MP3EI
PROGRESS AND INVESTMENT OPPORTUNITY IN INDONESIA
By: Eddy Satriya Head of International Cooperation Division Secretariat of KPE3I
Presented In: First Joint Workshop Indonesia-Korea Hotel Borobudur Jakarta, 3-4 Sept 2012
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Key Metrics
Abundant resources for gas-based energy and petrochemical industries Not including NonConventional Gases, from Coal Bed Methane and Coal Gassification
Will be at least partially processed domestically by 2013 (new mining law: 4/2009)
Appointed
Directly elected
Appointed 38%
2007
2009
Legislative
Demokrat
107 94 57
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Golkar PDI-P
Relations between the executive and legislative branch of government seems poised to display unprecedented cooperativeness
148
37 17 26 28
PKS
PAN PPP
PKB Gerindra
Population (million)
309.6 1,312.5 126.8 83.0 62.9 62.2 193.3 60.1 1,184 34.0 141.7 22.2 112.5 49.5 73.3 243.0 27.1 40.5 49.1
France United Kingdom Brazil Italy India Canada Russia Australia Mexico Republic of Korea Turkey Indonesia Saudi Arabia
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12
2025
2014
2010
GDP ~ US$ 700 bill Income/cap US$ 3,000 (2010) The 17th largest economy in the world 13
PDB: US$ ~ 1,2 bill Income/Cap: US$ ~ 4.800 The 14th largest economy in the world
GDP ~US$ 4.3 trill Income/cap is predicted ~US$ 14,900 (high income country) The 10th largest economy in the world
Masterplan
Basically MP3EI is based on these strategic initiatives: 1. Encourage a large scale investment realization in 22 main economic activities 2. Synchronization of national action plan to revitalize the real sector performance 3. The development of center of excellence in 6 (six) economic corridors Main strategy of MP3EI: 1. Economic potential development through economic corridor 2. Strengthening the national connectivity 3. Strengthening national human resources capability and science and technology
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Medium Term Nat. Plan Medium Term Plan Medium Term Nat. Nat. Plan (Pres.Regulations) (Pres.Regulations)
(Pres.Regulations)
Medium Term Nat. Plan Medium Term Nat. Plan (Pres.Regulations) (Pres.Regulations) (Pres.Regulations) Nat. Annual Plan
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22 main economic activities in 8 main programs of MP3EI are identified in each economic corridor
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There have been significant achievements of the MP3EI implementation, but there are still many challenges ahead:
projects (both private sector and infrastructure projects) have been identified experiencing difficulties in the land acquisition, mining permits, business licenses, the use of forest, etc (data was obtained during the meeting with investors on February 14-15, 2012).
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To guard and monitor the implementation of MP3EI (especially during the period of 2011 2014), implementation team has been form (KP3EI) The team is chaired directly by the President. Coordinating Minister for Economic Affairs chairs the KP3EIs daily operations. The national team (KP3EI) has 9 working teams, comprises of 3 intersectoral working teams and 6 economic corridors teams. Those working teams is coordinated and facilitated by National Secretariate. To strengthen the implementation coordination and to better facilitate various problems at the fields, provincial governments is requested to form the similar teams.
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KP3EI
Taking care of the development:
6 Economic Corridors
SECRETARIAT
WG-KE* Sumatera
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WG-KE Jawa
WG-KE Kalimantan
WG-KE Sulawes i
WG-KE Bali-NT
WG-KE PapuaKep.Maluku
Projects will be developed to support the main economic activitys growth through supporting KPI (group of investment activities)
Private sector investment Connectivity Regulation HR/ ScienceTe ch
Regulation
HR/ ScienceTe ch
All projects should be developed to support the development of production centers in each of the main economic activities
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Kawasan Perhatian Investasi (KPI) or Investment Focused Area is the driver for infrastructure, regulation and HR&Science Tech. project development
1. Production Center is one investment activity concentrated in a specific area within a corridor 2. KPI is a collection of one or several production center/ investment activities agglomerated in the adjacent area HR&Scien Hypothetical Connectivity KPI KPI Illustration ce Tech
Production center
KPI locations in each corridor need to be identified for the reference to determine the development of infrastructure projects (Connectivity WG), educational facilities and the enhancement of technology / innovation (HR&ScienceTech WG), as well as to facilitate regulatory improvements (Regulation WG).
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25
26
27
28
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To date, the total investment estimated in MP3EI has increased to IDR 4.925 Trillion of which infrastructure investments contribution is up to 48%
Number of KPI 22 34 36
Total Investment Indication up to 2014 (IDR Billion) Private sector investment 555.965 304.433 903.775 Infrastructure 581.357 1.118.685 HR&ScienceTech 955 467 324
220.780
201.499 87.293 155.631 2.365.245
Sulawesi
Bali-NT Papua-Maluku TOTAL
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8 7 74
28
23 8 151
126
46 44 725
214.847
129.884 448.605 2.557.509
382
95 166 2.388
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The funding gap for infrastructure investment is identified as much as IDR 638 Trillion (~USD 71 billion) 27% of total infrastructure investment required
Infrastructure investment up to 2014 (IDR Billion) APBN 39.427 82.383 25.214 9.352 22.712 6.903 185.991 BUMN 69.014 265.566 53.053 40.551 23.883 45.342 497.409 Private 49.985 390.267 56.399 14.680 27.841 9.149 548.321 PPP 60.210 328.518 0 19.398 10.268 44.890 463.284 Mix 23.100 3.700 0 0 0 6.437 33.237 Funding Gap 339.709 49.468 86.114 117.518 2.589 42.909 638.307 Total 581.357 1.118.685 220.780 201.499 87.293 155.631 2.365.245
Economic Corridor
Sumatera Jawa Kalimantan Sulawesi Bali-NT Papua-Maluku TOTAL
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The Government is committed to invest in HR & Science Technology programs to provide qualified human resources and required technology
HR&Science Tech WG KPI related programs up to 2012 Number of Project Investment Value (IDR Billion) HR&Science Tech WG Non-KPI related programs up to 2012 Number of Project Investment Value (IDR Billion)
Economic Corridor
11 33 8
10 2 30 94
51 35 36
24 20 19 185
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Number of project
Infrastructure 17 8 3 1 6 3 38 Private sector investment 2 8 12 26 1 7 56
Total
Investment Value (IDR Billion)
Sulawesi
Bali-NT PapuaKep.Maluku
Total
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Sumatera
Jawa Kalimantan Sulawesi Bali - NT Papua - Kep. Maluku TOTAL
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10
2 24 7 5 11 59
2
2 19 1 0 3 27
7
0 5 4 5 7 28
3
0 2 2 0 4 11
0
0 3 0 2 0 5
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2012
Jan Feb
74 Priority KPI*
Final validation of 597 Projects**
KP3EI coordination meeting (Hatta), Dec 8 KP3EI leadership meeting (SBY), Dec 13 KP3EI coordination meeting (Hatta), Feb 24
Mar onwards
KP3EI Secretariat
(six GB projects)
KP3EI leadership meeting (SBY), June 6
KP3EI
Secretariat
formed
1. Identification of bottlenecking issues, development of resolutions and monitoring for MP3EI GB projects 2. Dispute settlement success story 3. Regulations debottlenecking
Bilateral&multilaterals support for Shadow PMO meeting and ongoing discussion with potential donors
Connectivity WG formed
Wave 1 projects planning and selection 2011&2012 GB projects monitoring & debottlenecking
Action plan (form A,B,C) validation and collection from line ministries
1. Development of supply based HR&Science-Tech program 2. Coordination with corridor WG to get feedback on demand based assessment needs and qualifications
* 74 Priority KPI here stands for Kawasan Perhatian Investasi or Investment Focused Area, which is a collection of one or several production center/ investment activities agglomerated in the adjacent area. ** 597 infrastructure projects comprise of 294 national projects and 303 priority KPI related infrastructure projects.
MP3EI overview IDR 4,012 Trillion (~USD 445 billion) was identified as the total investment value over the next 15 years
Indication of Investment in Main Economic Activities (IDR Trillion) 4,500
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0
Planned & Proposed Private Sector Investments in the 6 economic corridors Private
1,786
51%
2,226
10% 18%
Government SOE
21%
Mix (PPPs) Planned Infrastructure Infrastructure Investments Investments by Indicative Value the Based on Investor Government & type Private Sector
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Total
Investment Value (Rp. Billions)
35.857,71 196.376 66.228,4 10.320,8 185,22
0
32
3
54
0
153.510
184.570
340.179
3
86
184.570
493.689
Grand Total
Road
Energy
Road
Energy
Other*
9 2 11
13 11 12 2 38
2 2 1 5
25 2 1 9 2 39
29 67 33 12 10 8 159
15 5 5 6 6 5 42
1 3 2 1 4 5 16
12 14 13 18 5 26 88
9 16 1 26
35 25 12 6 13 91
15 12 2 4 6 14 53
9 9 4 4 2 1 29 597
Indonesia offers huge investment opportunity palm oil industry as an example (1/4)
The current CPO national productivity in Indonesia is only 2,98 ton/ha while the producivity potential in Indonesia is 7 ton/ha.
Opportunity in Upstream Palm Oil Industry
The existing palm oil industry is concentrated in Sumatera, within following KPIs
Investment in infrastructure is required to support the palm oil industry investment opportunity:
Kuala Tanjung port (investment value: IDR 1.5 Trillion) Port Dumai port expansion (investment value: IDR 1.25 Trillion) Belawan port expansion (investment value: IDR 5.5 Trillion) Pekanbaru Kandis Dumai toll road Road Medan Kualanamu Tebing Tinggi toll road Medan Binjai toll road Trans Sumatera (IDR 55.3 Trillion) PLTU Banjarsari 2 x 100 MW PLTU Mulut Tambang 4x150 MW Energy South Sumatera 9 Mine Mouth Coal Fired Steam Power Plant (2 x 600 MW) South Sumatera 10 Mine Mouth Coal Fired Steam Power Plant (1 x 600 MW)
KPI Sei Mangkei Location: North Sumatra Ton CPO/ha KPI Muara Enim Location: Palembang, South Sumatera Current Productivity Productivity Potential KPI Dumai GAP 7 = 4,02 ton/ha Location: Riau KPI Rokan Hulu-Hilir Siak 2.98 Location: Riau KPI Kampar Location: Riau Current Productivity Productivity Potential KPI Kuantan Singingi Source: Kementerian Pertanian RI, Pusat Data InfoSAWIT, 2010 Location: Riau KPI Lingga The current global demand for biodiesel is 92 mn Location: Kep. Riau KPI Pasaman Barat tonnes, while total supply is only 33 mn tonnes Location: Pasaman, West Sumatera untapped opportunity. KPI Solok Selatan Location: Solok, West Sumatera Opportunity in Downstream Palm Oil Industry KPI Tanjung Api-Api Tanjung In percentage (%) 3 Location: Pasaman, West Sumatera KPI Empat Lawang Indonesia Others 30 Location: South Sumatera KPI Ogan-Komeling Ilir Others Location: South Sumatera 60 KPI Bangka Barat Untapped Location: Bangka Belitung KPI Lampung Timur Sumber: ISAAA 2011 Location: Lampung
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2.8
0 2006
Sumber: Oil World, Reuters, 2010
Palm Oil Outlook Positive Worldwide: China, EU and India respectively are the main consumers of palm oil accountable for 80% of worlds demand. Rising population and increasing income, world experiences an increase in demand for. palm oil & its derivats
2007
2008
2009
2010E
2011E
Consumption Growth > 7% CAGR: Consumption growth of palm oil worldwide for the last 7 years have been increased and is expected to rise as the price of oil continues to increase. Such growth is also on account of a growing population as well as the rising demand for alternative energy sources biodiesel.
in %
10
% CAGR
7
0
India
Sumber: Oil World, Reuters, 2010
Cina
Indonesia
Eropa
The demand for palm oil will likely remain strong and research and development work is being done in Indonesia.The availability of land in Indonesia, coupled with recent years of high seed sales, record energy prices, and high vegetable oil prices are factors that will result in Indonesia continuing to lead the world in palm oil production for years to come.
0.34
104 120
KPI Palopo Location: Luwu Timur, South Sulawesi Main Economic Activity in KPI: Nickel mining and processing KPI Kolaka Location: Kolaka, South East Sulawesi Main Economic Activity in KPI: Nickel Mining
Seaport
11%
KPI Konawe Utara Location: Mandiodo, South East Sulawesi Main Economic Activitty in KPI: Nickel Smeltering Pig Iron
KPI Morowali Location: Bahodopi, Central Sulawesi Main Economic Activity in KPI: Nickel Mining, Preparation and Smeltering (Pig Iron)
Road
Energy
89%
Source: United States Geological Survey
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Road
East Kalimantan Coal Fired Steam Power Plant (2x100MW) Energy PLTU Parit Baru (2x50 MW) West Kalimantan
Other
The investment opportunity in bauxite industry for both private sector investment and infrastructure investment is huge, particularly for the investment in upstream sector.
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The government had spent ~IDR 16 billion in Q4 2011 and will spend another ~IDR 100 billion until mid 2015
Total Funding Required by KP3EI is USD 24 million
Other Sources, 2 million
Even with the current government funding commitment, there is still funding gap thus, KP3EI needs another USD 9.5 million from donors to support
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Significance of KP3EI
The implementation of the first 3 years (that is 2011 2014) is very critical to make sure that MP3EI will sustain in the longer period. KP3EI is responsible implementing all of the committed programs to create success stories or quick wins in order to build investors (and other stakeholders) confidence on the government undertaking. This is essential to create snow-ball effects for implementations at the later stages. Along the process of monitoring the implementation (toward the end of 2014), the team (KP3EI), through its communications with related stakeholders, will coordinate and synthesize revisions on the original concepts of MP3EI to improve/adjust with the changing environments.
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In Additionswe have RECENT STRATEGIC INITIATIVES Global Hub for Kuala Tanjung (North Sumatra) and Bitung (North Sulawesi) Expansion and Modernization of Makassar and Kuala Namu airports Palu-Parigi Pass GMT +8
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Eddy Satriya
Head of International Cooperation Division, Secretariat of KP3EI Jalan Medan Merdeka Barat No. 7, Jakarta Pusat - Indonesia Phone: +62 21 34832611; Fax: +62 21 34832609 email: satriyaeddy@gmail.com
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Eddy Satriya
1989 :Graduated from Bandung Institute of Technology (Telecommunication Engineering) 1997 :Graduated from University of Connecticut (MA in Economics)
2002-present : Actively writes various article and column in national papers and magazines.
62.21.3511464 f