Government of Indonesia (GoI) has highlighted that approximately IDR 2,877 trillion (60% of total infrastructure funding needs) is required to fill the gap of total infrastructure funding needs. It is essential to improve the private participation in accelerating infrastructure development in Indonesia up to 40% through Public Private Partnership (PPP) scheme as an alternate creative financing.
Furthermore, to advance the quality of infrastructure services, private entity expected to contribute in sharing their knowledge and experience in the development, operation, and management of qualified infrastructure services. Moreover, the Government of Indonesia has committed to continuously improve and innovate in increasing investment attractiveness and to assure involvement of private sector.
Bandar Lampung City Water Supply PPP Project was developed to improve water service to community of Bandar Lampung City. With this project, the management of bulk water supply water in the city of Bandar Lampung will be conducted by PDAM Way Riau and Project Company. All the distribution network will be operated by PDAM Way RIAU. The level of services is expected to be increased from 20% in 2016 to 46% in 2024 with sustainable access to safe drinking water. The Capacity of the system is 750 l/sec and the system will serve 60,000 household connections.
One of the high value fishery commodities that also become the main commodities of aquaculture is shrimp, which can be obtained from fishing (sea and public waters) and cultivation. Indonesia is the second largest shrimp producer after China with total production of 627,643 in 2013 and is the world’s fifth largest shrimp exporter. The Ministry of Marine Affairs and Fisheries has also established a location for the shrimp pond revitalization program in Indonesia.
Road Map of shrimp farming revitalization location 2015-2019 are as follows:
2015: West Kalimantan and East Kalimantan
2016: North Sumatera and Aceh
2017: West Sulawesi and North Kalimantan
2018: South Kalimantan and Central Sulawesi
2019: South Sumatera and Southeast Sulawesi
Indonesia is the 4th largest nickel producer of the world’s top 5 nickel producing countries that contribute for more than 60 percent of the world’s nickel production. Indonesia’s nickel production reaches 190 thousand tons per year. Indonesia has 8% of the world’s nickel reserves. Therefore, the nickel mining and processing industry is highly feasible to accelerate and expand its development. Sulawesi is one of the region with the most advanced nickel production in Indonesia. Four important locations in Sulawesi that have abundant nickel reserves are:
• Sorowako, East Luwu District, South Sulawesi;
• Morowali District, Central Sulawesi;
• Pomalaa, Kolaka District, Southeast Sulawesi;
• Konawe District, Southeast Sulawesi.
Indonesia’s furniture industry faces solid growth prospects, not only from traditional export markets but also from the ASEAN region as well as the domestic market. Indonesia already has a good reputation in the furniture and handicraft sector both domestically and abroad. The world demand for furniture is expected to increase by 4.2% annually and continue the expansion pattern with the Asian market as the main growth engine. Indonesia’s furniture industry continues to grow in line with the growth of the middle class and consumer purchasing power. By utilizing the youth population also the availability of labor as well as the quality of raw materials and environmental sustainability in furniture production, it is expected that the export of this industry will grow by 20% annually.
Indonesia has great potentials in developing its Textile Industry, as one of the prominent textile manufacturing countries. One of the strong points of the industry is the well-developed upstream and downstream business, which allows for tight vertical integration. Indonesia has successfully positioned itself as an alternative production market for global fashion brands. The government has set its sights on increasing the value of exported textiles and garments to US$75 billion by 2030 and contributing 5% to global exports, up from less than 2% at present.
Textile factories, which are mainly located in Bandung, Bekasi, and Bogor, became an expensive brand suppliers like Hugo Boss, Giorgio Armani, Guess, Mark and Spencer, Mango and many other famous brands. Their export products have been reaching the markets of advanced economies like the Japan, UK, US, and other high-end markets. Indonesia has been becoming an industrial base for joint venture foreign companies producing specialized textile products like geotextile; army uniform, which has been exported to around 30 countries, one of them is for North Atlantic Treaty Organization (NATO) soldier; and Anti-Nuclear uniform, which has been exported to Saudi Arabia and Malaysia.
With strong government support, rising domestic disposable income, and the growing demand for footwear, Indonesia offers great opportunities for investment in the footwear industry. Competitive and skilled labor has attracted investment from various countries, while the strategic locations of the industry and the support from the government also had contributed to the development of this sector. Indonesia’s strategic location in a high-growth region and its proximity to the giant markets of China and India make it the ideal production hub for global footwear brands like Nike, Adidas, Reebok, and other famous fashion shoes.
Globally, total crude steel output reached 1,621 million tons in 2016 (increase 0.8% from previous year). The 50% of these products come from China, followed by Japan, India, United States, Russia and South Korea. From an economic point of view, steel is the most important base metal with a global market value of USD 225 billion per year. Indonesia total consumption of crude steel in 2016 was 14 million tons, while the total domestic production only reached 8 million tons. Therefore, to meet domestic demand, Indonesia has to import 6 million tons of steel products.
In the infrastructure development, which is the priority program of President Joko Widodo, the government plans to develop 3 tourism areas that are included in the list of 10 National Tourism Strategic Area. The three priority tourism areas are Borobudur in Central Java, Lake Toba in North Sumatra, and Mandalika in West Nusa Tenggara.
Borobudur is one of the three development area in tourism sector that become government priority. Borobudur located in Magelang, Provinsi Jawa Tengah. Borobudur is located in Magelang District, Central Java Province. Borobudur was appointed as the Biggest Buddha Monument in the world and was listed as one of the Seven Wonders of the World in 1991 at World Wonder Heritage. Borobudur has 2,673 reliefs that can reach about 6 km if we arange it in rows. In line with the development of Borobudur area which is done to increase the number of foreign tourists visit, it needs various supporting facilities and infrastructures such as international airport, hotel and resort, and other infrastructure.
Lake Toba, located in North Sumatra Province, is the largest volcanic lake in the world and the second largest lake in the world after Lake Victoria in Africa. Lake Toba is one of the ten deepest lakes in the world that reach a depth of about 500 meters.
Various open investment opportunities to develop tourism area in Lake Toba, such as investment in watersport sector, recreation park, creative economy, besides also development of facilities and infrastructure such as airport development, roads, availability of electricity and water management facilities and other infrastructure
Mandalika, located in Lombok Province, is the only conservation area in Indonesia that has a total sand ocean of 5,250 hectares. Mandalika is appointed as The Best Destination Halal and The Best Honeymoon Destination at Halal World Travel Award 2015. Special Economic Zone (SEZ) Mandalika is focused on the main activities of Tourism. In the development of Mandalika tourism area, various investment opportunities are quite open like beach recreational parks, improving health facilities and international safety, as well as infrastructure development such as cruise and marina port and other supporting facilities.
The Government has authorized the Electricity Supply Business Plan (RUPTL) of PT PLN (Persero) for the period of 2017-2026 through the Decree of the Minister of Energy and Mineral Resources Number 1415 K/20/MEM/2017 dated March 29, 2017. In RUPTL for the next ten years, the total power plant is planned to be 77.9 GW, transmission 67,627 kms, and Substation 165,231 MVA.
RUPTL 2017-2026 will also develop Renewable Energy plants in order to achieve optimal primary energy mix by 2025 as long as it meets the economic level, in accordance with the National Energy Policy. Domestic Component Level (TKDN) is also improved on the provision of goods and services for power generation, transmission, substations and distribution projects, in addition to improving primary energy supply efficiency.
Geographically, Indonesia is an archipelagic country where most of the islands in Indonesia have good water resources in the form of river or lake (reservoir) with diversity of the size and potential. This raises the potential use of water sources as a driving force for Minihydro Power Plant (PLTM) installations. The islands in Indonesia with the potential of hydropower is quite abundant, such as in Sumba Island, Flores Island, Timor Island, Bali Island, Papua Island, Sulawesi Island, and Java Island. The potential of minihydro power plant (PLTM) and microhydro power plant (PLTMH) in Indonesia that has been identified reaching 500 MW.
The development of the manufacturing sector with the digital platform becomes important as the latest technological advancements and the Industrial era are moving. Where, the Government is targeting Indonesia to become the largest digital economy in ASEAN by 2020. Apart from the uneven infrastructure development, the digital economy industry in Indonesia grows significantly. This can be seen by the rapid growth of various start-up companies based applications. Currently the Government provides opportunities for investors to participate in promoting the digital sector in Indonesia, where the digital industry sectors such as e-commerce, web portals, etc. become more open to foreign investment.
The government has opened investment opportunities in the film industry for foreign investors. With a population of 255 million, Indonesia is a promising business field for investors. However, cinemas viewer in Indonesia reached only approximately 10.5 million during the last 3 years (2013-2015) due to limited cinemas in each cities/regencies. The government hopes this policy can encourage economic growth in the film industry in Indonesia.