Prepared by: Sri Kumala CHANDRA - EU Outreach Manager

Bratislava, 24th April 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

… 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

13

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

Sou

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Min

istr

y o

f In

du

stry

, Fac

ts &

Fig

ure

20

17

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

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

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

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.

FOOD & BEVERAGEIndonesia’s growing middle class and high-income group have represented an increasingly discerning and

demanding consumer base, eager to try new and innovative food and beverages products

The F&B sector’s output has contributed 7% of total GDP, as well as 32.84% of the total industrial

manufacturing output .

The solid growth of F&B sector is supported by Indonesia's improving purchasing power amid the

accelerating economy and higher commodity prices, and growing output of the nation's processed

food and beverage industry.

The turnover of the F&B industry has been growing 8.46% in 2016.

Indonesia is one of the largest producers of, for palm oil, fish, cocoa and coffee, exporting its productionsurpluses abroad. On the other hand, Indonesia relies on imports of products that cannot be produced(either at all or in sufficient quantity) locally, such as wheat, dairy or processed food products.

Tourism industry has raised 124% growth in Foreign Direct Investment from 2013-

2016. It contributed 4.23% of total Indonesian investment in 2015 and it is Projected

to rise by 8% in 2019.It has became one of the trigger for the development of HORECA Business

Sou

rce:

The

Mar

kete

ers

. PT.

Mar

kPlu

sIn

do

nes

ia

The mass grocery retail value sales’ grow at more than

10% per year (outlet shift to modern markets).

In 2013, Indonesia has around 590 shopping malls.

While Jakarta contribute 173 shopping malls

And the number increased 3.9%per year.

145000

58740

51425

24060

34060

0

20000

40000

60000

80000

100000

120000

140000

160000

Prepared Food and Beverages Cereals Cigarettes Eggs and Milk Fish/Shrimp/Common Squid

Top 5 of Monthly Food Expenditure per Capita (in IDR)

The monthly expenditure per capita in F&B averaged to

approximately 51%.

The Food & Beverage sector is estimated to encompass over 6,000 companies, of which approximately 90% are classified as large or medium sized. The players are dominated by the

presence of large local companies, but also important international and foreign companies

5248

5463

5662

5852

328

335

345

348

0 1000 2000 3000 4000 5000 6000 7000

2010

2011

2012

2013

Number of Large and Medium companies in F&B Manufacturing

Beverage Food

Among the leading packaged food players in Indonesia, Indofood, Nestle Indonesia, Heinz ABC Indonesia and Unilever Indonesia has the strongest market share. In beverage, Danone

Aqua held on firmly to its leadership within soft drinks with 47.5% of market share

Packaged Food Breakdown Non-Alcoholic Beverage Breakdown

Source: Roy Morgan Research, 2012Source: USDA, Economic Research Service Calculations using EuroMonitor Data, 2012

Highest business potentials: halal products, branded and specialty food & beverages products, food processing machinery, supply of food ingredients and packaging.

Top commodities sourced from the EU are dairy products, prepared food, vegetable oilsand chocolate and cocoa products. For some commodities, trade with the EU accounts formore than 20% of total imports (e.g. wine and beer, dairy products, vegetable oils)

HEALTHCARE• The National Health Insurance program (launched in January 2014) will generate demand in a

new population group, by providing access amongst those that never could have afforded itbefore, driving an increasing demand for clinics, hospitals and clinicians.

• Indonesians spending on healthcare is expected to grow close to 14%

• Indonesia has the faster growth rate in Asia private hospital sector, the number of privatehospitals has grown by 59.92% in the periods of January 2012 though April 2015. in the otherside, the number of public hospitals has increased by 14.78%.

• Hospital beds, medical devices, diagnostic tests, IT systems and skilled manpower demand willsteeply raise.

• Opportunities: Medical & Surgical devices (dental equipment, medical equipment, laboratoryequipment); Health IT; Health infrastructure; Food and health supplements; Householdhealthcare devices; Islamic medicines.

Medical Devices

In 2013, It is estimated that 97.2% of medical apparatus in Indonesia is imported

Less than 3% Local Producers: furniture, tensimeter, wheelchair, dental chair, hospital billing system, etc

Further, Diagnostic imaging hardware and orthopedic implants are the quickest developing items in the market

The medical device market is estimated to grow from US$ 2.2 billion in 2016 to US$ 3.5 billion in 2019, at a Growth Rate (CAGR) of 23.87%.

Hospitals & Puskesmas

• The private sector represents almost 40% of total hospitals in Indonesia and continued growth

• The growth rate of hospitals is 12.95%.

• 9.599 Puskesmas across Indonesia, only 18.6% have obsetric neonatal facilities

• Currently there are 1061 hospitals working wiith BPJS Kesehatan

Category Owner General Hospital Specialized Hospital Total

Public Government 824 86 910

Private

Private non Profit 541 162 703

Private 624 301 925

State-owned enterprise 56 7 63

TOTAL 2.045 556 2.601

Name of the HospitalNumber of

Competing HospitalsEstimated Number

of Beds

Siloam Hospital Group (SILO) 14 3,000

Mitra Keluarga Group 10 1,200

Awal Bros Group 7 1,000

Sari Asih Group 6 900

Ramsay Sime Darby Health Care 3 650

41 6,750

TOP 5 Private Hospital Groups

Regional competitors from Singapore and Penang: - Mount Elizabeth Hospital- Gleneagles Hospital- Penang Adventist Hospital

SILOAM HospitalInvestment Plan 2,5 Md USD

14 existing hospital20 new projects

Objectives to have 50 hospitals by 2016 and has an advance HIS

Mitra Keluarga Group

Investment Plan 2,5 Milliards USD , where 1/3 of their budget is for medical equipment by 2020.

Ciputra Hospital

3 hospital under construction

10 hospitals by 2018

E-Health The Minister of Health Regulation No. 1171/2011 on Hospital Information Systems,37 requires all hospitals toimplement a Hospital Information System (HIS) or Enterprise Resource Planning (ERP) system. However, many pubichospitals and even some private-owned hospitals have until now used solely traditional systems for administrationprocesses and management

Other technology strains that are likely to gain momentum in the short-term are Mobile Health and Telehealth.

Waiting Lists and Booking Systems

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.

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

More information ?

www.eibn.org

info@eibn.orgkumala@eibn.org

Thank you for your attention!