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CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
INDONESIA

Invest Indonesia NOW

  iOUTLOOK              iTALK               iENERGY
  BKPM’s ‘Red Carpet’   Generating Highly   Harnessing Energy
  Strategy              Qualified Human     from The Earth’s Core
                        Resources through
                        Tax Incentives

         CREATING COMPETITIVENESS
          THROUGH HIGH-QUALIFIED
              HUMAN CAPITAL
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
Investment Incentives:
                                    Super Tax Deduction
                               Government Regulation (PP) No. Year 2019

                                     On Vocational Education                                 On Research & Development (R&D)

 Subject               Corporate taxpayers who provide work practices             Corporate taxpayers who conducts Research and
                       an apprenticeships                                         Development activities in Indonesia

                       Manufacturing, automotive, furniture, shipping,            The R&D activities must be conducted in
 Industry              textile & garments, industrial logistics                   Indonesia and produce new inventions,
  Groups                                                                          innovations, new technologies and/or technology
                                                                                  transfer to develop industries

                       200% Reduction Rate                                        300% Reduction Rate
                       - 100% of real cost of physical laboratory                 - 100% in real R&D costs in Indonesia.
Income Tax               facilities/workshops, goods and materials use in         - The additional deduction for net income is the
 Reduction               work practices/apprenticeships, and teaching               highest of 200% of the real R&D in Indonesia.
   Rate                  instructor fees and honorarium or the other like.        * Nb: regulated types of costs that do not get additional
                       - Additional deduction of net income of                    net income deductions: cost of quality
                         100% of the real cost.                                   control, seasonal design changes, routine equipment
                                                                                  design, construction engineering/ relocation/ start-up
                                                                                  facilities, market research, etc.

                       - The cost of building, physical facilities is charged     - Additional deductions from net income are
                         according to the useful life of the fixed assets.          charged for 5 years since the results of R&D are
  Period
                       - For other fees, it is charged in the year concerned,       used.
                         so long as the additional deduction for the net          - When taxpayers have intellectual property as a
                         income does not cause a fiscal loss.                       result of the relevant R&D.

                                                     Given to:

                Vocational                            Labor Intensive
                                                                                                   Research &
             (Work Practices &                           Industry
                                                                                                  Development
              Apprenticeship)                           Reduction in net
                                                                                              Up to 300% reduction
             Up to 200% reduction                     income tax by 60%
                                                                                                 in gross income
                in gross income                        of total investment

                   In order to improve the workforce, encourage innovation, and build labor-intensive industries.
                      Regulated in PP Number 45 Year 2019           concerning the Calculation
                         of Taxable Income and the Payment of Income Tax in the Current Year
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iWORDS

                               Bahlil Lahadalia
                                Chairman of Indonesia Investment Coordinating Board

Dear Invest Readers,
This great nation is          resources which is the key        to encourage human
reorganizing itself. With     for global competition.           resources development.
a territory stretching
from Sabang to Merauke,       Human resource                    The government plays an
Indonesia is undeniably       investment is the                 important role in preparing
a country with bountiful      government’s priority             strategic programs to
natural resources. This is    to stimulate domestic             generate competent
not the only determining      industrial sectors. In            human resources which
factor to become a            terms of opportunities            are the main foundation
developed nation,             and challenges, highly-           of a nation’s development.
however.                      competitive human                 In the hands of creative,
                              resources will have               innovative, and highly
For this reason, during       a positive impact on              competitive human
the past several years, the   national competitiveness          resources, Indonesia will
Government of Indonesia       and investment climate.           be able to compete on a
has been developing           Therefore, synchronization        global level.
highly-competent human        of authority is needed

                                                           INVEST Magazine #02 - 2019         3
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iCONTENTS

 CONTENTS                     INVEST MAGAZINE #01 - 2019

iWORDS                        10 Business Forum on           22 Maintaining the Role of
                                 Furniture Industries           MSMEs in the National
03 Message from The                                             Economy
   Chairman                   11 NextICorn International
                                 Summit                      iTALK
iCONTENTS
                              12 BKPM Promotes               24 Generating Highly
04 Contents                      Indonesia in Bloomberg         Qualified Human
iMOMENTS                         New Economy Forum              Resources through Tax
                                                                Incentives
06 China International Fair   13 MoU Signing BKPM-
   For Investment And            Hyundai                     STOPPER               28
   Trade 2019                 STOPPER                   14   iENERGY
07 Indonesia-Australia        iKNOW                          30 Sidoarjo PLTSa to
   Business Summit 2019                                         Manage Tons of Waste
                              16 Achieving success from
08 The 16th China-ASEAN          the bottom                  33 Harnessing Energy
   Expo of 2019                                                 from The Earth’s Core
                              iOUTLOOK
09 China International                                       STOPPER               36
   Import Expo                18 BKPM’s ‘Red Carpet’
                                 Strategy

 4    INVEST Magazine #02 - 2019
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iCONTENTS

                             42 Legok Nangka Solid                63 Regional Investment
                                Waste Treatment                      Forum (RIF)
                             STOPPER                    44           Dubai World Expo
                                                                     2020
                             iGROW
                                                                  62 Toyama General
                             44 West Java’s Corn                     Manufacturing Industry
                                Cultivation Open                     Trade Fair (TGMITF)
                                Wide Investment                      2019
                                Opportunities47
                                When Farmer Goes                     China International
                                Digital                              Import Expo 2019
                             49 Going After Top 10 The            63 Nexticorn 2019
                                World’s
                                                                     Bloomberg New
                             STOPPER                    52           Economy Forum (NEF)
                                                                     2019
                             iTOURISM
                                                                  iACTUAL
                             54 The Ecotourism
                                Concept in Tanjungsari            64 BKPM Go Write
                                Deer Breeding                        Competition of 2019
                             56 Tegalwaru, Cultural
                                and Agribusiness
                                Destinations

iBUILD                       58 Bromo Vulcania
                                Thematic Park
38 The Focus on East
   Java Infrastructure       STOPPER                    60
   Development               iEVENT
40 Regional Infrastructure   62 Indonesia Pavilion
   Potential and Solutions      Davos 2020
                                Hannover Messe 2020

                             Publish by                           Consultant
                             Directorate of Exhibition and
                             Promotion Media, BKPM
                                                                  www.dmc-indonesia.com

                             Editor’s address
                             Badan Koordinasi Penanaman Modal (BKPM)
         Scan to Download    Jl. Jend. Gatot Subroto No. 44, Jakarta 12190 P.O. Box 3186,
                             Indonesia
                             E-mail: tuditpsp@bkpm.go.id

                                                             INVEST Magazine #02 - 2019      5
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iMOMENTS

CHINA INTERNATIONAL FAIR
FOR INVESTMENT AND TRADE 2019

CIFIT of 2019 is an annual investment exhibition                  Ambassador Djauhari
                                                                  Oratmangun said that the
held in Xiamen Fujian Province, China. There are
                                                                  good relations between
hundreds of thousands of visitors, both local                     the two countries
and international, who yearly visited the Xiamen                  could continue to be
International Conference and Exhibition Center.                   strengthened and enhanced
                                                                  for the welfare of the two
CIFIT 2019 held between          entrepreneurs and spectated      countries. This all needs
September 8 and 11, 2019         by more than 100 thousand        to be reflected in good
was a moment for the             live viewers - was officially    numbers of export, import,
Indonesian government,           opened by the Deputy             investment, tourism and
through its Ministry of          Governor of Fujian Province,     the digital economy. He
Industry and BKPM, to            Ms. Guo Ningning.                said that Fujian Province will
introduce its six potential                                       be Indonesia’s entrance to
industrial zones and attract     In his remarks, he invited       China.
prospective foreign investors.   Indonesia and China to
                                 continue to improve this         At the Forum, directed by
The Indonesian Consulate         cooperation, especially in the   the Ministry of Commerce
General in cooperation           economic field. According        of China and the Provincial
with the Fujian provincial       to him, the economies            Government of Fujian,
department of commerce,          of the two countries can         ambassador Djauhari also
also organized an event          complement each other,           expressed his views on the
‘China (Fujian) - Indonesia      given that both countries        development and potential
Investment Cooperation           are currently experiencing       of Indonesia’s digital
Promotion Conference’ and        economic growth.                 economy and e-commerce
attended by around 300                                            cooperation..

 6    INVEST Magazine #02 - 2019
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iMOMENTS

Indonesia-Australia
Business Summit 2019
The Embassy of the Republic of Indonesia in                      will also bind the two nations
                                                                 together.
Canberra, in collaboration with IIPC Sydney and
ITPC Sydney, has organized Indonesia-Australia                   The Governor of New South
                                                                 Wales (NSW) also shared
Business Summit 2019.
                                                                 the same remark. “Indonesia
                                                                 is an important partner for
Held on September 19 at         speech was delivered by the      Australia. This partnership
Sydney InterContinental         Chairman of the Indonesian       has been going on since the
Hotel, Australia, IABS          Investment Coordinating          17th century.
2019, which was officially      Board (BKPM) via video
opened by the Indonesian        conferencing.                    During the panel discussion,
Ambassador to Australia, Y.                                      BKPM explained that
Kristiarto S. Legowo, and       In his brief remarks,            Indonesia desperately
the Governor of New South       Ambassador Kristiarto            needs to upgrade its human
Wales, Australia, Margaret      Legowo emphasized on             resources skills and this was
Beazley AO QC, raised the       Indonesia-Australia bilateral    a real opportunity. IACEPA
theme “IA- CEPA: Capitalizing   relations. He believes           which was signed in March
Partnership, Gaining Mutual     that IACEPA signing will         2019 will hopefully create
Benefits.”                      be the foundation of this        business cooperations.
                                increasingly close and           Indonesian and Australian
There were at least 250         mutually beneficial bilateral    education providers have
participants consisting of      economic cooperation. The        begun to work together
government officials, the       agreement will not only          to improve technical skills
academics and business          cover trade and investment       according to the standards of
partakers. The keynote          in education and training, but   the two countries.

                                                           INVEST Magazine #02 - 2019       7
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iMOMENTS

The 16th
China-ASEAN Expo of 2019
Indonesia has the honor of being a Country of                   to fear, but it something
                                                                we can use or exploit.
Honor for the second time at the 16th China –
                                                                Just like in real life, you
ASEAN Expo 2019 event held on September 22,                     can’t always run at high
2019 in Nanning, China.                                         speed,” he explained.
                                                                Thomas added that in the
                                                                last 5 years there was an
                                                                increase in the investment
                                                                ecosystem in Indonesia,
                                                                marked by the escalated
                                                                ranking of Ease of Doing
                                                                Business.

                                                                We can stay optimistic that
                                                                there will be improvements
                                                                in the investment climate
                                                                after President Jokowi
                                                                announced a new cabinet.
                                                                Furthermore, Thomas also
                                                                conveyed that, amidst
Indonesian Delegation was        Investment Promotion           reduced US Dollar liquidity,
led by the Coordinating          Agency, we must respond        we need ASEAN members
Minister for Maritime Affairs,   to the trend of slowing        leadership to start using
accompanied by the               down as a commonplace          other currencies for trade,
Trade Minister and BKPM          in the global economic         tourism and investment
Chairman. On the sidelines       cycle. This is the right       transactions.
of events, BKPM Chairman         time to make reflections,
                                                                The series of the 2019
delivered a speech at 3          corrections, and
                                                                CAEXPO events expected
separate forums including        improvements. One of the
                                                                to be the momentums
“Roundtable Meeting on           tasks of the promotion
                                                                for increasing trade,
Investment Cooperation”,         agency is to assure business
                                                                investment and tourism
“Indonesia Trade and             partakers that investment
                                                                relations in ASEAN. At
Investment Forum”, and           opportunities are still wide
                                                                present, China is the
“RMB Internationalization        open, particularly in the
                                                                third largest investor in
and ASEAN Local Currency         technology and digitization
                                                                Indonesia with a total
Settlement Forum.”               sector.
                                                                investment reaching 12.1
BKPM Chairman Thomas             “The economy slow down         billion USD in the first
Lembong said that as an          is not something we have       Semester of 2019.

 8    INVEST Magazine #02 - 2019
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iMOMENTS

China International
Import Expo
The 2nd China International Import Expo (CIIE)                  and beverages, swallow bird
                                                                nests, palm oil, coal, services
2019 was held November 5-10, 2019 at the
                                                                and medical equipment.
National Exhibition and Convention Center
Shanghai, China. Under the theme of “New                        On the sidelines of the 2nd
                                                                CIIE, The Ministry of Trade
Era, Shared Future,” attracted more than                        also held an Indonesia-
500,000 domestic and overseas buyers.                           China Business Forum on
                                                                November 6, 2019. What
                                                                was raised at this forum was
This year, Indonesian          for recycled plastic seed
                                                                the hopes of entrepreneurs
delegation was lead by The     products, swallow bird nests,
                                                                to increase cooperation
Minister of Coordinating       oleo chemicals, and coal.
                                                                between the two countries to
for Maritime Affairs and
                               Indonesian Pavilion itself       support the improvement of
Investment, H.E. Luhut
                               occupies an area of 136 m²       Indonesian products in China.
Binsar Pandjaitan as the
Special Envoy of the           in Hall 5.2 and feature booths
                                                                Attended by Indonesian
Republic of Indonesia and      of the State Gas Company,
                                                                Ambassador for China,
Minister of Trade, H.E. Agus   Indonesia Investment
                                                                H.E. Djauhari Oratmangun,
Suparmanto. At the 2nd CIIE,   Coordinating Board (BKPM),
                                                                Director General of National
Indonesia has managed to       and PT Astra International.
                                                                Export Development, Mr.
record a transaction value     Indonesian products that
                                                                Dody Edward, and the
of US$ 4.1 billion, which      are being exhibited in the
                                                                Consulate General of the
transaction came from the      2019 CIIE among others
                                                                Republic of Indonesia
signing of Memorandum          are electronics, automotive,
                                                                Shanghai, Mr. Deny W. Kurnia.
of Understanding (MoU)         garments, accessories, food

                                                          INVEST Magazine #02 - 2019        9
CREATING COMPETITIVENESS THROUGH HIGH-QUALIFIED HUMAN CAPITAL - Invest Indonesia NOW - BKPM
iMOMENTS

Business Forum on
Furniture Industries
Furniture industry is one of President Jokowi’s priority sectors
to create jobs, increase exports, and reduce the trade deficit.

On Tuesday, November 5,          an abundant supply of the       the center for Indonesia’s
2019, BKPM held ‘Business        industry’s raw materials.       furniture.
Forum on Furniture               Indonesia also one of the
Industries’ (BFFI) at Bidakara   largest rattan producers in     BFFI is the follow-up of
Hotel, Jakarta. Around           the world.                      the working visit of BKPM,
60 domestic and foreign                                          Industry Ministry, Indonesian
furniture businesspeople,        The determination of Central    Furniture and Crafts Industry
including from Shandong          Java as the location for the    Association, and Indonesian
Province, China, attended        furniture industry’s cluster    Furniture and Handicraft
this business forum.             was based on the magnitude      Industry Association to
                                 of its production forest, its   Guangzhou Province, China,
Investors that have been         availability of skilled human   on October.
affected by the US-China         resources, and its developed
trade war are the target         infrastructures.                Moreover, the series of
of Indonesia’s furniture                                         CJIBF event was followed
industry, and these investors    Indonesia needs to develop      by site visits to some
are expected to partner up       its furniture industry,         potential locations for the
with the local Micro, Small      considering that the export     furniture industry cluster in
and Medium Enterprises           value of furniture was still    Central Java (Pemalang and
(UMKM), or to take part in the   low, around USD 1.69 billion.   Kendal). BKPM will actively
industry’s supply chain.         This cluster would develop      assist the investment plan
                                 the industry from upstream      and realization on furniture
Indonesia has the potential      to downstream and will also     industry in
to be the world’s largest        be expected to become           Indonesia
furniture producer, as it has

 10    INVEST Magazine #02 - 2019
iMOMENTS

NextICorn
International Summit
This summit brought together more than a
hundred curated local tech startups and global-
scale venture capitals across the globe.

NextICorn actively            importance of startups             Indonesia. To achieve this,
streamlines and promotes      as the ‘new heroes’ of             the government has to
Indonesia’s most investable   economic growth and                catch up and take the lead
startups to the most          therefore has programs             to understand and regulate
capable investors around      to promote the rise of             new models of work so
the world. This year, the     startups by providing funds        that the startups can grow
NextICorn International       from the pre-startup stage         in a favorable environment.
Summit was successfully       until the post-startups or
held at Jimbaran Hub, Bali,   incubations.                       Through the summit, it is
on 14-15 November 2019.                                          expected that potential
                              Deputy Chairman for                local investors can gain a
This summit brought           Investment Promotion               better understanding on
together more than a          highlights the importance          investment in startups and
hundred curated local tech    of investment in digital           that local governments can
startups and global-scale     economy to boost                   regulate better policies for
venture capitals across       investment partnering              the development of the
the globe. Ministry of        with SMEs and ensure an            startups.
Research and Technology       evenly-distributed first-class
acknowledges the              investment throughout              To strengthen the startup
                                                                 ecosystem, related
                                                                 ministries and agencies
                                                                 have to work together to
                                                                 advocate and ease the
                                                                 access for startups to
                                                                 potential investors and
                                                                 other related stakeholders.
                                                                 A strong ecosystem will
                                                                 eventually become the
                                                                 foundation for Indonesian
                                                                 digital economy, and
                                                                 transform local startups
                                                                 into global players.

                                                            INVEST Magazine #02 - 2019      11
iMOMENTS

BKPM Promotes Indonesia in
Bloomberg New Economy Forum
Indonesia was invited to the series of Bloomberg                 Indonesia’s ranking in the
                                                                 Ease of Doing Business
NEF 2019 activities with the theme ‘Building Asia:               (EODB) and investment
Spotlight on Indonesia and Its Next-Generation                   realization.
Industries and Talents’
                                                                 “We expect a quality
                                                                 investment that can
One of the efforts made is to   Ambassador of the                develop a partnership with
utilize the 2019 Bloomberg      Republic of Indonesia to         local MSMEs. Therefore,
New Economy Forum (NEF)         the People’s Republic of         we focus to oversee and
at the Beijing Yanqi Lake       China and Mongolia Djauhari      accelerate the realization of
International Convention        Oratmangun explained             large investments and form
& Exhibition Center (ICE),      a number of investment           a Task Force to facilitate
Beijing, China which            policies under the leadership    constrained investors,” he
attended by more than 500       of President Joko Widodo         said.
government, political and       will provide greater certainty
business leaders. Guided by     for investors.                   The Ambassador explained
Haslinda Amin, Indonesia                                         that the EV sector is
was invited to fill one of      Director of Investment           currently in demand by
the breakout sessions with      Planning for Services and        a number of Chinese
the theme “Building Asia:       Zones of BKPM Nurul              investors. “The plan of
Spotlight on Indonesia          Ichwan said the policies         Chinese investors to open
and Its Next-Generation         currently support economic       the EV/hybrid industry will
Industries and Talents”.        growth through improving         certainly attract even more
                                                                 investment in the battery
                                                                 industry, considering that
                                                                 nickel resources very
                                                                 abundant in Indonesia,”
                                                                 added Nurul.

                                                                 As one of the participants,
                                                                 Founder of Traveloka Ferry
                                                                 Unardi said the development
                                                                 of digital economy in
                                                                 Indonesia is very significant,
                                                                 not only travel and
                                                                 e-commerce but also
                                                                 education and health.

 12    INVEST Magazine #02 - 2019
iMOMENTS

MoU Signing BKPM-Hyundai
Hyundai Motor Company (HMC) has announced their investment plan of
USD 1,549 Billion (IDR 21.8 Trillion) in Indonesia.

                                                                 Hyundai will begin
                                                                 production in 2021, with
                                                                 capacity of 70,000 to
                                                                 250,000 units per year
                                                                 including electric cars
                                                                 going forward. Hyundai
                                                                 investment can provide a
                                                                 high added value to the
                                                                 Indonesian economy,
                                                                 absorbing 3.500 workers,
                                                                 developing training centers,
                                                                 research and development
                                                                 of electric cars.
This announcement was            The signing was part of the
                                                                 One of the reasons
validated through the            President of the Republic
                                                                 Hyundai will operate in
signing of a Memorandum          of Indonesia’s visit to the
                                                                 Indonesia is because the
of Understanding (MoU)           Factory HMC in Ulsan,
                                                                 country has nickel ore
between the government and       South Korea on November
                                                                 raw material used for
the HMC signed by the BKPM       26, 2019. The investment is
                                                                 Lithium-ion batteries as
Chairman Bahlil Lahadalia and    planned to be carried out
                                                                 an important component
the President & CEO of HMC       through two stages, namely
                                                                 of electric vehicles.
Won Hee Lee, and witnessed       in 2019-2021 and 2022-
                                                                 Nowadays, there has
by the President of the          2030.
                                                                 been already a number
Republic of Indonesia Joko
                                 In the first phase, Hyundai     of companies developing
Widodo, the Coordinating
                                 will focus on investing in      the battery industry for
Minister for Maritime Affairs
                                 car manufacturing plants        electric cars, for instance in
and Investment Luhut Binsar
                                 and will export at least 50%    Morowali.
Pandjaitan, Coordinating
Minister for Economic Affairs    of total production. The
                                                                 Several electric vehicle
Airlangga Hartarto, Minister     second phase will focus
                                                                 battery manufacturers from
of State Secretary Pratikno,     on developing an electric
                                                                 East Asian countries are
Minister of Industry Agus        car manufacturing plant,
                                                                 now being approached by
Gumiwang Kartasasmita,           transmission plant, research
                                                                 Indonesia Government to
Minister of Trade Agus           and development (R&D),
                                                                 build a production facility
Suparmanto, and Minister of      training centers, and will
                                                                 and make Indonesia as a
Foreign Affairs Retno Marsudi.   export 70% of the total
                                                                 global production center
                                 production.
                                                                 for electric batteries.

                                                            INVEST Magazine #02 - 2019       13
INDONESIA INVESTMENT PERFORMANCE
                                 (2019 Q3)

                    INVESTMENT REALIZATION (JANUARY-SEPTEMBER 2019)
                      has reached IDR 601.3 T or 75.9% of the 2019 investment target of IDR 792 T.

                                             IDR 601.3 T                        IDR 205.7 T
                                                                                in 2019 Q3
                                             Total
                                             investment
                                             realization in                       Rose
                                             2019 Q3, from
                                                                                   by
                                                                                  18.4%
                                             the IDR 792 T
                                             (target in 2019)                   IDR 173.8 T
                                                                                in 2018 Q3

              INVESTMENT REALIZATION                                       INVESTMENT REALIZATION
             (JANUARY-SEPTEMBER 2019)                                     (JANUARY-SEPTEMBER 2019)
                 BASED ON SECTORS                                             BASED ON REGION

                                    Rp 253.3 T                                             Rp 330.2 T                                 Java
Other
                                     (42.1%)                                                (55.0%)

                                                                         Realization
Transportation,
warehouse and                   Rp 111,1 T                               based on region Rp 113.9 T
                                                                                                                                 Sumatera
telecommunication                (18,5%)                                 in January –          (19.0%)

                                                                         September 2019
Electricity,                                                             period, the highest Rp 63.4 T
Gas and                    Rp 95,9 T                                                                                           Kalimantan
Water Supply                (16,0%)                                      realization of DDI       (10.5%)
                                                                         and FDI is located
                                                                         in Java island. The
Construction           Rp 48.9 T                                                                    Rp 48.8 T                     Sulawesi
                        (8.1%)                        Transportation,    further ranks of             (8.1%)
                                                      warehouse and      realization of the DDI
Housing,                                  telecommunication are          is in Java, Sumatera,
Industrial Estate    Rp 47.4 T                                                                           Rp 24.9 T       Maluku and Papua
and Office            (7.9%)                   still the sectors with    Kalimantan, Sulawesi,            (4.1%)
Building                                   the highest investment        Bali and Nusa Tenggara,
                                                    realization in the   and also Maluku and
                    Rp 44,7 T                                                                                  Rp 20.1 T           Bali and
Mining                                         January-September         Papua regions. The further                         Nusa Tenggara
                     (7,4%)                                                                                      (3.3%)
                                               2019 period with an       ranks of realization of the
                                                   investment value      FDI is in Java, Sumatera,
                                           reaching IDR 111.1 T or       Sulawesi, Maluku and Papua,
                                         18.5% of the total sector       Kalimantan as well as Bali and
                                            investment realization.      Nusa Tenggara regions.

             14     INVEST Magazine #02 - 2019
INDONESIA INVESTMENT PERFORMANCE
                  (2019 Q3)

                         BASED ON LOCATION (JAN - SEP 2019)

                                                                                        Based on locations,
                                                                                  investment realization in
                                                                               West Java ranks first with a
                                                                                 total investment reaching
                                                                              IDR 102.1 T followed by DKI
                                                                              Jakarta (IDR 95.6 T), Central
                                                                               Java (IDR 47.2 T), East Java
                                                                                   (IDR 46.8 T) and Banten
                                                                                (IDR 33.8 T) in the current
                             Special
                                                                                 January-September 2019
                            Territory   Central                                                     period.
 Others     West Java      of Jakarta     Java      East Java     Banten
Rp275,8 T   Rp 102,1 T     Rp 95.6 T    Rp 47,2 T   Rp 46,8 T    Rp 33,8 T
 (45,9%)     (17,0%)         (15,9%)     (7.8%)       (7,8%)       (5,6%)

   INVESTMENT REALIZATION IN JANUARY – SEPTEMBER 2019 :
              BASED ON COUNTRY OF ORIGIN

                                                             Others
                                                                                   Singapore
                                                            US$ 5.5 B
                                                                                   US$ 5.4 B
Realization of investment in                                 (25.9%)
                                                                                     (25.5%)
the January-September 2019
period still puts Singapore in
                                                    Hong Kong
the first position with a total                      US$ 1.7 B                             China
investment reaching $ 5.4 M.                          (8.0%)                             US$ 3.3 B
                                                           Netherlands                    (15,6%)
China P.R. came second ($
                                                            US$ 2.1 B          Japan
3.3 M), followed by Japan ($                                 (9,9%)          US$ 3.2 B
3.2 M), the Netherlands ($ 2.1                                                (15.1%)

M), and Hong Kong, China ($
1.7 M).

                                                                   INVEST Magazine #02 - 2019          15
iKNOW

Achieving success
from the bottom
The wheel of life is always spinning. If we don’t
keep moving, we won’t ever reach the top. Being
born in a simple working-class family did not
dampen the spirit of Bahlil Lahadalia to achieve
his success.

The man who was born on        In the mining sector, he had
August 7, 1976 was appointed   successfully managed
by President Joko Widodo       39,000 hectares of coal
to occupy an important         mining in Fak-Fak,
position as Chairman of        West Papua, and
Indonesia Investment           11,000 hectares
Coordinating Board (BKPM).     of nickel
Due to his major in business   mining in
background, Bahlil was         Halmahera.
appointed to represent         While, in
professionals at BKPM.
                               construction,
Not many people know           PT Bersama
about Bahlil before he         Papua Unggul which he
occupies this position. But    owns had won a number of
certainly, the company         Bofuer-Windesi (MYC) road
he had managed have            construction projects with
been operating in several      the Ministry of PUPR. The
sectors: plantations,          same success had been
property, logistics, mining,   achieved by PT Dwijati
and construction. He also      Sukses, whose name is often
led several companies like     seen on government project
PT Rifa Capital, PT Dwijati    auction sites.
Sukses and PT Bersama
Papua Unggul. PT Rifa          THE KEY TO BUSINESS
Capital is a holding of 10     SUCCESS
companies, including PT        Before becoming the
Ganda Nusantara, PT MAP        Chairman of BKPM, Bahlil
Surveillance, and PT Pandu     had been the Chairperson of
Selaras.                       the Central Managing Board

 16    INVEST Magazine #02 - 2019
iKNOW

(BPP) of the Indonesian
Young Entrepreneurs
Association (HIPMI) since
2015. Bahlil had went
through a long-life journey
before finally achieving
his business success. He
suggested three things to
succeed in business: being
smart, hard-working, and
confident.

Intelligence is not only in
terms of science, but also
in seeking opportunities,            mother worked as a washer
by taking advantage of               woman.
                                                                        BAHLIL LAHADALIA
opportunities that come
your way, and being                  Before having success in           Birthdate & Birthplace :
able to convince others.             his grasp, he had tried a          Banda, August 7, 1976
  According to Bahlil, there         number of professions
                                     from selling cookies at            EDUCATION :
   are characteristics that all
    entrepreneurs must have:         school to financially aid his      Bachelor's Degree from Port
     hard work, persistence,         family to finally becoming         Numbay Higher Education of
      and firm belief.               a conductor and driver             Economics, Jayapura, Papua
                                     of a public transportation
      BEING A                                                           Master's Degree from
                                     during his teenage years.
      CONDUCTOR                                                         Financial Management of
                                     To make a long story short,
       AND A DRIVER                                                     Cendrawasih University
                                     due to his hard work and
       OF PUBLIC                     earnest effort, Bahlil finally     ORGANISATION :
        TRANSPORT                    managed to register at Papua
         Bahlil began his                                               Chairman of BPD HIPMI
                                     Port of Numbay School of
          success from the                                              Papua (2008)
                                     Economics.
           bottom. For him,                                             Head of Infrastructure and
            success without          With great determination and       BPP HIPMI Properties (2011-
            hard work is             confidence, he was able to         2014)
             impossible.             change his destiny. Bahlil was
                                     even able to realize his ideals.   Chairman of BPP HIPMI
              Growing up from
                                     “I came from and grew up in        (2015-2019)
               a working-class
                 family, he had      limitations. But I proved that     CAREER :
                  to fight for his   I could achieve what I had
                                                                        Commissioner of PT Rifa
                  dreams and         dreamed of. We need to
                                                                        Capital, Holding Company
                ideals. Bahlil’s     understand that the people
                                                                        which is in charge of 10
           father used to be         who survive are those with
                                                                        Companies
           a construction            great confidence,” he said.
           worker, while his                                            Head of BKPM (present)

                                                                  INVEST Magazine #02 - 2019       17
iOUTLOOK

                              BKPM’s
                           ‘Red Carpet’
                             Strategy

      The Investment         Investors are highly eager      SIMPLIFYING LICENSING
                             to invest in Indonesia.         REGULATIONS
  Coordinating Board
                             Unfortunately the realization   Therefore, investments will
 (BKPM) is preparing         shows otherwise. Seeing this    not be made complicated
a surefire strategy of       unsatisfactory realization,     nor will it be taken for
welcoming investors          the Head of the Investment      granted. Bahlil had prepared
                             Coordinating Board (BKPM)       six moves or strategies. The
    who are willing to       Bahlil Lahadalia seeks          first step is improving the
   invest in Indonesia       to ensure investors are         ranking of Ease of Doing
with a “red carpet.”         welcomed by a ‘red carpet’      Business in Indonesia.
                             when they invest here.          According to the Doing

18    INVEST Magazine #02 - 2019
iOUTLOOK

       Indonesia
       is targeted
  to be in the
  top 50 of the
  World Bank’s
  Business Ease
  of Business
  ranking.

Business of 2020 report             became a homework for             There are foreign
released by the World Bank          the government to provide         investments that face land
in late November 2019, the          stimulus in order to attract      use constraints of a IDR
ranking of ease of doing            investors to Indonesia            264.3 trillion-value, namely
business in Indonesia is still in   and be considered as an           2 companies in Banten and
the 73rd position.                  attractive foreign investment     1 in East Java. Others face
                                    destination.                      regional regulations worth
In 2018, Indonesia’s ranking
                                                                      IDR 21.3 trillion in Southeast
also rose significantly by 19       The second step or stance         Sulawesi and North Maluku.
ranks to the 72nd position.         to strengthen investments
Indonesia is targeted to be in      is through the execution          There are investments
the top 50 of the World Bank’s      of stalled and constrained        worth IDR 190.2 trillion
Business Ease of Business           large investments in the field.   which are constrained by
ranking. Elevating the Ease         Accelerating licensing at an      recommendations and
of Doing Business (EoDB)            area is one of the strategies     technical permits in several
rank, which had dropped,            to attract investors.             regions. Meanwhile, IDR 1.6
                                                                      trillion worth of investment
                                                                      is constrained by the State-
                                                                      Owned Enterprises (SOEs)
                                                                      business-to-business, IDR
                                                                      3.3 trillion is constrained by
                                                                      other issues, and IDR 226.5
                                                                      trillion is constrained by fiscal
                                                                      incentives.

                                                                      To overcome these licensing
                                                                      constraints, Bahlil also
                                                                      promised to do inventory
                                                                      and revise regional
                                                                      regulations that hamper

                                                                INVEST Magazine #02 - 2019         19
iOUTLOOK

                                                                    be targeted at European,
                                                                    East Asian and Middle
                                                                    Eastern countries. While
                                                                    the investment for the
                                                                    development of human
                                                                    resources is more likely to
                                                                    be targeted at Australia and
                                                                    America.

                                                                    The last step is inviting
                                                                    domestic investors to
                                                                    face the global economic
                                                                    slowdown. “We also have
                                                                    to strengthen domestic
investments. He will also         no longer confined in Java.       investors. Investments
prepare a Task Force to assist    “Not only is the investment       should not only be focused
investors and accelerate the      expanded, but it also has         on big sectors but also on
realization of investments.       first-class quality. There is     the MSMEs and medium-
“Whenever an investor has a       added value, employment           sized entrepreneurs,” he
permit but has not yet built      and partnership with local        said.
a factory, we will dispatch       communities, “said Bahlil.        SIMILAR REMARKS
a task force team to help,                                          FROM THE MINISTER
“Bahlil said.                     The fifth step is to strengthen
                                                                    OF FINANCE
                                  investment through
                                                                    In line with Bahlil, Minister
THE THIRD TO THE LAST             promotions focused on
                                                                    of Finance Sri Mulyani
STANCE                            the sector and investor
                                                                    Indrawati said that the new
In the Third Stance, he           country. For instance, the
                                                                    government will welcome
will encourage investors          focus of investment in
                                                                    foreign investors, who
to partner with local small       the infrastructure sector is
                                                                    are willing to invest their
and medium enterprises            considered more suitable to
                                                                    capital in Indonesia, with
(SMEs) to create a conducive
ecosystem and climate for
investment. Meanwhile, the
fourth strategy that will be
carried out by BKPM is to
encourage more widespread
first-class investment.

Investment opportunities
will be extended outside
Java. In his presentation
of Indonesia’s investment
figures in the third quarter of
2019, Bahlil explained that
investments for projects are

 20    INVEST Magazine #02 - 2019
iOUTLOOK

a red carpet. “You (foreign
investors) will not only be
                                       Investment realization in the
coming to our country, but             third quarter (2019)reached
you will also be served and
provided with incentives,”         IDR 601.3 trillion, while Realization
Sri Mulyani said to the US         of Domestic Investment reached
foreign investors who came
at the 2019 US-Indonesia           IDR 283.5 trillion and Foreign
Investment Summit at the           Investment IDR 317.8 trillion.
Mandarin Hotel in Jakarta
(11/21).
                                                                    same period in 2018. The
                                 INVESTMENT
Sri Mulyani said that, so far,   REALIZATION                        higher investment realization
the Indonesian government        Meanwhile, BKPM had                was due to the smooth
had assisted every investor      recorded that investment           general election last April,
who came in, such as             realization in the third quarter   and therefore providing a
through tax relief, from tax     (2019) reached IDR 601.3           positive climate for investors.
holidays to tax allowances.      trillion, while Realization of     Bahlil is optimistic that the
She said the various             Domestic Investment (PMDN)         investment realization target
incentives were being            reached IDR 283.5 trillion and     this year will be achieved.
reformulated in line with        Foreign Investment (PMA) IDR       Moreover, the achievements
the government’s attempt         317.8 trillion.                    between January and
to simplify the investment                                          September 2019 have
permit process and provide       This year’s realization is 12.3%   fulfilled the 75.9 percent
certainty to entrepreneurs.      higher compared to the             portion of the target.

                                                              INVEST Magazine #02 - 2019        21
iOUTLOOK

Maintaining the Role of MSMEs
in the National Economy
Even if they’re not as big as private companies,                  economy got affected by the
                                                                  global economic crisis.
Micro, Small and Medium Enterprises (MSMEs)
made a big contribution to the national economy.                  MSMES CONTRIBUTION
                                                                  Data from the Ministry of
MSMEs contribution today         but also aimed at MSMEs and      Cooperatives and Small
cannot be underestimated.        medium entrepreneurs.            and Medium Enterprises
The rise of e-commerce with                                       (Kemenkop UKM) states that,
its digital economic potential   According to Bahlil, MSMEs       in terms of the number of
is one of the milestones         had historically been known      units in 2017, MSMEs has
of the domestic rise of          as the savior of the 1998        a share of around 99.99%
small and medium scale           national economic crisis         (62.9 million units) of the
businesses.                      when the national inflation      total number of business
                                 reached 88 percent, with a 13    operators in Indonesia, while
The Sluggish global              percent deficit, and foreign     large businesses only have
economic climate has             exchange reserves fell to        0.01% or around 5400 units.
pushed the Chairman of the       approximately USD17 billion.     Micro Business absorbs
Investment Coordinating          When many investors fled to      around 107.2 million workers
Board (BKPM) Bahlil Lahadalia    save their fortune, it was the   (89.2%), Small Business
to encourage domestic            MSMEs that protected the         5.7 million (4.74%), while
investors for investment         national economy.                Medium Enterprises absorbs
escalation in the country.                                        3.73 million (3.11%).
The invitation was not only      Bahlil believes that MSMEs
aimed at domestic investors,     was considerably significant     Meanwhile, in terms of labor
particularly large companies,    when the Indonesian              absorption, Large Enterprises

 22    INVEST Magazine #02 - 2019
iOUTLOOK

only absorb around 3.58        In fact, MSMEs can             PROTECTING MSMES
million people. This means     contribute around 60% of       FROM FOREIGN
that, as a whole, MSMEs can    the total national Gross       INVASIONS
absorb around 97% of the       Domestic Product. In           In order for the MSMEs to
total national workforce,      2017, Indonesia’s GDP was      be the backbone of the
while Large Enterprises only   around IDR 13,600 trillion.    national gross domestic
absorb around 3%.              This means that the total      product (GDP), Bahlil stand
                               MSMEs revenue was around       guard over the national
                               IDR 8,160 trillion! Micro      MSMEs growth so that it
                               Business yearly contributes    will not be intervened by
                               around IDR 5,000,000, Small    any foreign investors. The
                               Business IDR contributes       government and the House
                               1,300 trillion, while Medium   of Representatives, according
                               Business around IDR 1,800      to Bahlil, are currently
                               trillion, and Large Business   discussing the Omnibus Law
                               around IDR 5,400 trillion.     to fix the bureaucracy and
                                                              regulations that hamper the
                                                              business climate.

                                                              The government wishes for
                                                              both domestic and foreign
                                                              investment to immediately
                                                              generate the real sector. “I
                                                              asked the Director General
                                                              to be very careful, to not
                                                              exclude MSMEs from the
                                                                        vacant list, so that
                                                                          foreigners will
                                                                           not be able
                                                                            to intervene,”
                                                                              Bahlil said.

                                                         INVEST Magazine #02 - 2019       23
iTALK

                                   l Farah Ratnadewi Indriani
                                     Deputy Investment
                                     Promotion of BKPM RI

24    INVEST Magazine #02 - 2019
iTALK

          Making
 Highly Qualified
Human Resources
    through Tax
      Incentives
          President Jokowi has issued a regulation
        on major tax deductions aimed at boosting
     investment, research and development (R&D)
       as well as the participation of businesses in
          improving Indonesia’s human resources.

                        INVEST Magazine #02 - 2019   25
iTALK

Under Government
Regulation (PP) No.                    With a bigger incentive,
45/2019 regarding                      domestic business players are
Calculation of Taxable
Incomes and Settlement of          expected to be more interested in
Income Tax in Current Year,        doing vocational training, as well
which was issued on June
25 and is an amendment             as R&D activities
of Government Regulation
No. 94/2010, taxpayers can
enjoy a tax deduction of up      tax. With a bigger incentive,    that they are relatively less
to 300 percent.                  domestic business players        skilled compared to other
                                 are expected to be more          ASEAN countries. Therefore,
HOW DOES BKPM                    interested in doing vocational   fiscal incentives are needed
VIEW THE SUPER
                                 training, as well as R&D         to stimulate the business
DEDUCTION TAX
                                 activities. ‘One of investors’   players to increase activities
POLICY?
                                 concerns on our workers is       in training their workers.’
Super deduction tax policy
could help improving the
skills of Indonesian workers.
Currently, there is an urgent
need to improve the skills
of Indonesian workers. The
amount of super deduction
incentive of 200 percent
reflects the critical needs of
domestic industrial players
for skilled workers. Besides,
ASEAN countries in average
have also imposed this 200
percent super deduction

 26    INVEST Magazine #02 - 2019
iTALK

AND HOW HAVE
INVESTORS RESPONDED                        We project that investment
TO THE POLICY?                             during the year 2020-2024 to
Investors have been giving
positive reactions towards the         reach Rp 5,745.3 billion with an
super deduction tax policy.
Seeing this, BKPM is optimistic
                                       average of 11.7 percent per year
that the investment realization
target could be achieved.            ‘Tourism becomes one               players to utilize the super
Investment is inevitably the         of the leading sectors in          deduction tax policy in
key to Indonesia’s positive          investment. We project             preparing for competent
economic growth. This is in          that investment during the         workers in tourism sector.
line with President Jokowi’s         year 2020-2024 to reach            Investors could also utilize
instructions to all ministries/      Rp 5,745.3 billion with an         this incentive to encourage
agencies, which is to open           average of 11.7 percent per        the creation of highly
the access as wide as possible       year.’ Moreover, we also           qualified human resources
to facilitate the investments        suggest tourism business           within that sector.
and to boost exports.

WHICH SECTOR DO YOU
ENCOURAGE TO TAKE
ADVANTAGE OF THIS
POLICY?
The government will offer
the super deduction tax to
investors in tourism sector,
specifically in five high priority
tourism destinations. These
destinations include Toba
Lake, Borobudur, Mandalika,
Labuan Bajo and Likupang.

                                                                   INVEST Magazine #02 - 2019      27
28   INVEST Magazine #02 - 2019
“If we focus on developing our human capital
using the latest ways and means, the demographic
   bonus will help us make a significant leap in the
                          country’s development.”

                              INVEST Magazine #02 - 2019   29
iENERGY

Sidoarjo PLTSa
to Manage Tons of Waste
Accumulation of waste becomes a serious                          SIDOARJO WASTE
                                                                 To reduce the garbage that
problem. Not only will it spread an airborne
                                                                 accumulates in urban areas.
disease, but the piles of waste will also be                     Several regions will process
hazardous to the surrounding community.                          waste into electricity, one
                                                                 of which is in Sidoarjo. Data
Along with the development        Waste is categorized           from the Department of
of the era and technology,        based on several criteria      Environment and Hygiene
scientists and researchers        which differentiate energy     (DLHK) of Sidoarjo Regency
had worked hard to solve          substance within each          said that in July 2019
the ever disturbing garbage       heterogeneous waste.           garbage in Sidoarjo reached
issue from year to year.          “To equalize these energy      2,400 tons per day. While
Through an environmentally        levels, we need to prepare a   the garbage processing
friendly technology-based         pre-treatment step through     installation in Sidoarjo is
management, the waste             chopping, blending, drying,    only able to accommodate
is managed and utilized as        and then pellets formation.    around 600 tons of garbage
a renewable energy. It will       This requires additional       per day.
therefore not only reduce         work and equipment. With a
the negative environmental        good management, this will     Sigit Setyawan, Head of
impact, but will also solve the   become a new source of         DLHK Sidoarjo, said, “There
energy crisis.                    income. “                      are 1,800 tons of potential
                                                                 waste per day that has not
                                                                 been treated by the garbage

 30    INVEST Magazine #02 - 2019
iENERGY

processing installation
system, both in temporary
landfills (TPS) and in landfills
(TPA) provided by the
government.” To overcome
this waste problem, the
Government of East Java
Province plans to build a
Waste Power Plant (PLTSa).
The construction of the
waste power plant (PLTSa)
will take place in Jabon,
Sidoarjo.

In addition to proposing
                                   complete and operational.
Sidoarjo as an alternative                                         FOR MORE INFORMATION
                                   “As soon as Surabaya signed
location for PLTSa, East                                           Director of Sidoarjo Investment
                                   the PJB (Sales and Purchase
Java Deputy Governor Emil                                          Agency and Integrated License Service
                                   Agreement with PLN), I
Dardak said the provincial                                         +628123253303
                                   will immediately notify the
government was also                                                a.suryono1975@gmail.com
                                   governor and will follow it
reviewing several other
                                   up,” Emil said.
locations to become PLTSa
development sites, including:      INVESTMENT IN PLTSA             Technology Assessment
Lamongan, Pasuruan,                The development project         and Application Agency
Malang, Jember, and Gresik.        of the Department of            (BPPT) Hammam Riza
                                   Environment and Sanitation      gave an explanation on the
The selection of regencies         of Sidoarjo Regency aims to     technology in PLTSa.
and cities is adjusted to          manage waste into electricity
the amount of waste,                                               He said, “The PLTSa Pilot
                                   and control the volume of
priority scale, and regional                                       Project uses thermal
                                   waste in Sidoarjo. With the
affordability. The step of                                         technology with an
                                   status of the land that has
assessing several cities as                                        incineration type with
                                   been prepared by the local
PLTSa construction sites                                           a reciprocating grate
                                   government, this PLTSa
is carried out in order to                                         type furnace. It was a
                                   project has an estimated
minimize the amount of                                             technology which has been
                                   investment value of US $
waste in the province. In                                          proven and widely used
                                   93.8 Million and a BOT (Build
addition, these regions can                                        worldwide in terms of Waste
                                   Operate Transfer) business
contribute to the national                                         to Energy (WtE) conversion.
                                   scheme with a concession
electricity supply sold to PLN                                     It’s also environmentally
                                   period of 30 years.
(the State Electric Supply                                         friendly (equipped with
Company).                          Before the construction of      pollution control devices),
                                   PLTSa, comparative studies      economical, and applicable
The PLTSa construction will        had been conducted in           for waste conditions in
begin once the construction        several countries, from Japan   Indonesia, and has a high
of the Surabaya PLTSa is           to Scandinavia. Head of the     potential of TKDN.

                                                             INVEST Magazine #02 - 2019        31
iENERGY

                                                             dioxins and furans can be
                                                             minimized.

                                                             Hamman explained that the
                                                             heat which was carried by
                                                             the exhaust gases resulting
                                                             from the combustion of
                                                             garbage, is used to convert
                                                             water in a boiler to steam
                                                             to turn a turbine to produce
                                                             electricity. The PLTSa unit
                                                             is also equipped with an Air
                                                             Pollution Control unit to clean
                                                             up hazardous substances
                               PLTSa has 4 main equipment    carried in the flue gas, so the
FOR MORE INFORMATION           consisting of a bunker as a   flue gas that comes out meets
Subsection Head of Promotion   garbage container, equipped   the quality standards set.
             +6281354081339    with a platform and grab
         niez9918@gmail.com                                  This waste-to-electricity
                               crane as well as combustion
                               grate combustion chamber      processing facility has a waste
                               system, designed to burn      processing capacity of 100
                               trash with temperatures       tons/day and is expected to
                               above 850 degrees Celsius     be able to produce 750 kWh
                               so that the formation of      of electricity per day.

32    INVEST Magazine #02 - 2019
iENERGY

Harnessing Energy
from The Earth’s Core
Indonesia’s geographic location within the                         Megawatts of electricity
tectonic plate and the equator contributes to                      (MWe) with reserves of
                                                                   around 17,506 MWe.
its large energy reserve, including geothermal
                                                                   Geothermal power station,
energy.                                                            a 250 kW Monoblock, in
                                                                   Indonesia was first developed
The Indonesian government        energy potential in the world
                                                                   in 1978 at Kamojang Field,
targets to accomplish a          and geothermal energy
                                                                   Garut, West Java.
23% renewable energy             exploration has not been
mix by 2025 which will be        fully maximized.                  TIME TO OPTIMIZE
continued to be increased                                          GEOTHERMAL ENERGY
up to 31 percent until 2050.     According to data from
Amidst the transition of this    the Ministry of Energy and        The abundance of East Java
renewable energy use, a lot      Mineral Resources (ESDM),         region geothermal energy
of people are still unaware      Indonesia’s geothermal            has motivated the Provincial
that Indonesia has the largest   resources have a total            Government to optimize the
geothermal renewable             potential of around 11,073        potential of this renewable

                                                              INVEST Magazine #02 - 2019     33
iENERGY

energy to meet the daily        mix targeted at 14 percent by   that there are 8 Geothermal
increasing energy needs.        2050,” said Khofifah.           Working Areas (WKPs),
This was mentioned by                                           including: Mount Lawu,
the Governor of East Java       She added that the highest      Arjuno Welirang, Blawan
Khofifah Indar Parawansa        electricity consumption in      ijen, Mount Iyang-Argopuro,
who said that geothermal        East Java in 2018 was held      Mount Pandan, Mount
energy will likely be a         by the industrial sector,       Wilis, Songgoriti, and Telaga
mainstay of East Java.          which reached 15,668 GWh,       Ngebel.
                                followed by households by
The 1,012 MWe geothermal-       13,181 GWh, trade/business      Of the 8 WKPs determined,
energy potential is scattered   by 4,751 GWh, and the           four of them are in East Java
around Mount Welirang,          society by 2,238 GWh.           Province. In early 2019,
Mount Wilis, Mount Ijen and                                     the East Java Provincial
several other mountains.
                                SERIOUS STEP                    Government took a serious
“Geothermal energy is an        Based on the Book of            step by establishing the
environmentally-friendly        ‘Indonesian Geothermal          Regional Regulation on the
renewable energy which          Potential of 2017’, the         General Design of Regional
will become a mainstay to       Ministry of Energy and          Energy (RUED) in 2019-
meet the East Java energy       Mineral Resources states        2050. Therefore, the East

 34    INVEST Magazine #02 - 2019
iENERGY

Java Provincial Government
has opened its doors wide       UTILIZATION OF GEOTHERMAL ENERGY
for investors who would
                                Then, what are the benefits    refined fragrant root oil, and
like to explore the potential
                                of this geothermal energy?     so on.
geothermal energy as a
                                First, this energy can be
renewable energy.                                              Please note, the 2017 Non-
                                used directly for electrical
                                energy. It is also used in     Tax State Revenue (PNBP) of
Khofifah said that East
                                the fields of agro-industry,   the geothermal sub-sector
Java RUED-P 2019-2050
                                industrial processes and       had contributed IDR 928.55
is very important due
                                tourism, such as hot water     billion in mid-November. The
to the provincial energy
                                baths, mushroom cultivation,   amount has exceeded 38%,
management policy.
                                potatoes, tea drying, palm     from the 2017 PNBP target of
Moreover, RUED-P is a cross-
                                sugar production processes,    IDR 671.26 billion.
sectoral implementation of
the National Energy General
Plan (RUEN).

                                                          INVEST Magazine #02 - 2019       35
36   INVEST Magazine #02 - 2019
"According to data from the Ministry of Energy and
Mineral Resources (ESDM), Indonesia's geothermal
  resources have a total potential of around 11,073
  Megawatts of electricity (MWe) with reserves of
                             around 17,506 MWe"

                              INVEST Magazine #02 - 2019   37
iBUILD

The Focus on East Java
Infrastructure Development
The lack of infrastructure is often a problem                    These three projects include:
                                                                 the construction of the
that hinders investment in the country
                                                                 Electric Railway (KRL), the
                                                                 tourism transportation, and
The government realizes         The Government has               the development of an
how important and vital         therefore synergized with all    oil refinery in Tuban. East
infrastructure is to the        Provincial Governments to        Java Governor Khofifah
growth of the investment        complete the development         Indar Parawansa said that
climate in Indonesia. A good    of a number of infrastructure    the provincial government
infrastructure will certainly   that will benefit the            will focus on the three
boost investment and makes      community, including the         big projects in order to
business more attractive.       three leading projects in East   accelerate East Java’s
However, the development is     Java determined by President     economic development.
not an easy task.               Jokowi in early July.

 38    INVEST Magazine #02 - 2019
iBUILD

CONNECTIVITY                     ENERGY                          TOURISM
                                 INFRASTRUCTURE
The first project in East Java                                   The next strategic project
is the construction of the       Another project that is being   is the development of the
Gerbangkertasusila Electric      accelerated is the Pertamina    Bromo-Tengger-Semeru (BTS)
Rail line (Gresik-Bangkalan-     oil Grass Root Refinery (GRR)   tourism area which covers the
Mojokerto-Surabaya-              in Tuban. The USD 16 billion    areas of Malang, Probolinggo,
Sidoarjo-Lamongan) which         megaproject which stands on     Lumajang, Pasuruan. In
is on the main route of the      a 900-hectare land is one of    addition to road infrastructure,
East Java industry. The rail     the prestigious and strategic   the Provincial Government
line will later support the      projects in the country         also focuses on developing
efficiency of goods and          built for national energy       tourism transportation such as
service distribution while       sovereignty.                    the Bromo-Tengger-Semeru
stimulating the regional                                         cable car (BTS).
economy through integrated       Tuban GRR, which is
                                 developed through a             The construction of these
transportation modes.
                                 cooperation scheme              supporting facilities will
The development of               between Pertamina and the       certainly make this tourist
the integrated public            Russian company, Rosneft Oil    destination more attractive as
transportation of                Company, is one of the most     tourists previously had to go
goods and services in            sophisticated refineries in     through a fairly narrow and
Gerbangkertasusila will later    the world with a processing     steep road. Khofifah said good
support the next strategic       capacity of 300 thousand        road access would bring more
projects, such as the oil        barrels per day which will      tourists to East Java.
refinery in Tuban Regency        produce 30 million liters
                                                                 “That’s not all, we also
that will be built next year.    of gasoline and diesel per
                                                                 have prepared a lot of
The construction of the          day. The Tuban refinery will
                                                                 transportation options to and
Electric Rail line will also     also produce 4 million liters
                                                                 from BTS. We are currently
support the development          of aviation fuel per day,
                                                                 developing Malang-Kepanjen
of oil refineries in Tuban       including 4.25 million tons
                                                                 toll road, dredging the
which requires a good            of petrochemical production
                                                                 docks at the Port of Tanjung
transportation system.           per year.
                                                                 Tembaga for harboring cruise
Khofifaf, Governor of            PT Pertamina’s President        ships, widening the Dampit-
East Java, admits that           Director Nicke Widyawati        Lumajang road segment,
the realization of this          targets the construction of     and internationalizing
infrastructure in East Java      the refinery and port to be     Abdulrahman Saleh
Province was indeed a bit        completed by 2026. This         Airport,"said Khofifah.
late. “We are preparing          mega project is realized
                                                                 Just for the record, foreign
a public transportation          based on the Minister
                                                                 tourists visiting East Java
that will facilitate regional    of Energy and Mineral
                                                                 through Juanda Airport in
connectivity, and that’s         Resources Decree No. 807K /
                                                                 March 2019 increased by
why we need a major road         12 / MEM / 2016 dated March
                                                                 22.80 percent compared
construction in eastern          3, 2016 and Presidential
                                                                 to February, from 17,561 to
Surabaya,” said Khofifah.        Regulation No. 56 of 2018.
                                                                 21,565 visits.

                                                           INVEST Magazine #02 - 2019        39
iBUILD

Regional Infrastructure
Potential and Solutions
East Java Province is developing. The Central Statistics Agency (BPS)
noted that the province’s economic growth continued to increase at
5.50% in 2018 and 5.51 in Quarterly I of 2019

The increasing economic           continues to focus on              Strategic Area, which is
growth in East Java was           developing infrastructure          part of the three focused
in line with the number of        within its regions, particularly   provincial infrastructure
tourist arrivals at the leading   in strategic tourist areas.        development, has made
destinations in East Java.                                           the Malang Regency
Therefore, the East Java          Bromo-Tengger-Semeru               Government seriously work
Provincial Government             (BTS) National Tourism             on the supporting facilities

 40    INVEST Magazine #02 - 2019
iBUILD

and infrastructure. This BTS   SINGOSARI FLYOVER                 National Road, Malang
area is also known as one of   INVESTMENT                        Singosari Special Economic
the ten new Bali areas.                                          Zone, and Bromo
                               To reduce the heavy               Tengger Semeru Tourism
SYNERGY IN THE                 traffic congestion that           Destinations.
DEVELOPMENT                    always occurs at the area,
                               the Malang Regency                It is planned that the
Accelerating the growth
                               Government has prepared           flyover, which is located on
of the tourism industry,
                               a Singosari Flyover               Surabaya-Malang Primary
agropolitan, and
                               development plan as one           Arterial Road (Singosari
strengthening connectivity
                               of the accesses to the            Malang Highway), will
are the main focus for BTS.
                               Singosari Special Economic        have an investment value
Meanwhile, for the Selingkar
                               Zone (SEZ). Singosari SEZ         of IDR 175.8 billion with a
Wilis region, the focus is
                               is part of the economic           Public-Private Partnership
on increasing the added
                               development within Malang         (PPP) funding scheme. The
value of agro-industry and
                               region which is strategic         realization of the project
agro-tourism as well as
                               for the national economic         will immediately contribute
strengthening infrastructure
                               development.                      to the acceleration of the
connectivity.
                                                                 development of other
                               Singosari Flyover will            infrastructure within
Malang has been known
                               later facilitate access to        Malang and its surrounding
as a tourist destination
                               various places, such as           areas
with various interesting
                               Malang Abdul Rahman
attractions. To improve the
                               Saleh National Airport,
economy and progress
                               Pandaan-Malang Toll Road,
of the region, we need a                                         FOR MORE INFORMATION
                               Surabaya-Malang Arterial          Tomie Herawanto
structured infrastructure
                                                                 Chairman of Planning Board of Malang
development which is
                                                                 Regency
connected to a number                                            Mobile: +628121720 5794
of national strategic areas
within the region.

The increased population
has an impact on the
activity and mobility of
the people of Malang.
This certainly results in
the increasingly high
traffic congestion in prone
areas, as is often the case
around the railroad track to
Singosari Market.

                                                            INVEST Magazine #02 - 2019      41
iBUILD

Legok Nangka Solid
Waste Treatment
Data in 2016 showed that the garbage load at                        ton) in which 30 percent will
                                                                    be subsidized by the West
Sarimukti TPA had reached 3,000m3 / day. This
                                                                    Java Provincial Government.
had started to saturate Sarimukti TPA. So, what                     This is important for the
are the steps taken by the Government of West                       success of the project
Java Province so far?                                               auction.

A higher population will          Legok Nangka was chosen           It was also agreed that the
impact the number of the          after a feasibility study by      quota of waste will be sent
generated waste in West           experts. After the landfill       by six regencies/cities using
Java. The right steps and         completion in 2017, the           Legok Nangka TPPAS. They
policies are required to better   Ministry of PUPR then built       are Bandung City 1,200-
manage the waste.                 a waste treatment plant           1,303 tons per day, Cimahi
                                  in 2018. The West Java            City 150-250 tons per day,
The high volume of waste          Provincial Government will        Bandung Regency 300-345
produced by the people            then operate the TPPAS            tons / day, West Bandung
of West Java, particularly        Legok Nangka by 2023.             Regency 78-86 tons / day,
in Bandung City, Bandung                                            Sumedang Regency 28-32
Regency, Cimahi, West             With a land area of ​​74.6 ha     tons / day, and Regency
Bandung Regency,                  and a total area of ​​90 ha,      Garut 100-115 tons / day.
Sumedang and Garut made           Legok Nangka TPPAS is able        The total amount of waste is
the West Java Provincial          to accommodate 2,000 tons         therefore around 1,853-2,131
Government take the               of waste / day and is able to     tons per day.
initiative to establish a new     process 1,820 tons / day of
region of Waste Processing        waste generated from the six      Legok Nangka TPPAS should
and Final Processing Site         regions of West Java. Later,      not be solely relied on,
(TPPAS) which has greater         Legok Nangka TPPAS will           and therefore West Java
capacity to solve the waste       expectedly become one of          Governor Ridwan Kamil
problem.                          the largest waste-to-energy       asked the Regency/City
                                  centers in West Java. It’s also   Governments to keep on
Moreover, the Baj Bajing          part of the national strategic    trying to reduce the volume
TPA, according to plan,           project.                          of waste from time to time.
will no longer operate. For                                         He also promised to provide
this reason, the West Java        West Java’s six municipalities    incentives for the ones
Provincial Government took        and regencies recently            who managed to reduce
the initiative to establish       agreed on the amount of           waste. “We are preparing a
Legok Nangka TPPAS to help        Legok Nangka TPPAS tipping        Governor Regulation that will
each region solve the waste       fee of USD 27.38/ton (or          provide incentives to regions
problem.                          equivalent to IDR 386,000/        that have succeeded in

 42    INVEST Magazine #02 - 2019
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