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BSD Bulletin
Indonesia Trade & Investment News 4/15
INDONESIA AND THE REGION
THIS MONTH’S BULLETIN
Indonesia Economic Quarterly, March 2015
Indonesia and the Region
 Indonesia Economic Quarterly, March
2015
 Jokowi’s Trade Policy: Determining
Indonesia’s Position on RCEP and TPP
 Challenges for Indonesia during the
Age of Sustainable Development
On March 18, 2015, World Bank released its latest quarterly report. Taking
place at The Energy Building, Jakarta, various business and embassy representatives attended this release and panel discussion to take an understanding on Indonesia’s macroeconomic situation. In their report entitled “High Expectation”,
World Bank praised the new government radical decision to reduce the fuel subsidy and implement a new fuel pricing system. This decision allowed the new government to shift its spending towards more important sectors, such as for infrastructure, that receives significant increase in their budget allocation. Unfortunately, oil prices decrease and weak tax compliance have reduced the savings obtained from this fuel
subsidy
change.
Nevertheless, this
decision has signaled the new government’s
strong
intentions to reform
the fiscal policy in
Indonesia and result
in the increase of
business
sectors’
optimism towards
the new government.
This event was opened by Rodrigo Chaves, World Bank Country Director for
Indonesia, which further praised the new government bold decision to reduce fuel
subsidy. Following the opening, The World Bank’s Lead Economist, Ndiame Diop,
explained in his presentation the recent development taking place in Indonesia.
He stated that the decrease in China’s commodity demand coupled with the lower
global commodity price and followed by US Dollar strengthening would harshly
affect Indonesia's economic growth. World Bank predicted that GDP growth for
2015 was 5.2 percent, far below Indonesian government’s expectation of 7 percent GDP growth.
In the panel discussion, Wijayanto Samirin, Economic Adviser to VicePresident Jusuf Kalla, explained that Indonesian Rupiah weakening was due to US
economy recovery and strengthening. Relatively speaking, the Rupiah has been
doing fine compared to other currencies in the region. He urged the business
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Industry News
 The U.S. “Immigrant Investor” Visa: An
Investment for the Future
KADIN Indonesia
 2nd PIT Networking Event: “How to
Bring Ideas to the Market: Push or
Pull?”
 Kickoff Session for Series of KADIN-BSD
English Training
 A Series of Discussions towards AABS
2015: “Infrastructure in Indonesia compared to Asian and African Countries”
 KADIN Indonesia’s Role in The 60th
Asian-African Conference Commemoration and Asian-African Business Summit (AABS) 2015
IBCSD’s Column
 Energy Efficiency in Building Kickoff
Meeting in Singapore
Events & Imprint
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people to see the potentials from this situation such as the opportunity to increase exports, more foreign direct investment and domestic reinvestment for Indonesia. It is up to the people to make the most of this situation.
Regarding World Bank expectations GDP growth for 2015, Suryo Bambang Sulisto, Chairman of Indonesia Chamber of Commerce and Industry (KADIN Indonesia), believes that Indonesia has potential to grow more than this expectation, but to reach this high GDP growth, the new government needs to synchronize the policies among their government’s department. So, it will be beneficial and supportive for the business sectors. He urges the government not to
make a policy which could restrict or ban a business activity without providing a policy support. (PT)
Jokowi`s Trade Policy: Determining Indonesia`s Position on the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP)
On Tuesday, February 24, 2015, The Habibie Center Jakarta held a dialogue Talking ASEAN entitled “Jokowi`s
Trade Policy: Determining Indonesia`s Position on the Regional Comprehensive Economic Partnership (RCEP) and the
Trans-Pacific Partnership (TPP)”. Academics, journalist, and representatives of diplomatic corps attended this dialogue
in order to know the position of Indonesia in the upcoming Regional Trade Agreement; RCEP and TPP. This dialogue
was moderated by Dr. Alexander C. Chandra (Executive Director of ASEAN Business Advisory Council) and featured by
Prof. Dr. Firmanzah (Rector of Paramadina University), Dr. Yose Rizal Damuri (Head of Economics Department, CSIS),
and Reza Pahlevi Chairul (Head of Sub Directorate for Inter and Sub Regional Cooperation, Ministry of Trade).
Reza Pahlevi Chairul opened the dialogue
with a presentation about the current
economic situation in Indonesia compared to
other ASEAN countries. He explained that
Indonesia was currently behind some other
ASEAN countries in network production.
Therefore, Indonesia was actually not yet
ready to participate in the upcoming Regional
Trade Agreement, but, ASEAN proposed RCEP
in 2011 that made Indonesia, as the largest
country in ASEAN, should also involve in this
partnership. Moreover, he also explained a
study that showed more GDP impact if
Indonesia joined RCEP rather than TPP.
Dr. Yose Rizal Danuri added that
Indonesia’s position in global partnership was
still on hold, except for RCEP. Indonesia was currently not actively involved in forming trade agreement with its
partners compared to other countries in ASEAN. In joining RCEP, Jokowi’s administration is still continuing the
Yudhoyono’s administration policy to participate in RCEP negotiations. He believes that with RCEP, Indonesia will
have many benefits in the future, such as market access, receiving direct foreign investment, etc.
Afterwards, Prof. Firmanzah shared his experiences as the advisor of economic affair in Yudhoyono’s presidency.
He basically had the same perspective with other speakers about how Indonesian government responded to both
regional economic cooperation. Nevertheless, he observes until now that most of the talks among the ministries in
Jokowi’s administration are still about ASEAN Economic Community (AEC), not about RCEP. Also in regional level, all
the ASEAN leaders, which are the lead negotiators for RCEP, are still concerning about their own domestic economy.
He stressed that RCEP was an extension of AEC. Once the AEC agreements are implemented, the next focus for ASEAN
leaders might be on the RCEP. He also believes that Jokowi will currently focus on the development of domestic economy instead of giving priority to RCEP.(AI)
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Challenges for Indonesia during the Age of Sustainable Development
On March 25, 2015, Columbia University together with Centre for Strategic and International Studies (CSIS) and
Research Center for Climate Change (RCCC) held a public lecture to discuss “The Age of Sustainable Development” in
the CSIS office. In his opening speech, Dr. Jeffrey Sachs, an American economist and Director of The Earth Institute at
Columbia University address the exceptional growth of human population that reach more than 7 billion recently, and
its tremendous effect to the environment. Dr. Jeffrey Sachs emphasize the importance Sustainable Development, a
development that meets the needs of the present without compromising the ability of future generations to meet
their own needs.
Throughout the public lecture, Dr. Jeffrey Sachs discussed the future of Indonesia and gave an impression on how
to canvass sustainable development throughout government regulation/activities and their business operations.
Sachs deliberated the challenges, threats and opportunities for Indonesia in the future in regard to sustainable development. The emphasis laid mainly on the
fact that Indonesia should not solely focus on the GDP since it will miss two fundamental questions: what about lifequality and the quality of interaction
among each other. Sachs main point during the summit was on “how to effectively utilize our resources while living on
a sustainable planet” and therefore the
emphasis laid on the fact that this era has
to be the era when sustainable development has to be achieved. Sachs’ advice
for Jokowi, in order to develop a sustainable Indonesia, is to develop long term
planning; resist the short term fix and put
the eyes on the horizon. It may take time but it will ultimately take you to the right place. (OF)
INDUSTRY NEWS
The U.S. “Immigrant Investor” Visa: An Investment for the Future
By Michael B. Dye
Now has never been a better time for investors or entrepreneurs in Indonesia for seeking to gain permanent residency, or a “Green Card,” in the United States. The increasingly popular EB-5 “Immigrant Investor” Regional Center
Pilot Program is, perhaps, the most direct path to acquire a Green Card for those individuals who do not have immediate relatives in the U.S. or a firm job offer from a U.S. employer. This unique program offers benefits for both the foreign investor and the United States, creating a win-win situation for all parties. The significant benefits of the program, most notably its clear path to permanent residency in what normally involves wading through a fluid and bureaucratic maze of immigration laws, have been known for some time by many Asian countries which have made the
most proficient use of the program in recent years (South Korea, China, and Taiwan for example).
The EB-5 Pilot Program is the most recent – and popular – version of the original EB-5 Immigrant Investor visa
program. The U.S. Congress created the fifth employment-based preference (EB-5) immigrant visa category in 1990
for immigrants seeking to enter to engage in a commercial enterprise that will benefit the U.S. economy and create at
least 10 full-time jobs. The basic amount required to invest is $1 million, although that amount may be $500,000 if the
investment is made in a "targeted employment area,” which is defined as a rural area or area of high unemployment.
Of the 10,000 EB-5 investor visas available annually, 3,000 are set aside for those who apply under the Pilot Program
established in 1993 involving a United States Citizenship & Immigration Services (USCIS) designated "regional center."
A regional center is an entity, organization or agency that has been approved as such by the Service; focuses on a specific geographical area within the United States; and, seeks to promote economic growth through increased
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export sales, improved regional productivity, creation of new jobs, and increased domestic capital investment. Practically speaking, regional centers are organizations that allow many different investors to pool their funds in an effort to
further their business objectives. Regional centers can be publicly owned, (by a city or state, for example), privately
owned, or be a public-private partnership and are located in California, Florida, New York, Pennsylvania, and in nearly
every U.S. state and territory, including Guam. While the original EB-5 “Million Dollar” option is available, the process
for the regional center Pilot Program is less complex and may be a better fit for those investors who do not want the
day-to-day responsibility of managing a business in the United States. By participating in a regional center, the requirement of creating at least 10 new jobs is met by a showing that as a result of the new enterprise, such jobs will be
created directly or indirectly. Therefore, the investor receives the Green Card in exchange for his or her investment –
not for individual efforts to run a new business. More than 90 percent of all EB-5 investors choose to invest through
the regional center Pilot Program.
The process for participating in the EB-5 Pilot Program is relatively straightforward. An immigrant petition must
be submitted to the U.S. Citizenship and Immigration Services (USCIS) proving that the applicant satisfies the regulatory requirements. Once the petition is granted, the investor must obtain an immigrant visa at the American consulate or, if already in the United States on a separate visa, apply for adjustment of status. Once
this is completed, the applicant is granted conditional resident status. One reason for this
“conditional” status is to deter fraudulent investments. After 21 but before 24 months later,
the applicant must file another petition to remove conditions, verifying that the investment
has been maintained and the required jobs have
been created or saved. When the second petition has been approved, a permanent “Green
Card” is issued to the investor. The investor may
file an application for U.S. citizenship after being
a Green Card holder for five years. As an incentive to spur development of specific regions and
industries deemed important for the country's
overall economic development, Indonesia
grants a multifaceted tax facility on certain investment projects. Investors can apply for a reduction of corporate net
income tax amounting to 30% of the investment value (spread out over six years) and reduced income tax on dividends paid to offshore taxpayers.
There are many benefits for an investor in the Pilot Program. For example, in return for the investment, a Green
Card will be issued to the investor, spouse and unmarried children under the age of 21. Under the EB-5 regional center Pilot Program, the processing time for acquiring the Conditional Green Card is generally between 12 to 18 months,
although some cases have been processed in much less time. Investors may live and work anywhere in the U.S., and
there are no age, language, education, or previous business experience requirements - the investor must simply have
the required net worth and capital. Under the regional center Pilot Program, the investor is not obligated to hire U.S.
workers or manage day-to-day business operations. The Pilot Program is the most appropriate for investors who see
acquiring a Green Card as the real motivating factor for the investment. It may also be a viable option for retirees or
successful businessmen and women who wish to reside in the U.S. and provide their children with access to many of
the world’s top colleges and universities – taking advantage of much lower in-state tuition fees available to Lawful
Permanent Residents. Each of the USCIS designated regional centers are different, and various administrative fees
associated with each program normally range from $20,000 - $60,000. Therefore, the total cost of the actual program
is $500,000 (investment) + $20-60,000 (administrative fees) + legal fees. One of the key factors in receiving permanent residency through the EB-5 program is that the source of funds must be obtained through lawful means
(specifically, where and how the investor acquiring the funds must be carefully shown to USCIS to establish that the
investment was earned legitimately). A separate financial accounting prepared by an international accounting firm
may be required. Generally, after 5 years, the investor may choose from one of several investment exit strategies.
Each program is different and the requirements/exit procedures vary.
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KADIN INDONESIA
2nd PIT Networking Event: “How to Bring Ideas to the Market: Push or Pull?”
To promote innovation and technology in ASEAN countries, the ASEAN-German Cooperation Project Promoting
Innovation and Technology in ASEAN Country (PIT) held the 2nd PIT networking event under the title “How to Bring
Ideas to the Market: Push or Pull?” at Grand Mercure Hotel Jakarta on March 10-12, 2015.
This networking event
was the continuity of the 1st
PIT Networking Event which
was held in Manila on September 22-24, 2014. For
additional information, PIT
has a series of networking
events to provide a forum for
organizations, policy markers, and private sector representatives in ASEAN region.
The main agenda of this
networking events are presentation from six Pilot Project Schemes (PPS) launched
by PIT in the late 2014, material explanations from international experts related to the theme, field trips, and interactive sessions which allowed
discussion among the participants. One of the pilot projects is developed by Indonesian Chamber of Commerce and
Industry (KADIN Indonesia).
KADIN Indonesia develops “Info 4 Innovation” platform which would provide potential innovators and new entrepreneurs an access to important financial information from government as well as private sectors. “This Info 4 Innovation platform is a very interesting idea because it coordinates and facilitates sources of useful information for SMEs,”
said Clavesillas from Bureau of Small and Medium Enterprise Development Philippines.
As the team leader, Dr. Klaus Altemeier closed this 2nd PIT Networking Event by explaining the conclusion and
outlook on the next activities of the Pilot Project Scheme followed by Sri Setiawati from RISTEK as the Indonesian representative. One of the participants, Maria Tarnogrocki, was very satisfied with this event because both the speakers
and the participants were very proactive and open during the discussion, so she could get a lot of new knowledge and
different perspectives. (RD)
Kickoff Session for a Series of KADIN-BSD English Trainings
Thursday, April 2, 2015, mark the beginning of a series of English trainings organized by KADIN-Business Support Desk.
The training serves as the means of opening
the door for participants coming from various sectors to accomplish a broader business outreach. The improvement of their
English language skills is guaranteed to improve networking capabilities as well as to
conduct business. The training was given by
Peter Reger, the Senior Advisor of KADINBusiness Support Desk, together with Tom
Baker, an Australian intern at KADINBusiness Support Desk.
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This series of English trainings consists of 10 sessions with different focus: from writing business letters to holding
Skype-meetings. The first session was centered on how to write business letters, and the difference among Englishspeaking countries under which Australia, UK and the USA. The highlights from the training comprised the following
rules for writing a business letter: stay consistent throughout the letter, be concise and be personal yet formal. After
all – with regards to the latter – a friendly, warm letter is more captivating than one filled up with jargon.
Before starting the training, the participants were asked to indulge in a small test. All participants were asked to
take a stand in the room, either all in the back for those who are not very fluent or all in the front for those who are.
As the result, most of the participants placed themselves in the back. Then the participants were asked to fill up a
moderation board to visualize when the course would be a success for them and their expectations from the trainings. The board read the following comments: “I want to build skills for business presentations”; “I need to raise my
English to a business conversational level”; “My expectation is to confidently use English in daily activities”.
As a reflection, this is what the participants need to bring them to the front of the room. It can be seen as a metaphor: the front of the room represents confidence and being out there means being noticeable. It is what the English
training is meant for; to bring the participants confidence in speaking and writing in a language that is known as the
verbal tongue of the world. The participants still have nine more sessions and nine more weeks to go for this goal to
be achieved.(EH)
A series of Discussions towards Asian African Business Summit (AABS): "Infrastructure in Indonesia compared to Asian and African countries"
The first discussion as a preparation of Asian African Business Summit (AABS) was held on March 13,2015 at AEBC
Room, KADIN Indonesia. The speakers were Didik J. Rachbini and Ina Primiana from LP3E KADIN Indonesia. This discussion brought the topic "Infrastructure in Indonesia compared to Asian and African countries."
Limited fiscal, only 30% allocated infrastructure development budget for the term 2015-2019, less than 3%
allocated infrastructure budget from
PDB (ideally min.5%) of APBN/APBD,
slow response from central and local
government, and difficulty in land
acquisition are some causes why the
infrastructure development in Indonesia
is relatively slow. Compared to other
Asian countries, Vietnam spends 9%
from its PDB for infrastructure, India 7%
and China 10%. Based on this data,
Indonesia's expense for infrastructure is
still low. In the meantime, the high
number of urbanization in Indonesia
automatically forces the infrastructure
improvement.
In other cases, Indonesia still has a
lack of financing in the field of electricity, drinking water, sanitation and decent housing. Moreover, the development
in Indonesia has not spread evenly. 60% of PDB are used for the development in Java Island.
According to the World Economic Forum (WEF), Indonesia has good economic situation and conducive
competitiveness. Furthermore, Based on WEF data in 2012, Indonesia lies in the position 17 among Asian and African
countries in the field of infrastructure. In Asia, Indonesia is at number four after Singapore, Malaysia and Thailand.
Ina Primiana made some points as conclusion: 1) there should be a revamping of an integrated infrastructure and
connectivity (one window); 2) a re-evaluation to logistics costs should be done; 3) it is necessary to do some
infrastructure improvements, so that Indonesia is not behind other ASEAN countries and 4) improve the cooperation
between Asian and African countries.(WL)
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KADIN Indonesia’s Role in The 60th Asian-African Conference Anniversary and Asian-African Business Summit (AABS) 2015
The first-ever Conference of the Asian and African nations was held in Bandung, Indonesia at 1955. This
conference established a solid foundation for closer interaction between the two continents based on the principles
of solidarity, friendship and cooperation which called as the Spirit of Bandung. Since that moment, Asian and African
countries have made significant political advances, but have not yet attained equal progress in the social and
economic spheres. In each continent, the Spirit of Bandung has inspired regionalism, but has not yet translated into a
strong line of productive interactions between the regions of the two continents.
In line with this spirit, Indonesia will host the 60th commomeration of Asian-African Conference and the 10th
New Asian-African Strategic Partnership (NAASP) conference this year. A series of these commemorative events will
consist of the senior official meeting (April 18), ministerial meeting (April 19-20) and head of state plenary session
(April 22-23). These events will be held in Jakarta and the President of the Republic of Indonesia, H.E. Mr. Jokowi
Widodo, will lead the plenary session.
As government’s partner, KADIN Indonesia will hold the Asian-African Business Summit (AABS) on April 21, 2015
at Jakarta Convention Center (JCC). This Summit will be opened by the President of the Republic of Indonesia, H.E. Mr.
Joko Widodo and attended by the President of the Republic of South Africa, H.E. Mr. Jacob Zuma as the keynote
speaker.
The Asian-African Business Summit (AABS) 2015 chose the theme: “Realization of Asia-Africa Partnership for
Progress and Prosperity”. The theme reflects the growing awareness of Asia and Africa countries to further
strengthen business collaborations and to build mutually beneficial partnership on economic development activities
towards progress and prosperity of the people.
During this summit, business dialogues in various sectors such as; Infrastructures and Constructions, Maritime,
Agriculture and Strategic Industries will be organized. Speakers from various backgrounds and competencies will
present their perspectives in each sector. On conclusions of these dialogues, a bussiness matching will be offered
among the attended companies. This business matching forum is an excellent opportunity for companies to build
business relationships and meet with potential customers and business partners from companies in both continents
that normally would be difficult to do. The organizer of AABS 2015 has created a program that allows companies to
take the opportunity from the presence of international company representatives. KADIN´s business matching
services will provide a reliable occasion to comfort your business conduct. On the next day, an additional program to
visit a presidential palace in Bogor will be offered. This tour is only dedicated for registered participants.
As the closing of these series of commemorative events, a memorial ceremony of Asian-African Conference will
be held on April 24 in Bandung, which make outcome documents on topics such as “Bandung Message” and it is expected to change the South-South cooperation paradigm from aid approach into mutually beneficial cooperation. For
further information about the Asian-African Business Summit (AABS) 2015, please visit the website: http://
aabs2015.kadinindonesia.org/.
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IBCSD’S COLUMN
Energy Efficiency in Building Kick off Meeting in Singapore
In January 20th, IBCSD attended the Energy Efficiency in Building (EEB) Kick
off Meeting in Singapore. As part of WBCSD works, it was an essential milestone
towards EEB Actions for Singapore, Malaysia and Indonesia.
The objective of the meeting was to present in detail the EEB lab concept,
share knowledge on markets for energy efficiency in building in Singapore, Indonesia, and Malaysia, set up committee of experts, and mapping the stakeholders. The project aims to unlock financially viable energy efficiency
investments that today are not being realized because of mostly non-technical (i.e. financial, regulatory, organizational) barriers, therefore raise awareness on the shared value of investing in EEB and remove barriers are part of
the project.
As the outcome, Indonesia will have the EEB lab in July, engaging stakeholder in energy efficiency in building
segmented in commercial and industrial building, hospitality and hospital, and airports. Several issues will also be
addressed on the EEB Lab in July where Business Models/Investing and Financing, as well as Verifying Value and
Return of Investment are among them.
Currently, the steering committee from each countries are organizing the Technical Committee and Logistical
Matter. It is expected that private sectors can participate on the EEB Lab that will be held in end of July.
EVENTS
Date
Event
More Information
April 21, 2015
Asian-African Business Summit (AABS)
www.aabs2015.kadinindonesia.org/
April 28-30, 2015
Asian Paper Indonesia 2015
www.asianpapershow.com/2015-home-page/
May 7-9, 2015
The Big 5 Construct Indonesia
www.thebig5constructindonesia.com/
May 21, 2015
APKASI International Trade and
Investment Summit 2015
www.aitis.co.id/id
IMPRINT
Publisher:
KADIN Business Support Desk (BSD) - Indonesian Chamber of Commerce and Industry
Menara Kadin Indonesia, 24th fl., Jl. H. R. Rasuna Said X-5 Kav. 2-3
Jakarta 12950, Indonesia
Tel. +62 21 527 4503,
info@bsd-kadin.org
www.bsd-kadin.org
About KADIN BSD
KADIN Business Support Desk is the service unit of the national Indonesian Chamber of Commerce and Industry (KADIN) in the Kadin Secretariat. Its
major goal is to help foreign parties to settle in Indonesia and to support Indonesian companies on their way to international markets.
BSD also works as research partner on emerging issues in investment and trade. It draws on a network of Indonesian and international institutions.
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