presentation - ib forum - final

7/29/2019 Presentation - IB Forum - FINAL

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Investing in Inclusive Businessin Indonesia:

A Market Scoping Study

Preliminary Findings

October 16, 2012


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Indonesias dual development goals are evolving

2

Pro-growthPro-job

Pro-poor

7% (2014)6.5% (2012)

11% (2012)

Pro-green 26-41% (2020)

+


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Outcome Document The Future We WantPada penutupan KTT Rio+20, telah disahkan

outcome document The Future We Wantdiadopsi

pada akhir sesi Debat Umum pada tanggal 22 Juni

2012. Dokumen ini terdiri dari 283 paragraf yang

intinya berisi: Our common vision;

Renewing political commitment;

Green economy in the context of sustainable development andpoverty eradication;

Institutional framework for sustainable development;

Framework for action and follow-up;

Means of implementation.


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4

AGENDA

1. What is IB and the purpose of our study?

2. Macro-economic context for IB in Indonesia

3. Inclusive Business Models in Indonesia

4. IB Investments

5. Recommendations for ADB Support

6. Questions and Answers


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5

Assessment ProcessMacroeconomic landscape, PE market, SE & IB market and donorlandscape

Studyrecommendations

Investment

Strategy

Macroeconomicassessment

PE marketassessment

Inclusive BusinessMarket

DonorMapping

Secondary research of macro andmicro economic conditions inIndonesia

38 in-person company interviewsso far

Secondary research on landscape Specifically targeted companies

operating in Eastern Indonesia

30 fund manager and co-investorinterviews

10 case studies being developed Secondary research on PE and

capital markets in Indonesia

8 donor interviews completed Existing donor-funded initiatives

analyzed

Relevance

Findings

Data collectionmethods

Inclusive BusinessForum

Forum held in Jakarta, Indonesiato gather inputs from diversestakeholders and review progress

so far


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Market

returns

1 Improvement in human development indicators, Source; Dalberg analysis

Business

Belowmarket

Socialenterprise

Abovemarketreturns

Low High

Classification of businessmodels

Positive externalities1

Inclusivebusiness

Companies and enterprisesthat directly engage- ininnovative ways - BoPpopulations in their valuechain as consumers,suppliers, distributors oremployees and create

systemic impact in scale onpoverty reduction andinclusiveness.

Inclusive businesses maximize profits while delivering strong social impact:

Helping Business to be more inclusive Helping Social enterprises to scale up and achieve market returns

What is inclusive business


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7

Key Market Trends

Increasing Growth stimulated by national demandfrom the lower middle class (BoP)


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Source: Central Statistics Agency / Susenas (National Socio-Economic Survey) 2010

7.4% = 18.16 Ml Indonesiansin abject poverty living onless than US$1.00 per day

16.7% = 40.99 Ml livingbelow National Poverty Line(US$1.25 per day)

49.0% = 118.74 Ml nearpoor Indonesians living

around PPP US$2 per day

78.0% = 193.90 MlTotal population living onUS$3 per day

% of Total Population

Key Market TrendsDeclining poverty, but a large number of BoP


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9

and high underemployment IB can help in involving the poor through value chain production

INFORMAL EMPLOYMENT BY REGION (AGES 15+ at %)90

80

70

60

50

40

30

20

10

0

2001 2010 Source: BPS Quarterly Wage Statistics


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10

AGENDA




3. IB Investments

4. Recommendation for ADB Support


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38 Companies with IBs selected based upon Size, Potential Growth and BoP engagement

Company Name SizeGrowth

ProspectSector Specific/Product

BoP Engagement Model

C D E S

Agriculture/Agribusiness

1 Usaha Kita Makmur Indonesia (UKMI) Small High Rice, Forest Honey etc.

2 Paskomnas Large High Agribusiness Wholesale Market

3 PT. Mars Symbioscience Indonesia Large High Chocolate Producer

4 PT. Great Giant Pinneaple Indonesia Large High Canned Pineapple Producer

5 Green Gold Group Medium/Large High Seaweed

6 Riau Sagu Lestari & Sinar Sagu Mas Small/Mediun High Starch producer /processor

7 PT. Agri Spices Indonesia Medium/Large Moderate Spice trader and processor

8 CV Indo Agro Perdana Small High Coffee

9 Javanegra Medium High Tourism

Manufacturing/Light Manufacturing

10 Lautan Luas Tbk Large High Chemical trader and processor

11 PT. Panasonic Manufacturing Indonesia Large High Electronic/Home Applience

12 PT. Holcim Indonesia Large Moderate Cement producer

13 PT. DUA Lighting Small Average Lamp/lighting

14 PT. Aditec Cakarwiyasa Large Average Manufacturing/Light Manufacturing

15 Mandala Marmer Small Average Marble producer

16 Dian Handycraft Small High Handycraft

17 Silverplas Pasific Small High Plastic pellet

18 Nike Indonesia Medium/Large Sport apparel

Consumer Product/Retail

19 PT. Tirta Investama (Aqua Danone) Large High Bottled water

20 PT. Adiwara Worldwide Small Average Health Product 21 Tudung Group Large High Food


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Company Name SizePotential

GrowthSector Specific/Product

BoP Engagement Model

C D E S

Consumer Product/Retail

22 PT. Sarinah Large Moderate Department Store/retailer

23 PT. Unilever Indonesia Large High Consumer good

24 Mustika Ratu Large High Herbal and cosmetic

25 Asa Food Medium Average Bread producer /distributor

Renewable Energy

26 Medco Power Indonesia Large Moderate Geothermal

27 PT. Sintesa Banten Geothermal Medium/Large Moderate Geothermal

28 PT. Sinar Indonesia Merdeka Medium/Large High Biomass/Biogass

29 Ecoport Power Persada Medium/Large Average Energy Efficiency System

30 Terrasys Energy Small/Medium Moderate Multi-source renewable energy

31 RiverGen Small Moderate Hydro Power

Tourism

32 Pulan Macan Village & Eco Resort Small High Eco resort

33 Manuaba Mandiri Small High Eco resort and estate

34 Ecolodges Indonesia Small High Tourism

35 idGuides Small High Tourism

Others

36 Bakrie Telecom Tbk. Medium/Large Moderate Telecommunication

37 PT. Riau Andalan Pulp and Paper Large Moderate Forestry

38 Link Taxi Small Average Transportation

38 Companies with IBs selected based upon Size, Potential Growth and BoP engagement


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Agriculture, Manufacturing, Consumer Product, Renewable Energyand Tourism are the most attractive sector with IB Model

Sector

MarketScope

FinancialReturns Social Returns Relevance

Number ofIBCompanies

ProfitabilitySystemicproblemsolving

Reach ofthe Poor

Depth ofpovertyreduction

Innovativeness of IBModel

Agriculture Very high Very High High Very high High

Manufacturing/lightmanufacturing High Very High High High High

Consumer Product/Retail Very high Very High High Very high Medium

Renewable Energy Medium High High Very high High

Tourism Medium High MediumMedium /

High Medium

Telecommunication Low Very High Low Low High

Forestry Low High Low Low / Medium Medium

Transportation Low Medium HighMedium /

High Low

Finance Interview in process

Health, Education Interview in process

Housing, Water Interview in process


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14

Agriculture, consumer products, andretail.

High IB involvement

- Agriculture/ Agribusiness

- Handicraft/ Traditional products

- Retail market & Tourism services

Geographic target

Direct correlation to infrastructureavailability; High population centers

Renewable energy, IT, and basicservices (i.e. housing, water, etc)

IBs that address systemic problems

Renewable energy

Supply chain constraints

Nutrition and food products

Geographical targets

Rural/ isolated regions

Rich natural resources

IB Model 1: BoP as part of the supply-chain

Model 2: Business addressessystemic problem for BoP

Large scale producers relying on smallfarmers/ producers to supply to their plant/factory

Established system in-place: Inti-plasma orcontract farming

Scaleable and Replicable

Involves most number of households

Infrastructure/ Health or Education related

Innovative

Small-scale

Integrated Strong multiplier implication

commodity/ location-based

development of scalable methods andsystems

strong multiplier effect


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15

AGENDA




3. IB Investments



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Capital Market EnvironmentThere is a niche for inclusive business finance

Good Macroeconomic Environment for Investment market liquidity, default loans, exchange reserves, inflation rate, debt ratio, JCI, GDP . PE sectors 2011 - coal mining, infrastructure, telecoms, plantations and banking 2010 FDI $14b; 2011 FDI $20b; 2012 $25b (est) Concentrated in mining & chemi/pharma $2b; utilities $600m; F&B $500m; MME $500m VC/PE market to expand with regional competition for regional and global investment

Successful IPOs and multiple exits with minority positions in smaller deals

Challenges Limited IB finance expertise, lack of investment-ready SMEs and angel networks

Inept bureaucracy, endemic corruption and weak investor protection Regulated PE market environment and transition to Financial Services Authority

Legal factors to recognize limited partnerships and collective investment frameworks

Opportunities Engage IB market niche with regional IB fund

Up-swelling in entrepreneurship ecosystems Mandated CSR with limited value proposition

Low valuations and under-valued/managed assets


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Capital Market Environment

Source: BI, Bloomberg, Nomura Research, BPS, Stan Chart Research, Bain & Co., IDX Factbook , WSJ, World Bank

SME Sources of Capital

NBFI Asset Growth

(IRD trn)

Banking Sector Trends

Lots of money available, not reaching SMEs (due to collateral/businessreadiness)


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16 Possible IB Fund Managers Analyzed (1)Mix of regional/global IB-focused funds and national capital market funds

Fund ManagerIB

Focus

Geographic

FocusInvestment Stage Investment Sector

Aureos CapitalSMEs

+ IB interest

Emerging Markets

Asia Regional &

Special Funds

Growth

Clean Energy, Hospitality, Financial Services,

F&B, Transport, Education, Healthcare,

Retail, Pharmaceutical/Bio- tech

AXA AssetManagement

No

but IB interestIndonesia

Listed Equities

Fixed Income

Financial Services, Real Estate, Hospital-ity,

Clean Energy, IT, Natural Resources,

Healthcare

Bahana TWCInvestmentManagement

No

but IB interest

Indonesia

PE Growth Listed

Equities

Public Bonds

Transport & Logistics, IT

Bamboo Finance YesEmerging Markets

Asia, Africa, C.

America

Early/Growth

Micro/Impact

Clean Energy, Healthcare, Financial Services,

Education, Water, Low Cost Housing,

Agriculture

Batavia InvestmentManagement

No

but IB interestIndonesia Growth

Infrastructure, Mining, Transport & Log-istics,

Energy. Interest in SME funds

Batavia ProsperindoAsset Management

Nobut IB interest

Indonesia Listed EquitiesFixed income

Financial Services, Energy, F&B, Transport &Logistics, Real Estate

BlueOrchard YesEmerging Markets

Asia, Africa, S.

America

Early/Growth

Micro/Impact

Financial Services, Clean Energy, Agri-

culture, Healthcare.

Brent AssetManagement

No

but IB interestIndonesia Listed Equities Financial Services, Real Estate, F&B,

Transport & Logistics, Manufacturing, Retail


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16 Possible IB Fund Managers Analyzed (2)Mix of regional/global IB-focused funds and national capital market funds

Fund ManagerIB

Focus

Geographic

FocusInvestment Stage Investment Sector

Grassroots BusinessFund

Yes

Emerging

Markets

Indonesia

Early/Growth

Micro/Impact

Agriculture, Clean Energy, Healthcare,

Education

LGTPV Yes

Emerging

Markets

Indonesia

Early/Growth

Micro/Impact

Agriculture, Clean Energy, IT, Health-care,

Education

Mandiri Manajemen

Investasi

No


Listed Equities

Fixed IncomePublic Funds

Real Estate, Retail, Energy, Agriculture,

Infrastructure

Manulife AssetManagement

No PE

but IB interestIndonesia Listed Equities

Public Bonds

Financial Services, F&B, Energy, Real

Estate, Transport & Logistics, IT

Milenium DanatamaIndonesia

No


Listed Equities

Public Bonds

Financial Services, Energy, F&B, Manu-

facturing, Real Estate, Agriculture

Nikko SecuritiesIndonesia Nobut IB interest IndonesiaListed Equities

Fixed Income

Public Bonds

Infrastructure, Hospitality, Real Estate

OSK NusadanaAsset Management

No


PE Growth Listed

Equities

Public Bonds

Financial Services, Infrastructure, Energy,

Manufacturing, F&B, Real Estate, Retail

Trimegah SecuritiesNo

but IB interestIndonesia Listed Equities

Public Bonds

Financial Services, Real Estate, Trans-port

& Logistics, Pharmaceutical/ Bio-tech


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Co-investors willing to engage in inclusive business includingDFIs (DEG, FMO, AFD)

Current exposure Planned entry

Co-Investors &

Investment Sectors

Natural

Resources

FMCG &

Retail

Energy &

Transport

Food &

Beverage

Healthcare

& Education

Hospitality

& Tourism

TMT &

Financial

Services

Manufacture

& Industry

Real Estate

& Housing

PE

Funds

Mahanusa

FairwaysCapital

UnoKapital

CapsquareAsia

ReCapital

Creador

Quvat

Institutional

Investors &

Banks

UBS

Credit

Suisse

ManulifeCapital

BTPN

BNI 46

Independent

Foundations

& Family

Funds

AstraFoundation

Sampoerna

Foundation

X X X

X X

X X XXX

X

XX X XXX

X X X X

X XXX

XX

X

X X X

X XX X

X X XX

XX

X X X XX

X

X XX

X

X

XX XX

X

X

X X

XX

X

X

XX

X X


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There is a missing middle in equity and a major gap in debt

Source: Interviews with Fund Managers & Co-Investors

Equity

Debt

TechnicalAssistanc

e

Interview Findings Indicate financial instruments likely to bepreferred by investees and potentialpercentage of fund portfolio (Q13)

Over 80% of Fund Managers and Co-Investorsrecognize need and value in TA facilityforinvestee training, advisory support and risk man-agement

A gap or missing middle exists where early/midstage growth firms lack funding, collateral andTA to scale ($2m - 10m)

LPs place greater emphasis than GPs on equityversus debt in fund structure and deal sourcing

Gap created by growth equity space (>$20m)populated by existing and new players geared forlarger deals

Indonesia remains primarily collateral-dependentfor debt with limited cash-flow financial products(i.e. higher interest & informal sector rates)

Working and expansion capital are main barriers toearly and growth stage IB opportunities

Credit guarantees specifically designed for IB

Defined as credit guarantee (i.e. long-termpurchase agreement, performance bond,

etc)

Fund Managers

Co-Investors

45%

30%

30%

30%

5%

5%

35%

20%

Guarantee*

Blend

Debt

Equity


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Donor Preferences

Donors and development agencies areincreasingly interested in market-based solutions

Technical Assistance:

AusAID Partnership for Rural Economic Development, UNDP inclusive business development

GIZ

USAID

Investments Proposed KfW equity investments in Social Enterprise

Fund (start ups)

IB debt investments of IFC, DEG, FMO\

Issue of security


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23

AGENDA




3. IB Investments



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Funding

1. Funding is available (Banks and other financialproducts)

1. Access to funding remains a challenge

because of inherent issues from banks(collateral, financial reports, limited productscope)

there is a funding gap for IB IB companies are interested in equity (50%) and debt (50%)

financing between $0.5 and $20 million We need to develop a specific deal sourcing mechanism for

IB Model that can connect business opportunities with

funds/investors

F d D i R d ti


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BusinessInclusivebusiness

Belowmarket

Social enterprise

Abovemarketreturns

Low High

Classification of business models

Strategy for social enterprises and

SMEs in the larger companiesvalue chains

Address equity requirementsbeyond the scope of seed andsocial venture capitalAddress debt requirements ofequity investees so that equitygoes further

Identify impediments to growthand profitability

- technology gap- management skills- strategic alliance

Offer technical assistance /grantsupport to help companies investin areas that are typically under-invested due to long-term, public

good nature of returns (ADB/SNV assist to develop and raisesocial enterprises to levelattractive to PE funds)

Fund Design RecommendationsHelping high performing social enterprises scale to achieve market returns

1 Improvement in human development indicators

Source; Dalberg analysis

Positive externalities

1


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BusinessInclusivebusiness

Belowmarket

Socialenterprise

Abovemarketreturns

Low High

Classification of businessmodels

Positive externalities

Fund Design RecommendationsHelping businesses become more inclusive

Strategy for social enterprises

and SMEs in the largercompanies value chainsAddress equity requirementsbeyond the scope of seed andsocial venture capitalAddress debt requirements ofequity investees so that equitygoes furtherIdentify impediments to growth

and profitability- technology gap- management skills- strategic alliance

Offer technical assistance/grant support to help companiesinvest in areas that are typicallyunder-invested due to long-term,public good nature of returns(ADB/ SNV assist to develop andraise social enterprises to levelattractive to PE funds)

1

Strategy for Business &

growing SMEs

Offer concessional debt toaccount for higher risk andvalue of social benefit createdby firms wishing to expandinclusive operations

Provide credit guaranteefacility to select SMEs thatdeliver high financial andsocial impacts

Offer technical assistance/grant support to helpcompanies invest in areas thatare typically under-invested

due to long-term, public goodnature of returns (ADB/ SNVassist to develop and raisesocial enterprises to levelattractive to PE funds)

2


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Rigorous selection & development steps Multiple filters along the way

One key need for TA (project managementfacility): Mapping Framework

Review &Analysis

Development

Pool of Potential Companies

Owner Acid Test

Pre-selection Due Diligence Final Selection


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Design Parameters for the IB Financing

Sectors

Deal Size

Investment Strategy

Investment Exits

Fund Manager/Co-Investors

TA Facility

Target Sectors: Companies say Agriculture, Energy, Consumer Goods 2nd category: financial services, basic services, health

Deal Size: .5 to 5m vs 2 to 10m

Fund Size: 60m to 100m; avg deal size 2m to 5m

Investment: BLENDED: Debt 60%; Equity 35%; Guarantees 5%

Expected Return: 10-12% v. 6% v. 25% depending on investment mix

GP: externally managed

Need for TA facility with three core components: Incubator,

impact assessment, post-investment technical assistance

Preliminary interest from DFIs and Co-investors such asCredit Suisse, Manulife, UBS and UnoKapital, Quvat

Generally MBOs and strategic sales


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Questions?Thank you


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Further

Information


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Key Questions for Feedback Session

Sector Focus: Does the sector focus consistent with your own assessment (asa company, investor and/or donor?)

Fund and Deal Size: Is the fund size adequate for the IB opportunities in theIndonesian market? Is the deal size filling a current gap in the marketplace? Willit crowd-in other investors?

Return Profile: Is the IRR per deal achievable? How might you distribute theinvestment strategy between debt, equity and other financing strategies?

Exit: What are the most likely exit strategies?

Co-Investor/Donor Interest: What is your degree of interest in leveraginginvestment and/or investing in such a fund? What is your decision parameters?

TA Facility: How would you structure a TA facility? Would you focus the TA inthe core areas outlined?

Other Recommendations:Are there any other recommendations we shouldconsider? Sectors? Government incentives? Niche?


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Key Questions

How to strengthen the environment for IB How does an inclusive business fund crowd-in investment and not crowd-

out? Government incentives for agricultural growth often do not consider IB

Does the company CSR mandate provide a specific opportunity inIndonesia?

If ADB is a co-investor:

Are we overemphasizing equity?

How patient does capital need to be?

How should investors plan to exit?

What is the right package of equity, debt and TA to meet early and growth

stage SEs and SMEs needs? Is TA a solution?

Is a fund necessary at all?

Would a project management facility (TA) not be enough?


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Fund Manager Recommendations for IB Fund

Clean energy, financial services, natural resources (incl agriculture) andhealthcare

Sectors

Company Performance

IRR expectation >15% with companies active in sectors noted above Investee SMEs need solid management/track record, transparency and good

operational/cultural fit A sense growth stage SMEs more interested in debt and credit guarantees than

equity

Investment Strategy

Preference to work with a mix of equity and debt Minority stake + Board representation bare essentials Growth stage SMEs where possible with credit/performance guarantees

Interest in convertible feature to equity with supporting warrant for assurance. Deal size US$ 2-15m with 10-15% IRR (average equity/blend 20% - less for

debt/smaller firms) 3-5 year term for debt (rollover option) and 4-8 year time horizon for equity Competitive management fees/carry (min 2:20) and hurdle rate (TBA) Local debt rate up to 10% with 5 year term + business risk premium (possibly

more for small firms)

Investment Exits MBO/MBI more likely

Fund Manager/Co-Investors

Quality pipeline of investee SMEs crucial for commitment/success Experienced/reputable GP with asset class and in-country results commercial

tie-ins amy apply Some LPs prohibited from or prefer option to invest on individual deal basis Assessment/measurement and systems/reporting on non-financial performance

and other incentives (i.e. social/environmental impacts)

TA Facility ADB seed funding and TA facility key to attract co-investors and mitigate

investee risks/performance Tied (dedicated) or independent (ad hoc expertise) TA is a consideration


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What is Inclusive Business?

Business models that involves BoP(Base of Pyramid): A business model thatcreates shared value by integrates the lowincome segment in the company s core business

activity as part of the value chain

Addresses a systemic issue:examples

- e.g. energy requirement

- access to clean water

- nutritional needs- education- credit access- techniology- etc.

BoP as

Supplier

Consumers

Distributors

Employees

Social BusinessInclusion

EconomicBenefits

BusinessPhilanthropyNon-Profit

CommercialVenture Profit-

Making

InclusiveBusiness


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How Inclusive Business evolve in Indonesia?Inti Plasma: Inclusive Business Model

Core Company Cooperative(farmers asmember)

Installment Payments Feasibility aspectBANK

1

MoU

3 2

6

45

Avalist

Net Income Plasma

Production Cost

Product sales/marketing


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Real GDP Growth


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Indonesia has a vibrant SME Sector, many of themproviding employment for the poor

Size ofEnterprise Assets Annual Turnover

Micro > IDR 50,000,000 > IDR 300,000,000

Small IDR 50,000,000 (50 millionrupiah) to IDR 500,000,000(500 million rupiah);

IDR 300,000,000 (300 million)to IDR 2,500,000,000 (2.5billion rupiah).

Medium IDR 500,000,000 (500million) to IDR10,000,000,000 (10 billionrupiah);

IDR 2,500,000,000 (2.5 billionrupiah) to IDR50,000,000,000 (50 billionrupiah).

Large More than IDR 10 billion More than IDR 50 billion


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INDONESIAS SIX ECONOMIC CORRIDORS

Sector : Indonesia Investment Coordinating Board BPKM

BandaAceh

JakartaSurabaya

Padang

PekanbaruTanjungPinang

Jambi

Palembang

Bengkulu

Pangkal

Pinang

BandarLampung

Bali Nusa Tengarra

PontianakSamarinda

Bandjarmasin

Makassar

Melunda

Palu

GorontaloManado

Ambon

Ternate

SorongManokwari

Wamena

Jayapura

Merauke

Medan

Kendari

1

2

3

4

5

6

1

2

34

5

6

Legend

Sumatra

Java

PapuaMaluku

Sulawesi

KalimantanBali - NusaTenggara

Tumbangsamba

Sumatra: Natural resource productionand processing centerJava: driver for national industry andservice provisionsKalimantan: Production and

processing of national mining and energy

Bali-Nusa Tenggara: agricultural, plantation,fishery, oil and gas, and miningSulawesi: gateway for tourism and nationalfood supportPapua-Maluku: development of food, fisheries,

energy, and national mining

1

2

3

4

5

6

MP3EI: For 2012, the Indonesian Government had been preparing for the ground-breaking for 110 projects relatedto the MP3EI program valued at Rp 368.6 trillion (USD 40.95 billion). These projects are divided among six corridors.


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Supporting Macro Trends

POOR IN INDONESIA


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40

POOR IN INDONESIA

54.2

0

43.2

0

35.0

0

30.0

0

27.2

0

25.9

0

22.5

0

34.5

0

49.5

0

48.0

0

38.7

0

37.9

0

38.3

9

37.3

4

36.1

5

35.1

039.0

5

37.1

7

34.9

7

32.5

3

31.0

2

40.1

0

2

8.6

0

21.6

0

17.4

0

15.1

0

13.7

0

11.3

01

7.7

02

4.2

0

23.4

0

19.1

4

18.4

1

18.1

9

17.4

2

16.6

6

15.9

7

17.7

5

16.5

8

15.4

2

14.1

5

13.3

3

1976 1980 1984 1987 1990 1993 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Populasi Penduduk Miskin (Juta Jiwa) Persentase Penduduk Miskin (%)Population of Poor (Million) Percentage of Poor to Population

Source: University of Indonesia Faculty of Economics


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UNEMPLOYMENT AND UNDER-EMPLOYMENT (AGE 15+, %)

2000 2005 2006 2007 2008 2009 2010 2011

35

30

25

20

15

10

5

0

Unemployment Underemployment

15.5

24.2

11.8

33.4

Female Percentage

30.6

12.6

9.1

25.1

8.4

23.3

8.1

22.1

7.1 6.6

21.2 18.9

65.274.91

72.4

78.480.9 81.6

83.082.7

Source: BPS,GoI

UNEMPLOYED &UNDEREMPLOYED

(MILLIONS)

YEAR


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Indonesia BoP Context

INFORMAL EMPLOYMENT BY REGION (AGES 15+ at %)90

80

70

60

50

40

30

20

10

0

2001 2010 Source: BPS Quarterly Wage Statistics

Agriculture, Manufacturing, Consumer Product, Renewable Energy


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43

g cu u e, a u ac u g, Co su e oduc , e e ab e e gyand Tourism are the most attractive sector with IB Model

Sector Potential BoPParticipationt (rank 1[low] 4 [high])

Systemicproblemsolving

IBOpportunity/Model

Potential forsocial impact

Commoditylocated base

Agriculture High High All country

Manufacturing/lightmanufacturing High High Java

Consumer Product/Retail High MediumJava,

Sumatra

Renewable Energy High High All country

Tourism Medium Medium All country

Telecommunication Low High W. Indonesia

Forestry Low Medium All country

Transportation High LowJava,

Sumatra

Finance Interview in process

Health, Water, Housing Interview in process

4321


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Indonesia PE Investor Mix and Deal Type(2010 - 2011)

PIPE - private Investment in public equityNotes: excludes deals


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Examples of IB 1: Refurbishing marketplaces :transformation of traditional buying centers

Pasar Induk Osowilangun,Surabaya (East Java)

Pasar IndukBeras,

Tangerang


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Pasar Induk Tanah Tinggi, Tangerang

Pasar Induk Jaka Baring, Palembang (South

Sumatera)


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Examples of IB 2: Seaweed: scalabilitykeeping it simple

10,000ha marine concession forseaweed

Long-line method for farming- easy to replicate

- scalable by farming groups- unique design of farming apparatus

easy to build and;mobile easy to move

Strong domestic and export demand High value-added downstream products


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Examples of IB 3: Using palm fruit waste asfeedstock for Biomass Plant

Turns waste intofuel for energy

Ready supply offeedstock

Addressesenergy shortagein rural areas(Feed-in orsupply into Grid)

Expansion fromexisting business

presentation - ib forum - final

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