Boosting The Economy Through Direct Investments

General Army (Ret) Luhut Binsar Pandjaitan

Coordinating Minister for Maritime and Investment Affairs

February 2021

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
Covid19 Situation and Government Policies to Control It
 COVID-19 Affects More than 100 Million People in the World

Global
Case: Fatality:
102,817,575 2,227,420

CFR:
2.2%

Indonesia
Confirm Case: Fatality Cases:
1,099,687 30,581

CFR:
2.8%

Source: WHO, MoH

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 3
 Recovery of Global Economic Activities Depends on the Containment of
COVID-19

PMI Manufacturing PMI Service

70
70 60
60 50
50 40
30
40
20
30 10
20 -

Oct-18

Oct-19

Oct-20
Feb-19

Feb-20
Jun-18

Jun-20
Dec-18

Apr-19
Jun-19

Dec-19

Apr-20

Dec-20
Aug-18

Aug-19

Aug-20
China Germany India Indonesia UK US China Germany India UK US

PMI Manufacturing shows improvement, in various regions along with the relaxation of governments policy on COVID-19, for
large countries such as US, China, Germany, U.K., India, and Indonesia, to its pre-COVID level.
Also, PMI Service improved from the bottom for most, although for UK, India, and Germany, declined from their peaks.
The improvement is not stable yet as restriction is re-implemented after the second wave. Hence, the recovery depends on
the success of the containment. Source: IHS Markit

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 Main Strategies for Covid-19 Response are Focused for Most Affected
Provinces
Downstream Target : Increase in
Upstream Target : Reduction in Daily New Cases Recovery Rate and Reduction in
Mortality Rate
8 Provinces: DKI Jakarta, West Java, Central Java, East Java, South Kalimantan, South Sulawesi, North Sumatra, and Bali.
Additions: Riau and Aceh

Strategy #I: Behavior Change and Early Detection of Strategy #2: Makeshift Centralized Isolation Strategy #3: Standardizing Clinical
Covid-19 transmission Facilities Management of COVID-19

1. Encouraging people’s compliance to health
protocols through:
a. Massive and systematic campaign for
health protocols in the community
engaging various stakeholders.
b. Disciplinary operations (operasi
yustisia) to enforce people’s compliance
to health protocols.
2. Improving targeted testing and tracing.
1. Centralized isolation facilities are
provided for asymptomatic and mild
patients to reduce hospital occupancy and
prevent household transmission.
2. Every city that has a high number of
confirmed cases should provide
centralized isolation facilities, equipped
with adequate health support for
handling asymptomatic and mild patients.
1. Improving clinical management of
Covid-19 patients, through
standardizing treatment guideline,
written by the MoH, 5 professional
organizations, and BUMN hospital
team.
2. Ensuring each hospital handling Covid-
19 patients has adequate bed capacity,
medical supplies and equipment to
carry out the clinical guidelines.

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 5
 Provinces Contribution to National Confirmed Cases

National Contribution
As Per 2 Feb 2021 8 Provinces: 78.9%
5 Provinces: 6.6%
Other Provinces Positivity rate: 29,0%

5 Provinces (Riau, Aceh, Sumbar, Kaltim, Papua) 301,652

300,357
298,120 84.970 87.337
8 Provinces (DKI Jakarta, Jabar, Jatim, Jateng, Sulsel,
80.615
Sumut, Bali, Kalsel) 271,877 12,669
Case 256,718
DailyTested
Average 240,231
247,678 244,839 12,660
17,136
233,054 234,303 238,679 67.217
230,528 230,192 5,800
204,523 5,114 5,848
194,884 195,707 12,173
52.426
163,809 48.696 48.997 4,991
42.867 42.587 9,218
10,509 9,117
37.673
8,364 8,924 3,491
29.446 30.107 31.847 4,046 3,451 68,868
28.220 27.612 25.973
8,073
5,853 62,841 61,986
4,878 5,682 3,319
4,611 4,388 4,863 21.921 4,290 4,199 50,053
5,973 3,634 4,515 4,973
6,743 6,270 36,429 39,717
4,426 34,141
4,544 28,650 30,344
25,401
18,862 17,257 20,714 21,192
17,089 16,479 13,743

7 Okt - 14 Okt - 21 Okt - 28 Okt - 4 nov - 11 Nov - 18 Nov - 25 Nov - 2 Des - 8 9 Des - 16 Des - 23 Des - 30 Des - 6 Jan - 12 13 Jan - 20 Jan - Last 7
13 Okt 20 Okt 27 Okt 3 Nov 10 Nov 17 Nov 24 Nov 1 Des Des 15 Des 22 Des 29 Des 5 Jan Jan 19 Jan 26 Jan Days

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 Provinces Contribution to National Mortality Cases

National Contribution
8 Provinces: 76.5%
As Per 2 Feb 2021 5 Provinces: 2.0%
Other Provinces

5 Provinces (Riau, Aceh, Sumbar, Kaltim, Papua)

8 Provinces (DKI Jakarta, Jabar, Jatim, Jateng, Sulsel, 2.113

Sumut, Bali, Kalsel) 1.945
1.878
454
322
344
1.536 43
1.446 1.406 113
113
306
260 230
1.111 1.146
85 90 110
970 919 184
221
778 718 188 79
106
653 707 218 1,616
634 615 632 114 1,510 1,421
65 59 156 112
132 124 135 1,101 1,086 1,120
118 112
106 811 856
112 668
503 589
456 471 400 385 455 450

7 Okt - 14 Okt - 21 Okt - 28 Okt - 4 nov - 11 Nov - 18 Nov - 25 Nov - 2 Des - 8 9 Des - 16 Des - 23 Des - 30 Des - 6 Jan - 12 13 Jan - 20 Jan - Last 7
13 Okt 20 Okt 27 Okt 3 Nov 10 Nov 17 Nov 24 Nov 1 Des Des 15 Des 22 Des 29 Des 5 Jan Jan 19 Jan 26 Jan Days

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 7
 Total Vaccine Needs: 181.5 Millions. Medical and Public Service Workers
Will Be Main Priority
First Phase: JAN-APRIL 2021 Second Phase: APR 2021 - MAR 2022

1 2 3 4

Medical Workers Public Service Vulnerable Other

17.4 Mill
Vaccination for Medical Communities in area Cluster approach
Workers in 34 Provinces with high infectious rate depending on vaccines
availability
Elderly*

1.3 Mill 21.5 Mill 63.9 Mill 77.4 Mill

Notes:
1. In the first phase, vaccination is given for medical workers and subsequently for age group of 18-59 years.
2. Age group above 60 years will be vaccinated after study is done (e.g. data from clinical trial phase 3).
3. Vaccination can be done to controlled comorbid (criteria awaits from ITAGI/ expert recommendation)
4. Amounts and schedule can be revised for non-medical workers.

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 8
Economy Update, Omnibus Law and Sovereign Wealth Fund (SWF)
 COVID-19 Caused Economic Contraction Globally

Economic Growth (%YoY)

10 7777
6666 65
4.9 5555 44
5 3.2 3.0 3.1 3.7
2.6 23
3 32.2 3.3 2222
1011 2121
0.4 0.6
0
-0.6 -0.3
-5 -2.5 -2.8
-3.5
-5.3
-6.8 -7.0
-10 -9.0

-15 -13.3 -14.0

-20
-25 1Q2019 2Q2019 3Q2019 4Q2019
-23.9
1Q2020 2Q2020 3Q2020
-30
China Indonesia India Vietnam Taiwan Singapore EU US
COORDINATING MINISTRY FOR MARITIME AND
INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 5 Main Sectors Continue to Slow Down in 3Q, But at A Lower Pace vs 2Q
Growth YoY (%)
Kontribus 2018 2019 2020
Sektor
i (%) FY 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q
• 5 main contributing sectors
GDP 100.0 5.2 5.1 5.1 5.0 5.0 5.0 3.0 -5.3 -3.5 are slowing down, with lower
Manufacturing Industry 19.9 4.3 3.9 3.5 4.1 3.7 3.8 2.1 -6.2 -4.3 contraction in manufacturing
Wholesales and Retail Trade, Repair and trading industries, and
13.0 5.0 5.2 4.6 4.4 4.2 4.6 1.6 -7.6 -5.0
of Motor Vehicles
higher contraction for mining
Agriculture, Forestry and Fisheries 12.8 3.9 1.8 5.3 3.1 4.3 3.6 0.0 2.2 2.1
Construction 10.5 6.1 5.9 5.7 5.6 5.8 5.8 2.9 -5.4 -4.5
Mining & Quarrying 8.1 2.2 2.3 -0.7 2.3 0.9 1.2 0.4 -2.7 -4.3 • Contraction of sectors closely
Transportation & Storage 5.4 7.1 5.5 5.9 6.7 7.6 6.4 1.3 -30.8 -16.7 related to PSBB, hotels and
Financial & Insurance Activity 4.2 4.2 7.2 4.5 6.1 8.5 6.6 10.6 1.1 -0.9 restaurants decreased from -
Information & Communication 3.8 7.0 9.1 9.6 9.2 9.7 9.4 9.8 10.8 10.6 22% yoy to -12.9% yoy
Public Administration, Defense &
3.7 7.0 6.4 8.9 1.9 2.1 4.7 3.2 -3.2 1.9
Compulsory Social Security • Information and
Education Services 3.2 5.4 5.6 6.3 7.8 5.5 6.3 5.9 1.2 2.4 communication industry
Accommodation & Food Beverages
2.8 5.7 5.9 5.5 5.4 6.4 5.8 1.9 -22.0 -11.9 (related to WFH trend) is still
Activity
Real Estate 2.7 3.5 5.4 5.7 6.0 5.9 5.7 3.8 2.3 2.0 going strong compared to
Other Services 1.8 9.0 10.0 10.7 10.7 10.8 10.6 7.1 -12.6 -5.5 2019, but slowed slightly from
Business Services 1.8 8.6 10.4 9.9 10.2 10.5 10.3 5.4 -12.1 -7.6 10.8% yoy in 2Q2020 to 10.6%
Electricity & Gas Supply 1.2 5.5 4.1 2.2 3.7 6.0 4.0 3.9 -5.5 -2.4
Human Health & Social Work
yoy in 3Q2020
1.1 7.1 8.6 9.1 9.2 7.8 8.7 10.4 3.7 15.3
Activity
Water Supply, Sewerage, Waste 0.1 5.6 8.9 8.3 4.9 5.4 6.8 4.6 4.6 6.0 Source: BPS, calculated
COORDINATING MINISTRY FOR MARITIME AND
INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 11
 Leading Indicators Show Signals of Improvement

Cement Sales (Mn Ton) 4-Wheeler Sales (Unit)

8,000 Dec-20, 150,000 Avg 2019: 85,582 • In general, leading
Avg 2019: 5,814
5,738 100,000 Avg 2020: 44,336 Dec-20, signals show
6,000 improvement in the
57,129
end of year. This is
4,000 50,000
despite lower 2020
2,000 0 overall average.

Apr-20
Apr-19

Jul-20
Oct-20
Jul-19
Oct-19
Jan-20
Jan-19
• PMI continues to
rebound well into
2021, with a number
Manufacturing PMI (s.a.) Consumer Confidence Index
higher than 2019
55 Avg 2019: 50 Jan-21, 140 Avg 2019: 125 average.
Avg 2020: 45 52.2 120
45 Dec-20,
100 • However, caution still
35 80 96.5
needed as cement
25 60 sales show decline
from peak in October.
Apr-20
Apr-19

Jul-20

Oct-20
Jul-19

Oct-19

Jan-21
Jan-20
Jan-19

Jul-19
Jan-19

May-19

Jul-20
Mar-19

Jan-20

May-20
Sep-19
Nov-19

Mar-20

Sep-20
Nov-20
Source: CEIC

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 Government Has Prepared Fiscal Stimulus IDR 695.2 Trillion to
Stimulate the Economy
TOTAL Rp695,20 T
Health Social Protection Business Incentive
Rp87,55 T Rp203,90 T Rp120,61 T
1. Covid-19 Handling Expenses Rp65,80 T; 1. Cash incentive for poor family Rp37,40 T; 1. PPh 21 incentive Rp39,66 T;
2. Healthcare Incentive Rp5,90 T; 2. Basic food needsRP43,60 T; 2. PPH 22 Import incentive Rp14,75 T;
3. Death Incentive RP 0,30 T; 3. Social package for Jabodetabek Rp 6,80 T 3. Reduction of PPH 25 Rp14,40 T;
4. Incentive JKN fee Rp3,00 T; 4. Social package for Non Jabodetabek Rp32,40 T; 4. Early Tax Return Rp5,8 T;
5. Specialized team for Covid-19 Rp3,50 T; 5. Pra Kerja package Rp20,0 T; 5. Reduce corporate income tax Rp20,00 T;
6. Tax incentive to healthcare industry Rp9,05 T 6. Electricity discount Rp6,90T; 6. Other Stimulus a Rp26,00 T
7. Logistic/ food/ and basic food need Rp25,00 T
8. Cash incentive for rural area Rp31,80T;

SMEs Corporation Financing Sectoral and Regional Govt.

Rp123,46 T Rp53,57 T Rp106,11 T
1. Subsidy on interest Rp35,28T; 1. Funds for labor intensive Rp3,42 T; 1. Labor intensive program Rp18,44 T;
2. Loan structuring incentive Rp78,78 T; 2. Labor intensive expense allocation Rp5,00 T 2. Housing incentive Rp1,30 T;
3. Returns on Guarantee Services incentive Rp5,00 T; 3. Guarantee for Working Capital(Stop Loss) 3. Tourism Rp3,8 T;
4. Guarantee for Working Capital (Stop Loss) Rp1,00 T; Rp1,00 T; 4. Economic Recovery Rp5,00T;
5. Final income tax for SMEs Rp2,40 T; 4. State Equity Participation Rp14.5, T; 5. Saving for physical allocation fund Rp8,70 T;
6. Investment Financing for Cooperatives through LPDB 5. Debt allocation for business Rp29,65 T 6. Regional Loan facility Rp10,00 T
KUKM Rp1,00 T 7. Reserve Rp 58.87 T

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 Accelerated Disbursement in 4Q 2020*, Reached 83.9% of Total PEN
*Temporary figures

Cumulative +147.5Tn 583.8

Realization
PEN +72.7Tn
436.3
+45.2 Tn
363.7
+106.9 Tn 318.5
+63.9 Tn 211.6
147.7

July August September October November December

% Budget
21.2% 30.4% 45.8% 52.3% 62.8% 84%%
Realization

Source: Kemenkeu

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 14
 The Need for Transformation

…While having low productivity of capital shown by high

Indonesia shows signs of early deindustrialization…
ICOR compared to Malaysia, Philippines, and Vietnam
Incremental Capital Output Ratio (ICOR)
12
10.2
10

8
6.7
6
4.9
4.3
3.8
4

0
Indonesia Malaysia Philippines Thailand Vietnam
2015 2016 2017 2018 2019

Source: Bappenas, IMF calculated

COORDINATING MINISTRY FOR MARITIME AND
INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 Higher EoDB Score But Still Room for Improvement

Even though Indonesia’s EoDB rank and score are getting higher, the number of business procedures is still stagnant, and
is still higher compared to other ASEAN countries such as Malaysia, Vietnam, Thailand, and Singapore.

EoDB Indonesia Components Trend ASEAN EoDB Components 2020

Starting a Construction Getting Starting a Construction Getting
Business Permit Electricity Property Paying Tax Business Permit Electricity Property Paying Tax
Procedure Procedure (Days) Permit (Days) (#Payments) Procedure Procedure (Days) Permit (Days) (#Payments)
0 0
10 2
5 4.5 5
12131312121111 10 6
20 17171717181818 8 8 9 10 9 9 9
11
30 26
13 14 13
2828282828
3131 20 18
16.5
40 343432 21
22
42424242 24
50 30 26 26
5353 31 30 31
60 58
32
35
70 40 37

80
8179 50
90 87
53.5
100 60
2014 2015 2016 2017 2018 2019 2020 Philippines Indonesia Malaysia Vietnam Thailand Singapore
COORDINATING MINISTRY FOR MARITIME AND
INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 Importance in Regulating Business Licensing

Why regulate business licensing? Challenges

Too many permits (521 permit from 25 institutions) and following

1. Hands-on with people and
business
2. Licensing corruption puts
hurdle on business and
investment, economic
growth, and employment
1
regulation
2 Overlapping permit in local and national government
Strong cartel and monopoly practices in strategic business sectors
3
such as mining and agriculture.

3. Business corruption
increase cost on staples, Corruption prevention culture has not been developed in private sector
putting the burden into the 4
most vulnerable

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
 Omnibus Law Set to Improve Investment Climate

Simplification of doing Business 52 Laws (770 Articles)

1 Consist of ESG, building and location permit, IMB & SLF, etc

2 Investment Requirement 13 Laws (24 Articles)

Limited business (Kegiatan Usaha Tertutup); Priority List
Manpower
3 3 Laws (55 Articles)
Labor, severance pay, foreign workers, outsource, expatriates, etc

4 Ease, Protection and Empowerment of Micro, SMEs 3 Laws (6 Articles)

Collaboration, processing partnership, incentive, etc
Ease of doing business
5 9 Laws (23 Articles)
Immigration, patent, village-owned enterprises, monopoly, etc
Supports for Research and Innovation
6 2 Laws (2 Articles)
Development of Export, special assignment for SOEs/Private companies

7 Government Administration to Support Job Creation 2 Laws (14 Articles)

Discretion, NSPK (standard), system and electronic docs
Omnibus Law would
amend 79 Laws Sanctions 49 Laws (295 Articles)
8
1,244 Articles Administrative sanctions, warning, suspension

9 Land Procurement 2 Laws (11 Articles)

Land procurement, Forestry

10 Central Government Investment and Ease for National Strategic Project 2 Laws (3 Articles)
Establishment of Indonesia SWF, permit simplification
11 Economic Zone 5 Laws (38 Articles)
SEZ: one stop service, Industrial Area, Special facility for SEZ

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 18
 Simplification of Licensing through Risk-Based Method

Risk-based licensing
(Articles 9, 10, 11 of Omnibus Law)

1 Low-risk Registration of business

registration number (NIB)
2 Medium Risk

Standard certification required The standard certification includes a declaration by the business that it has
- Low-Medium Risk
in addition to NIB fulfilled the required standards, which includes environmental standards

- Medium-High Risk Standard certification whereby the declaration of fulfilling required standards by the business is
verified by a due diligence process conducted by the government.

Government licence is required Amdal is a prerequisite for the issuance of this licence, which is required
3 High-Risk
in addition to the NIB for business operations to begin.

With risk-based licensing, business licensing in low to low-medium industries would be freer from regulatory hindrance

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 19
 Environmental Approvals will Still Be Needed Especially for
High-Risk Businesses

Business Permit Process

UU 32/2002 (36-40) OMNIBUS LAW (13,21,22)

Environmental permits Environmental approvals*

*Risk-based licencing

Environmental assessment report Business permit By integrating the environmental approval into
(AMDAL or UKL-UPL business permit, the Omnibus Law stipulates
the revocation of the business permit and
halting of operations in the event of a breach
Environmental approval of environmental commitment/regulation such
as :
- Providing incorrect data AMDAL /UKL-UPL
Environmental permit - Failure to commit to the requirements stated
in AMDAL/UKL-UPL

Business permit

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 20
 Various Facilities for MSME in Omnibus Law

1. Single Licensing for SME via registration

2. Granting incentives and facilities for Medium and Large Enterprises partnering with SME
3. Integrated management of SME through synergy with stakeholders
4. Fiscal and Financing incentives for the development and empowerment of MSMEs
5. Government prioritizing the use of DAK to fund activities for the development and empowerment of MSMEs
6. Providing legal assistance and protection services for SME
7. Prioritizing products/services in the procurement of Government goods and services
8. SME Partnership: rest and service areas (rest area), stations, and Terminal (transport, port and airport), etc,
to promote and sell SME products through partnership patterns
9. Convenience for Cooperatives:
a) Primary Cooperatives are formed of at least 9 members
b) Permitted Representation in the Yearly Members Agreement (RAT);
c) Written or Electronic; and
d) Cooperatives ability to conduct business based on Sharia Principles

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 21
 Establishment of Indonesia Investment Authority (INA)
• Established by Indonesian law as a sui generis Indonesian legal entity
• Mandate:
• Asset optimization (e.g., shares in SOEs, fixed assets, operating assets) through corporate actions
• Attract investments by co-investing with both overseas and local partners
Theme & • Play active role in improving Indonesian investment climate
Mandate
• Management of the entity majority are professionals
• Management of the Institution’s asset is fully conducted by the management of the Institution based on the principle of good
international practice, and accountable governance.
Governance • Audit of the management and financial accountability by publicaccounting firm

• Asset management activity (transfer asset, dissolution of asset)

• Cooperation with the third party by establishing fund and sub fund
Investment • Independency of asset management (investment decision)
Activities
• Public and private equity, project financing, debt instruments
• Key sectors of Indonesian economy (selection of priority socio-economicinvestments)
• Investment horizon: medium-to-long term
• Geography: domestic in its inception with the possibility to go overseas
Investment Universe And
• Obtain board-level positions to oversee operations and significant value-add for the economy
Strategies
COORDINATING MINISTRY FOR MARITIME AND
INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 22
 Indonesia Investment Authority (INA): Investment Structure

As of initial establishment, the fund aims to get

initial capital USD 5 Bn
Initial focus for first thematic
fund
Government of Indonesia

Fund Mgt
Indonesia Sovereign Wealth Fund Agreement Anchor Investor(s) – international and
(Indonesia Investment Authority/IIA) domestic funds

Overseas and Domestic Master Fund

Investors Manager

Direct investment to
thematic funds, portfolio
companies, and/or Master Fund
LP Agreement LP Agreement
asset/project level

Infrastructure Energy & Resources Healthcare Tourism Technology New Capital City

 Toll roads  Oil & Gas reserves  Hospitals  Tourism SEZ  Digital lending  Contractor
 Airports  Pharmaceutical  Hotel chains  Payments  Utilities
 Seaports  Commerce  Land & building

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 23
Development of Downstream Industry
 Investment Focusing in Key Areas to Generate Big Bang for the Buck

Healthcare Sector
Increasing autonomy in the healthcare sector, to prevent shortage of medicine and other medical essential
supply

Downstream of Natural Resource

To improve Indonesia economic complexity and reduce dependency on volatile natural resource prices

EV Battery Development
Development using nickel and cobalt, two of main EV battery cathode components

Infrastructure
Developing maritime connectivity

Green Economy
New and renewable energy, EV, REDD+ projects, etc

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 25
 Wealth in Natural Resources Has Made Indonesia Dependent on Volatile
Commodity Prices for Years
Top Export in 1990 Indonesia Total Export & Energy Price Index
20 200
#1 Mineral fuel: USD 11,2 Bn 18 180
16 160
#2 Woods: USD 3,3 Bn
14 140
12 120
#3 Apparel: USD 1 Bn
10 100
8 80
6 60
Top Export in 2019
4 40
#1 Mineral fuel: USD 34,7 Bn 2 20
0 0

Oct-09
Feb-05
Sep-05

Jun-07

Aug-08

Aug-15

Oct-16
Dec-03

Feb-12
Sep-12

Jun-14
Dec-10

Feb-19
Sep-19
Jul-04

Apr-06

Mar-09

May-10

Dec-17
Nov-06

Jan-08

Jul-11

Apr-13

Mar-16

May-17
Nov-13

Jan-15

Jul-18

Apr-20
Nov-20
#2 CPO: USD 17,5 Bn

#3 Machinery: USD 8,3 Bn Export (USD Bn-LHS) Energy Price Index (RHS)

Source: BPS, World Bank

COORDINATING MINISTRY FOR MARITIME AND
INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 26
 Downstream Program in East Indonesia Improves Interregional Equality

TOTAL IUP OP

323IUP & 2KK 53 SMELTERS NPI

28
CONSTRUCTION
25
EXISTING
Ferro Nickel
Nickel Matte
52 IUP
North Maluku
NiOH

Central Sulawesi Bonded Zone (KI)

81 IUP
MOROWALI

KONAWE

Century
Metalindo 155 IUP/2 KK
Production in 2019 Gebe Industry
Nickel BANTAENG
Southeast
1. Ni Matte : 75 th Ton Sulawesi
2. FeNi : 968,871 Ton
3. NPI : 5.4 mn Ton
4. NiOH : 21,601 Ton
5. FeCr : 600 th Ton TOTAL EXISTING CAPACITY
PRODUCTION OF SMELTERS
6. CR Steel : 700 th Ton 12,765,872 TON
7. Slab Steel : 2.3 mn Ton Beginning Prod. Continued Prod.
COORDINATING MINISTRY FOR MARITIME AND
8. HR Steel : 2.7 mn Ton 7,065,872 TON
INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 5,700,000 TON 27
Source: MEMR
27
 Nickel-Focused Downstream Policy Has Born Fruit; Jump in Iron and
Steel Export
Export Ranking Indonesia Top Ekspor Indonesia 11M2020 (USD Bn)

11M 2018 11M 2019 2019 11M2020

Mineral Fuel and Oil 22.83

Mineral Fuel and Oil Mineral Fuel and Oil Mineral Fuel and Oil Mineral Fuel and Oil
Animal or Vegetable Oils 18.10
Animal or Vegetable Oils Animal or Vegetable Oils Animal or Vegetable Oils Animal or Vegetable Oils
Iron and Steel 9.64
Electrical Machinery and Electrical Machinery and Electrical Machinery and
Iron and Steel
Equipments Equipments Equipments Electrical Machinery and
8.26
Vehicles Other Than Vehicles Other Than Vehicles Other Than Electrical Machinery and Equipments
Railway Railway Railway Equipments
Pearls, Precious Stones 7.88
Rubber and Articles Iron and Steel Iron and Steel Pearls, Precious Stones
Vehicles Other Than Railway 5.86
Nuclear Reactors, Vehicles Other Than
Pearls, Precious Stones Pearls, Precious Stones
Boilers, Machinery Railway
Rubber and Articles 5.07
Iron and Steel Rubber and Articles Rubber and Articles Rubber and Articles
Nuclear Reactors, Boilers,
Nuclear Reactors, Nuclear Reactors, Nuclear Reactors, Machinery
4.67
Pearls, Precious Stones
Boilers, Machinery Boilers, Machinery Boilers, Machinery
Miscellaneous Chemical Miscellaneous Chemical Miscellaneous Chemical Miscellaneous Chemical Products 3.38
Ores, Slag, and Ash
Products Products Products
Miscellaneous Chemical Ores, Slag, and Ash 2.66
Ores, Slag, and Ash Ores, Slag, and Ash Ores, Slag, and Ash
Products

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 28
 Iron and Steel Export Surpassed Vehicle Export in 11M2020

With the current trajectory, iron and steel export in 2020 could reach around USD 10 Bn.

Indonesia Export to the World (USD Billion)

12
USD Bn

10 9.64
8
8 8 7
7
6 6 6
6 5 5

4 3
2
2 1 1

0
2014 2015 2016 2017 2018 2019 11M2020
Iron and Steel Vehicle (2-,4-wheeler and parts)

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 29
 After Focusing on Nickel Processing to Stainless Steel, Indonesia Has
Opportunities to Process Nickel to Lithium Battery Component

Nickel Alloy
Concentrate
Nickel
Sulphide Chemicals
Metal
Ores
Matte
Battery
Nickel
ore
FeNi
Stainless
Saprolite
Steel
Nickel Pig
Iron
Laterite
Ores

Nickel Battery
Limonite MHP / MSP
cathode

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 30
 Nickel Downstream For Electric Vehicle Industry

Tin Solder Carbon Steel and

Alloy Materials

Automotive
Iron Ore parts
Stainless Steel

Nickel Cathode

Lithium-ion battery cathode Electric Vehicle

Aluminium Sheet

Lithium-ion Battery

Current Collector
Copper Cathode

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 31
 Indonesia Has Enough Reserves to Become A Key Player in EV Battery
Industry

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 32
 EV Battery Increasingly Need Nickel

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 33
 Prospect Partner for Electric Battery Ecosystem

Proposal Full end to end – sejalan dengan Full end to end – sejalan dengan
Pemerintah Pemerintah
In accordance with government, further discussion In accordance with government, further discussion
Scale and Timeline
on charging station, recycling, and offtaker on charging station, recycling, and offtaker
guarantee guarantee

Investment Solid financial condition, need clarification on cell to Need in depth review
pack, recycling, charging station, and ESS

Need incentive, ongoing discussion with related Incentives needed already in the regulation
Incentives
ministries

Risk Identification Identified risks, need further review on the charging Identified risks, need further review on the charging
station and ESS station and ESS

Illustration: end to end ESS, Charging

MHP Ni, Co Precursor/ Cell, Modules
ecosystem Nickel Ore Stations & Recycling
Sulphate Cathode & Packs
PQS

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA
Sumber: Kementerian BUMN 34
 Summary

1. There is global economy slowdown by the end of 2019, due to US-China trade war. Although, at the
beginning in 2020 there was less tension, COVID-19 caused governments to put restrictive policy to contain the
infection. Hence, 2020 economy contracted globally.
2. Indonesian economy was also contracted, although better than other large countries, and in the recovery phase
(-3,5%yoy on 3Q vs -5,3%yoy on 2Q). This improvement is due to domestic activity and government
stimulus. This stimulus is financed with prudent fiscal governance before COVID-19 and burden sharing with
the Central Bank.
3. Externally, Indonesian economy is maintained by less dependency on the commodity and improving
investors confidence.
4. Outlook for Indonesian economy 2021 generally shows improvement compared to 2020, which is
dependent on:
1. Good containment of COVID-19 (including mass and effective vaccination) hence mobility can
be back to pre-COVID level
2. Availability of fiscal stimulus if condition has not recovered
3. Implementation of Job Creation Law that will improve investment
4. Accommodative policy on downstream industry development

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA 35
 Thank You

COORDINATING MINISTRY FOR MARITIME AND

INVESTMENT AFFAIRS REPUBLIC OF INDONESIA