EU Indonesia Business Network Your Gateway to Indonesia

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EU – Indonesia Business Network: “Your Gateway to Indonesia”

EU – Indonesia Business Network: “Your Gateway to Indonesia”

Population of 250 Million 10 th largest economy worldwide Largest population of Muslims worldwide

Population of 250 Million 10 th largest economy worldwide Largest population of Muslims worldwide 2 nd fastest growing G 20 Indonesia Ø Inflation 2007 -2013: 6. 0% Ø real GDP growth 2007 -2013: 6. 0% Third biggest democracy worldwide

Agenda Market Potential Indonesia • Reasons to look into the Indonesian market Challenges Indonesian

Agenda Market Potential Indonesia • Reasons to look into the Indonesian market Challenges Indonesian market • Obstacles in the Indonesia the market EU-Indonesia Business Network • Your partner for overcoming these obstacles Sector outlooks Market Potential • Overview and examples of promising sectors EU-Indonesia Business Network Challenges Sectors

1. Market Potential Indonesia Market Potential EU-Indonesia Business Network Challenges Sectors

1. Market Potential Indonesia Market Potential EU-Indonesia Business Network Challenges Sectors

Sustained GDP growth Real GDP growth (%) Inflation (%) 7 12 6 10 5

Sustained GDP growth Real GDP growth (%) Inflation (%) 7 12 6 10 5 8 4 6 3 4 2 1 2 0 0 2007 2008 2009 2010 2011 2012 Sustained high growth rates Market Potential 2013 2007 2008 2009 Independent Central bank stable inflation rates 2011 250 million inhabitants 10 th largest economy in the world EU-Indonesia Business Network Challenges 2010 Sectors 2012 2013

Economic activity by region

Economic activity by region

Stable macroeconomic environment General Government Gross Debt Indonesia (%GDP) 100 90 80 Fitch •

Stable macroeconomic environment General Government Gross Debt Indonesia (%GDP) 100 90 80 Fitch • BBB • Outlook: Stable Moody’s • Baa 3 • Outlook: Stable Standard & Poors • BB+ • Outlook: Stable 70 60 50 40 30 20 10 0 20002001200220032004200520062007200820092010201120122013 Market Potential EU-Indonesia Business Network Challenges Sectors

Stable political environment • Since 1998 thriving and stable democracy • Newly elected President:

Stable political environment • Since 1998 thriving and stable democracy • Newly elected President: Joko Widodo (former governor of Jakarta) Dr Susilo Bambang Yudhoyono President 2004 -2014 Joko Widodo Governor of Jakarta 2012 – 2014 Presidential candidate 2014

Large domestic consumption base… Structure Indonesian Economy (% of total GDP) Export of goods

Large domestic consumption base… Structure Indonesian Economy (% of total GDP) Export of goods and services 19% Household Consumption Expenditure 46% Gross Domestic Fixed Capital Formation 26% Market Potential EU-Indonesia Business Network Challenges Sectors Large domestic consumer base = Locomotive and guarantor of GDP growth

… that will grow even further 300 Population development prediction (in million inhabitants) 250

… that will grow even further 300 Population development prediction (in million inhabitants) 250 135 million people 200 150 100 Consuming class 50 Below Consuming class 0 2010 2020 Market Potential 2030 EU-Indonesia Business Network Challenges Sectors Consuming class defined as persons with a real net monthly income of US$ 300 or above

Indonesia international • Political & economic key player regionally and globally • Free trade

Indonesia international • Political & economic key player regionally and globally • Free trade agreements with: – ASEAN – Japan – China – Soth Korea • Member of international organizations • Founding member and biggest economy of ASEAN Market Potential Association of Southeast Asian Nations • Political & economic organization • 10 Member states • 600 million inhabitants EU-Indonesia Business Network Challenges Sectors

Sustained growth rates Macroeconomic and politically stable environment Indonesia Large & growing domestic consumption

Sustained growth rates Macroeconomic and politically stable environment Indonesia Large & growing domestic consumption base Market Potential Key member ASEAN EU-Indonesia Business Network Challenges Sectors

2. Challenges in the Indonesia Market Potential EU-Indonesia Business Network Challenges Sectors

2. Challenges in the Indonesia Market Potential EU-Indonesia Business Network Challenges Sectors

Market access restrictions • Numerous protectionist laws in place • Obtaining licenses can be

Market access restrictions • Numerous protectionist laws in place • Obtaining licenses can be cumbersome due to inefficient bureaucracy Legal uncertainties • Unclear and incoherent laws • Overlapping ministerial responsibilities • Insufficient IPR protection Market Potential EU-Indonesia Business Network Challenges Sectors

Poor infrastructure • Bottlenecks & high costs of transport of goods and people •

Poor infrastructure • Bottlenecks & high costs of transport of goods and people • Economic Master plan 2011 -2025 to tackle infrastructure shortcomings Corruption • Notorious, especially in public tenders • Political initiatives (e. g. KPK) are improving situation Market Potential EU-Indonesia Business Network Challenges Sectors

Market access restrictions & excessive bureaucracy Legal Uncertainty & insufficient IPR protection Challenges Poor

Market access restrictions & excessive bureaucracy Legal Uncertainty & insufficient IPR protection Challenges Poor infrastructure Market Potential Corruption EU-Indonesia Business Network Challenges Sectors

Challenges & difficulties to unleash this potential Large market potential (!) Partner on the

Challenges & difficulties to unleash this potential Large market potential (!) Partner on the ground with expertise of the country advised Market Potential EU-Indonesia Business Network Challenges Sectors

3. The EU-Indonesia Business Network (EIBN) Market Potential EU-Indonesia Business Network Challenges Sectors

3. The EU-Indonesia Business Network (EIBN) Market Potential EU-Indonesia Business Network Challenges Sectors

What is the EIBN? Britcham IFCCI Euro. Cham INA A consortium of European chambers

What is the EIBN? Britcham IFCCI Euro. Cham INA A consortium of European chambers of commerce CCI Barcelona EIBN EKONID Market Potential Eurochambre EU-Indonesia Business Network Challenges Sectors

Mission • Promotion of Indonesian market among EU companies • Business support services for

Mission • Promotion of Indonesian market among EU companies • Business support services for companies, especially SMEs, from all EU 28 member states Origin & location • Initiated & co-funded by EU, launched 2013 • Located in Jakarta, Indonesia Resources • Team of European & Indonesian experts from all 7 chambers • Long-standing experience of more than 40 years in the Indonesian market Market Potential EU-Indonesia Business Network Challenges Sectors About EIBN Expertise • Joint expertise, knowledge and experience of 7 chambers of commerce • Extensive network in Indonesia and Europe

Services I: Knowledge center Interactive webportal Database Knowledge Center Publications Newsletter Market Potential EU-Indonesia

Services I: Knowledge center Interactive webportal Database Knowledge Center Publications Newsletter Market Potential EU-Indonesia Business Network Challenges Sectors

www. eibn. org

www. eibn. org

Services II: Market Entry Pre-market check, market & Helpdesk sector analysis Market Potential Business

Services II: Market Entry Pre-market check, market & Helpdesk sector analysis Market Potential Business partner search EU-Indonesia Business Network Challenges Sectors Business Delegations Trade Fairs

4. Sector Potentials Market Potential EU-Indonesia Business Network Challenges Sectors

4. Sector Potentials Market Potential EU-Indonesia Business Network Challenges Sectors

Sector Outlook Engineering Automobile Chemistry Construction & Infrastructure Electronics Sector overview • Growing economy

Sector Outlook Engineering Automobile Chemistry Construction & Infrastructure Electronics Sector overview • Growing economy • Large domestic market with expanding consuming class • Catch up Information technology demand for consumer goods Environmental and sustainable technology demand for production machines of Mining Healthcare sector Energy Food and beverage consumer goods • Investments in infrastructure through Economic Master plan

Food and beverage industry FOOD AND BEVERAGE Indonesia is Asia’s third-largest agricultural producer (after

Food and beverage industry FOOD AND BEVERAGE Indonesia is Asia’s third-largest agricultural producer (after China and India), its food and agribusiness trade is valued at US$44. 5 billion PACKAGING The country’s packaging industry expects revenues to grow by 8, 7%, boosted mainly by the local food, beverage and pharmaceutical industries Market Potential EU-Indonesia Business Network Challenges Sectors

Electronic industry Electronics: • Market volume: US$30 billion • Average growth 8% • Market

Electronic industry Electronics: • Market volume: US$30 billion • Average growth 8% • Market volume in 2025: US$80 billion • Gross value added growth of 6% annually Electricity Production • Annual growth rate of 12% in energy consumption • Market potential for sectors linked to energy production

Healthcare § Healthcare: Growth 8. 2% § Medical devices: Growth 4. 0% § Currently,

Healthcare § Healthcare: Growth 8. 2% § Medical devices: Growth 4. 0% § Currently, government and private spending in the health sector only 2% of GDP § Next 30 years rise to 8%, totaling about USD 1 billion in investment to meet demand § An estimated 56% of Indonesia’s population have some form of health insurance § Health Ministry’s 2014 goal of universal coverage (base safety net) SOURCE: KADIN / BUSINESS MONITOR Market Potential EU-Indonesia Business Network Challenges Sectors

Engineering MECHANICAL ENGINEERING & PLANT CONSTRUCTION • Market volume today is US$18 billion •

Engineering MECHANICAL ENGINEERING & PLANT CONSTRUCTION • Market volume today is US$18 billion • Average growth of 7% • Market volume until 2025 > US$47 billion • Gross value added 37% METAL WORKING & PROCESSING • Average growth of 4, 2% • Market volume until 2025 > USS 34 billion Market Potential EU-Indonesia Business Network SOURCE: PROGNOS 2012 / BDI STUDY Challenges Sectors

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More information ? www. eibn. org [email protected] org

Thank you for your attention!

Thank you for your attention!