Number VI / May 2017 | Trade & Investment Bulletin 1

Number I | September 2016

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U.S. Vice President Mike Pence Visits Indonesia

Photo: US Vice President Mike Pence listens to Indonesian President Joko Widodo at Merdeka Palace in Jakarta on April 20 (http://www.cnn.com/2017/04/22/opinions/us-indonesia-pence-ties/)

EDITOR’S NOTE Dear Readers,

The charm of Bali is never ending. Trip Advisor

has chosen Bali as the best tourism destination

in the world in 2017. Thanks to its traditional

values which combine with modern life that

has become a great attraction for tourist from

all over the globe.

The U.S.A. is one of the top five foreign

investments by country in the first quarter of

2017, ranked fourth with US$587.4 million

investment between January and March.

Indonesia's agriculture products such as

mangosteen, bananas, star fruit, snake-fruit,

rambutan, round coconut, cabbage, cauliflower,

and flowers have been exported to 29

countries. Nevertheless, Indonesia is still

seeking the opportunities to market its

products to U.S.A. through a partnership.

U.S. Vice President Mike Pence Visits Indonesia 1

Sri Mulyani: Asia’s Best Finance Minister 2

Indonesia Foreign Minister visit the US to Strengthen Strategic Partnership 2

Trip Advisor: Bali, Indonesia – One of the top 25 Destinations in the World 3

BKPM: The US Makes the List of Top-5 Foreign Investment by Country 4

Indonesia – U.S. Trade Overview 4

Indonesian Tropical Fruits to World Markets 5

Indonesia's Horticultural Products – a Great Demand in Many Countries 6

Domestic Production, Export, and Consumption of Indonesian Coffee 7

Indonesia Organic Products 10

For more detail information please contact: Economics Affairs - Consulate General of the Republic of Indonesia 211 W. Wacker Drive #8 Chicago, Illinois 60606 Phone: 312.920.1880 Fax: 312.920.1881 Email: economy@indonesiachicago.org Website: www.kemlu.go.id/Chicago

U.S. Vice President, Mike Pence visited

Indonesia on April 19 – 21 as part of his 10-

day visit to Asia.

His visits consist of meetings such as

meeting with the President of Indonesia,

Joko Widodo and Vice President Jusuf Kalla,

as well as celebrating the 50th

anniversary

of the Association of Southeast Asian

Nation (ASEAN) and the 40th

anniversary of

US ties with the group.

During his visit to Jakarta, the country's

capital, Pence declared "As the largest

majority Muslim country, Indonesia's

tradition of moderate Islam, frankly, is an

inspiration to the world," Pence declared.

He added that the United States commends

Indonesia and its people "for the great

inspiration that Indonesia provides to the

world."

The visit has resulted in signing 11

commercial and investment agreements

between U.S. and Indonesian companies

that amounted to USD 10 billion over time.

The deals include Lockheed Martin

providing an advanced weapons targeting

system for Indonesia's F-16 fighter jets,

ExxonMobil selling 1 million tons of liquid

natural gas to state-owned oil and gas

company Pertamina for 20 years starting in

2025, Honeywell supplying turboprop

engines to Indonesian aerospace company

Dirgantara, and a USD 2 billion electricity

metering system organized by a

consortium of companies.

Number VI | May 2017 More articles available at: www.kemlu.go.id/chicago

2 Trade & Investment Bulletin| Number VI / May 2017

Sri Mulyani: Asia’s Best Finance

Minister

Photo: Sri Mulyani, Indonesia Finance Minister (http://thejak.co)

Indonesia Foreign

Minister Visits the

United States to

Strengthen

Strategic

Partnership

Photo: Retno Marsudi, Indonesia Foreign Minister meets with US Vice President, Mike Pence in Washington, D.C. (www.kemlu.go.id)

According to Finance Asia’s, Sri Mulyani

Indrawati is a worthy winner of 2017

Finance Asia’s Finance Minister of the

Year award. Sri Mulyani Indrawati was

appointed as Indonesia’s Finance Minister

last July, returning to a job she held

between 2005 and 2010.

Sri Mulyani emphasized improving the

efficiency of tax collection, a crucial step

for Indonesian Government in order to

get its wealthiest citizens to declare their

assets.

The Hong Kong-based financial journal, in

its article explained why Sri Mulyani was

their top pick. They have noted that she

has been particularly successful in

improving the Indonesian government’s

revenue streams, which had failed to hit

the mark for the last seven years.

This success also came along with the

implementation of tax amnesty program

that had been launched before Minister

Indrawati started the job where in July

last year, Sri Mulyani accepted the

position to head the Finance Ministry

under President Joko "Jokowi" Widodo,

succeeding Bambang Brodjonegoro after

he left to head the National Development

Planning Agency (Bappenas).

Bambang jump-started the national tax

amnesty program, but Finance Asia said

that Sri's "fearsome reputation" was

"undoubtedly crucial" to its continued

success. Indonesia's tax amnesty has

been lauded as one of the most

successful programs of its kind, with

participants declaring Rp 4,590 trillion

($344 billion) worth of assets previously

hidden from government oversight.

The early take-up of the tax amnesty was

far lower than the administration had

sought after.

Minister Indrawati has also pushed for

cuts in spending, slashing government

expenditure by 3% last year. This two-

pronged approach is economics 101 in

balancing the budget. However, it is a

rarity in a region where tax collection

often disappoints, and governments

often overspend.

(continue page 3)

The Indonesia Foreign Minister visited

Washington, D.C. on 4-5 May 2017. The

purpose of her visit is to follow up on US

Vice President Visit to Jakarta last month

as well as to strengthen Indonesia – US

Strategic Partnership through mutually

beneficial cooperation for the people of

both countries.

The Minister visits consist of meetings with Secretary of State, Rex Tillerson, Speaker of the House, Paul Ryan, and the Assistant to the President for Homeland Security and Counterterrorism, Thomas P. Bossert. The issues that were raised during the meetings include mutually beneficial economic cooperation, common efforts in countering terrorism and radicalism through soft power, cooperation in maintaining stability and peace in the region as well as resolving the Palestine-Israel Conflict.

Number VI / May 2017 | Trade & Investment Bulletin 3

Number I | September 2016

Indonesia achieved a dramatic narrowing

of its current account deficit in the last

quarter of 2016 with household

consumption improving and

infrastructure investment is on the rise.

(Source: Finance Asia)

Trip Advisor: Bali, Indonesia - One of the top 25

Destinations in the World

According to Trip Advisor – 2017

Travelers’ Choice, Bali in Indonesia

ranked the first spot among other 24

cities in the world, including locations

throughout Asia, Northern Africa, The UK,

USA, Latin America, and Australia.

Before Hollywood caught on (aka Eat Pray

Love) to the charm of Bali, travelers have

been flocking from near and far to

experience the fantastic organic foods,

spiritual experience and colorful sunsets

on offer. But perhaps no place is as

serene and surreal as Ubud, lying in the

center of Bali with its’ pristine rice fields,

rolling hills, and friendly locals. It is the

best destination to surf, bike and for a

yoga retreat.

Also known as the Land of the Gods, Bali

appeals through its sheer natural beauty

of looming volcanoes and lush terraced

rice fields that exude peace and serenity.

Bali enchants with its dramatic dances

and colorful ceremonies, its arts, and

crafts, to its luxurious beach resorts and

exciting nightlife. And everywhere you

will find intricately carved temples.

Bali’s white beaches are one of the

favorite places to go for family holidays.

There are a variety of water sports

available, such as banana boats,

parasailing or jet skiing, swimming or

plain sunbathing. Most well known

among Bali’s beaches is Kuta. Along with

this stretch of Kuta are an array of hotels,

restaurants, shops and cafes. In the

evenings the area throbs to the beat of

disco music. For a quieter evening enjoy

the beach at Jimbaran, a popular spot to

eat fresh barbecued seafood. Sanur

Beach also dotted with hotels and

restaurants. You can also visit Nusa Dua,

where more private beaches are located

front at the luxurious hotels.

Surfers love the waves at Nusa

Lembongan near Nusa Penida. These

islands are a 45 minutes boat trip

from Nusa Dua or from Sanur. At Nusa

Penida’s southwestern coast are the

Manta Point and the Malibu point where

divers can swim with Trevally, big rays,

and even sharks. The best dive spots are

at Menjangan with its reef flat, anchor

wreck, eel garden and caves to explore.

(Source: www.indonesia.travel)

4 Trade & Investment Bulletin| Number VI / May 2017

BKPM: The US Makes the List of Top Five Foreign

Investment by CountryThe Investment Coordinating Board

(BKPM) reports that the United States has

made it into top five foreign investments

by country in the first quarter of 2017.

US ranked fourth with US$587.4 million

investment between January and March.

“US investment is substantial. I hope the

US can continue to at least be in the top

7,” the BKPM chairman Thomas Lembong

said yesterday in Jakarta.

Lembong underlines Indonesia’s economic

ties with the US, which was reflected in the

US Vice President Mike Pence’s visit to

Jakarta last week.

Thomas also stressed the importance of

Chinese investment that reached US$599.6

in the first quarter this year. The figure

puts China in the third place, behind

Singapore (US$2.1 billion) and Japan

(US$1.4 billion).

The former trade minister said that

Chinese investment in Indonesia continues

to grow above average in recent years

compared to other countries.

“China is already the world’s second-

largest economy and Asia’s number one.

So, it would be natural if it becomes

number one in Indonesia,” he said.

Thomas even said that Chinese investment

in Indonesia is smaller than its investment

in the neighboring countries.

“We lag behind the neighboring countries.

I believe the trend is apparent, Chinese

investment will continue to increase,” he

said.

Data from the BKPM show that Indonesia

experienced Rp165.8 trillion investments

in the first quarter of 2017 or 24.4 percent

of the full-year target of Rp678.8 trillion.

The figure was a 13.2 increase compared

to the same period last year at 146.5

trillion and created 194,000 new jobs.

Domestic investment realization reached

Rp68.8 trillion, a 36.4 percent increase

compared to the same period last year.

Meanwhile, foreign investment realization

stood at Rp97 trillion, a 0.94 percent

increase compared to last year.

(Source: Tempo.co)

Indonesia – U.S. Trade Overview

Photo: fas.usda.gov

Indonesia is the most populous Southeast

Asian nation and is the largest market in

the region for U.S. agricultural exports,

which totaled $2.7 billion in 2016.

Indonesia ranks as the United States'

ninth-largest market worldwide, with top

U.S. agricultural exports including

soybeans, cotton, feeds and fodder,

wheat, and dairy products.

While bilateral trade continues to grow,

Indonesia has increasingly adopted trade

restrictive measures in an attempt to fulfill

food self-sufficiency goals.

During the global financial crisis, Indonesia

outperformed its regional neighbors and

joined China and India as the only G20

members posting growth.

Indonesia’s annual budget deficit is capped

at 3% of GDP, and the Government of

Indonesia lowered its debt-to-GDP ratio

from a peak of 100% shortly after the

Asian financial crisis in 1999 to less than

25% today.

Moody's Investors Service on February

8th, 2017 revised the outlook on

Indonesia's government ratings to positive

from stable.

President Joko Widodo - elected in July

2014 – develops Indonesia’s maritime

resources and pursues other infrastructure

development, including significantly

increasing its electrical power generation

capacity. Fuel subsidies were significantly

reduced in early 2015, a move which has

helped the government redirect its

spending to development priorities.

(Source: fas.usda.gov; Indexmundi.com;

cia.gov)

Number VI / May 2017 | Trade & Investment Bulletin 5

Number I | September 2016

Indonesian Tropical Fruits to World Markets “Equipped with more than almost 30 years of industry know-how and the latest technology, Fruit-ING is set to manufacture high-quality tropical fruit pulps and juices US, European and Japanese standards. We are experienced in Tailor-Made fruit products as

well as Standard pulps and juices, all of which are 100% natural and made from the freshest produce possible.”

As a country that is crossed by the

equator, Indonesia is a suitable place for

the plantation of many types of tropical

fruits. The varieties include snake fruits,

rambutan, banana, and much more, which

are certainly difficult to be found in non-

tropical countries. Indonesian local fruits

are not only delicious to eat but also rich

in nutrients.

Fruit ING, a processed fruit company

located in Gresik, East Java, is a company

that produces fruit pulps and juices as the

superior products export to the United

States and several Asian countries, Japan

and South Korea.

Some of its popular fruit pulps products

are made of acerola, cantaloupe, coconut,

gac-fruit, honeydew melon, jackfruit,

mango, mangosteen, noni, papaya,

passion fruit, pineapple, rambutan, snake

fruit, soursop, tamarind, and watermelon.

The Managing Director Iwan Winardi

shared his views on business development

opportunities of the Indonesian tropical

fruit product. His understanding of

Indonesia’s abundant agriculture and

plantation including fruits with diverse

variants and nutrition led him to become a

businessman.

The ability to manage his time and control

profit is the advantages which encourage

his passion of being a business man.

"Indonesia has many kinds of potential

export fruits, such as mangoes, guavas,

soursop, s

trawberries, bananas, pineapples, and

much more,” he said.

Those sorts of fruits are typical and only

growing in tropical lands. He believes that

with this uniqueness, Indonesia can

compete with other tropical countries

selling similar products.

Key to Access World Markets

“I collect the fruits from all around our

environment as an export commodity,"

said Iwan. However, not all fruits from

farmers are acceptable for export. The

company implements tight standards that

ensure selecting only high-quality fruit for

export.

To gain high-quality products which meet

the market demand in the U.S. and

Europe, FruitING also implements strict

procedures on the fruit selection and

packaging process. The company selects

non-synthetic pesticides and non-

synthetic fertilizers for fruits from its

trusted farmers. The contract is made

6 Trade & Investment Bulletin| Number VI / May 2017

between Fruit ING and the farmers to

ensure the quality of fruits.

In addition to the fruit selection phase, the

company is also paying attention the

production process to ensure the products

are receivable on the targeted markets. To

meet the export standard, Fruit ING uses

production machines from Europe. “To

meet their (developed countries) demand

and need, Fruit ING uses Tetra Pack

machine for the food and beverage

packaging process. It is the key (to access

their markets)," said Iwan.

Imported from Sweden, the packaging

system combines the process of aseptic

with UHT that allows products to survive

without refrigeration for up to one year. It

also provides quality assurance for the

processing and packaging of food and

beverages. "The quality of the products

produced by the machine has been tested

and trusted by the market, especially the

main markets in America and Europe,"

said Iwan.

(Source: Indonesia Invites)

Indonesia's Horticultural Products - A Great Demand in

Many CountriesIndonesia has a number of superior

horticultural products such as

mangosteen, star fruit, snake fruit and

rambutan.

Good quality products have been

exported regularly to other countries,

such as mangosteen which in 2016 was

exported to 29 countries on a regular

basis.

In 2016, Indonesian vegetables such as

cabbage and cauliflower with the amount

up to 40,240 tons and about 77 kinds of

other vegetables were exported to

Taiwan, Malaysia, Singapore, Thailand

and the Netherland. Those commodities

bring the economic value and trust from

the consumers in the destination country.

Similarly, the export of Indonesian fruits

such as coconut, mangosteen, and

bananas and 176 other types of fruit

reached 564,372 tons and have a high

demand from world consumer.

Indonesian coconut has been exported

routinely to China, Thailand, Japan and 16

other countries. Meanwhile, Japan,

China, and Malaysia rank as the 3rd

largest importer of bananas from

Indonesia.

Besides fruits and vegetables, Indonesian

horticultural products in particular

frangipani flower, jasmine, and

chrysanthemum are also experienced

high demand from Korea, Malaysia,

Vietnam and several other countries. The

export to those countries reached 4,982

tons.

Based on the export data in 2017

(January to March), the Indonesian

horticultural product remains in high

demand in their recipient countries.

The export of vegetables such as

cabbage, beans, and watercress reached

132.878 tons.

While the export of coconut,

mangosteen, and banana reached

173,865 tons periodically and has been

exported to Thailand, Malaysia, China and

20 other countries.

Meanwhile, the export of jasmine and

frangipani flowers to Cambodia, Vietnam,

Thailand, China, and Singapore reached

1,067 tons.

(Source: Pertanian.go.id)

Number VI / May 2017 | Trade & Investment Bulletin 7

Number I | September 2016

Domestic Production, Export, and Consumption of

Indonesian Coffee Indonesia is the world's top coffee

producing and exporting countries. Most

of the production constitutes the Robusta

type. Indonesia is also famous for having

a number of specialty coffees such as

'Kopi Luwak' (known as the world most

expensive coffee) and 'Kopi Mandailing'.

Among agricultural commodities, coffee

is Indonesia's fourth-largest foreign

exchange earner after palm oil, rubber,

and cocoa.

Coffee was introduced to the archipelago

by the Dutch who initially planted coffee

trees around their stronghold of Batavia

but quickly expanded to Bogor and

Sukabumi regions in West Java in the

17th and 18th century. Indonesia proved

to have a nearly ideal climate for coffee

production; hence plantations were soon

established in other parts of Java and on

the islands of Sumatra and Sulawesi.

Today, Indonesia's coffee plantations

cover a total area of approximately 1.24

million hectares, 933 hectares of Robusta

plantations and 307 hectares of Arabica

plantations. More than 90 percent of

total plantations are cultivated by small-

scale growers.

Indonesia coffee export to the US grew by

37.9% in the period of 2014-2016,

reaching USD 25.48 million in 2016.

One successful story of a small-scale

grower is the KOPEPI Ketiara Cooperative.

Located in the Gayo Highlands of

Sumatra, the KOPEPI Ketiara Cooperative

cultivates coffee at elevations between

900 and 1700 meters above sea level.

The area's soil is suitable for the

production of Arabica coffee and these

plants have grown in the region since

1908 and are now recognized globally for

their rich flavor and strong body. The

cooperative uses the wet-hulled or semi-

washed processing method and applies

Good Agricultural Practices (GAP).

The Koperasi Pedagang Kopi Ketiara is a

women-run cooperative with over 890

grower-members who cultivate coffee on

more than 830 hectares of land. The

cooperative produces 100% shade-grown

Arabica coffee. Member farmers are

located around the Lut Tawar Lake in the

Gayo Highlands in the district of

Takengon and Bener Meriah, Central

Aceh. The area is a mountainous, tropical

forest within the Leuser Ecosystem.

The current chairwoman, Ibu Rahmah,

founded the cooperative in 2008 and has

also operated and managed her family's

coffee business for 20 years - purchasing

cherries, processing the green coffee and

selling to local traders. The commitment

of the coop's women managers to have

all members working together in support

of coffee production has enabled Ketiara

to expand and become a major player as

a coffee exporter to US, Europe, Japan,

Australia, and Asia

Photo: Chairwoman, Ibu Rahmah picking

Coffee with other women.

Indonesian Coffee Production & Export:

2008 2009 2010 2011 2012 2013 2014 2015 2016¹

Production (in tons)

698,016 682,690 686,921 633,991 748,109 740,000 711,513 550,000 650,000

Export (in tons)

491,335 518,122 440,241 353,698 520,275 460,000 382,774 350,000 400,000

Export (in bln USD)

1.08 0.88 0.86 1.09 1.53 n.a. 1.03 1.19 1.36

¹ indicates forecast

Source: Asosiasi Eksportir dan Industri Kopi Indonesia (AEKI)

8 Trade & Investment Bulletin| Number VI / May 2017

Number VI / May 2017 | Trade & Investment Bulletin 9

Number I | September 2016

VISITORS

PROFILE Chambers of Commerce in Midwest

Industrial and Trade Business owners in the

Midwest

Local and international community in Chicago

and in the Midwest

Potential Buyers and Investors

Local officers

Consular Corps in Chicago

±2.000 visitors (free for public)

EXHIBITORS

PROFILE Indonesian Ministry/Agency

Provincial Government

City Government

District Government

Entrepreneurs

Indonesian diasporas

Industries sector: Travel, Tourism, Arts, Textile,

Apparel, Fashion, Food and Beverage, Services

and other products.

PROGRAM 1. Exhibition of trade products, investment opportunities, arts, cultures and tourism destinations in Indonesia

2. One-on-one meeting

3. Workshop “Market Access to the Fishery and Maritime Sector of Indonesia – USA”

4. Business Meeting “Region Potency and market access to the USA”

5. Indonesian Art and Culture Performance

6. Cooking demo

7. Fashion show

8. Food and coffee/tea testing

9. Photos exhibition and Indonesian films promotion

“A VIBRANT INDONESIA” Highlight the modern and advance Indonesia

while keeping its richness of arts and cultures

10 Trade & Investment Bulletin| Number VI / May 2017

Source: International Coffee Organization

Gate to American and

European Markets

By: Lisa Yuliana, Vahd N. Mulachela

Global inquiries for organic products increase every year.

More and more people realize how important healthy foods are for their wellbeing. Making a commitment to healthy eating is a great start towards a healthier life.

But to guarantee the authenticity of organic products, certification becomes an imperative and inevitable requirement.

In Indonesia, efforts to ensure the genuineness of organic products are

conducted by professional certification agencies.

Like many other countries, Indonesia

experienced a significant expansion of the

domestic market for organic products.

This phenomenon occurred

simultaneously with the growing

awareness of the local public towards

healthy and ‘back to nature’ lifestyle.

Organic products available in the market

are getting more varied and diverse.

Cafes and restaurants selling organic

products are increasingly popular and

booming. People seem to understand the

benefit of consuming organic products.

Along with this trend, the need for

safeguarding the authenticity of organic

products becomes essential.

A high demand for organic products

requires a high and secure control

mechanism to protect consumers from

threats of counterfeit products that could

be harmful to health and the

environment. This necessity led to the

creation of a credible certification

mechanism compatible with regional and

international standards.

Number VI / May 2017 | Trade & Investment Bulletin 11

Number I | September 2016

To have a standardized certification gives

a set of benefits including wider access

for organic products into international

markets, a higher degree of consumer

protection, and broader access to

premium markets. Nowadays, through

participating in organic and sustainable

agriculture programs, producers could

gain multiple advantages.

Overview of Global Market As stated earlier, organic products saw

plausible demand increase not only in

Indonesia. The rise of queries for organic

products reflects the increase of their

sales in a global scale. In 2014, the sales

of organic products with estimated value

of USD80 billion were generated from

43.7 million hectares of organic

plantations throughout the world. Fifteen

years earlier, in 1999, organic market size

was valued around USD15.2 billion. The

combined area of an organic farm in the

world was approximately 11 million

hectares. In 2014, the countries with the

largest market for organic food were the

United States (27.1 billion Euros),

Germany (7.9 billion Euros) and France

(4.8 billion Euros). But the largest

distribution of retail sales by single

market was the United States (comprising

of approx. 43 percent of the global

market), followed by the European Union

(23.9 billion Euros/38 percent) and China

(3.7 billion Euros/6 percent). (Source:

Research Institute of Organic Agriculture

(FiBL-IFOAM survey 2016).

According to the FIBL’s 2016 survey,

Indonesia in 2014 ranked as the country

with the 8th highest increase of organic

agricultural area (47,950 hectares). That

surge contributed to Indonesia’s total

area of 88,247 hectares (0.16% of the

world total).

BIOCert Indonesia: Toward Global

Organic Product Market Indonesia has 19 organic products

certification agencies operating in the

country. While 8 of them are locally

based agencies, the rest are international

organizations specializing in certificating

organic products for export.

(Source: Indonesia Invites)

12 Trade & Investment Bulletin| Number VI / May 2017

Manado International

Conference on Tourism

Investment

Bring Tropical Indonesia Closer to the China and

East Asia Tourism Markets

Creating a sustainable platform for tourism

development

Manado International Conference on Tourism Investment is hosted by BKPM, Ministry of the Tourism of the Republic of Indonesia

together with Government of North Sulawesi Province, and will be opened by the President of Indonesia.

May 23 - 24, 2017

at Sintesa Peninsula Hotel, Manado, North Sulawesi –

Indonesia

Registration

info@manadoinvestmentforum.com

www.manadoinvestmentforum.com

Phone: +62 21 525 2008

Fax: +62 21 520 2050

Trade Expo Indonesia Indonesia's largest Business to Business trade event showcasing the best of Indonesia

The largest archipelago in the world export products

For more info contact: Economics Affairs - Consulate General of the Republic of Indonesia in Chicago 211 W. Wacker Drive #8, Chicago, Illinois 60606 Phone: 312.920.1880 Fax: 312.920.1881 Email: economy@indonesiachicago.org www.tradexpoindonesia.com

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