“ASEAN: lo sviluppo dei mercati mondiali passa per il sud-est asiatico” Confindustria Vicenza, 19th December 2012
«Indonesia: the Archipelago Economy» Mr. Luca Vianelli, Partner and Managing Director MDA CONSULTING S.E.A. – BANGKOK
“Strategy is important but execution is everything” 1
AGENDA
1. Facts of Indonesia 2. Strategic Sectors Focus 3. Trade Statistic with Italy
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Facts of Indonesia
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Indonesia at a Glance •
Country name: Republic of Indonesia
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Capital city:
Jakarta
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Total Area:
1,904,569 km2 - World ranking 16
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President:
Susilo Bambang Yudhoyono (since October 2004)
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Population:
240,271,522 (July 2009 est.) – World ranking: 4
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Language:
Bahasa Indonesia, English, Dutch and local dialects
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Currency:
IDR (Indonesian Rupiah)
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Religion:
Islam (majority), Christian, Catholic, Buddha, Hindu –
- 24 Million inhabitants (2010)
Indonesia is the largest Muslim country in the world 4
Indonesia and ASEAN
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Sound Economic Fundamentals • GDP size of over US$ 800 billion in 2011, Indonesia is the largest economy in Southeast Asia; • Indonesia’s economy grew by 4.5% in 2009, 6.1% in 2010, 6.2% in 2011, and 6.3 in 2012 (average from 2000-2010 is 5,2%); • GDP Standard deviation annualized (2000-2010): 0,86% • Inflation rate (2011): 8,4 • Share of debt to GDP: 25% • Private consumption accounts for 70% of GDP; • Nominal per-capita GDP is expected to quadruple by 2020; 6 Source: McKinsey Global Institute
2012 Actual Figures
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Indonesia is 16th largest economy in the world;
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45 million members of the consuming class;
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53% of the population in cities producing 74% of the GDP;
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55 millions skilled workers in the Indonesian economy;
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USD
0,5
trillion
market
opportunity
in
consumer
services,
agriculture and fisheries, resources and education;
7 Source: McKinsey Global Institute
2030 Projected Figures
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7th largest economy in the world (10th in 2020);
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135 million members of the consuming class;
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71% of the population in cities producing 86% of the GDP;
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113 millions skilled workers needed;
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USD 1,8 trillion market opportunity in consumer services, agriculture and fisheries, resources and education;
8 Source: McKinsey Global Institute
Dynamic Demographic Base •
Over 50% of the population (240 million people) is under 29 years old and lives in the urban area;
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Education spending accounts for 16% of total government expenditures, higher than any other sector, and university graduates are trained in technical fields such as finance and economics (28%) or engineering and sciences (27.5%);
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Labor cost is relatively low compared to neighboring countries;
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Emerging Urbanization •
Jakarta
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Gretear Jakarta: Bogor, Bekasi and Tangerang;
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Medan, Bandung, Surabaya;
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Pakanbaru, Pontianak, Karawang, Makassar, Balikpapan
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Emerging Digital & Tech Driven Nation
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220 Millions of mobile subscribers;
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Internet annual growth rate is 20% in average: 2016 shall reach 100 million people;
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Abundant Natural Resources
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Renewable Energies •
Indonesia is rich in non-renewable energy (coal), renewable energy (geothermal and hydro power), and agricultural products (palm oil, cocoa and rubber).
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Natural resource-based export has expanded to 52.7% of total share in 2010 from 50.3% in 2009.
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Development potential is far from saturated, particularly in renewable energy. 13
Major Challenges
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Productivity
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Inequalities as uneven distribution of growth
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Infrastructure ‘s system as bottle neck
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Skilled labor availability
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Corruption
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Red tape
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Strategic Sectors Focus 1.
Agriculture
2.
Energy
3.
Renewable Energies
4.
Infrastructures 15
Agriculture
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Agriculture: Sector Snapshot • • • •
Contribution to GDP: Contribution to Exports: Number Employed: Main Products:
15.3% (2010) 3.17% 41 million (2010) Palm Oil, Rubber, Cocoa, Cassava, Coffee, Tea, Tobacco, Rice.
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Main Export Markets:
China, USA, Japan, Singapore, Korea, EU.
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Changes to the Negative Investment List for 2010 have opened up parts of the agricultural sector that were previously closed to foreign investment.
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For example, investors can now own up to 49% in staple crop plantations over 25 hectares such as soybeans, sweet potato, rice and cassava; 17
Agriculture: World Palm Oil Production (2009)
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Agriculture - Palm Oil Plantation Plan
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Agriculture – Palm Oil
Source: Oil Palm Business Association
Demand for exports is being driven by China and India’s rapid growth for use as edible oils in foodstuffs and for bio-fuel production. The 2007’s EU directive that makes mandatory to use at least 10% of biofuel in transportation by 2020 is also contributing to the growing demand. 20
Agriculture – Rubber •
Indonesia is the world’s 2nd largest natural rubber exporter after Thailand, while having the largest area of rubber plantations.
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Demand is predicted to reach 16.2 million MET by 2020 up from 11.2 million MET for 2011 (International Rubber Study Group).
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Consumption of national production is currently only at 15%.
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Investors may own up to 95% of a 25 hectare or more plot of land for cultivation and integrated downstream facility; this includes sheet rubber, thick latex and the crumb rubber industry. (as per the Negative Investment List 2010)
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Agriculture – Cocoa •
Indonesia is the world’s 3rd largest cocoa exporter for 18% of global market share with 470,000 MET produced in 2010.
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Demand is arising out of increased confectionary and chocolate consumption from markets such as China and India as well as the European Union.
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Indonesia’s cocoa production is concentrated in Sulawesi where 63% of the country’s raw cocoa is produced.
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The value added chain in cocoa is a priority area for the government with the target of $6.25 billion USD in export value by 2025.
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The target of 1 million MET annual output over the period 2013-2014 requires investments and meet 22
Energy
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Energy – Sector Snapshot Contribution to GDP: 11% (2010) Imports: $2.36 billion (2010) Proven Oil Reserves: 4.2 billion barrels (end 2010) Proven Gas Reserves: 108.4 trillion cubic feet Proven Coal Reserves: 5529 million MET Proven potential in Geothermal Energy: 27 GW Proven potential in Hydropower: 75 GW Other Energy Sources: Coal Bed Methane, Biomass, Solar, Sea Current Energy Current Energy Mix: Oil 47.6%, Coal 26.3%, Gas 21.4%, Hydro 3.2%, Geothermal 1.5% (2010) Relevant Law : Energy Law No.30/2007 Setting the National Energy Policy on course to secure energy security and pursue greater reliance on renewable energy by providing incentives for its development. 24
Energy Mix: 2010 vs. 2025
Source: PLN
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Energy - Coal’s volumes prodictions
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Energy - Countries Ranked for Coal (2009)
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Renewable Energy
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Energy – Coal Bed Methane (2010) •
Indonesia is the 2nd largest producer of coal bed methane (CBM) after China with reserves of 453 trillion cubic feet;
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Indonesia has the largest proven global reserves of CBM with the main sources being located in Kalimantan, South Sumatra and Riau.
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Production targets are set at 500 tcf (2015) and to 900 tcf (2020);
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The first CBM fed power plant located in East Kalimantan will come on stream in 2011 (operated by PT Ephindo in a consortium with GE).
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5 further work areas are also expected in 2011.
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Pricing of CBM power for the domestic market is at $0.27 USD per kwh; 50% lower compared to diesel. PLN forecasts that CBM could produce as much as 2000 MW of power for the country by 2015. 29
Energy – Bio-ethanol Plan
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Energy – Biodiesel Plan
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Renewable Energy Potential Energy Resource Potential in Indonesia:
Major Islands
Java Bali Sumatra Kalimantan Sulawesi Nusa Tenggara Maluku Papua Total
Geo Thermal
Hydro
Biomass
Mwe 3086 226 5433 -
MW 54 20 5489 6047
MW 13622 347 6433 6231
721 645 142
4479 292 217 24974 41436
5337 1174 1093 6814 41651
10027
* total geothermal potential: installed, reserve, and resources for electricity is around 20,000 MW Source: DESDM, RUKN (National Electricity Master Plan), 2004
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Infrastructures
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Infrastructure: Sector Snapshot Contribution to GDP: Existing Road Network: Existing Railway Network: Number of Airports: Number of Commercial Sea Ports:
6% (2010) 476,337 km (2009) 4,800 km 187 (local and international) 111
Main Government Bodies: Ministry of Transport, BAPPENAS, Ministry of Public Works, Ministry of State Owned Enterprises through Directorate General of Highways, the Indonesian Toll Road Authority. Indonesia’s vast size stretching over 5,000 km across the equator and being made up of over 17,000 islands has made the development of an efficient national transport network a challenge and priority. 34
Infrastructure - Challanges
•Rail – Accounts for less than 10% of passenger and less than 1% of freight transport. Jakarta is the largest city in the world without proper intracity rail; •Roads - 35% of subnational roads and 10% of national roads are classified as “Heavily Damaged”; subnational roads are 92% of network; •Ports - Indonesia has only 2 international hub ports; no investment for 25 years;
Source: Glendale Partners 35
The 6 Economic Corridors
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Infrastructure – Seaport Future Projects
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Trade with Italy
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Interscambio Italia-Indonesia
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Export dall’Italia
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Import dall’Indonesia
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Italian Companies Doing Business in Indonesia
• Eni – Saipem • Perfetti Van Melle • Lotto Sport Italia • Gruppo Mastrotto • Sacmi - Sicem – Smalticeram • Zambon
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MDA S.E.A. CONTACTS MDA Consulting S.E.A. Co. Ltd. Bangkok Thailand Suite 504 Tonson Building 50 Soi Tonson Ploenchit Road Bangkok 10330 Tel: +662 6522447 Fax: +662 6522448 Email: lvianelli@mda.it Web site: www.mda.co.th
“Strategy is important but execution is everything” 43
Population’s Growth Projection
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