Indonesia

1
Indonesia

• Richard Rothman
• Senior Commercial Officer
• U.S. Embassy - Jakarta

2
Geography

• Archipelago of 17,000 Islands
• Size of United States
• Located in South East Asia

Indonesia
3
Facts and Figures

• 4th Largest Country in the World
• 230 Million
• 300 Dialects 5 Main Religions

• Population
• Diversity

4
Indonesia
Indonesia Historical Perspective

• 1995 Era of the Big Emerging Markets
• 1997 Asian Financial Crisis
• 1998 Era of Economic Political
  Reforms
• 2004 Election of Susilo Bambang Yudhoyono

5
Indonesia Today
Assessing the Commercial Environment

• Security Situation
• Political Conditions
• Economic Performance

6
Security Conditions Improving

• Security Situation
• October 12, 2002 Bali Bombings Kill 202
• August 5, 2003 Marriott bombing
• September 2004 Australian Embassy Bombing
• October, 2005 Bali Bombings Kill 23
• 2006 No Bombing

7
Political Conditions

• Financial Crisis prompts Suhartos resignation
  VP B.J. Habibie becomes President
• Democratic Elections Held Abdurrachman Wahid
  becomes President
• 2001 Abdurrachman Wahid impeachedVP Megawati
  becomes President
• 2004 First Democraticly Elected Government SBY
  becomes President

8
Key Economic Indicators

• GDP Growth 2006 5.8
• 2005 5.6
• 2004 4.8
• Per capita GDP 2006 1,430
• Per capita GDP 2005 1,233
• Purchasing Power Parity 3,800 (2006,
  estimated)
• Inflation Rate 2007 6.10, target
• 2006 6.60
• 2005 17.11 (Fuel prices)
• 2004 6.40
• Exchange Rate 2007 Rp9,300 to US1.00,
  estimated
• 2006 Rp9,166 to US1.00
• 2005 Rp9,810 to US1.00
• 2004 Rp8,600 to US1.00

9
Key Economic Indicators
Percentage
Purchasing Power Parity 3800
10
Key Economic Indicators
US
11
Key Economic Indicators
Percentage
12
Key Economic Indicators
Rupiah to US1.00
13
U.S. - Indonesia Trade
Japan
Other countries combined
Singapore
USA
Malaysia
China
Thailand
Saudi Arabia
South Korea

• In 2005, U.S. was the 4th Largest Source of
  Indonesian imports after Japan, Singapore and
  China

14
U.S. - Indonesia Trade

• In 2006, Indonesian Imports from USA 3.08
  Billion

Machinery
Others
Misc Grain
Cotton
Soap/Wax Etc
Aircraft
Electrical
15
U.S. - Indonesia Trade
In 2006, Indonesian Exports to USA 13.40
Billion
Fish Shellfish
Natural rubber and similar gums
Other
Apparel Household Goods
Television receivers, vcr's other video equip
Furniture, household items, baskets
Manufactured Goods Classified Chiefly by Material
Sporting and camping apparel, footwear and gear
16
U.S. Trade Balance with Indonesia
2006 U.S. Exports to Indonesia 3.08
billion U.S. Imports from Indonesia 13.40
billion U.S. Deficit 10.32 billion 2005 U.S.
Exports to Indonesia 3.05 billion U.S. Imports
from Indonesia 12.02 billion U.S.
Deficit 8.97 billion   2004 U.S. Exports to
Indonesia 2.67 billion U.S. Imports from
Indonesia 10.81 billion U.S. Deficit 8.14
billion
17
U.S. Trade Balance with Indonesia
In Billion
18
Indonesia Leads ASEAN Region for Export Success
in FY 2007
19
Top Ten US Exporting States to Indonesia - 2005
20
Foreign Direct Investment Approval in Indonesia
16,014.90
15,201.90
14,278.10
13,889.40
13,579.20
13,635.00
10,894.30
10,415.60
9,955.40
As of January 2007
468.50
91.20
133.20
142.80
236.30
565.80
211.70
133.30
87.70
Year
21
Top 10 Things to Know about Doing Business in
Indonesia

• 1 Need an Agent
• Required by Law
• Needs Government Permit
• Familiar with U.S. Business Practices
• 2 Most Business People Speak English
• 3 State Owned Enterprises 40 Market Activities

22
Top 10 Things to Know about Doing Business in
Indonesia
Continued...

• 4 Corruption
• 5 Problems With Contract Enforceability
• 6 IPR Violations (2005 Piracy 253 Million)
• 7 Deteriorating Infrastructure
• 8 Active Foreign Business Community

23
Top 10 Things to Know about Doing Business in
Indonesia
Continued...

• 9 U.S. Government Agencies Who Can Assist You
• U.S. Embassy (Commercial Service, ECON)
• Trade Development Agency, EXIM bank, OPIC
• 10 Secretary Rice signed waiver for Indonesia
  January 2006
• FMS and Direct Sales of Defense and Security
  Equipment allowed
• Licensing requirements still apply, as always

24
Market Opportunities
Security Safety

• Strong Demand
• Imported Products 187.4 Million in 2006
• U.S. Market share 10-15
• Sizeable Police Budget
• 2005 Credit export 64.71 Million
• State Budget 1.1 Billion
• 2006 State Budget 1.6 Billion

Anasia Silviati
25
Market Opportunities
Energy

• Power Shortage in 2005, demand increase 8/year
• Imported Products Over 688 Million
  (Estimated)
• 13 Future Projects - Demand for Subcontracts
• Oil and Gas Investment
• 7.7 Billion in 2006
• U.S. Products 200 Million in 2005
• 15 New Blocks Offered in 2006

Anasia Silviati
26
Market Opportunities
Telecommunication Equipment and Services

• Market size is estimated 4 billion in 2006
• U.S. Share of import market estimated at 15
• Growth rate is forecasted at 30 40
• Imports accounted for 90 of market
• Cellular operators invest 1.9 billion in 2006
• Best prospect Cellular System, 3G Software,
  Network Management Systems, Cellular HandSets

Kalung Riang
27
Market Opportunities
Industrial Chemicals

• Dependence on imports of chemicals
• Total imports in 2006 8.1 Billion
• U.S. Market Share 5
• Jan-July 2006 101.6 Million In Foreign Direct
  Investment
• Major players USA, Japan, Germany,
• China and South Korea
• Promising sub-sectors
• Organic chemicals (HS 29)
• Plastic products raw materials (HS 39)

Anasia Silviati
28
Market Opportunities
Environmental Technologies

• The market estimated at 23 million and projected
  to grow by 10 percent in 2006.
• Major issues Deforestation, Water Pollution,
  Sewage, Air Pollution, and Smoke and Haze from
  Forest Fires.
• The U.S. is strong in pumps and water treatment
  chemicals.
• U.S. exports to Indonesia 10 million in 2005.
• Main suppliers are USA and Japan.

Aulia Rochaini
29
Market Opportunities
Retail

• Opened to foreign investment in 1998
• Sales in 2006 predicted to reach 5.4 billion
• Most foreign investment is in the hypermarket
  sector
• Foreign retailers account only 8 percent of
  outlets, but capture 40 percent of the total
  retail sales
• U.S. retailers are strong in the specialty shop
  and minimarket sectors

Henry Sutanto
30
Market Opportunities
Franchises

• Home to 250 foreign and 50 local franchises
• Best prospective sub-sectors Food and Beverages,
  Educations, Retail and Business Aids and
  Services.
• American franchises dominate, but strong
  competition come from Singapore, France,
  Australia, the United Kingdom, Thailand, and
  domestic franchises
• Estimated future growth around 5 percent.

Hanry Sutanto
31
Market Opportunities
Food Supplements

• Estimated market was 230 million in 2006
• 2006 Imports estimate 190 million over 50
  percent was from U.S
• Competitors China, Taiwan, and European
  Countries
• Best Prospects Degenerative Prevention
  Products,
• Diet and Aesthetics Products, Maintenance
• of Vitality and Stamina Products, and Vitamins
• and Minerals

Sharon Chandra
32
Market Opportunities
Information Technology

• Market size is estimated 1.9 billion in 2006
• Growth rate is forecasted at 15
• Imports accounted for 50 80
• Best Prospect PCs High End Servers
• U.S. Share of import market estimated at 70-80

Kalung Riang
33
Market Opportunities
Aviation

• 18 scheduled and 35 chartered airline companies
• Number of domestic passengers increase 10,
  estimated at
• 27.8 million in 2006
• Imports of aircraft parts in 2006 290 million
  
• U.S. products hold 20 market share
• Opportunities leasing commercial aircraft,
• upgrading airports facilities, supplying spare
• parts

Anasia Silviati
34
List of the Indonesian governments priority
projects

• Security Equipment and Services Airport and
  Seaport
• Waste Management Water Treatment
• Energy
• Transportation Projects City of Jakarta
• Health Care Services
• Electronic Government
• Internet Community Access Point

35
U.S. Foreign Commercial ServiceU.S. Embassy
Jakarta

• Services Offered
• Single Company Promotions
• Gold Key Service
• International Partner Search
• Market Research
• Video Conferencing
• Company Background Check
• Asia Now Initiative

www.buyusa.gov/indonesia
Richard.Rothman_at_mail.doc.gov
36
Important Websites
Business Chambers
U.S. Government

• www.usembassyjakarta.org
• http//www.state.gov/r/pa/ei/bgn/2748.htm
• www.buyusa.gov
• www.opic.gov
• www.exim.gov
• www.tda.gov
• www.export.gov

• www.amcham.or.id
• www.aiccusa.org
• www.us-asean.org
• www.kadin.or.id