Indonesia Preview 2013 by Strategy Business Group

SBG

STRATEGY Power through Knowledge

indonesia

2013

A Foundation in Principle

Franky Oesman Widjaja Sinar Mas Agribusiness and Food

Harbouring Growth

Richard J. Lino Indonesia Por t Cor poration (IPC)

Middle Easter n Promise

PT Bank QNB Kesawan Tbk “Indonesia’s successful development offers rich lessons for other emerging markets.” The World Bank

STRATEGY

Indonesia 2013

CONTENTS PAGE

Industry

Country 7 ARTICLE:

28 ARTICLE:

Triumph Against the Odds – The Largest Economy in South-East Asia is Unstoppable

An Ambitious 2020 Target - Indonesia is Set to Experience a New Industrial Revolution

8 INTERVIEW: Putera Sampoerna, Putera Sampoerna Foundation

29 INTERVIEW: H.E. Mohamad S. Hidayat, Minister of Industry

Economy

30 INTERVIEW: Franky Oesman Widjaja, Sinar Mas Agribusiness and Food

9 ARTICLE:

The Fastest Growing Economy in South-East Asia: How Can Indonesia Manage the Transition to Global Heavyweight?

32 INTERVIEW: Ir. Mochammad Ali Suharsono, PT Rekayasa Industri Engineering and Construction

11 INTERVIEW: Dr. Stefan G. Koeberle, The World Bank, Indonesia

Transportation & Logistics

12 INTERVIEW: Sarvesh Suri, IFC

34 ARTICLE:

13 INTERVIEW: Jakob Friis Sorensen, EuroCham 14 ARTICLE:

36 INTERVIEW: Dr. Ketut Mardjana, PT Pos Indonesia (Persero)

The Path to Greatness: Indonesia’s Master Plan for Economic Advancement and Expansion (MP3EI)

38 INTERVIEW: Tommy Soetomo, PT Angkasa Pura I (Persero)

Finance & Banking 19 ARTICLE:

40 INTERVIEW: Richard J. Lino, Indonesia Port Corporation (IPC)

Once a Turbulent Market for International Funds, Indonesia’s Financial Services Sector is Fast Becoming a Go-To Destination

43 INTERVIEW: Abdul Rahim Tahir, PT DHL Exel Supply Chain Indonesia

21 INTERVIEW: David Fletcher, PermataBank

Infrastructure

22 INTERVIEW: Ibrahim Hassan, PT Bank Maybank Syariah Indonesia 23 ARTICLE:

44 ARTICLE: 3 Words to Modernise Indonesia’s Aging Infrastructure: Public Private Partnerships

Is Indonesia All Set to See a Premium Explosion, as it Becomes South-East Asia’s Next Insurance Hot Spot?

45 INTERVIEW: Kartika Wirjoatmodjo, PT Indonesia Infrastructure Finance (IIF)

25 INTERVIEW: Evelina F. Pietruschka, Fadent Consolidated Companies (FCC)

46 ARTICLE:

26 INTERVIEW: Hendrisman Rahim, PT Asuransi Jiwasraya (Persero)

A Bold Decision - This Key Reform Aims to Secure Indonesia’s Future

46 INTERVIEW: Anthony Setiawan, PT BAUER Pratama Indonesia

The ability to improve infrastructure quickly will be the major determinant of Indonesia’s future growth.

Kalibaru Port is a $4 billion USD project that is one of the most important infrastructure projects in Indonesia. STRATEGY

Indonesia’s Transportation - An Epic Challenge on Land, Air & Sea

Indonesia 2013

CONTENTS PAGE

53 ARTICLE:

Telecommunication & IT 48 ARTICLE:

54 INTERVIEW: Kris Wiluan, Citramas Group

Indonesia’s Wireless Network - Mobile Phones Have Never Mattered More

Company Profiles

Energy & Mineral Resources 49 ARTICLE:

Idyllic Investment

56 COMPANY PROFILES: QNB Kesawan

It Possesses a Wealth of Natural Resources, But For the Moment Indonesia Lacks the Power to Unlock Them.

57 COMPANY PROFILES: PT Bank Victoria International Tbk 58 COMPANY PROFILES: PT Waskita Karya (Persero) Tbk

50 INTERVIEW: Dr. Ing. Evita Herawati Legowo, Directorate General of Oil & Gas

59 COMPANY PROFILES: PT Alkindo Naratama Tbk

50 INTERVIEW: Elisabeth Proust, Indonesian Petroleum Association (IPA)

60 COMPANY PROFILES: Indopoly Swakarsa Industry Tbk

Special Feature

62 COMPANY PROFILES: PT Sulindafin

52 ARTICLE: Long Thought a Sleeping Giant, West Sumatra Has the Power to Become an Essential Component of Indonesia’s Economic Engine

Directory 64 DIRECTORY

Without sufficient readily available sustainable power, Indonesia’s economic ambitions will be thwarted.

The Palapa Ring project will bring broadband access to all of Indonesia’s major cities as early as 2015.

Editor-in-Chief: Maria Johnson Editorial Director: Marco Cabello Country Director: Mary Mnatsakanyan Senior Research Analyst: Bradford Miller Senior Writer: David Congreave Contributing Writers: Colin Pawsey, Ian Phillipson, Barry Rosenfeld, David M. Anthony, & Austin Osoroh Senior Production Designer: Karin Haggård (k.haggård design) Contributing Production Coordinator: Shruti Garg Contributing Production Designer: Manish D’Souza Web-Editor: Randy Fraser (k.haggård design)

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STRATEGY

Indonesia 2013

Country Overview

Triumph Against the Odds – The Largest Economy in South-East Asia is Unstoppable Indonesia has a unique geography, a hidden wealth of resources, a young and vibrant population, and an explosive economy.The closer you look the more remarkable this country appears. In 1815, Indonesia witnessed the largest volcanic eruption in recorded history. Mount Tambora burst with such force that the explosion could be heard over a distance of 1,500 miles. So severe was the eruption it contributed to anomalies in weather systems throughout the Northern Hemisphere and the result was the worst global famine of the 19th century. Almost 200 years later, Mount Tambora is still active. One might presume that, as a result, the Indonesian people live in a state of anxiety, but this would be a failure to consider the complex geography and geology of the country and the resilience of the people in overcoming hardships and finding opportunity in adversity.

found strength as a result, the present day government has adapted with startling alacrity. President Susilo Bambang Yudhoyono has led the country’s development as a democratic nation since 2004 and has instituted significant reforms across the complete spectrum of politics, social care and cultural heritage that are moving the country forward at a rate that has seen many point to Indonesia as a definitive example of how developing nations can progress.

Stability and Growth

Indonesia is sometimes described as a bridge between the Asian and Australian continent. As an archipelago of over 17,500 islands, Indonesia is the largest of its kind in the world, not just in area but also in population (with 240 million people, it is the fourth largest country in the world). The archipelagic nature presents logistical challenges of its own but consider also that Indonesia sits Economically Flourishing near the edges of three different tectonic plates; the result is more Yet, without doubt, the most astonishing feature is found within earthquake activity than almost any other place on earth. And the economy. To call it growth would fail to capture just how reseismic activity of this kind also means increased volcanic activmarkable Indonesia’s progress ity. Mount Tambora is, in fact, just has been. one of over 150 active volcanoes Many point to Indonesia as a definitive all the countries affected by in the region. example of how developing nations can theOfAsian financial crisis, Indonesia With these kinds of upheavals progress. was the most severely affected. and complications it is nothing The economy shrunk by around short of astonishing to observe 13% and turning this calamity that Indonesia is currently one of around took time. However – helped in part by the fact that the the most stable political and economic regions in existence. It is economy grew by more than 7% for most of the previous ten almost as if the above challenges have created a stoicism within years – Indonesia has made a strong return to form; national ecothe people that has allowed them to prosper where other civilisanomic growth has averaged 6% for the last five years and, even tions might have crumbled. It may also have something to do with in 2009 when much of the world was languishing in recession, the benefits that have resulted from these environmental condieconomic growth still hit 4.5%. tions. Indonesia is rich with natural resources, including petroleum, Indonesia now has the largest economy in South-East Asia natural gas, coal and a variety of valuable metals. In addition, the and with growth expected to remain around 7% for many years, to geological conditions have created an abundance of geothermal some, Indonesia could well be the seventh largest economy in the energy that is largely untapped. world as early as 2025. Perhaps most significantly, the volcanic ash from historic eruptions has created land that is incredibly fruitful. It is the high proGarnering Attention duction levels, made possible by the fertile soil that has allowed Volcanic eruptions, earthquakes, unique and challenging geogthe largest of the Indonesian islands to sustain dense populations. raphy, political struggles and financial crises; Indonesia has overPolitical Stability come every difficulty, and even turned some of them to its advanThe natural elements are not the only storms that Indonesia tage. In the early 19th century, an Indonesian volcano shook the has had to weather; political upheaval and endemic corruption globe. Today, with its heady mix of economic growth, democratic are a feature of Indonesia’s modern history. But in the same way reforms and creative development, Indonesia is once again atin which Indonesia has withstood environmental difficulties and tracting the attention of the rest of the world. STRATEGY

Indonesia 2013

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