What do Indonesians think of Paytren

Economic Structure and Opportunities - Indonesia

Jakarta (GTAI) - Indonesia has developed remarkable economic and political stability. However, the economic success is still largely based on the export of raw materials.

For the full article, please click; Economic structure_and_ opportunities _-_ Indonesia October 2018

Source: EKONID - German-Indonesian IndChamber of Commerce and Industry

Indonesia's import demand is skyrocketing

Bonn (GTAI) - Indonesia's imports expand by 23 percent in the first half of 2018. China is further expanding its leading position as a supplier.

For the full article, please click; Indonesia's import demand is skyrocketing

Source: EKONID - German-Indonesian IndChamber of Commerce and Industry

German exports to Asia-Pacific continue to grow strongly

Bonn (GTAI) - Asia-Pacific continues to gain importance as a buyer of German goods. The development is particularly strong in the automotive industry, in electrical engineering and in mechanical engineering.

For the full article, please click; German exports to Asia-Pacific continue to grow strongly

Source: EKONID - German-Indonesian IndChamber of Commerce and Industry

In Indonesia, products “made in Germany” are status symbols

Bonn (GTAI) - Technology from Germany is in great demand in Indonesia. Above all, luxury automobiles are symbols of German engineering. They serve the status thinking of the Indonesians. However, where technology only has to work, such as in the manufacturing process, expensive German machines are in strong competition with cheap ones from China. They are only bought if they pay off through longevity. In principle, however, the following applies: Those who can afford it prefer products “made in Germany”.

For the full article, please click; In Indonesia, products made in Germany are status symbols

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

EKONID connects Tasikmalaya to waste management solutions

- Projects starts with waste data gathering and analysis and waste bank training in Tasikmalaya- Private and public sector participation encouraged in a follow-up waste management seminar in Jakarta

EKONID successfully implemented its waste management project in 2018. Starting in the middle of 2018, EKONID, in cooperation with lecturers and students of Siliwangi University, successfully conducted a waste composition analysis at the Ciangir Landfill in Tasikmalaya, West Java, before following through with a seminar on opportunities for public and private sector cooperation in municipal waste management in Jakarta on August 15. Supported by the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMUB), the program is expected to provide solutions to waste management issues in Indonesia.

During the first phase of the project in Tasikmalaya this year, the team initially conducted an initial over ground assessment of the landfill samples of the landfill’s leachate water, which would be sent to a testing facility later on. Subsequently the project team took out a total of 7% of the 180 tons of municipal trash that end up in the Ciangir Landfill every day. The goal was to sort the waste and separate the different organic and inorganic components. The final data of the analysis was then given to German recycling technology expert who would then develop a concept for a sorting facility on the landfill in Tasikmalaya.

During the separation of around 12 tons of waste, the importance of separating trash already before it reaches the landfill in order to reduce and recycle waste efficiently became particularly clear. Therefore EKONID organized an intensive three-day training on waste separation at the household level that took place from July 23-25. The training was held in the Agriculture Vocational School of Tasikmalaya, alongside of experienced trainers from the Central Waste Bank Banjarmasin and experts from smash.id, an online waste bank application provider.

Some 40 people participated in the training, hailing from stakeholder units such as waste bank units and the 3R waste treatment facilities (TPS 3R). Some environmental activists and other interested inhabitants of the local neighborhood and community also joined the event.

Students and lecturers from Siliwangi University, as well as German experts and EKONID staffers, presented the results to the local city government of Tasikmalaya, as well as other key stakeholders on August 13. The data report is supposed to suggest a suitable solution considering waste management at the Ciangir landfill and aims at guiding the future development of a technology-based concept. Furthermore, the involved participants and trainers have summarized a list of recommendations for waste reduction that will be followed up by the local government of Tasikmalaya.

In a follow-up effort to the project, EKONID held a forum on waste management involving several key stakeholders. Held in Ayana Midplaza Jakarta on August, more than 70 people attended the seminar, including staffers from the Indonesian Ministry of Environment and Forestry (KLHK), the Jakarta Environmental Agency, the Ministry of Public Works, as well as managing directors and chairpersons from the private sector and non-governmental organizations.

Due to the complex nature of waste management, which may be attributed to the unique social and cultural characteristics of where such projects are being conducted, it is little wonder that the forum would be well received as it ensures that the interest of all stakeholders are taken into account. The forum covered numerous aspects of waste management, from technology to financing, all of which were appreciated by the participants.

Mr. Ujang Solihin Sidik, Head of Waste Management Sub-Directorate at the KLHK, said he appreciated the forum’s discussion on financing, which he considers to be a persistent problem in waste management in Indonesia. Mr. Asep Kuswanto, Head of Technical Implementation for Landfills at the Jakarta Environmental Agency, said the forum helped him greatly as the city administration is currently planning to use Refuse-Derived Fuel, or RDF technology, to solve its waste issue. Mr. Simon Gotz, Area Manager Asia & Middle East at WEHRLE Umwelt GmbH, a company that specializes in treating wastewater, also expressed his appreciation to EKONID for holding the forum as waste water could prove to be a serious problem for the country if left untreated .

Ms. Katharina Dellbruegger, Project Officer of Export Initiative Environmental Technologies from the German Chambers of Industry and Commerce (DIHK), which is EKONID's main headquarter in Berlin, said she was encouraged by the enthusiastic reception of the participants of the forum and of the project in general.

“For me it's a pleasure to see everyone so interested. I have a feeling here, and in Tasikmalaya, that the interest is huge not only from the municipalities but also from the companies. And I think we saw already some very good best practices from Indonesian companies and I'm looking forward to how this project would continue to develop from here on out, ”she said.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Sales and Agent Search - Indonesia

Bonn (GTAI) - Indonesia is still a small but growing market for imported goods. In the cities in particular, purchasing power has already reached a remarkable level. If you want to sell your products there, you need a local sales representative who is familiar with the local conditions. When choosing one, companies have to take into account special legal requirements. Risks and opportunities for profit have to be weighed up.

For the full article, please click; Sales_and_Distributor Search _-_ Indonesia

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

The packaging industry is the growth driver of the Indonesian printing industry

Jakarta (GTAI) - The printing industry in Indonesia is benefiting from high economic growth. Society, which is keen to buy, is increasingly asking for high-quality consumer goods and is thus driving the packaging business. Classic print products, on the other hand, cannot keep up. You are confronted with declining shares of advertising revenue as digitization advances. When it comes to printing technology, Indonesia is dependent on imports. German products remain in demand.

For the full article, please click; packaging-is-the-growth-driver-of-the-indonesian-printing-industry

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Purchasing Power and Consumption - Indonesia

Bonn (GTAI) - Private consumption in Indonesia is growing in step with the country's economic output. However, the distribution of disposable income is unequal: the small upper and the growing middle class face the vast majority of people who can only meet their basic needs. Therefore, on average, Indonesians ask for imported consumer goods worth little more than 50 US dollars a year.

For the full article, please click; Purchasing_power_and_consumption _-_ Indonesia

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

EKONID Supports for waste management in Tasikmalaya

In cooperation with the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMUB), EKONID has continued implementing its waste management project in 2018. This is a follow up to the previous project in 2016, in which EKONID performed needs-assessment in six medium-sized Indonesian cities. In the previous project, external consultants proposed several recommendations, namely reducing waste at the household level, improving data availability at the landfill, sorting the waste residues at the landfill and further processing of the residues. In this year's program, the main project activities were focused on supporting the reduction of waste in the landfill in Tasikmalaya, West Java.

To commence the project, EKONID conducted a pre-visit to Tasikmalaya on April 23-24. The purpose of the visit was to reconnect with the Tasikmalaya city government and to introduce the planned activities to the Mayor, senior government officials and the Siliwangi University (UNSIL).

The planned activities are divided into four separate modules. The first module focuses on the waste composition analysis and the development of an environmental friendly technology-based solution to improve waste processing on the landfill. In this module, EKONID will be cooperating with UNSIL and a German waste management consulting company. The subsequent module includes the presentation of the proposed concept to the Tasikmalaya city government and local stakeholders.

During the pre-visit, EKONID also had the chance to meet with several waste banks to discuss the needs and challenges of a waste bank. The third module covers an intensive training on waste bank management and waste separation at the household level. Local waste banks and the city government officials will be the target group of the training. The fourth module comprises of a seminar in Jakarta on how the private sector can be involved in waste management projects. This last module aims to involve waste treatment experts, stakeholders and potential investors in a discussion on a wide range of waste management and the most applicable and feasible solutions for Indonesia.

For the implementation of the project, EKONID will be partnering with several external partners. Most important is the environmental department of the Tasikmalaya city government. With UNSIL, EKONID will be cooperating in the field research on the waste composition and data sample gathering at the landfill. A couple of lecturers and several university students will take part in the research activities. As an external partner, a German waste management consultant company will be developing the environmentally-friendly technology concept for the landfill in Tasikmalaya based on the gathered data and analysis from UNSIL. For the intensive seminar in module 3, EKONID will be collaborating with a well-experienced waste management training provider.

The project is expected to run until August 2018. The next agenda is the data sampling and data analysis at the landfill, which is scheduled for ten working days starting from July 2 to 13.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Compact economic data - Indonesia

The “Economic Data Compact” series is updated twice a year in May and November. The following indicators are included, among other things: Inhabitants, population density, currency, exchange rate, gross domestic product, GDP per inhabitant, GDP growth, inflation rate, average wage, unemployment, budget balance, foreign trade, most important import and export goods, most important trading partners, foreign direct investments, country creditworthiness, foreign exchange reserves , Foreign trade with the EU and Germany, most important German import and export goods.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Industry check - Indonesia

Bonn (GTAI) - Indonesia's imports have been picking up again after four years of continuous decline since 2017. In the first quarter of 2018, there was an almost sharp increase, especially in the import of capital goods and intermediate products. The industry is catching up on urgently needed investments. The nationwide expansion of the infrastructure could further increase the need for technology. The booming healthcare market in particular offers German companies opportunities.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Economic Outlook - Indonesia (May 2018)

Bonn (GTAI) - Indonesia's economic growth has recently leveled off at around 5 percent. In the years to come, they are expected to rise slightly. The foundations for this are rising direct investments and growing trade. After a continuous decline between 2012 and 2016 by a total of 30 percent, imports have now risen again. But there are also worrying trends: The share of industry in economic output is falling.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

German Business Mission to Indonesia: Decentralized Energy Supply Solutions

From March 20-22, EKONID hosted a German business mission to Indonesia for the energy sector. The three-day event program was part of the initiative, “Energy Solutions made in Germany” of the Federal Ministry of Economics and Energy (BMWi) and is implemented in cooperation with Berlin-based Renewables Academy (RENAC).

Held at Ayana Midplaza Jakarta Hotel, the event saw over 120 participants, consisting of both local and international companies, who were looking to gain further insights into Germany’s energy supply solutions.

Energy supply is an important issue in Indonesia. The country aimed at building 35GW worth of new electricity generating capacity by next year, a target that is largely believed to be unachievable. In the last few years, however, over 1GW of new capacity has come online, with 15GW under construction and 10GW signed for purchase agreements - an admirable achievement of itself.

Thus, Indonesia remains a prospective market for German energy solutions companies, as noted by the speakers at the conference held on the first day of the business mission on March 20. The speakers included Mr. Hendrik Barkeling, Deputy Head of Mission at the Germany Embassy to Indonesia, and Mr. Rida Mulyana, Director General for New and Renewable Energy and Energy Conservation at the Indonesian Ministry of Energy and Mineral Resources. Also presenting the various opportunities and challenges for renewables in the potential cooperation between the Indonesian public and private sector and German companies were Mr. Bernd Wollwerth, Head of the Division "Solar Energy and Rural Electrification" at RENAC also presented.

Following the conference, EKONID facilitated 44 individual meetings between interested parties. The individual meetings were arranged during and right after the conference, as well as during the two following days when EKONID escorted the delegation to visit the participating local companies.

Overall, the feedback of the event’s participants was positive. Rolf Schleicher, Managing Director at Maxxtec GmbH, complimented the selection of companies who presented at the event. He was especially interested in the companies that presented on financing for projects in Indonesia. “I think form that point of view it was a valuable event,” Mr. Schleicher said.

Sandra Winarsa, Project Manager Green Energy at Hivos Southeast Asia, said the attending companies and individuals fit well with the topic of decentralized energy supply solutions. She suggested to allocate more time and space for networking. “Overall it was a good event however. I've had many people come and ask me questions and saying how much they appreciate what we were doing, asking to know even more, ”she added.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Wage and Non-wage Costs - Indonesia

Bonn (GTAI) - The low wage costs are an incentive for many companies to open production facilities or sales offices in Indonesia. However, the island state is no longer a classic low-wage country, at least in the urban centers. One problem for foreign companies on site is the poor level of training and education. The country also has strict labor law. At the same time, legal certainty is low.

Download the publication; Wage _and_ ancillary wage costs _-_ Indonesia

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

EKONID put Indonesia in spotlight of 1st ASEAN-German Education and Vocational Training Forum

On March 2nd, 2018 in the Vocational School of Media and Communications in Hamburg, EKONID discussed the latest developments and future perspectives in Indonesian vocational education and training with approx. 100 representatives of ASEAN member states embassies, German ministries, business associations, companies as well as education and training providers.

In a panel session on successful ASEAN-German cooperation, Ms. Ute Brockmann, Deputy Managing Director and Head of EKONID's Training and Education Department, highlighted EKONID's German-standard Dual Vocational Education projects as well as its new seminar training platform “ICCQ” and pointed out Indonesia's efforts and challenges in the current reform process of its vocational education system.

The forum under the auspices of the German Federal Ministry of Education and Research (BMBF) had been organized by the German Asia-Pacific Business Association (OAV), the Hamburg Chamber of Commerce as well as the German Federal Institute for Vocational Education and Training ( BIBB) and its initiative “iMOVE - Training Made in Germany”.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Compact economic data - Indonesia

The “Economic Data Compact” series is updated twice a year in May and November. The following indicators are included, among other things: Inhabitants, population density, currency, exchange rate, gross domestic product, GDP per inhabitant, GDP growth, inflation rate, average wage, unemployment, budget balance, foreign trade, most important import and export goods, most important trading partners, foreign direct investments, country creditworthiness, foreign exchange reserves , Foreign trade with the EU and Germany, most important German import and export goods.

Download the publication; mkt201611222052_159640_economic data-compact — indonesia

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Hospital construction in Indonesia drives medical technology needs

Private and state health expenditure is increasing / German products in demand / By Frank Malerius

Jakarta (GTAI) - Since the introduction of general health insurance in 2014, Indonesia has been expanding its health sector rapidly. All over the country new clinics are emerging that need to be equipped. In addition, old hospitals receive modern equipment so that they can be certified according to national standards. The most important driver of the development is private health expenditure. There is great interest in German technology. (Contact addresses)

How good the reputation of medical technology “made in Germany” is in Indonesia was shown by the great response to the German business delegation on the subject of hospital construction and equipment at the beginning of November 2017. The presentation events in Jakarta and Surabaya each had well over 100 specialist participants.

Indonesia's imports of medical technology have grown rapidly in recent years. In 2016, Germany was the most important supplier with a share of 18 percent. For high-tech devices such as X-ray machines, the rate was 40 percent (detailed figures under: Indonesia's medical technology imports are rising rapidly http://www.gtai.de/MKT201705228007).

The health sector in Indonesia is expanding. There are currently around 2,800 hospitals and new ones are being built every week. In the past four years, more than 500 new facilities have started operations. Few of them achieve an international standard. But the new large urban houses, like the small and remote hospitals, must be equipped with imported equipment. Because only simple medical technology products can be manufactured in the island nation.

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Uniform regional registration rules planned from 2018

In Indonesia today there are around 240 manufacturers of medical technology devices and 2,800 companies that sell them (as well as the distribution of imported devices). According to the Ministry of Health, 4,250 locally manufactured and 36,700 imported product types are currently registered.

When registering, there are four risk-level oriented product classes with registration fees between 110 and 380 US dollars (US $). According to the Ministry of Health, the evaluation period is between 45 and 120 days, depending on the product class. A registration renewal or extension takes 45 days (the EU-European Business Network, EIBN, provides a detailed description of the registration process at: HYPERLINK "http://www.eibn.org/upload/EIBN_Indonesia_Medical_Device_regulation.pdf" http://www .eibn.org / upload / EIBN_Indonesia_Medical_Device_regulation.pdf).

The alignment of regional registration rules for medical technology products is in sight. As of 2018, standardized processes are to come into force within the Southeast Asian confederation of states Association of Southeast Asian Nations (ASEAN) (ASEAN Medical Device Directive - AMDD). However, they will not replace the obligation to register in the individual member countries.

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Private investment necessary

The reason for the boom in the health sector is the sustained economic growth at rates of around 5 percent, which enables the growing middle class to pay for health services. In addition, general health insurance was introduced in 2014, giving poorer sections of the population the right to medical care. Today it comprises around 80 percent of Indonesians, and in 2019 the rate is expected to be 95 percent.

The insurance has led to a considerable expansion of health treatments. Between 2014 and 2016, the number of cases more than doubled from 90 million to 190 million. A large part of this is accounted for by the 21,000 hospital wards distributed throughout the country with minimal equipment, but the number of treatments in regular hospitals also rose from 4.2 million to 7.6 million.

Building state health insurance for 260 million people is a financial feat for the government. The monthly insurance premiums are, depending on the selected tariff, only between the equivalent of 1.90 and 6.00 US $. However, the services also include potentially expensive emergency care. The state health budget has been gradually increased to 5 percent of total expenditure in recent years. In 2017, that equates to US $ 7.8 billion.

General data on the health system in Indonesia 2015
indicatorvalue
Doctors / 100,000 inhabitants27,7
Dentists / 100,000 inhabitants2,3
Hospital beds / 100,000 inhabitants, of which107,4
.Private45,9
.public61,5

Sources: Ministry of Health; Statistics Office Badan Pusan ​​Statistics (BPS)

The funds required for the development of the health sector come to a large extent from the private sector. Around 85 percent of the new hospitals built between 2013 and October 2017 are private clinics. Above all, they can afford expensive high-tech equipment.

But they are also obliged to treat those with state insurance. However, since this often does not cover costs, there is a conflict of interest between high-quality treatment and basic care. This will decide in which segments the demand for medical technology will grow particularly strongly in the coming years.

Contact addresses

(FMA)

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Economic Structure and Opportunities - Indonesia

Jakarta (GTAI) - Under the difficult conditions of being an archipelago with hundreds of different languages ​​and cultures, Indonesia has developed remarkable stability, both economically and politically. However, the economic success is still largely based on the export of raw materials. So far, the low wage level has not been used to build up an export-oriented light industry. Further development is hindered by the low level of education.

For the full article, please click; Economic structure_and_ opportunities _-_ Indonesia

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Regional dispersion of German standard technical education

Initiating and realizing dual vocational education in Indonesia following German standards is one of EKONID’s main missions in order to promote high quality training and education solutions in the country.

Having successfully implemented a 3-year dual vocational education course in automotive mechatronics with PT Astra International Tbk and its Manufacturing Polytechnic School in Jakarta in 2015, EKONID started a dual course in industrial mechanics in December 2017 with SMKN 26 in Jakarta and German and Indonesian companies , their offices and training sites being spread over Jakarta and beyond: PT Siemens Indonesia (Jakarta, Cilegon), PT Mercedes-Benz Indonesia (Jakarta, Bogor, Tangerang), PT MAN Diesel & Turbo Indonesia (Jakarta) and PT Barata Indonesia (Jakarta , Surabaya & others).

Driven by the motivation to provide dual vocational education courses following German standard also on Indonesian islands other than Java, EKONID has recently turned its view to Batam. In November 2017 on Batam island, Managing Director Jan Rönnfeld and the Chamber's Training & Education Department discussed with representatives of PT Infineon Technologies Batam and PT Epcos Indonesia, both running important production sites there, about the potential and the necessary steps towards the realization of a dual mechatronics education. At this occasion, EKONID also exchanged with representatives of Politeknik Negeri Batam and SMKN 1 Batam, being already cooperation partners of Infineon and Epcos, to learn about their curricula and to take a first look at their premises. EKONID plans to set up a dual vocational education course in 2018 with the two companies to support a high quality mechatronics qualification of their staff.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Indonesia is planning a special economic zone near Jakarta

Industrial centers of Bekasi, Karawan and Purwakarta could offer massive investment incentives / By Frank Malerius

Jakarta (GTAI) - The Indonesian government is commissioning feasibility studies for a special economic zone east of Jakarta. The industrial centers there are already responsible for 43 percent of the archipelago's industrial production and are also home to the major automobile manufacturers. Investors would be entitled to a number of perks. Meanwhile, the low-growth Batam free zone upstream from Singapore could also be converted into a special economic zone. (Contact addresses)

The Indonesian government is examining the establishment of a special economic zone (SEZ) in the three municipalities of Bekasi, Karawang and Purwakarta to the east of Jakarta. The Archipelago's Chamber of Commerce and Industry (Kadin) recommended such a step and presented it to President Joko Widodo. Now feasibility studies are to be carried out. However, the national planning authority Bappenas has already spoken out against a SEZ, which does not see the necessary conditions there.

The three regions are responsible for 43 percent of the country's industrial output and are home to numerous multinational corporations, including the major automobile manufacturers. And the course has already been set for further growth. A new city called Meikarta is to be built there for 20 billion US dollars (US $). The first of the 250,000 planned apartments are already in place. Project developer Lippo Group, who started without an official building permit, is one of the advocates of a SEZ in its own interest.

In the immediate vicinity of the planned SEZ, the Patimban deep-water port is also being built for US $ 3 billion and is scheduled to start operations in early 2019. The project is financed by the Japanese development bank JICA (Japan International Cooperation Agency). The major Japanese automobile manufacturers in particular are interested in an alternative loading location to Jakarta's Tanjung Priok port.

A SEZ would give companies investing at least US $ 36 million tax breaks for 5 to 25 years. In addition, there would be an exemption from import, VAT and luxury taxes. In addition, the authorities in Jakarta would no longer be responsible for the time-consuming bureaucratic processes for land acquisition or for a work permit, but the SEZ administration.

So far there are twelve SEZs in Indonesia. The first was Tanjung Reading in the far west of Java Island, which was set up in 2012 to develop tourism. The youngest is Galang Batang on the Riau archipelago, which was approved in October 2017 and which mainly processes bauxite. Nine SEZ serve the manufacturing industry, three exclusively for tourism. The SEZ concept is primarily aimed at promoting the periphery of the archipelago and reducing their dependence on Java. The perspective goal is an equalization of living conditions between the main island and the underdeveloped regions.

Special Economic Zones in Indonesia
SurnameregionfoundingIndustry sectors
Galang BatangRiau / Sumatra2017Bauxite processing, logistics, energy
Arun LhokseumaweAceh / Sumatra2017Oil, gas, petrochemicals, agriculture, logistics, cement packaging
SorongWest Papua2016Power generation, logistics, food and wood processing
Tanjung KeyalangBelitung / East Sumatra2016tourism
MBTKEast Kalimantan2014Palm oil processing, logistics
MandalikaCentral Java2014tourism
Tanjung Api-ApiSouth Sumatra2014Rubber, oil processing, petrochemicals
MorotaiNorthern Moluccas2014Logistics, fish processing
BitungNorth Sulawesi2014Fish, coconut processing, herbal medicine, logistics
PaluCentral Sulawesi2014Manufacturing industry, cocoa, rubber, seaweed, rattan, nickel, iron ore and gold processing, logistics
Be MangkeiNorth Sumatra2012Rubber, oil, fertilizer processing, logistics, tourism
Tanjung readingBanten / West Java2012tourism

Source: National Council of Indonesian Special Economic Zones

The island of Batam off Singapore could also be converted into a SEZ. It was granted autonomy status from Jakarta in 1999 and became a free zone in 2008 (the technically incorrect term “free trade zone” is often used). It has thus developed into an investment magnet and brought its residents a remarkable level of prosperity. Batam's per capita income is the second highest after Jakartas.

The transformation of Batam should bring new momentum

However, the island weakened last. The economy grew by only 2 percent in each of the last two years and thus remained well below the nationwide 5 percent. More than 150 companies have left Batam in the past two and a half years, according to press reports. As a result, the entire management team of the Free Trade Authority, BP Batam, has now been replaced.

The new management of BP Batam appointed by Jakarta hopes that the conversion into a SEZ will bring a return to the old growth path. In addition to the associated tax and customs relief, it would be important to exclude them from the negative investment list, which denies foreign companies access to various industries. Above all, however, investors from Batam could offer goods and services throughout the archipelago, which the status of the free zone does not allow.

A potential obstacle to a conversion into a SEZ, however, is the then virulent overlapping of competencies between BP Batam and the municipal authorities, which determine, for example, the public supply. The Riau archipelago, to which Batam belongs, has always had a strong regional identity. In 2004 it forced the administrative separation from Sumatra and has since formed its own province.

Contact addresses

descriptionInternet addressRemarks
Dewan Nasional Kawasan Ekonomi Khusushttp://kek.go.idWebsite of the National Council of Indonesian Special Economic Zones
Badan Koordinasi Penanaman Modal (BKPM)http://www.bkpm.co.idIndonesian Investment Authority website
Batam Free Zone Authority (BIFZA)http://www.bpbatam.go.idBatam Free Zone website

(FMA)

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Indonesia is becoming a magnet for foreign capital

Another rise in the Ease of Doing Business Index / German investors continue to hold back / By Frank Malerius

Jakarta (GTAI) - After three quarters, there are indications of a new high in foreign direct investment in Indonesia for 2017 as a whole. Mining and supply infrastructure in particular show high growth rates. At the same time, the archipelago has improved by 19 places in the current Ease of Doing Business Index. Nevertheless, the capital inflows from Germany remain at a low level. (Contact address)

Indonesia raised nearly US $ 24 billion in foreign direct investment (FDI) in the first three quarters of 2017. This is a new high at this time of the year and corresponds to an increase of 11 percent compared to the previous year. This could exceed the US $ 30 billion mark for the year as a whole. In the most important industries, the highest rates of increase were in mining and in supply infrastructure. The reasons for this are likely to be the recovering world market prices for mineral raw materials and the high capital requirements for power generation and distribution.

In Indonesia, around two thirds of all investments traditionally come from abroad. Of these inflows in 2017, 72 percent were new investments and 28 percent were expansion investments. 44 percent went into the secondary sector, i.e. into the manufacturing industry.This roughly corresponds to the share in previous years. Jakarta alone accounts for a third of the FDI, and the rest of Java accounts for another third.

Foreign direct investments made in Indonesia by sector (in billion US $; change compared to the same period of the previous year in%)
sector2016 *)2017 *)Change
Mining1,73,292,2
Electricity, gas, water supply1,32,7110,3
Chemicals and pharmaceuticals2,12,23,4
property1,72,021,5
food1,61,5-9,6
Transportation equipment2,01,2-42,3
Agriculture1,11,1-1,3
Trade and repair0,51,0110,6
Hotels and restaurants0,70,936,9
Transport, storage, telecommunications0,60,956,5
Total investment21,423,911,3

*) 1st to 3rd quarter

Source: BKPM; Calculations by Germany Trade & Invest

By far the largest inflows come from Singapore, which acts as the regional headquarters of many international, but above all Chinese, companies. As the second largest investor, Japan is primarily involved in the automotive sector and infrastructure projects.

With an investment sum of 196 million US $ (spread over 245 projects), Germany is only in 18th place. That is, however, a third more than in 2016 as a whole and more than three times as much as in 2015. According to reports, this increase is hidden behind this increase larger project in the field of oil storage on the island of Batam off Singapore.

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Improved investment conditions

Almost at the same time as the announcement of the new quarterly figures by the investment authority BKPM, the World Bank announced the ranking of the Ease of Doing Business Index for 2018. Indonesia has made up 19 places compared to the previous year and now ranks 72nd (out of 190 countries). Five years ago, the archipelago was only 128th. The investment conditions have therefore improved significantly.

The World Bank justifies the improved assessment of Indonesia as an investment location with, among other things, the shorter time to set up a business (23 days), better and cheaper availability of electricity, faster registration of property (28 days) and easier import of goods through the introduction of electronic processes.

In a regional comparison between the investment locations, Indonesia has consolidated its midfield position among the ASEAN countries. While Malaysia and Thailand are not yet in sight, the gap to Vietnam has been shortened and the lead over the Philippines expanded.

Rank of the ASEAN countries in the Ease of Doing Business Index
country201320172018
Singapore122
Malaysia122324
Thailand184626
Brunei797256
Vietnam998268
Indonesia1289172
Philippines13899113
Cambodia133131135
Laos163139141
Myanmar170171

Source: World Bank

Fight for jobs

In the Indonesian press, the investment figures are mostly mentioned in the same breath as the topic of unemployment. The official unemployment rate is only between 5 and 6 percent. In its extremely soft definition, however, it only includes people who “have not done anything in the past week”. The reality has nothing in common with the mere quota: nationwide, more than half work in the informal sector, even in the economic center Jakarta it is a third. According to BKPM, the US $ 24 billion in FDI from the first nine months of 2017 created 177,000 jobs.

But every year more than a million new people enter the labor market, and a very significant proportion of them do not find adequate employment. When foreign companies bring their own workers into the country, resentments sometimes arise. According to a recent study by the Jakarta-based think tank CSIS, 48 percent of 17 to 29 year olds believe that foreign companies have a negative impact on the economy. 78 percent see foreign workers in the country negatively. According to figures from the immigration authorities, there are only 75,000 expatriates in the country, which is fewer than in Singapore, Malaysia or Thailand.

But in order to score points in this discourse, the government has significantly tightened the issuing of work visas to foreigners in recent years. Now companies have to prove in detail (with a so-called Expatriate Placemant Plan - "RPTK") why the work of an expat cannot also be carried out by an Indonesian.

Chinese investors, who often bring their own work teams into the country for their large infrastructure projects and thus stir up resentment in the population, complain about the complicated visa issuance. Chinese were the largest group with work visas in the first half of 2017 with 17,400, followed by Japanese (10,600) and Koreans (5,400). However, since the largest investment sums come from their countries, it will be difficult for the authorities to consistently implement the strict visa rules.

Contact address

descriptionInternet addressRemarks
Badan Koordinasi Penanaman Modal (BKPM)http://www.bkpm.co.idIndonesian Investment Authority website

(FMA)

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Renewable energies are developing slowly in Indonesia

Coal and gas continue to serve the rapidly increasing demand for electricity / Wind and solar energy remain local niche segments / By Frank Malerius

Jakarta (GTAI) - There will be no energy transition in Indonesia for the foreseeable future. The demand for electricity in industry and households is growing too quickly. There is also an abundance of coal and gas. Of the renewable energies, only hydropower and geothermal energy offer substantial potential. Technology-intensive wind and solar power plants are mainly used as isolated solutions in remote regions.

At around 800 kilowatt hours per year (2014), Indonesia's electricity consumption per capita is low compared to that of other emerging countries. In Vietnam, for example, it is around twice as high. The archipelago is so far only weakly industrialized. But the electricity demand is growing particularly rapidly: According to the state electricity supplier PLN, it should increase by 8.3 percent per annum over the next ten years. That would be more than a doubling.

Therefore, power plants have to be built at high speed all over the country. And they will mainly work with conventional energy sources. Today more than half of Indonesia's electricity is generated with coal. Another quarter is accounted for by gas. The share of renewable energies - that is almost exclusively hydropower and geothermal energy - is eleven percent.

According to the PLN forecast, this electricity mix will hardly change in the coming decade. At least the share of renewables is to be almost doubled and compensate for the part of the systems that are still powered by oil and diesel today. Wind and solar energy will not play a significant role in the future either.

The archipelago with its 17,500 islands and many remote regions has meanwhile achieved an electrification rate of just over 90 percent. Only in the poorly developed eastern parts of the country is it sometimes below 70 percent. In 2025, practically every household should be connected to the electricity grid.

MKT201711078008.14

Geothermal energy and hydropower offer potential

The only two regenerative forms of energy that make a significant contribution to electricity supply are geothermal and hydropower. As a volcanic archipelago, Indonesia has the world's greatest geothermal energy potential, but exploration and development are expensive and time-consuming. Progress will be slow here. An estimated 75 gigawatts of electricity generation capacity could be built up with hydropower. However, these are mainly in remote and sparsely populated regions and not where electricity is mainly needed: on Java and Bali. So far, only around 5 percent of the potential has been tapped.

Indonesia has a high level of solar radiation all year round, which is mainly used in remote regions and smaller or outside power grids to generate electricity, often also in so-called hybrid storage areas in connection with diesel generators. In 2013, the government initiated a subsidy program under which independent power producers (IPP) were paid 25 to 30 US dollar cents for a kilowatt hour of solar power. According to the Asian Development Bank (ADB), this program was discontinued due to numerous organizational problems.

The wind energy potential of the archipelago is limited due to the low wind strengths around the equator. In the meantime, some worthwhile regions have been identified. But they are also often in remote locations. Pilot plants were mainly financed with bilateral development aid. What is needed above all is wind turbines that generate electricity even at low and medium wind speeds.

Biomass and biofuels are other renewable energy sources. Both are predominantly based on palm oil or its waste products. So far there are only a few biogas plants, as there are hardly any incentives for their complex construction. Biodiesel has other uses in the archipelago than electricity generation. It is mainly used as a substitute for imported oil in the tank of cars.

Electricity generation in Southeast Asia (in TWh; change compared to previous year in%)
year2016Change
Indonesia248,96,1
Thailand179,70,8
Vietnam175,79,7
Malaysia156,88,1
Philippines89,98,8
Singapore51,62,3

Source: BP Statistical Review of World Energy 2017

High consumer prices

Indonesia has reduced feed-in tariffs for green electricity and grants tariff relief for the import of technology for its generation. Nevertheless, wind and solar energy remain far more expensive than electricity from coal and gas, which are available in abundance. However, conventionally generated electricity is also heavily promoted. In the 2017 state budget, electricity subsidies are estimated at 3.8 billion US dollars.

There is a good reason for this: because electricity costs in Indonesia are high compared to other household expenses and an enormous burden for middle-class families. Depending on the voltage installed, the kilowatt hour costs between 8 and 11 US dollar cents (Germany: around 29 euro cents). If you are looking for a house with air conditioning, you should pay close attention to the possible electricity demand. For companies and industry, the prices are slightly lower than for private households.

In addition, the state electricity supplier PLN for private households is gradually changing its payment system. While the electricity consumption was previously read and billed monthly, it now has to be paid in advance, especially for new buildings. This means that consumers have to top up a credit - prepaid cards available on the Internet or in retail stores. If you are short of cash, the air conditioning stops, the refrigerator defrosts and the lamp stays dark.

(FMA)

Further information on the economic situation, industries, business practice, law, customs, tenders and development projects in Indonesia can be found at http://www.gtai.de/Indonesien. The page http://www.gtai.de/asien-pazifik offers an overview of various topics in the region.

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

Indonesia expands biodiesel processing capacities

Increased production of raw materials containing palm oil requires technology imports / By Frank Malerius

Jakarta (GTAI) - Indonesia accounts for more than half of world exports of palm oil. The raw material is now the most important export good and has overtaken oil and coal as the strongest foreign exchange earners in recent years. In 2016, palm oil caught up with natural gas, with an export volume of 14.4 billion US dollars. The oil extract is primarily used as a low-emission biodiesel and mixed with conventional fuels.

Indonesia is the world's largest producer and exporter of palm oil. According to Indonesian export statistics, palm oil outperformed all other raw materials in the first half of 2017. The areas under cultivation are still growing, especially on Sumatra and Kalimantan. In the newly created plantations, the still young plants promise increasing productivity in the coming years.

Palm oil is a raw material for processed foods and is used in the manufacture of cosmetics and pharmaceuticals. Its extract is used as an edible oil. So far it has mostly been exported in raw or refined form. In the future, downstream markets are to be served in order to keep more added value in the country. This requires machines for further processing and packaging, which have to be introduced to a large extent.

The reddish fruit of the oil palm is also in great demand on the domestic market. Its extract is used primarily as a low-emission biodiesel that is added to conventional fuels. Since Indonesia has long been a net importer of crude oil and products, biodiesel not only relieves the environment, but also serves as an import substitute. Since 2015, conventional fuel has to contain 15 percent biodiesel, and since 2016 it has been 20 percent for the transport sector. Other industrial sectors were also obliged to use biofuels.

In Indonesia, biodiesel is mainly produced from palm oil. The production capacities have increased almost ninefold from 1.2 million kiloliters in 2007 to an estimated 10.6 million kiloliters in 2017. According to the market research company Data Consult, there are currently 26 biodiesel manufacturers in the archipelago. Despite the dramatic growth in production, there are bottlenecks: there is still a lack of warehouses, sales facilities and transport infrastructure.

Indonesia's biodiesel production capacities (change in%) *)
yearMillion kiloliterschange
20071,2n / a
20083,1160,5
20094,235,9
20105,120,8
20115,10,6
20125,10,0
20135,710,2
20145,70,2
20156,820,2
20168,727,9
201710,621,8

*) 2015 to 2017: estimate

Source: Directorate for Renewable Energies and Energy Saving (EBTKE), calculations by GTAI

Chemical raw materials should increasingly be produced in-house

The raw material palm oil is not only used to produce biodiesel, it can be used in a variety of ways. Palm oil is found in processed foods, cosmetics and pharmaceuticals, making it essential for countless everyday consumer goods. To do this, it must first be processed into raw materials such as fatty acids or glycerine. This requires so-called oleochemical systems. For the most part, especially when it comes to modern technology, they have to be purchased abroad due to the lack of domestic production.

Studies assume that the increase in value of palm oil in the form of edible oil is 35 percent, for raw materials such as fatty acids 140 percent and for cosmetics more than 500 percent. That is enough incentive to invest in further processing.

For the time being, however, there is a lack of capacity - large parts of the palm oil are still being exported in its raw form or refined. The big competitor Malaysia, with which Indonesia has practically a duopoly on the world market for palm oil, is way ahead. In order to shorten the distance to neighbors in the production of chemical raw materials from vegetable fats, the Indonesian government has introduced a tax on the export of crude palm oil (CPO) based on the degree of processing. It is intended to encourage industry to do more processing.

The first successes become visible. A look at the export statistics shows that the export of raw or refined palm oil fell by almost 20 percent from 2012 to 2016, despite the rapid increase in production. The prices that have fallen during this period alone cannot explain this trend. An estimated 80 percent of the olechemic raw materials currently produced in Indonesia are exported, a large part of them to the USA and Europe.

It is true that the major Indonesian market participants, such as the Sinar Mas Group or Unilever, have invested in oleochemical production facilities and in some cases received tax breaks. However, in view of the abundance of domestic palm oil, processing capacities are still comparatively low. One reason for this are deficiencies in the energy supply. Often enough gas and electricity are not available to producers.

Export hit edible oil

Indonesia's production of palm and palm kernel oil has almost doubled from 21 million to 40 million tons in the past ten years. For many years there have been protests in Europe and North America against the clearing of rainforests associated with the expansion of the palm oil plantations. However, only a small part of Indonesia's palm oil exports are delivered there.

The EU wants to introduce a uniform certification scheme for palm oil imports. According to a resolution of the European Parliament from April 2017, from 2020 biofuels sold in the EU should no longer contain vegetable oils, the production of which causes deforestation. According to MEPs, 46 percent of the palm oil imported by the EU is used to produce biodiesel. For this, an area of ​​around one million hectares would have to be cultivated.

The EU also increased the anti-dumping tariff rates on biodiesel from Indonesia in September 2017. In the meantime, Indonesia wants to increase its palm oil exports to the PR China in particular. The outrage in Europe and North America is another incentive for producers to turn to the downstream markets for the raw material - so-called downstreaming

Indonesia's production of palm and palm kernel oil (in million tons, change in%) 1)

Palm oilPalm kernel oilTotal 2)change
200717,73,521,1n / a
200817,53,521,0-0,4
200919,33,924,717,3
201022,04,426,46,7
201124,04,527,64,7
201226,05,228,22,4
201327,85,633,318,0
201429,85,935,66,9
201531,36,337,55,4
201633,56,740,27,1

1) 2015, 2016: preliminary figures; 2) Rounding errors possible

Source: Statistics Office BPS; EBTKE, calculations by GTAI

An important palm oil product is edible oil, which is produced for both the domestic and export markets. Around a tenth of the production ends up in the pans of the consumer. According to Data Consult, Indonesia exported edible oil worth US $ 9.6 billion in 2016. To ensure its quality, the government introduced its own product standard in March 2016, which also applies to packaging.

However, this cannot be met by many market participants due to the lack of technical possibilities. Small and medium-sized producers usually supply the edible oil in large units, only larger companies can meet the packaging standard. Data Consult anticipates an additional investment requirement of US $ 250 million for more than 1,500 special packaging machines in the entire island state.

(FMA)

Source: EKONID - German-Indonesian Chamber of Commerce and Industry

EKONID and Coordinating Ministry for Economic Affairs enhance their cooperation in German standard Vocational Education & Training