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Badan Koordinasi Penanaman Modal

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Biomass Investment Proposition

July 29, 2016

Indonesia Investment Coordinating Board

Why Canadian firms are investing in Indonesia

Indonesia’s GDP will increase by over 150% to $2.2 trillion by 2025

The government is targeting private sector energy investment of $80 billion by 2025

Indonesia has the 4th

largest population in the world (261 million as of August 2016)

Up 60 gb of private power plants will be approved by 2025

Indonesia is one of the fastest growing economies in the world in the world (>5% p.a. 2012-16)


Why Canadian firms are investing in Indonesia

invested by Canadian firms

in Indonesia

of Canadian investors in Indonesia are

planning to re-invest in Indonesia

(WAVTEQ, June 2016 survey)

of Canadian investors in Indonesia would recommend other

Canadian companies to invest in Indonesia

(WAVTEQ, June 2016 survey)

Renewables was the sector with the best opportunities for FDI into Indonesia according to Canadian investors.


Why Invest in Indonesia’s biomass sector

Indonesia’s competitive strengths Labour costs nearly half of China and lower than India for skilled positions Better availability of scientist & engineers than China or India Effective corporate tax less than half China and India


Demand for energy in Indonesia

Final energy consumption, thousand barrel oil equivalent, Indonesia, 2005-2020

Source: WAVTEQ based on Ministry of Energy and Mineral Resources- Handbook of Energy and Economic Statistics 2015 and EIU

0

500000

1000000

1500000

2000000

2500000

1000’s

Energy consumption increased by almost 50% between 2005 and 2014

Electricity generation is forecast to increase by over 50% from 2015-2020


Biomass investment potential in Indonesia

17.6% 5.0% 8.5% 71.2% 50,000 MW

Of primary energy supply from biomass

Of primaryenergy supply from bio-fuel

Of industrial energyrequirements from biomass

Of household energyrequirements from biomass

Biomass power generation potential


Biomass – energy supply

240000

250000

260000

270000

280000

290000

300000

310000

320000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Primary energy supply of biomass, Indonesia, thousand BOE (2005-2014)

Source: Ministry of Energy and Mineral Resources- Handbook of Energy and Economic Statistics 2015


Government support

25% $100 bn 508 Feed-in-tariff

Target of energy from renewable sources by 2025

Investment in green energy by 2019

Proposed powerprojects from 2015 to 2019

To encourageinvestment in renewable energy

Waste to energy Partnership Incentives

Strong focus by government to encourage use of waste from domestic, agriculture and wood

Waste-to-Energy scheme in partnership with organisations including EU

Strategic Policies, incentives and regulations to promote use of solid waste from municipalities


FDI Track Record

$130 bn FDI attracted by Indonesia in the last five years (2011-2015) (Source: BKPM)

$10 bnFDI attracted by Indonesia in electricity, gas & water supply in the last five years (2011-15) (Source: BKPM)

$3 bn FDI attracted by Indonesia in electricity, gas & water supply in 2015 (Source: BKPM)

1 in 6Energy FDI projects in Indonesia have been in renewable energy in the last five years (2011-15) (Source: fDi Markets, Financial Times)


FDI Track Record – biomass / bio-fuel case study

Sinar Mas, through its subsidiary Asia Pulp & Paper (APP), is investing around USD780 million to develop 10 biomass power plants over the next eight years with a total generating capacity of 1000 mw.

Louis Dreyfus Company has established a bio-fuel plant in Lampung province in Sumatra, with the capacity to produce 470,000 million tons of bio-fuel annually.


Competitive strengths – Size of economy

0

500

1000

1500

2000

2500

Indonesia

Philippines

Thailand

Malaysia

Vietnam

Singapore

Indonesia’s GDP 2025 forecast:• Increase >150% to $2.2 trillion• Larger than India’s in 2015• Nearly same size as Canada’s ($2.6 tn)• GDP/capita: $3370 (2015) to $7840

GDP 2011-2025, US$ billion (EIU forecasts)


Competitive strengths – Size population

6

31

69

92

101

255

7

36

70

103

128

308

0 50 100 150 200 250 300 350

Singapore

Malaysia

Thailand

Vietnam

Philippines

Indonesia

Population projection (mid-2030, Millions) Population (2015, Millions)

Source: fDi Benchmark (IMF and Population Reference Bureau World Population Data Sheet)

Population by country, 2015-2030

Indonesia’s population is the 4th largest in the world and will increase to over

300 million people


Competitive strengths – Skilled workforce

Source: fDi Benchmark (Global Competitiveness Report, World Economic Forum, Switzerland, 2015-16 )

Availability of Scientists and Engineers – out of 7 (2015)

3.9

4.0

4.2

4.3

4.5

4.6

3.4 3.6 3.8 4 4.2 4.4 4.6

Vietnam

Philippines

India

Thailand

China

Indonesia


Competitive strengths – Available workforce

Unemployment rate, 2015-2020

3.6%

6.0%

4.1%

3.2%

2.4%

2.0%

0.8%

5.9%

8.4%

6.0%

4.0%

2.9%

2.9%

1.9%

0.8%

6.3%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9%

India

Philippines

China

Malaysia

Vietnam

Singapore

Thailand

Indonesia

Forecast Unemployment Rate in 2020 (%) Unemployment Rate in 2015 (%)

Source: fDi Benchmark (Economist Intelligence Unit March 2016 & International Monetary Fund 2016)

Indonesia has the least tight labour force in ASEAN


Competitive strengths – Low taxes

Total Tax Rate (% profit) in 2015

61%

68%

43%

40%

39%

28%

30%

0% 10% 20% 30% 40% 50% 60% 70% 80%

India

China

Philippines

Malaysia

Vietnam

Thailand

Indonesia

Source: fDi Benchmark (World Bank Doing Business 2016)

Indonesia has low effective tax rates


Competitive strengths – Lowest wages in ASEAN

Average monthly wages, USD, 2011-2020

Source: EIU

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

2011 2012 2013 2014 2015 2016 2017 2018 2019

Indonesia

Malaysia

Philippines

Thailand

Vietnam


Competitive strengths for biomass– Low labour costs for engineering positions

Labour costs by country for an engineer, USD, 2015

Source: fDi Benchmark

57537

24030

15893

15840

15552

13801

12000

11029

0 10000 20000 30000 40000 50000 60000 70000

Singapore

China

India

Malaysia

Thailand

Indonesia

Philippines

Vietnam

Indonesia has highly competitive labour

costs


Competitive strengths – Innovation

Total of Patent applications, non-residents (foreign investors) (2014)

3255

3960

6267

6924

9009

7321

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000

Philippines

Vietnam

Malaysia

Thailand

Singapore

Indonesia

Source: fDi Benchmark (World Bank World Development Indicators)


Competitive strengths – Low cost of living

Cost of Living Index, 2015*

Source: fDi Benchmark *Rating 0-10 (0=lowest cost of living; 10=highest cost of living) (2014)

5.7

3.28

2.22

2.14

1.86

1.82

1.4

1.79

0 1 2 3 4 5 6

Singapore

China

Malaysia

Thailand

Philippines

Vietnam

India

Indonesia

The Investment Coordinating Board of the Republic of Indonesia

20

Badan Koordinasi Penanaman Modal (BKPM)


Jln. Jend. Gatot Subroto No. 44Jakarta 12190 - Indonesia

t . +62 21 525 2008

f . +62 21 525 4945

e . [email protected]

Contact Centre :0807 – 100 – 2576 (BKPM)

www.bkpm.go.id

Thank You

Terima Kasih

Indonesia Investment Promotion Centre (IIPC)

invest in - tpsa · 2017-04-11 · in indonesia are planning to re-invest in indonesia (wavteq,...

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