.
• Wärtsilä in Indonesia has 180 professional employees serving customers in both the Power Plant and Marine sectors throughout Indonesia.
• The service workshop is located in Cikarang
• To date the total sold engines' power output is more than 2300 MW which are installed in the distributed power generation industry and maritime vessels in Indonesia.
1.10.2014 41
HISTORY OF WÄRTSILÄ IN INDONESIA
1.10.2014 42
Year History
1978 Stowindo Power established by initiative of Stork-Werkspoor Diesel
1996 Wärtsilä Diesel Indonesia established
1997 The first contract over 50MW PT. Wachyuni Mandira, 6x Wärtsilä 16V46 engines with total 87MW
1998 Certification of ISO 9001 by KEMA
1999 WNSID officially take over business and workforce of Stowindo Power and name become PT. Wärtsilä Indonesia
1999 The first goverment aided program for engine rehabilitation (EFI) started with 20 engines
2000 The first Total Maintenance Contract (TMC) signed for 95MW
2001 Certification of ISO 9001 and ISO 14000 by DNV
2002 The first Gas Engine sold to PT. PLN Tarakan located at Tarakan - East Kalimantan
2003 Supported PLN (State Owned Electrical Company) to arrange financing scheme from ORET Netherlands to
rehabilitate Power Plant at 4 Power Plants for 20 engines
2004 The first O&M Contract of more than 10 years for 6x Wärtsilä 8L46 and 10 old MAN engines signed with PT.
ANTAM Tbk.
2006 Certification of OHSAS 18001 and integrated with ISO 9001 and 14001 by DNV
2007 The first Gas Cube in the world sold in Indonesia. Engine type 2x Wärtsilä 16V34SG with total output 14 MW
located in Bontang - East Kalimantan
2009 Inauguration Propeller Repair facility in Cikarang Workshop
2009 Renewal ISO 9001 (up grade ver. 2008), ISO 14001 (ver. 2004) and OHSAS 18001 (ver. 2007)
WÄRTSILÄ TO SUPPLY 184 MW PEAKING GAS POWER
PLANT TO INDONESIA
• The Arun power plant with a 184 MW operating capacity will be the largest gas engine based peaking power plant in Indonesia. This order further strengthens Wärtsilä’s global position as one of the leading suppliers of large gas powered power plants of up to 500 MW.
• The order has been placed by PT Wijaya Karya (Persero) Tbk., a government owned company and one of Indonesia’s biggest construction contractors, who is building the plant on behalf of PT Perusahaan Listrik Negara (PLN), the state utility company. The power will be generated by a total of 19 Wärtsilä 34SG engines running on liquefied natural gas (LNG). The power plant will be built in Lhokseumawe in Aceh Special District in northern Sumatra. The electricity produced will be used to stabilise the grid. The power plant will also strengthen the Aceh Special District electricity system so as to ensure a reliable electricity supply to consumers during peak loads.
• “Wärtsilä has been selected as the preferred supplier by the customer, based on our proven capability to deliver high quality, extremely efficient, and flexible power plant solutions on a fast-track basis,” says Sushil Purohit, Regional Director South-East Asia & Australia, Wärtsilä Power Plants.
• The previous project in 2013 was received from Indonesia this year for a 155 MW gas engine based peaking plant owned by PT PLN. Wärtsilä will supply 16 Wärtsilä 34SG engines to the plant which will be located in Bangkanai in Central Kalimantan. It is scheduled to be fully operational by the end of 2014 and will produce electricity to the Kalimantan grid.
• Wärtsilä has a strong presence in Indonesia, with some 3 GW of installed power in operation. These, and all Wärtsilä installations, are supported by the company’s global service network. Wärtsilä has service agreements for over 350 MW of power generating capacity in Indonesia.
1.10.2014 43
WÄRTSILÄ IN INDONESIA 2014
• Wärtsilä receives order for major turnkey power plant project from Indonesia 17 January 2014
• The Pesanggaran Bali power plant with a 200 MW nominal output will be the largest engine based power plant in Indonesia.
• The new power plant will ensure greater reliability in the supply of electricity to both domestic and industrial consumers on the island of Bali.
• The order further strengthens Wärtsilä’s position and reputation as one of the leading global suppliers of large gas and multi-fuel power plants of up to 600 MW.
1.10.2014 44
KONE CORPORATION
• KONE’s business in Indonesia started in 1994, when KONE established a joint venture with a local elevator company. A year later KONE acquired 100% of the joint venture and is today one of the fastest growing elevator and escalator companies in Indonesia.
• Some key references in Indonesia include 38-storey, 5-star Mulia Hotel and 50-storey Wisma Mulia office building in Jakarta.
• KONE’s Indonesian operations, PT KONE Indo Elevator, is based in Jakarta with branch offices also in Surabaya, Bandung and Bali. KONE Indonesia is part of KONE’s South East Asia region where KONE is one of the leading elevator and
escalator companies.
1.10.2014 45
KONE Corporation, press release, April 14, 2014
• KONE, an innovative leader in elevators and escalators, has received an order for 131 elevators and escalators for District 8, a commercial and residential use development in Jakarta's business district in Indonesia. Containing a shopping mall as well as seven tower buildings reaching up to 250 meters in height and comprising offices and apartments, District 8 is expected to be completed by the end of 2016.
FDI LIBERALIZATION IN INDONESIA
(OECD 2011)
1.10.2014 46
FUTURE POTENTIAL - DEVELOPMENT
• No great changes to be expected in the amount of Finnish investments
• Future depends on the development in world economy
and what happens in Indonesia
• What happens with the investment climate/restrictions, corruption
• Starting of ASEAN economic union in 2015
• Good atrractiveness
big population :
and a lot of young workers
Thus good potential for several consumer goods manufacturers
• In BtoB fields good prospects in energy and contruction related sectors
1.10.2014 47
CULTURAL DISTANCE BETWEEN FINLAND AND
INDONESIA BASED ON GLOBE DIMENSIONS
• GLOBE PRACTICES DIMENSIONS
– Short distance
– Medium distance
– High distance
• GLOBE VALUES DIMENSIONS
– Short distance
– Medium distance
– High distance
1.10.2014 48