IB Indonesia

8/6/2019 IB Indonesia

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INDIA AND INDONESIA


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ABOUT INDONESIA

Capital Jakarta

Government Presidential republic

Population 2009 estimate 229,965,000(4th)

Religion Islam (88% of Population)

GDP (nominal) Total $511.765 billion(19th)

GDP (nominal) Per capita $2,239 (116th)

Currency Rupiah (IDR)


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INDONESIA- INDUSTRY WISE GDP BREAKUP

GDP (2007): $433 billion; (2008 est.): $511 billion.

Per capita income (2007): US$1,942; (2008): US$2,271

Natural resources (11.0% of GDP): Oil and gas, bauxite,silver, tin, copper, gold, coal.

Agriculture (14.4% of GDP): Products--timber, rubber,

rice, palm oil, coffee. Land--17% cultivated.

Manufacturing (27.9% of GDP): Textiles and Textile

Product, footwear, electronic goods, furniture, paper

products.

Source: Website of Indonesian Ministry of Commerce


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TRADE

Exports (2008)--$137.02 billion including oil,natural gas, crude palm oil, coal, appliances,textiles, and rubber.

Major export partners--Japan, U.S., Singapore,

China, Republic of Korea, India and Malaysia.

Imports (2008)--$129.20 billion including oil andfuel, food, chemicals, capital goods, consumergoods, iron and steel.

Major import partners--Singapore, China, Japan.

Source: Coordinating Ministry for Economic Affairs Republic of Indonesia


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INDONESIA TRADE OVERVIEW

NON-OIL GAS PRODUCTS

EXPORT IMPORT

In Billion US $

5%

India 2.16 2.55

2%


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INDIA- IMPORT (IN MILLION US$)

Sr.

No.Country 2007-2008 %Share 2008-2009 %Share %Growth

1. CHINA P RP 27,146.41 10.7872 32,497.02 10.7005 19.71

2. U ARAB EMTS 13,482.61 5.3576 23,791.25 7.8339 76.46

3. SAUDI ARAB 19,470.30 7.7369 19,972.74 6.5766 2.58

4. U S A 21,067.24 8.3715 18,561.42 6.1118 -11.89

5. IRAN 10,943.61 4.3487 12,376.77 4.0754 13.10

16. INDONESIA 4,821.25 1.9158 6,666.34 2.1951 38.27


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1,491.80

38%

1,083.00

28%

557.93

14%

66.622%

42.11

1%

659.72

17%

VEGETABLE OILS FIXED

(EDIBLE)

COAL,COKE & BRIQUITTES

ETC.

METALIFERS ORES & METAL

SCRAP

ORGANIC CHEMICALS

ELECTRONIC GOODS

Others

Based on Current Years Data( Apr 09-Sept 09)

BREAK UP OF INDIAS IMPORT FROM

INDONESIA


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No

.Country 2007-2008 %Share 2008-2009 %Share %Growth

1. U ARAB EMTS 15,636.91 9.5854 24,477.48 13.2100 56.54

2. U S A 20,731.34 12.7083 21,149.53 11.4140 2.02

3. CHINA P RP 10,871.34 6.6641 9,353.50 5.0479 -13.96

4. SINGAPORE 7,379.20 4.5234 8,444.93 4.5576 14.44

5. HONG KONG 6,312.96 3.8698 6,655.00 3.5916 5.42

18. INDONESIA 2,164.17 1.3266 2,559.82 1.3815 18.28

INDIA- EXPORT (IN MILLION US$)


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BREAK UP OF INDIAS EXPORT TO

INDONESIA

282.31

18%

236.79

15%

142

9%107.24

7%79.55

5%70.54

5%

639.51

41%

PETROLEUM (CRUDE &

PRODUCTS)

TRANSPORT EQUIPMENTS

ELECTRONIC GOODS

DYES/INTMDTES & COAR TAR

CHEML

PRMRY & SEMI-FNSHD IRON &

STL

MACHINERY AND

INSTRUMENTS

Others

Based on Current Years Data( Apr 09-Sept 09)


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SCOPE OF INCREASE IN INDIA-INDONESIA

TRADE

Developing Economy

Large population (230 Million)

Not affected much by recession as economy is not basedon export

Export contains large share of agricultural productslike rubber and palm oil

Now focusing on growth in Manufacturing Sectorand Infrastructure Development

Hence India can focus on improving trade withIndonesia by providing material required for growth ofManufacturing sector

Both governments targeting for doubling the trade till2013.($ 10 billion to $ 20 billion)


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SCOPE FOR FUTURE TREND

COMMODITY WISE

50% decline in 2008-09 due to recession

263 million$ to 133 million$

Target: 400 million$ till 2013

Iron andSteel

(5%)

367 million$ in 2008-09

Target 2013:$ 500-600 million

Electricalequipments

(8%)

2007-08: 35 million$, 2008-09: 212 million $(500% growth)

Large demand due to huge population

Target 2013: $ 600-800 million

OrganicChemicals

(14%)


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SCOPE FOR FUTURE TREND

COMMODITY WISE

2007-08: 34million$, 2008-09: 87 million $ (150%growth)

Target: 150-200 million$ till 2013

Ships andBoats

(5%)

2007-08: 44 million$, 2008-09: 88million $ (100%growth)

Target 2013:$ 200-300 million

Nuclearreactors &Boilers(4%)

2007-08: 73 million$, 2008-09: 111 million $ (50%growth)

Required for energy generation

Target 2013: $ 200-250 million

Transportehicles

(4%)


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INDIAN PRESENCE IN INDONESIA

Bajaj, Essar and Birlas from India set up theirbusinesses in Indonesia in the 1970s.Bajaj, Essar and Birlas from India set up theirbusinesses in Indonesia in the 1970s.

Recently Tata, TVS, Minda, Bajaj and many others

also established their operations in the island nation.

Recently Tata, TVS, Minda, Bajaj and many others

also established their operations in the island nation.

The Mittals and Jindals were also planning to enterinto steel production in Indonesia.The Mittals and Jindals were also planning to enterinto steel production in Indonesia.

The Ambanis of Reliance Industries, planning to enterCoal Mining in Indonesia.The Ambanis of Reliance Industries, planning to enterCoal Mining in Indonesia.

National Aluminium Cooperation (NALCO) of Indiawas also planning to set up an aluminium smelteringNational Aluminium Cooperation (NALCO) of Indiawas also planning to set up an aluminium smeltering


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MAJOR BARRIERS FOR SETTING THE

BUSINESS IN INDONESIA

Procedure for the establishment of a new business inIndonesia takes 151 days.

Getting a property registered in Indonesia takes 42 days.

To enforce a contract through judicial means is a protracted

process usually taking 570 days. Payment for such procedure is very high, often as high as

126.5 percent of the payment involved in the enforcedcontract.

Lack efficiency and the awareness and attitude to providegood services and facilitation to foreign investors.

Legal system in Indonesia is confusing.

Lack of regulations in many sectors.

Lack of transparency in policy.

Corruption in the judicial system.


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MAJOR BARRIERS FOR TRADE WITH

INDONESIA

Investment Coordinating Board (BKPM)

Taxation of Foreign Direct Investment

1. Value Added Tax (VAT) of10% on goods and services;

2. Luxury Goods Tax of10%-75% levied on manufactureor importation;

3. Stamp Duty of up to Rp.6,000 on documents;

4. Land and Building Tax (PBB) 0.1% per annum of theproperty value;

5.

A5% land acquisition tax and a 5% deemed profit taxon land sales; and

6. In respect of non-residents, a withholding tax of20% onmost types of payments such asdividends, interest, royalties, services, deemed profitand property disposal proceeds.


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BARRIER BREAKERS

Initiative by both countries for Mutual Trade

(Increasing trade by 100% till 2013).

Agreements between India and Indonesia for

tariff reduction. Special consideration for Indian companies to set

up business in Indonesia.

Agreements with ASEAN countries.

Import of Agricultural products like Sugar andRice, in case of deficit. First preference can be

given to Indonesia in such cases.


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BIBLIOGRAPHY

Website of Indonesian Commerce Ministry

Ministry of Commerce, India

Thank You

IB Indonesia

Documents

Transcript of IB Indonesia