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M I N I S T R Y O F T R A D E KEMENTE RIAN REPUBLIK INDONESIA PERDAGANG AN TRADE, INVESTMENT & TOURISM OPPORTUNITIES WITH INDONESIA Embassy of the Republic of Indonesia Praha, Czech Republic www.kemlu.go.id/prague Tel: +420257 214388

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In 2010: 6.1% in 2011: 6.5% 2 Economic Growth...

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Total GDP: US$ 928 Billion (in 2011) Per-Capita: US$ 3,495 (in 2011) GDP Composition by Sector: Industry (46.4%) Services (37.1%) Agriculture (16.5%) Unemployment 6.6 % (in 2011) Inflation 4.5 % (present) Interest rate 5.75% (present) Debt-to-GDP ratio 24.5% (in 2011) Balance of Payment surplus of US$ 11.9 Billion (in 2011) International Reserves reached US$ 108,990 thousand, equivalent to minimum 7.1 months of import and the repayment of short-term government debts due. Foreign Direct Investment (FDI) inflows of US$ 19,28 Billion (in 2011) Rating by S&P BB+ 3 Economic Outlook

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Fourth most populous in the world, 245 mio. Size of Middle Class Economy = Market Population share of the middle class increased from about 25% in 1999 to 43% in 2009. In absolute size, the Indonesian middle class roughly doubled over the ten years, from 45 million to 93 million. (ADB Report 2010 The Rise of Asias Middle Class; 56.5% share of middle class to total population (2010), shows an increasing number of wealthy middle class; 60% productive age, average 40 years. 4

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5 Fiscal Policy In 2011...

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Rich Natural Resources most of them are still intact to be processed into higher VA products Natural Gas CoalGeothermal Palm Oil CocoaTinNickelBauxite Key Metrics About 165 TCF of reserves at production rate 3 TCF pa World second largest exporter Home of 40% of worlds resources (the largest in the world) Worlds largest exporter; >19 mil tons per year At 770 thou tons/year, worlds 2 nd largest producer At 65 thou tons/year, worlds 2 nd largest producer Own 12% of worlds reserves (4 th largest) Worlds 7 th largest reserves; worlds 4 th largest production About 40% is assumed feasible. Up to now, 1.200 MW has been developed. Will be at least partially processed domestically by 2013 (new mining law: 4/2009) Abundant resources for gas- based energy and petrochemical industries Abundant resources for gas- based energy and petrochemical industries Not including Non- Conventional Gases, from Coal Bed Methane and Coal Gassification Not including Non- Conventional Gases, from Coal Bed Methane and Coal Gassification Abundant resources for gas- based energy and petrochemical industries Abundant resources for gas- based energy and petrochemical industries Not including Non- Conventional Gases, from Coal Bed Methane and Coal Gassification Not including Non- Conventional Gases, from Coal Bed Methane and Coal Gassification 6

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1. Export (to 218 Countries) Value : US$ 000 Source : Trade Map Indonesia World Trade Balance 2. Import (from 222 Countries)

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Indonesia Czech Trade Balance 200620072008200920102011 Changes in Percentage 2010/2011 Total Trade260,37318,46327,51313,89384,74474,67 23.36% Import from Czech 41,2870,3962,2551,6661,3588,85 44.77% Export to Czech219,1248,06265,26262,23323,39385,82 19.30% Balance177,37177,67203,02210,56262,04296,97 13.33%

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Indonesia Czech, Export & Import 2011 Top Commoditties Traded Export to Czech HS CodeCommodityUSD (ths) 0Food and live animals16,147 1Beverages and tobacco186 2Crude materials, inedible, except fuels54,741 4Animal and vegetable oils, fats and waxes7 5Chemicals and related products, n.e.s.6,743 6Manufactured goods classified chiefly by material27,873 7Machinery and transport equipment185,164 8Miscellaneous manufactured articles94,954 TOTAL385,815 Import to Czech HS CodeCommodityUSD (ths) 0Food and live animals692 2Crude materials, inedible, except fuels9,675 5Chemicals and related products, n.e.s.15,005 6Manufactured goods classified chiefly by material12,666 7Machinery and transport equipment45,617 8Miscellaneous manufactured articles5,197 TOTAL88,852

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4. List of Products Exported by Indonesia to Worldwide (30 of 1119 products)

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5. List of products imported by Indonesia from worldwide (30 of 97 HS : 2 digit) V : US$ 1000 Source : Trade Map

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INDONESIA AS A GREAT PLACE TO INVEST invest in Invest in remarkable indonesiaInvest in remarkable indonesiaindonesia Invest in remarkable indonesia indonesia Invest in Invest in remarkable indonesia indonesia Invest in able indonesiaInvest

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The Investment Coordinating Board of the Republic of Indonesia 13 Top 10 FDI to Indonesia by Countries 2011 (in US$. million) Source: BKPM Czech Republic investment realization was nil in 2011

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The Investment Coordinating Board of the Republic of Indonesia 14 Czech Republic Investment Realisation in Indonesia Source: BKPM Year Czech Investment (US$. million) World FDI Investment (US$. million) Contribution to World FDI (%) 2005 0.288,911.000.00 2008 3.2514,871.400.02 2010 33.3916,214.000.20

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The Investment Coordinating Board of the Republic of Indonesia 15 Czech Republic Investment Realisation in Indonesia by Sector Source: BKPM, 2012 YearSector Realisation (US$. million) Number of Projects 2005 Other services0.282 2008 Trade services2.501 Basic metal, machineries and electronic industry 0.751 2010 Hotel and restaurant33.392

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1.Proven resilient economy: Macroeconomic condition remains strong with robust growth: Market-based macro-economic policy. Free foreign currency exchange regime. 2.Stable political transition towards democracy, respecting human rights and upholding supremacy of law. 3.Improved business climate: improving international perception and positive economic forecast. 4.Strategic geographic location and strong global presence. 5.Abundance of diversified natural resources. 6.Increasingly skilled labor. 7.Closer EU Asian relations in the future. 16 Why In Indonesia?

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The Investment Coordinating Board of the Republic of Indonesia 17 Incentives Exemption of import duty on machinery, goods and materials for business activities in the field of Industries that produce goods and/or Industries that produce services. It is granted as long as they are: Not produced domestically; Produced in the country but do not meet the required specifications, or Produced in the country but not sufficient for industry needs. Import Duty VAT Exemption VAT Exemption on import and/or delivery of certain taxable goods that are strategic, including capital goods, animal feed and/or raw materials; seeds/seedlings of agricultural goods, plantation, forestry, animal husbandry, animal husbandry, fishery.

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The Investment Coordinating Board of the Republic of Indonesia 18 Incentives Tax Allowance Tax Allowance for an investment up to Rp 1 Trillion (approx. US$ 111.1 million) in certain business activities and/or certain locations: A reduction of up to 30% of total investment value on annual net taxable income, spread over 6 year period. Depreciation and amortization accelerated to fixed intangible assets (building and non-building) Income Tax on dividends paid to foreign tax subject to a 10% or a lower rate according to double taxation avoidance agreement Compensation for losses of more than 5 years but not more than 10 years. Examples of high priority business activities and investment locations in the national scale include: 1) Cocoa industry, food and confectionary industry containing cocoa 2) Development of the eastern part of Indonesia: - Salt industry in the East of Nusa Tenggara - Manufacturing industry of brass ingot, aluminium ingot, copper ingot, and other basic non-iron metals in Kalimantan, Papua, Maluku, and Sulawesi Provinces.

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The Investment Coordinating Board of the Republic of Indonesia 19 Incentives Tax Holiday Tax Holiday for an investment up to Rp 1 Trillion (approx. US$ 111.1 million) in certain business activities: 5 Priority Sectors: Basic metals, Oil Refinery and/or Organic Basic Chemical which use oil & gas, machinery industry, industrial in the field of renewable resources, and communications equipment industry. The facility : - Tax exemption over 5-10 years period effective from the commercial production of the investment project (100% investment realisation). - On top of the above exemption, a 50% reduction of Corporate Income Tax for 2 years period which brings it down to 12.5%.

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The Investment Coordinating Board of the Republic of Indonesia 20 Doing Business Source: BKPM, 2012 FDI in Indonesia has to set up an Indonesian legal entity. FDI has to be initially registered with the Indonesia Investment Coordinating Board (BKPM) and subsequent permits by the central and regional governments where the investments take place. Indonesia strives to improve the investment climate by simplifying the regulatory system for business Time in starting new investment has been reduced from 105 days to 30 days since 2007. Use of services from local lawyers or consultants to set up your business is recommended.

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21 Source: Tax Board, Ministry of Finance Primary types of Taxation: 1.Corporation Income Tax: 26,6% 2.Individual Income Tax: 10,6% 3.Value Added Tax (VAT): 10% 4.Sales Tax on Luxury Goods: 10% 75% 5.Tax on Land and Buildings: 0,5% 6.Stamp Duties: IDR. 6000,00 (eqv 50 cents Euro) 7.Transfer Tax 8.Excise Duties TAXATION

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Nine Core Areas for Investment First: Infrastructure Building (seaports, toll-roads, railways, power plants, drinking water) Second: Transportation Third: IT and Telecommunications Fourth: Food Industry and its R&D Fifth: Energy Industry, including renewable industry Sixth: Mining Industry Seventh: Manufacturing Industry Eighth: Creative Industry Ninth: Training and Education, Research, Development and Innovation. 22

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POPULAR DESTINATIONS EMERGING DESTINATIONS Batam & Bintan Toba Lake (North Sumatra) Jakarta Bromo (East Java) Yogyakarta & Borobudur Bali Lombok & Gili Islands (West Nusa Tenggara) Toraja, Makassar (South Sulawesi) Bunaken (North Sulawesi)

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ADVENTURE Culture Spa Golf Diving MICE Bohorok National Park (Orang Utan) Mentawai (Surfing) Way Kambas (Elephant) Bali Barat National Park (Bird Watching) Ujung Kulon N.P. (Rhinoceros) Merapi & Merbabu (Hiking) Komodo Island Jayawijaya Bandaneira Rinjani Tanjung Putting NP (Orang Utan)

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Adventure CULTUR E Spa Golf Diving MICE Toraja Yogyakarta & Borobudur Papua West Sumatera Banten Tengger in Bromo Bali Sumba

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Adventure Culture SPA Golf Diving MICE Bintan, Riau Islands Bali Yogyakarta West Java East Java Lombok Central Java Jakarta

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Adventure Culture Spa GOLF Diving MICE Jakara Bandung Bali Batam & Bintan Medan Surabaya Papua

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Adventure Culture Spa Golf DIVING MICE Raja Ampat Karimunjawa Bali Komodo Island Wakatobi Flores Morotai Nias Pulau Weh, Aceh Bunaken

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JAKARTA SURABAYA YOGYAKARTA BATAM BALI LOMBOK BALIKPAPAN PALEMBANG MEDAN PADANG BANDUNG MAKASSAR MANADO SOLO INDONESIAN MICE DESTINATIONS

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9.

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DEKUJI / THANK YOU / TERIMA KASIH Usefull links: ww.bkpm.go.id, www.kemendag.go.idww.bkpm.go.idwww.kemendag.go.id