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In the Middle of Growth: Indonesia’s Road to World’s
No. 4
Best, Indonesian Business Networking Event, 8 October 2015
By Rio Praaning Prawira Adiningrat
Managing Partner PA Group, Chairman PT PA CSR Indonesia
(Beijing, Brussels, Jakarta, Moscow, Muscat, Washington DC)
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
SomePA Clients
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
Some PA Signature Projects
• The Acquisition for The Hague of the Organisation for the Prohibition of Chemical Weapons (OPCW, UN)
• The acquisition of Europol (EU) for The Hague
• Lithuania Member State of the EU
• Lifting the SSN ‘Kursk’
• Support to multi-billion greenfield and brownfield investment projects including Port of Sohar/Oman, LNG terminal/Wales, mining/Indonesia, aluminium production/Oman, food production/UK etc
• Major M&A including AB InBev, DSM, KLM
• Prevention of a ban on fish imports into the EU from Indonesia
• Repairing EU-Indonesia airline ban
• Supporting mining, food@beverages, agri, transport, infrastructure, construction projects in Indonesia
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
Global and Regional Requirements• Food Safety and Food Security
• Clean Water
• Clean Air
• Low Carbon Economy
• Interconnectivity/Market Access
• Road/Port Connections
• Holistically Integrated All Food Chain Approach
• Focused Education and Training
• Enabling Authorities/CSR/Individual Responsibility
• In-Country Value
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
McKinsey&Company 2012 ReportThe Archipelago Economy: Unleashing Indonesia's Potential
Raoul Oberman, former McKinsey Jakarta Director,
now PA Board Member:
“By 2030, Indonesia could have the world’s 7th-largest economy, overtaking Germany and the United Kingdom.”
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
Lijst PwC met plaats Indonesia in 2050
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Indonesia
• 255,46 million people (National Bureau of Statistics 2015)
• GDP 2,554 billion USD by PPP, 2014 (PWC Feb 2015)
• Annual GDP growth 5,73 percent in the last ten years. (World Bank)
• World’s 4th largest economy by 2050 (PWC, Feb 2015)
• Median age 29,6 years old (CIA Factbook)
• ICT and innovation oriented
• World’s 4th largest in mobile phone users (CIA)
• World’s 2nd largest in text messaging
• World’s 4th largest in Facebook users (2014) 7
PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
Indonesia’s strengths
• Median age = 29,6 years old
• Large Productivity Growth Potential
• Large ICT/Innovation Potential
• Large Geothermal Energy Potential
• World’s No.1 Palm Oil Producer
• Large Safe Food Production Potential8
PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
Indonesia’s Vulnerabilities• Lack of infrastructure
• Lack of legal security
• Lack of protection of investment
• Lack of balance between haves and haves not
• Weak education and training system
• Ranking low in “Ease of Doing Business Index”: 114 (improving)
• Indonesian Rupiah dropped more than 18% against the dollar in 2015
Repair Offers Unique Investment OpportunityJokowi Government is Destined to Make It Work
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
The New Maritime Silk Road: One Belt One Road - OBOR
• Six economic corridors • 1) To the north - China, Russia and
Mongolia
• 2) The Eurasia Bridge
• 3) Connecting China with West Asia through Central Asia
• 4) The BCIM Economic Corridor (The Greater Mekong Sub-region and BCIM will also link Yunnan with the Silk Road)
• 5) The China-Pakistan Economic Corridor
• 6) The Maritime Economic Corridor from China to SE Asia and LatAm
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
• Total 1,1 trillion USD to cover future needs through external investment• Projected budget of a.o. AIIB: 100 bn USD; Silk Road Fund: 40 bn USD; ‘Silk Road Gold Fund’: 16 bn USD…
• 10 bn for India, 45 bn for Pakistan, a whisper of 85 bn for Indonesia
• BUT: Finance offer to OBOR participating foreign countries: • pro-Chinese involvement (Chinese dredgers beat EU dredgers in the Swansea Bay Tidal Lagoon tender
due to privileged UK-China agreement)
• no ‘in-country value’ (lock gates for the Deurganckdok in Antwerp, Belgium)
• acceptance of (local) corruption (the funds include payments for middlemen)
• However, Jakarta-Bandung Railway demonstrates Jakarta’s ability to play out its cards: • In-Country Value through new factory to build aluminum train cars in Indonesia
• Optimal lending conditionalities – no guarantees required
China’s OBOR Financing Model
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
• Xie Feng, China's ambassador to Indonesia, noted that China's 21st Maritime Silk Road initiative complements Indonesian President Joko Widodo's “Maritime Axis" ambition and his plans to build ocean highways
• Chinese investment realization in Indonesia between 2010 and 2015 stands at USD 1,7 billion. In the first half of 2015, it is already USD 160 million.
• Bilateral trade volume: USD 63,6 billion
• China ranks only 12th in terms of FDI in Indonesia: the trend is slowly rising
• Shortcomings in Chinese projects:• Suramadu Bridge (East Java): USD 317 million project realized in 2003 by a consortium of Indonesian
and Chinese companies. 6 years after construction: discolored cables, signs of corrosion, cracks on pylons.
• Lack of quality of Chinese products: Transjakarta buses, Merpati Airlines new airplanes• Cilacap power plant in West Java: 3 years after the inauguration, availability factor of only 80%, while
European power plants usually reach 85 to 90% in 1 year12
PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
Link between OBOR and Jokowi’s Sea Highway
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Multiple opportunities for larger and smallerDutch companies to work with Indonesian, Chinese and other partners so that funding, technology, experience, transparency, in-country value, CSR and access are all in place
Japan and Korea also have major funding capacities while the EU is considering to develop such extra-EU infrastructure fundingas well.
PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
The “Maritime Axis”
• President Joko Widodo established the “Coordinating Ministry for Maritime Affairs” to help the development of the sector. The position is currently held by Dr. Rizal Ramli, former Minister of Finance and Minister for Economics Affairs
• Boosting Indonesia’s maritime economy and culture by improving the country’s port infrastructures, shipping industry and connections
• 24 new harbours
• 5 deep sea ports, including the Port of Kuala Tanjung (expected to become the biggest port on the Strait of Malacca); also regional initiatives such as Cikalong Port in Tasikmalaya
• General upgrade of port infrastructures
• Potential shortcomings and solutions: • Lack of a specific fund to support infrastructure development. New possibilities through China’s “One Belt, One Road”
policy and funding, and a doubling to 200 bn USD of Japan’s JBIC14
PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
New Economic Stimulus Package Will Help
• Launched in September 2015 to boost economic growth
• 3 Economic Policies:1. Deregulation and red-tape curtailing to promote industrial competitiveness2. Acceleration of strategic projects of national interest 3. Encourage investments in the property sector
• October 2015: the Government announces a Fast-Track Business Licensing for Major Investors• Investors seeking to sink money into industrial estates will be able to secure a principal business
license within just 3 hours• “super-fast” processing available only for companies seeking to invest more than Rp 100 billion
($6.8 million), employing more than 1,000 people and setting up a base in an industrial estate
• Potential pitfalls: lack of good implementation, deregulation policies not strong enough to produce significant effects
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PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
President Joko Widodo Food and Water
Highways Plan
“Food sovereignty is targetted to be reached
within the next three years.”
ANTARA News, 15 November 2014
“Sea Highway is a large-scale distribution system using the sea
routes. Distributions between large islands in Indonesia will be
done by ships which will keep sailing back and forth around deep
sea ports.”
Nefosnews.com, 27 September 2014
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PT. PA CSR Indonesia
Apartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1
Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, Indonesia
Tel: +62 21 392 20 70, Fax: +62 21 392 16 86
PT. PA CSR IndonesiaApartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, IndonesiaTel: +62 21 392 20 70, Fax: +62 21 392 16 86
Source: wearesocial.sg/blog/2015/01/digital-social-mobile-2015/
Opportunities in the ICT sector
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The Silk Road is Back
Indonesia is in the Middle
Dutch Companies Can Step In With
Experience, Expertise, Science,
Persons and Products
Bringing in: CSR, In–Country Value
PT. PA CSR Indonesia
Apartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1
Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, Indonesia
Tel: +62 21 392 20 70, Fax: +62 21 392 16 86
CONTACTRio D. Praaning Prawira Adiningrat
Secretary General PA International Foundation
Managing Partner of the PA Group
Chairman PT PA CSR Indonesia
PA in China: No. 2407, Building 4, Taida Times Centre, No. 15 Guanghua Road, Chaoyang District
Beijing 100026, People’s Republic of China Tel: +86 10 8571 8830 / +86 8571 8832
PA in The Netherlands: Lange Voorhout 100, 2514 EC Den Haag, Tel. +31 70 345 6210
PA in Belgium: Franklinstraat 106-108, 1000 Brussels, Tel. +32 2 735 83 96
PA in Indonesia: Apartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1-4, Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, Indonesia, Tel. + 62 21 390 63 06
PT. PA CSR Indonesia
Apartemen Eksekutif Menteng, Tanjung Tower, 9th floor, no. 1
Jl. Pegangsaan Barat no. 6-12, Jakarta Pusat 10320, Indonesia
Tel: +62 21 392 20 70, Fax: +62 21 392 16 86