Polic licy Credibi edibility lity and nd Ma Macr croecono - - PowerPoint PPT Presentation
Republic blic of Indones esia ia Polic licy Credibi edibility lity and nd Ma Macr croecono oeconomi mic St Stabi bility lity to Su Supp pport rt Re Reforms orms and nd Growt owth Mo Moment entum um Jun une 201
Republic blic
Indones esia ia
1
About ut Investo estor Re Relatio tions ns Unit
the Re Republ public ic
I Indo donesi esia
Investor Relations Unit (IRU) of the Republic of Indonesia has been established as a joint effort between Coordinating Ministry of Economic Affairs, Ministry of Finance and Bank Indonesia since 2005. The main objective of IRU is to actively communicate Indonesian economic policy and to address concerns of investors, especially financial market investors. As an important part of its communication measures, IRU maintains a website under Bank Indonesia website which is administered by International Department of Bank Indonesia. However, day-to-day activities of IRU are supported by all relevant government agencies, among others: Bank Indonesia, Ministry of Finance, Coordinating Ministry for Economic Affairs, Investment Coordinating Board, Ministry of Trade, Ministry of State Owned Enterprises, Ministry of Energy and Mineral Resources and Financial Services Authority. IRU also convenes an investor conference call on a quarterly basis, answers questions through email, telephone and may arrange direct visit of banks/financial institutions to Bank Indonesia and other relevant government offices. Published by Investor Relations Unit – Republic of Indonesia Website: http://www.bi.go.id/en/iru/default.aspx Contact: Wiwit Widyastuti (International Department - Bank Indonesia, Phone: +6221 2981 8279) Evy Mulyani (Fiscal Policy Office - Ministry of Finance, Phone: +6221 345 0012) I Gede Yuddy Hendranata (Directorate General of Budget Financing and Risk Management - Ministry of Finance, Phone: +62213510714) E-mail: contactIRU-DL@bi.go.id This Presentation Book also can be downloaded from: http://www.bi.go.id/en/iru/presentation/red/Default.aspx
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What’s New in This Edition
…page 61
Bank nk Indonesia donesia Lo Lower ered ed Rupiah piah Reserve erve Requi quirem emen ent by 50 bps.
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Overview rview
Instit itutio utional nal and Governan ernance Effectiv ivene eness: Acceler lerated ted Reforms rms Agenda with Instit itutio utional nal Improvem ement ent Econo nomic ic Factor: Strong ng and Stable le Growth wth Prospec ects Remain in Intact Externa ernal l Facto tor: : Impro roved ed Externa ernal l Resilien lience Fiscal l Perfo rformanc nce and Flexibility xibility: : More re Fiscal al Stimulus lus with Prud udent nt Fiscal l Mana nage gement nt Moneta etary ry and Financ ncial ial Factor: : Credible ible Monet netar ary y Polic licy y Track k Record rd and Favour
ble Financ ncia ial l Sector
Pro rogres gressiv ive e Infras rastr truc uctur ure Develo lopment ent: Strong ng Commitm itment ent on Acceleratio leration n
rastruc tructure ture Pro rovis ision ion
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Improving ving Global bal Percep ception tion
…with recent improve vement nts
corru ruptio ion perce ceptio ion index and governan rnance ce indica icator
1. Source: World Economic Forum – The Global Competitiveness Report 2018; 2. Source: World Bank – Doing Business 2019 Report; 3. Source: World Bank – World Governance Indicators 2018; 4. Source: Transparency International – Corruption Perceptions Index 2018 Report
World ldwid wide Governa nanc nce Indic icator tors3 Ease of Doing ng Busin iness2 Global l Compe petitive titivene ness Index1 Corruptio uption n Perce cept ptio ion n Index4
Higher rank is better Higher score is better Higher rank is better (rankings at the time of annual report publication) Higher rank is better 41 36 45 20 30 40 50 60 70 80 90 Rank nk India Indonesia Philippines Bulgaria Colombia 91 72 73 20 40 60 80 100 120 140 160 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Indonesia India Philippines Bulgaria Colombia
*New Concepts by using the Global Competitiveness index 4.0 which captures the determinants of long- term growth.
51 29 55 52 41 48 15 25 35 45 55 2010 2011 2012 2013 2014 2015 2016 2017 Voice and Accountability Political Stability/Absence of Violence Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 38 41 42 36 30 32 34 36 38 40 42 44 2012 2013 2014 2015 2016 2017 2018 Indonesia India Philippines Bulgaria Colombia
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Contin tinuou
Improv
ement
Investme stment Clima imate te
…anothe her leap
Rank nk
Ease
Doing Busine ness ss (EODB)*
EoDB 201 019 Rank EoDB 201 2018 Rank nk Chan hange in Rank nk EoDB 201 019 Point ints EoDB 201 2018 Point ints Chan hange in Points ints
Overall all 73 73 72 72 1 67.96 66. 66.54 54 1.42 Start rting ing a business 134 144 10 81.22 77.93 3.29 Dealing ing with Constr truc uctio ion Permit rmit 112 108 108 4 66.57 66.08 0.49 Getting ng Electr tric icity ity 33 33 38 38 5 86.38 83.87 2.51 Registe tering ring Prop
rty 100 100 106 106 6 61.67 59.01 2.66 Getting ng Credit it 44 44 55 55 11 70.00 65.00 5.00 Prote tecting ting Mino nority ity Inves esto tors 51 51 43 43 8 63.33 63.33 0.00 Paying ing Taxes 112 114 2 68.03 68.04 0.01 Trading Across Border ers 116 112 4 67.27 67.27 27 0.00 Enforcing ing Contrac acts ts 146 145 1 47.23 47.23 0.00 Resolv lving ing Insol
36 36 38 38 2 67.89 67.61 0.28
Source: World Bank * Higher rank is better, EoDB 2019 was published in October 2018
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BBB / Stab able Baa2 a2 / Stab able BBB / Stab able
Apr 201 2018, Ratin ing g Upgr grade ded d at Baa2/ 2/Stabl ble “The upgrade to Baa2 is underpinned by an increasingly credible and effective policy framework conducive to macroeconomic stability. Together with a build-up of financial buffers, prudent fiscal and monetary policy strengthens Moody’s confidence that the sovereign’s resilience and capacity to respond to shocks has improved.” May 2019 19, Ratin ing g Upgr graded ded at BBB/ B/Stabl ble “We raised the ratings to reflect Indonesia’s strong economic growth prospects and supportive policy dynamics, which we expect to remain following the re-election of President Joko Widodo recently.” March 2019, 019, Ratin ing g Affir firmed ed at BBB/ B/Stabl ble The decision was supported by favorable GDP growth outlook
government debt burden compared with its peers. Indonesia’s sovereign credit fundamentals should be resilient to substantial exchange rate volatility.
BBB BBB / Positive ive
April il 201 019, 9, Ratin ing g Affir firmed ed at BBB, B, Outlook Revis ised ed to Positi itive “The ratings mainly reflect Indonesia’s solid economic growth underpinned by domestic consumption, restrained level of budget deficit and public debt, and resilience to external shocks stemming from flexible exchange rate policies and accumulation of foreign exchange
infrastructure development plan and is vigorously promoting it to eliminate the infrastructure
BBB / Stab able
April il 2019, 019, Ratin ing g Affir firmed ed at at BBB/ B/Stabl ble “Indonesia’s economy is growing at a solid pace. The fiscal deficit to GDP ratio narrowed from a year earlier, and the government debt to GDP ratio remains low. While the CAD somewhat widened, foreign reserves are ample relative to short-term external debts. Its economic resilience to external shocks is maintained, supported by the government and central bank’s policies emphasizing macroeconomic stability.”
Indo donesia esia is Now Fully ly Ra Rated as as Investm estment nt Grad ade Countr try
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31.59 34.47 23.63 27.04 25.01 26.57 31.74 34.61 24.61 27.14 25.79 26.04 31.81 34.69 24.56 28.05 26.17 25.98 5 10 15 20 25 30 35 40 India Indonesia Malaysia Philippines Thailand Vietnam 2018 2019e 2020e
22.5 25.2 26.3 31.9 32.1 34.2 36.4 36.4 38.5 39.2 39.8 48.1 48.7 58.3 10 20 30 40 50 60 70 Myanmar Taiwan South Korea Philippines Hong Kong Malaysia Australia Japan Thailand Singapore Vietnam Indonesia India China 3.7 4.4 5.1 5.6 5.8 8.4 8.6 10.0 13.7 28.8 30.4 33.9 37.1 46.2 52.2 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Russia Taiwan Korea Brazil Germany Malaysia Myanmar Philippines Mexico US Indonesia Vietnam Thailand India China 50 100 150 200 250 300 350 400 450 500 Billion USD 2016 2017
Indo donesia esia Re Remains ains the he Investment stment Dest stin inatio tion
C Cho hoice ice
1. Source: The Economist – Asia Business Outlook Survey 2018 2. Source: IMF World Economic Outlook, Database April 2019 3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2018 4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (30th Annual Survey)
Tota tal Investmen tment t / GD GDP (%)
Indo done nesia a Enjo joys Large Investm tments Relat lative to Peers within n the Region2 JBIC: C: Among ng ASEAN AN countr ntries, , Indonesia a is one of the most prefe ferred d plac ace for busine ness investm tment nt (Nove vembe ber 2018) 18)4 The Econo nomi mist: : Indo done nesia a round nds out the top five of Asian an econo nomi mies that t can look forwar ard d to increas ased d investme ment nt spendi nding ng. . (January nuary 2019) 19)1
% of surveyed who consider each country has promising prospects
UNCTAD: AD: Indonesia a is listed d in the top 20 host econo nomi mies based d on FDI inflo lows, , 2016 16 and d 2017 17 (June ne 2018) 18)3
(x) = 2016 ranking
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Indon donesi esia Elect ection ion Time melin ine
Preparation of Elections Commission Regulation
August ugust 1st
st, 2017 –
Febr brua uary 28th
th, 2019
Socialization
August ugust 17th
th, 2017 –
April il 14th
th, 2019
Registration and Verification of Presidential & Legislative Candidates
Sept ptembe mber 3rd
rd, 2017 –
Febr brua uary 20th
th, 2018
Candidacy of Legislative Candidates, President & Vice President
March ch 26th
th, 2018 –
Sept ptembe mber 21st
st, 2018
Campaign Period
Sept ptembe mber 23rd
rd, 2018 –
April il 13th
th, 2019
Quiet Period
April il 14th
th, 2019 – April
il 16 16th
th, 2019
Election Day
April il 17th
th, 2019
Voting Recapitulation
April il 18th
th, 2019 –
May 22nd
nd, 2019
Completion Period for President & Vice President Election Disputes
May 23rd
rd – June
ne 15th
th, 2019
Octob tober er 2019 Official Oath of President & Vice President
Source: General Elections Commission (Komisi Pemilihan Umum)
10
Indon donesi esia Elect ection ion: Jo Joko Widodo dodo Wins ns Second
Term
Source: General Elections Commission (Komisi Pemilihan Umum)
General Election Commission has announced the
the early hours of Tuesday morning, May 21st,
Widodo – Ma’aruf Amin had received 55,5% of the vothes, compared with 44.5% for Prabowo Subianto – Sandiaga Uno. By this result, Joko Widodo wins the second term. Moreover, Indonesia's Constitutional Court on June 27, 2019 confirmed the victory of President Joko Widodo.
Prabo abowo - Sand ndi 44.5% Jokowi kowi - Ma'aruf uf 55.5%
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Natio ional nal Strategic tegic Dev evel elopme pment nt Plan an (Naw awa Cita ta)
Human Development
Educ ucation ion Healt alth Hous using ing Char aracte ter
Priority Sector Development
Food Securi rity ty Energy & Electr tric ical Securi rity ty Mari ritime time & Mari rine ne Touris urism & Indus ustr try
Water ter Security rity, Basic ic Infra rastru tructu ture re & Connect ectivity ivity
Equitable Development
Inter- Incom
Group
Inte ter-Reg Region: ion: (1) Rural al Area ea, (2) Perip ripher hery, y, (3) Outs tside ide Java, (4) Easte tern rn Area ea. .
Security & Order Politic & Democracy Governance
The 3 Dimensio ions
Econom
ic Develop
ment Necessary sary Condit ition
Legal Certainty & Law Enforcement
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purposes
system, build seeds market, tools and machinery
poverty, & land demand
Economic ic Equal alit ity Policies cies
to support sustainab nable le public ic welfar are.. ...
Source: Coordinating Ministry for Economic Affairs
Econom nomic ic Equali ality ty Polici cies
Human n Resour
ce Capaci city ty
Land
Oppor portuni tunity ty Agra raria ian Reform rm Agric icultu ture e (Landle dless Farm rmer er) Planta tatio ion Urban Poor
dable le Hou
Fisher hermen en & Seaweed eed Cult ltiv ivation tion Fair ir Tax x System tem Manu nufact cture and d ICT Retail l and Mark rket et Financin ing g & Gov
ernmen ent Budget get Vocatio ional, , Entre repr pren eneu eurs rship hip & & Labor r Marke rket
Priority
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The he Economic ic Policy cy Pac ackag ages es
“To improve national industry competitiveness, export and investment to generate significant economic growth”
Phase e III I (7 Oct t ’15) Financial services facilitation, export financing and elimination
Phase e IV (15 Oct t ’15) Social safety net and betterment of people welfare Phase e V (22 Oct t ’15) Improving industry and investment climate through tax incentives and deregulation on sharia banking
Harmo moni nizi zing ng Regulat ations ns Simp mpli lifyin ying Bureauc ucratic Proc
Ensuring Law Enfo forceabi bili lity
Phase e VI (5 Nov ’15) Stimulating economic activities in border areas and facilitating strategic commodities availability Phase e I (9 Sept t ’15) Improving national industry competitiveness Phase e II (29 Sept t ’15) Easing permit requirement and simplifying export proceeds requirement Phase e VII (7 De Dec ’15) Stimulating business activities in labor-intensive industries nation-wide through incentives in the form of accelerating land certification process for individuals Phase e VIII I (21 De Dec ’15) Resolving land acquisition disputes, intensifying domestic oil production, stimulating domestic parts and aviation industries Phase e IX (27 27 Jan ’16) Accelerating electricity generation, stabilizing meat prices and improving rural–urban logistics sector Phase X (11 Feb ’16) Revising the Negative investment List and improving protection for SMEs Phase e XI (29 29 Mar r ’16) Stimulating national economy through facilitation to SMEs and industries Phase e XII II (28 28 Apr’16) Improving Indonesia’s rank on Ease of Doing Business (EODB) Phas ase e XIII I (24 Aug ’16) Low Cost Housing for Low-Income Communities Phase e XI XIV (10 Nov ’16) Roadmap for E-commerce
Source: Coordinating Ministry for Economic Affairs
Phase XV (15 Jun ’17) Improving logistics In additio dition to the 16 Policy licy Packa kages ges, on Augu gust t 31, 2017 the Gov
ernmen ent has issued ed a Pres esiden identia tial l Regulatio tion No.
hancin ing g busin ines ess licen ense e serv rvic ice standa dard Phase e XVI (1 (16 Nov Nov ’18) Improving the competitiveness and domestic economy
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Improving ving the Compet petitivene itiveness ss an and Domestic stic Economy
The 16th
th Econo
nomic mic Policy cy Packag age has been launche nched
Source: Coordinating Ministry for Economic Affairs
TAX HOLIDAY EXPANSIO ION
Backgr ground und In
to further increase investment value in Indonesia, there is a need for expansion of sector and standard classification of Indonesian Business Fields (KBLI) that are given tax holiday, complemented with a process simplification to receive the tax holiday according to the Online Single Submission (OSS). Objectives tives and benefits fits 1) Increasing investment and strengthening the industrial sectors from the downstream to the upstream through the expansion of the business sector, KBLI’s pioneer industries, and Special Economic Zones (SEZ) that can receive tax holiday facilities 2) Increasing the process of convenience of filing process and tax holiday facilities provision
EXPORT PROCEEDS (DHE) SCHEME
Tax Rate tes on Deposit it Inte terest t Income Tax Rate tes on Deposit it Interest Income
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Progress ess
t the he Economic ic Policy cy Pac ackag ages*
Initially, there are 236 regulations which need to be deregulated As of January 23rd, 2019, deregulation of 222 regulations are finished (99%), comprising 53 regulations at Presidential level and 169 regulations at Ministerial/Institutional level Total regulation which are still discussed: 3
SET
REVOK OKED ED REGULATIONS TIONS
ON GOIN ING DISCU SCUSSION SION
171 TOTAL
169
MINIST STERIAL IAL/I /INST NSTIT ITUTI UTIONAL ONAL LEVEL VEL 99%
47 47 42 42
SELESAIPRESI SIDE DENTI NTIAL
54 TOTAL
53 53 FINI
NISHED SHED
PRESIDENTIAL AL LEVE VEL
FINI NISHED SHED
TOTAL INITIA TIAL REGULATIONS IONS
TOTAL REGULATIONS TIONS
Based
the further assessment, 11 regulations has been revoked from deregulation process Total regulation subject to be deregulated: 225 regulations
Source: Coordinating Ministry for Economic Affairs *as of January 23rd, 2019
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Othe her Progres ess
Economic ic Policy cy Pac ackag ages es
29 Provinces have set 2016 Minimum Wage System in accordance to the Government Regulation (GR) No. 78/2015
Fair, Simplif ifie ied & & Project ctab able le Wage Sys System
IZ’s: Kendal, Demak, and Ungaran
IZ in Bitung (North Sulawesi) in 2017
Indus ustrial rial Zone Develo lopmen ment
Spesial al Economic mic Zone ne (SEZ)
Investment commitments in SEZ up to 2017 reach 41 T, with 3 hour licenses already applied in 4 SEZ’s Administrators in 2017 52 Bonded Logistic Center has been launched to support various industries
Deregula ulatio ion
Logis istics ics Sect ctor
17
Invest vestmen ment Inc ncent entives ives to Bo Boost st Industry dustry Sector
BUSINE INESS SS EXPANSIO ANSION
wanc nce
xemptio mption n or relie lief of import t duty ty on capita ital l goods, machine chinery or equi uipme pment nt for production purposes that can not be produced domestically;
xemptio mption n or relie lief of import t duty ty on raw mate teria ials or auxi xilia liary mate teria ial l for production purposes for a certain period of time and certain conditions;
xemptio mption n or suspe pens nsio ion n of VAT on the import t of capita ital l goods
chinery or equi uipme pment nt for production purposes that have not been produced domestically for a certain period of time;
ciation n or amortizatio tization n (part of tax allowance); and
perty ty tax relie lief, especially for certain business sectors in certain regions;
Tax holid liday of corporate income tax in a certain amount and time
PION ONEE EER INDUSTRIES USTRIES SPECIAL ECIAL ECONOMI ONOMIC ZONE
lectio ction n of VAT T and Luxu xury Goods Sale les Tax (PPnB PnBM), ),
toms tax exemption xemption,
lowa wance and Tax Holid iday,
pens nsio ion n of Import t Duty,
t Duty for goods produced using local components of a certain level
INDUST STRIAL RIAL ZONE FREE TRAD ADE ZONES AND PORTS MICRO RO, SMAL ALL, MEDIUM IUM ENTERP RPRIS ISES (MSM SMES) S) E-COM OMMERC RCE
T exem xempt ptio ion n on import or delivery of capital goods,
t Duty exemption xemption on machineries/goods/materials,
lowanc nce and Tax Holid iday Exe xemptio mption n of:
t Duty
xury Goods Sale les Tax x (PPnB PnBM)
toms duty ty Decr creasin ing MSME MEs Tax from 1% to 0.5% % of gross revenue
mall ll entrep treprene neur urs through the market place will be subject to 0.5% % income come tax and 1% VAT
ll entr trepr preneurs through the market place will be subject to 0.5% % inco come me tax
Source: Coordinating Ministry for Economic Affairs
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New Tax Holiday liday Polic licy* y*
to boost industry try sector
Taxpay payer
Pioneer Industry with minimum investment value of 1 trillion Rupiah (minimum investment value
500bn Rupiah for telecommunication sector) Corporate te Income me Tax (CIT) T) reductio tion rate
Conce cession n perio iod Transit nsitio ion
After Tax Holiday Not available 100% (single rate)
discretion 1. 500Bn – 1Tn : 5 years 2. 1Tn – 5Tn : 7 years 3. 5Tn – 15Tn : 10 years Pioneer Industry with minimum investment value
500bn Rupiah Applied to 8 industry groups: (i) upstream basic metal industry; (ii)
and gas refinery industry; (iii) organic basic chemicals industry; (iv) machinery industry; (v) plantation, forest, and fishery products processing industry; (vi) telecommunication, information and communication industry; (vii) marine transportation; and (viii) economic infrastructure Applied to 17 industry groups: (i) upstream base metal; (ii)
and gas refinery; (iii) petrochemical (oil, gas,
based); (iv) non-organic base chemical; (v) organic base chemical; (vi) pharmaceutical materials; (vii) semiconductor and other components; (viii) communication devices components; (ix) medical devices components; (x) machine manufacturing for industry; (xi) machine main components manufacturing; (xii) robotic components manufacturing; (xiii) ship components manufacturing; (xiv) airplane components manufacturing; (xv) train components manufacturing; (xvi) power plants; and (xvii) economic infrastructure
PROVIS VISION BEFO FORE RE AFTE TER
5 – 20 years depends on the investment value (in IDR): 4. 15Tn – 30Tn : 15 years 5. ≥ 5Tn : 20 years 50% CIT reduction for the next 2 years 10 – 100% Tax allowance not provided Tax allowance for business expansion can be provided with terms and conditions applied
Source: Coordinating Ministry for Economic Affairs *) MoF has issued a new Tax Holiday policy through Regulation No. 35/PMK.010/2018 (PMK-35) dated 4 April 2018.
19
Enhan ancing cing Busines iness Li Licen ense se Serv rvice ice Stan andar dard
Presiden identi tial al Regul ulati tion to Accelerate te Ease
Doing Busine ness ss has been launched ched
Source: Coordinating Ministry for Economic Affairs
Policy cy Goals
Improve efficient, streamlined, & integrated business license service standards Accelerate the business licensing process Provide business licensing process assurance in terms
Increase coordination & synergy between central & regional government Overcome the barriers to doing business in Indonesia Implement integrated licensing process (single submission)
Main Policy cy
Forming a Task Force to identify & overcome the end- to-end licensing barriers Implementing a licensing checklist for Special Economic Zones (KEK), Free Trade Zones (FTZ), Industrial Zones & Tourist Zones Utilizing data sharing
Business license regulatory reforms Implementation
the Single Submission system
1st
st Phase
2nd
nd Phase
Note: 1st and 2nd Phase are implemented in parallel
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Impr proving ving Inv nvestment estment Clima imate
Onlin ine Sing ngle le Submissi ission
(OSS SS) Has Been en Laun unched hed... ...
Source: Coordinating Ministry for Economic Affairs
OSS is a web-based business licensing system intended to cut the red tape involved in obtaining business permits and integrated between the central government and regional administrations
Lorem Ipsum Suitable for all category, Envir ironm nment ent & Fores restr try y Secto tor Electr tric icit ity y Secto tor Public lic Wor
ks & Housin ing g Secto tor Health Sec ecto tor Indus ustr try y Secto tor Mari rine ne & Fishery ery Secto tor Medic icine ine & Food Sector Trans nsport rtat atio ion n Secto tor Trade ade Secto tor Informatio ation n & Communic unicatio tion Secto tor Other Secto tor Secto tors rs The Advant antag age e of Using g OSS Business licenses can be secured in under an hour Standardized business licenses are available Ellectronically integrated The whole licensing process is monitored by the Task Force More practical Accessible at anytime and anywhere
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(Pusat Logistik Berikat/PLB) is a facility provided by Ministry
Finance as part
the implementation
the 1st Economic Policy Package. PLB facility aims to improve efficiency and reduce the cost of transportation and logistics in Indonesia; support the growth of the domestic industry, including small and medium industries; increase investment; and to make Indonesia to become a logistics hub in Asia Pacific.
To To da date, e, 52 Bo Bond nded ed Logis gistic tic Cent nter ha has been en laun unched hed to to suppo pport variou rious indus dustries ries.
Improving ving Investment stment Clima imate te
…Bonded Logistic Center to Improve Indonesia’s Competitiveness
Oil il and ga gas, s, and mining ng indus ustr try Food & bever erag ages es indus ustr try Auto- motiv ive e indus ustr try Pers rsonal nal care/ home care indus ustr try Textile ile (cotto tton) n) indus ustr try Small and medium ium indus ustr try Synthetic tic textile ile (chemic ical al substanc nces es) indus ustr try. y.
Bonded Logistic Center
Heavy Equipment nt indust ustry ry Defence indus ustr try Aircraft ft MRO indus ustr try
22
Impr proving ving Invest stment ment Clima imate te
…revising the Negative Investment List
1 For total project value of IDR10bn and aboveBefore
Cold storage ge Restaurants, , Bars Pharmaceutical Raw Materials Manufacturing Sports Center, Film Processing g Lab, Crumb Rubber
Revisio ion of "Partnership ip" category y to refer to partnership ip with Micro, Smal all and Mediu ium Enterpris ises (MSME MEs) Gran andf dfat ather Law: If a par artic icul ular ar sector is tightened in futur ure, existin ing foreig ign investor does not need to comply with tighter stak ake Key Reforms in Negative ive Foreig ign Investment List Strengthen implementatio ion of negative investment law throug ugh active ive roles from min inistrie ies, agencie ies and regio ional governments
100% 49% 100% 51% 100% 85% 100% 95% 100% 33% 67% 51% 67% 67% 55% 67% 65% 67%
Distribution,
housing Private Museum, Catering, g, apparel Manufacturing, g, Exhibitions
Conve ventions
Toll Road Operator, Telecom
Consultancy for Construction
Telecom
der with Integrated d Servi vices Professiona
g, Golf Course Management, , Air Transport
vices, , Trave vel Bureau
After Before After Before After Before After Before After Before After Before After Before After Before After Before After 33% 49%
Introduc uctio tion n of New w Foreig ign n Owne wnership ip Regula ulatio tion n for Strate tegic ic Secto ctors Source: Investment Coordinating Board (BKPM)
23
Investm estment nt Re Real aliza izatio tion (Q1-201 2019) 9)
IDR tn
2013 2014 2015
Direct ct Inve vestme tments nts
2016
Mini ning ng Housin ing, Ind ndust ustria ial Estate tate, and Offic ice Build ildin ing Food Indus ustry Ele lectric icity ty US$ US$949.6 .6 mn US$ US$611.6 .6 mn mn US$ US$383.2 .2 mn mn US$ US$614.8 .8 mn mn US$ US$1,526.4 .4 mn mn US$ US$1,641.9 .9 mn mn Transp nsportatio tion, n, Warehouse use, and Tele leco comm mmun unica catio tion
400.7%
US$ US$314.0 .0 mn mn
40.4% 77.6% 4. 4.0% 69.9% 49.5% 57.9% Invest stment nt Reali liza zatio ion
Food Crops ps, Planta ntatio tion, n, and Live vestoc tock US$ US$217.1 .1 mn
61.1%
Top 8 FDI Realiz lizatio tion n by Secto ctors (Q1-2019 vs Q1-2018)
Source: Investment Coordinating Board (BKPM), compared to Q1-2018 period
2017
Rp145.4 5.4 T Rp159.4 T IDR107.9tn tn 434 434,463 463
9.6 9.6% 15.6 .6%
14.1%
Q1-201 016 Q1-201 017 Q1-201 018 Q1-201 019 Q1-201 016Q1-201 017 Q1-201 018 Q1-201 019
*
* * perso son 37 375,9 ,982 IDR195.1tn tn
5.3 5.3%
Q1-201 018 Q1-201 019
IDR185.3tn tn IDR87.2tn tn IDR76.4tn tn IDR108.9tn tn Chemi mica cal l and Pharma mace ceutic utical l Indust ustry Metal, tal, Exce cept pt Machine chinery, and Equi uipm pment nt Indust ustry 107.9 195.1
20 40 60 80 100 120 140 160 180 200 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 FDI DDI TOTAL
2018
Decreasin ing
2019
25
Conducive cive Environment ment Unde derpin rpinning ning Strong ng Growth th Funda damenta mentals ls
Larges gest t Economy my in South East Asia 4th Most Populous country y in the World; ; 64% in productiv tive e age Manageable Inflatio tion Rate Risin ing g Middle e Class and Affluen ent t Custome mers
From commodity-based to man anufa ufactur urin ing and servic vice sectors via infrast astruc ucture development From consum umptio ion-led to investment-led growth via a stronger man anufac ufactur urin ing sector and more investment init itia iative ives Policie cies to main intain purchasin hasing power to stim imulate domestic ic economy in the mid idst
ing macr croeconomic ic condit itio ions Budget reform as a a part of larger economic ic reform init itiat iative Tax base to be broad adened from
uce dependency on commodit ditie ies Fuel subsid idie ies signif ific ican antly y reduc uced and spendin ing redir irected to more produc uctive allocat atio ion Prud udent debt man anag agement
Reform rm-Or Orien iented ted Adminis inistr tratio ion
Three main ain sources of finan ancin ing for investment needs: Stat ate and regio ional al budget, Stat ate Owned Enterpris ises and PPP Contin inui uing from 2015 polic icy, infras astructur ure will be higher than fuel subsid idy Fiscal al and non-fis iscal al incentive ives to attrac act infras astructur ure investment and promote PPP Infras astructur ure spendin ing focused on basic ic infras astructur ure projects
Large rge and d Stab able le Econo nomy Consi nsiste tent nt Budg dget t Reform
New Econo nomic ic Structu ructure re High h Infras rastructu ructure re Investmen ents
26
Indonesia’s Strong GDP
Growth th Prospe pect ct Strong ng GDP Growth th1
%
Instit itutio ions 2019 GDP growth (%YoY) 2019 Budget 5.3 Bank Indonesia 5.0 – 5.4 IMF (WEO April 2019) 5.2 World Bank 5.2 ADB 5.2 Consensus Forecast (June 2019) 5.1
Favo vour urable ble GDP Growth th Compar pared to Peers2
1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption 2. Source: World Economic Outlook Database – April 2019; * indicates estimated figure %
first quarter
2019, pointing to maintained domestic economic performance despite retreating from 5.18% (yoy) in the fourth quarter of 2018. Seasonal factors at the beginning of the year as well as the impact of weaker-than-expected global economic gains contributed to the moderate economic downturn in Indonesia.
domestic demand
the back
consumption by non-profit institutions serving households (NPISH) and households.
building investment. Net exports maintained a positive position as imports declined, although exports also softened in line with global economic moderation and sliding international commodity prices.
0.04 3.83 3.27 (2.07) (0.16) 3.74 3.31 (1.73) (0.36) 4.01 3.14 (1.81) (0.30) 4.01 3.19 (1.70) (0.42) 4.21 3.09 (1.69) (0.52) 5.12 4.94 4.93 5.05 4.82 4.74 4.77 5.17 4.92 5.18 5.01 4.94 5.01 5.01 5.06 5.19 5.06 5.27 5.17 5.18 5.07
1.0 3.0 5.0 7.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 2018 2019 QoQ YoY 3.3 3.0 3.5 3.6 7.3 7.5 5.2 5.2 6.5 6.6 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2012 2013 2014 2015 2016 2017 2018 2019* 2020* Bulgaria Colombia India Indonesia Philippines
27
GDP Growth th Breakd akdown wn
GDP Growth th by Secto ctor (%, YoY YoY)
By sectors 2014 14 2015 15 2016 16 2017 17 2018 18 2019 19 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot Q1 Q1 Agriculture, forestry, and fishery 5.2 4.9 3.6 3.3 4.2 3.7 6.5 2.9 1.6 3.8 1.5 3.5 3.2 5.5 3.4 7.1 3.3 2.8 2.4 3.9 3.3 4.7 3.7 3.9 3.9 1.8 Mining and Quarrying
0.7 0.7 1.5 0.4 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.0 0.2 1.4 0.9 (1.3) 2.1 1.8 0.0 0.7 1.1 2.6 2.7 2.2 2.2 2.3 Manufacturing 4.5 4.9 5.0 4.2 4.6 4.1 4.2 4.6 4.4 4.3 4.7 4.6 4.5 3.3 4.3 4.3 3.5 4.9 4.5 4.3 4.6 3.9 4.4 4.2 4.3 3.9 Construction 7.2 6.5 6.5 7.7 7.0 6.0 5.4 6.8 7.1 6.4 6.8 5.1 5.0 4.2 5.2 6.0 7.0 7.0 7.2 6.8 7.4 5.7 5.8 5.6 6.1 5.9 Wholesale and Retail Trade, Repair of Car and Motorcycle 6.1 5.1 5.2 4.4 5.2 3.8 1.6 1.4 3.5 2.5 4.3 4.3 3.7 3.9 4.0 4.6 3.5 5.2 4.5 4.5 5.0 5.2 5.3 4.4 5.0 5.3 Transportation and Storage 7.0 7.6 7.7 7.2 7.4 6.3 6.0 7.0 7.5 6.7 7.4 6.5 8.2 7.6 7.4 8.1 8.8 8.9 8.2 8.5 8.6 8.7 5.6 5.3 7.0 5.3 Information and communication 9.9 10.7 9.8 10.1 10.1 9.7 9.3 10.6 9.2 9.7 7.6 9.3 8.9 9.6 8.9 10.5 11.1 8.8 8.3 9.6 7.8 5.1 8.1 7.2 7.0 9.0 Financial service 3.6 5.5 1.9 7.9 4.7 8.6 2.6 10.3 12.8 8.6 9.3 13.6 9.0 4.2 8.9 6.0 5.9 6.1 3.8 5.5 4.2 3.1 3.1 6.3 4.2 7.3 Other Services* 5.4 4.7 5.9 6.5 5.7 5.1 6.5 4.8 5.5 5.4 6.0 5.6 4.5 3.8 4.9 4.2 3.5 4.8 6.0 4,6 5.4 6.2 6.7 6.4 6.2 6.8 GDP 5.1 4.9 4.9 5.0 5.0 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008)
GDP Growth th Based on Expe xpend nditur itures (%, YoY YoY)1
By expen pendit diture 2014 14 2015 15 2016 16 2017 17 2018 18 2019 19 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot Q1 Q1
5.2 5.2 5.1 5.1 5.1 5.0 5.0 5.0 4.9 5.0 5.0 5.1 5.0 5.0 5.0 4.9 5.0 4.9 5.0 4.9 4.9 5.2 5.0 5.1 5.0 5.0 Non profit HH. consumption 23.2 22.4 5.8 (0.5) 12.2 (8.1) (8.0) 6.6 8.3 (0.6) 6.4 6.7 6.7 6.7 6.6 8.1 8.5 6.0 5.3 6.9 8.1 8.8 8.6 10.8 9.1 16.9 Government consumption 6.1 (1.8) 1.2 0.9 1.2 2.9 2.6 7.1 7.1 5.3 3.4 6.2 (3.0) (4.0) (0.1) 2.7 (1.9) 3.5 3.8 2.1 2.7 5.2 6.3 4.6 4.8 5.2 Gross Fixed Cap. Formation 5.4 4.0 4.4 4.1 4.4 4.6 4.0 4.9 6.4 5.0 4.7 4.2 4.2 4.8 4.5 4.8 5.3 7.1 7.3 6.2 7.9 5.9 7.0 6.0 6.7 5.0 Exports 3.1 1.5 4.9 (4.4) 1.1 (0.6) (0.3) (1.0) (6.4) (2.1) (3.1) (1.5) (5.8) 4.1 (1.6) 8.4 2.7 16.5 8.4 8.9 5.9 7.6 8.1 4.3 6.5 (2.1) Imports 5.1 0.4 0.2 3.0 2.1 (2.6) (7.1) (6.5) (8.6) (6.2) (5.0) (3.5) (4.1) 2.7 (2.4) 4.8 0.2 15.4 11.9 8.1 12.6 15.2 14.0 7.1 12.0 (7.8) GDP 5.1 4.9 4.9 5.0 5.0 4.8 4.7 4.8 5.2 4.9 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption
28
Regio gional al Economic ic Growth th
Regio ional nal growth th in Java, a, Kaliman mantan, tan, and Papua was weighe hed down by restrai aine ned manufa fact cturin uring exports ts and minig ig sector
perform
ance.
Source: Central Bureau of Statistics of Indonesia (BPS)
30
1.87 7 (8.10) (1.79) 1.06 (6.97)
2 4 6 8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3*Q4* Q1** 2013 2014 2015 2016 2017 2018* 2019** Goods Services Primary Income Secondary Income Current Account US$bn
2 3 4 5 6 7 8 9 10 11 12 13 14 15 50 60 70 80 90 100 110 120 130 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 2013 2014 2015 2016 2017 2018 2019 FX Reserves (LHS) Month of Import & Debt Service (RHS)
Month US$bn
0.00 1.00 2.00 3.00 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 2013 2014 2015 2016 2017 2018 2019 OG Non-OG Total
Exter ernal al Bal alan ance ce under r Contr trol l Support rted ed by A y Adequ quate ate Re Reser serves es
Curren ent t Account Defic icit it withi hin Safe Thres esho hold Balance e of Payme ments Portrait it Substantia tial FX Reser erves es to Mitiga igate te Exter ernal Challen enges ges Trade e Balance Portrait it
Source: Bank Indonesia Source: Bank Indonesia Source: BPS * Preliminary Figure ** Very Preliminary Figure
2015: Surplus us US$7.59bn 2013 2013: Defic icit it (US$4.10bn) n) 2014 2014: Defic icit it (US$2.37bn) n) 201 2016: : Surplus us US$8.83b 3bn 2017: Surplus us US$11.83bn bnSource: Bank Indonesia FX Reserves s as of May 2019: US$120 20.3 bn n (Equiv
ths s of impo ports ts + servic icin ing of government t debt) t) US$bn
2015 2015: CA Defic icit (US$17.5bn) n) 2013: 2013: CA Defic icit (US$29.1bn) n) 2014: 2014: CA Defic icit (US$27.5bn) n) 201 2016: CA Defic icit (US$17.0bn) n) 201 2017: CA Defic icit (US$16.2bn) n)
2018: Defic icit it (US$8.57bn) n)2018: 2018: CA Defic icit (US$31.1bn) n)
10.1 2.4 124.5 .5 40 80 120 160
5 10 15 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3*Q4* Q1** 2013 2014 2015 2016 2017 2018* 2019** Current Account Capital and Financial Account Overall Balance Reserve Asset (rhs) US$bn US$bn
31
2.08 0.20 0.83 0.37
3.51 1.51 1.28 0.77 0.54 0.06
0.0 2.0 4.0 6.0 THB JPY PHP IDR BRL INR CNY SGD MYR ZAR EUR KRW TRY point-to-point average
%
Data as of June 19th, 2019
Exc xchan ange Ra Rate In Li Line ne with Funda damentals mentals
Move veme ment nt of Rupia iah Rupia iah Exc xchang nge Rate Fared Relative latively ly Well ll Compar pared to Peers
IDR/US$
In In general, rupiah iah exchan ange rat ate stab abil ilit ity has as been main aintain
In May May 2019 2019, the rup upiah ah depreciat iated 0.18 18% (ptp) compared wit ith the posit itio ion recorded at at the end of
April il 2019. The latest developments are linked to the recent furtherance
financial markets. The rupiah regained momentum in June 2019, however, appreciating 0.04% (ptp) as
19th June 2019 compared with the rate recorded at the end of May 2019, or by an average of 0.69% compared with the May 2019 average. The rupiah strengthened in June 2019 on the back of a solid domestic economic
including the recent improvement in Indonesia’s sovereign rating affirmed by Standard & Poor’s (S&P), in addition to a global loosening of monetary policy. Such dynamics are expected to attract foreign capital flows back to Indonesia and appreciate the value of the rupiah. Moving forward, Bank Indonesia expects to maintain rupiah exchange rate stability in line with market mechanisms. Meanwhile, to enhance the effectiveness of exchange rate policy and reinforce domestic financing, Bank Indonesia will continue to accelerate financial market deepening, targeting the money market and foreign exchange market in particular.
Source: Bank Indonesia
YTD 201 2019 vs 201 018
Rupia iah Exc xchang nge Rate Volatil tilty ty
14270 13576 13952 14601 14798 14134 14269 13,378 14,409 15,176 14,207 14,381 14,282 13,000 13,500 14,000 14,500 15,000 15,500 1-Jan 1-Feb1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb1-Mar 1-Apr 1-May 1-Jun IDR/USD Quarterly Average Monthly Average Data as of May June 19th, 2019 14.2 12.0 19.3 9.4 11.0 6.8 5.0 6.5 4.4 6.2 19.5 13.2 22.1 6.6 5.2 9.4 4.8 5.3 6.4 5.6
10 15 20 25 BRL ZAR TRY IDR KRW THB MYR INR SGD PHP May-19 Jun-19 % Data as of June 19th, 2019
32
Bank Indonesia’s Policy licy Direct ection ion
To maintain ain Rupiah ah stabilit lity and support growth
A pre-emptive, front- loading and ahead-of- the-curve policy response Strengthening the monetary operations in the foreign exchange and money markets To stabilise the rupiah exchange rate, while consistently controlling inflation within the 2018-2019 target range of 3.5±1% To stabilise the rupiah exchange rate, adjust fair prices in the financial markets and maintain adequate liquidity in the money market To maintain adequate liquidity in the rupiah money market and interbank swap market To form rational expectations, thus helping to mitigate the rupiah overshooting its fundamental level. Dual intervention in the foreign exchange market and government securities (Surat Berharga Negara – SBN) market in a measured way Intensive communication, especially to market players, banks, businesses, and economists
4 3 2
Measures es To To Stabi bilize lize Rupia piah Exchange nge Rate te Measures es To Supp ppor
t Gro rowth th
Further easing of macroprudential policy Payment system development to support digital economy To bolster the growth of the property sector which has positive impact to the economy Coordination with the Coordinating Ministry of Economic Affairs, the Ministry of Finance, and the Financial Services Authority to accelerate financial market deepening, particularly in private financing for infrastructure. Electronification to support social assistance disbursement and financial transcation of the central and regional government Sharia economy and finance development to create halal value chain, sharia financal sector development both for commercial and social purposes, including its education and communication Policy coordination to accelerate financial market deepening Sharia economy and finance development
4 3 2 1 1
Source: Bank Indonesia
33
Ampl ple Li Lines of D Defen efense se Against ainst Ext xter ernal nal Shocks cks
Ample level of FX reserves to buffer against external shock
FX Reserves as of May 2019: US$120.3 billion
South th Korea
Renewed a 3 year KRW / IDR swap arrangement with the size of up to KRW 10.7 trillion / IDR 115 trillion in March 2017
Australia alia
Renewed a 3 year A$/IDR swap arrangement of up to A$10 billion or IDR 100 trillion in August 2018
Chia iang g Mai i Initia tiative tive Multila ltilatera terali liza zation tion (CMIM IM) ) Agreem eemen ent
Entitled to a maximum swap amount of US$ 22.76 bn under the ASEAN+3 (Japan, China, and Korea) FX reserves pool created under the agreement
Came into effect in 2010 with a pool of US$120 bn
Doubled to US$240 bn effective July 2014
Japan
Renewed a 3 year USD22.76 billion swap line with Japan on October 14th, 2018
The facility is available in USD and JPY
IMF Global al Financ ncial ial Safety ty Net
Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem
Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL)
Bilateral teral Regio iona nal Global al FX Reserv rve
Ampl ple Reserve ves Swa wap p Arrang ngeme ment nt
Source: Bank Indonesia
ASEAN N Swap p Arra rangem gemen ent (ASA)
Entitled to a maximum swap amount of USD600 million under ASA
The first MoU on the ASA was signed in 1977 among 5 ASEAN Central Banks with total facility USD100 million
Doubled to USD2 billion in 2005
Singapo apore
Established a one year SGD/IDR swap arrangement with a size up to USD10 billion (equivalent) in November 2018
China
Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 200 bn / USD 30 billion in November 2018
34
Solid id Policy cy Coordi dina natio tion
In Managin aging Financial ancial Market kets Volati tili lity ty
Source: Ministry of Finance First Line of Defense State’s Budget Buyback fund at DG of Budget Financing and Risk Management Investment fund at Public Service Agency (BLU) (min. level Aware) Stat ate Owned Enterprises (BUMN)’s Budget Related SOEs (min. level Aware) Social al Secur urity y Organ anizing zing Agency y (BPJS)’s Budget BPJS (min. level Aware) Second Line of Defense State’s Budget
State General Treasury Account (Rekening KUN) (min. level Alert) Accumulated cash surplus (SAL) (min. Level Crisis)
Gov’t Securities Crisis is Mana nage gement ent Proto tocol (CMP)
Bond nd Stabilizatio ilization n Framew ework rk
The enac actm tment nt of Law No. 9/201 016 6 regar arding ng Prevention ntion and Mitig tigat ation
nancial al Syste tem Crises as a legal foundation for the government to serves at the time of financial crisis in the form of Financi Financial al Syste tem Stabili ability ty Com
ttee (KSSK) KSSK membe bers: the Ministry of Finance, Bank Indonesia, the Financial Services Authority, and the Deposit Insurance Corporation Swap facility arrangements based on international cooperation Enhancing coordination between government institutions and continuous dialogue with market participants Implementing Crisis Management Protocol (CMP)
CMP
Implementing Bond Stabilization Framework (BSF)
BSF
35
23.3 34.8 20.3 39.6 68.8 21.9 35.2 19.5 40 63.5 20.8 34.4 21.5 39.6 62.7 10 20 30 40 50 60 70 80 Philippines Indonesia India Colombia Bulgaria 2019F 2018F 2017
Strengthe engthened ned Pri rivate te Ext xter ernal nal Debt ebt Ri Risk Man anag agement ement
Regulat atio ion Key Points Phase 1 Jan 1,2015 – Dec 31,2015 Phase 2 Jan 1,2016 – Dec 31,2016 Phase 3 Jan 1, 2017 & & beyond
Obj bjec ect of Regu gulatio ion Governs all Foreign Currency Debt Hedg dgin ing g Ratio io < 3 months 20%* 25%** > 3 – 6 months 20%* 25%** Liquid idit ity y Ratio io (< 3 months) 50% 70% Credi edit Ratin ing Not applicable Minimum rating of BB- Hedg dgin ing g transaction ion to meet hedg dge ratio io not necessarily be done with a bank in Indonesia Must be done with a bank in Indonesia Sanctio ion As of Q IV-2015 Applied Exter ernal Debt/ bt/GDP (%)
Debt Burden en Indicator (Exter ernal Debt/G /GDP DP) ) Rema mains Comp mparable e to Peers Rating
Enco cour uragin ing Corpor
ates Compli liance ance on Hedgin ing Ratio io & Liqui uidity ty Ratio io
Source: Bank Indonesia
Liquid idity ity Ratio* Hedging ging Ratio*
*Data as of Q4 2018, with total population 2.726 corporates
Regulatio tion on Pruden entia tial Prin incipl iple in Managing g Exter ernal Debt
Source: Bank Indonesia
Source: Moody’s Statistical Handbook, November 2018
2,466 , 90.5% 260 , 9.5%
≤ 3 m mont nths hs
2,545 , 93.4% 181 , 6.6%
> 3
mont nths hs
2,418 , 88.7% 308 , 11.3% Comply Not Comply
36
Healthy althy Ext xter ernal nal Debt ebt Compo posit sitio ion
Exte xterna nal l Debt Struc uctur ture
Source: Bank Indonesia, External Debt Statistics of Indonesia, May 2019 *Provisional Figures
The Struc uctur ture of Exte terna nal l Debt bt is Domin inate ted by Long ng-Te Term m Debt bt Exte xterna nal l Debt t Rema mains ns Manageabl ble Exte xterna nal l Debt t to GDP Ratio io & Debt bt to Expo xport t Ratio io
11.5 17.1 11.3 12.0 5.4 10.2 5.9 3.0 10.1 7.1 7.9 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 % Million USD External Debt External Debt Growth (rhs) 121.8 114.9 101.0 113.8 123.1 139.5 168.4 176.1 168.0 164.0 168.4 31.8 26.5 25.0 27.4 29.1 32.9 36.1 34.3 34.7 36.2 36.9 5 10 15 20 25 30 35 40 80 100 120 140 160 180 200 % % External Debt to Export Ratio External Debt / GDP Ratio (rhs) 18.3 21.2 20.7 21.7 21.2 20.2 17.9 17.1 15.6 15.8 15.8 14.9 15.4 16.1 81.7 78.8 79.3 78.3 78.8 79.8 82.1 82.9 84.4 84.2 84.2 85.1 84.6 83.9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Short Term External Debt Long Term External Debt 42.6 41.4 47.4 50.0 53.6 55.8 54.1 50.5 48.8 50.7 50.4 50.0 50.9 51.3 57.4 58.6 52.6 50.0 46.4 44.2 45.9 49.5 51.2 49.3 49.6 50.0 49.1 48.7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Private Debt Government and Central Bank Debt
37
Man anag ageable eable External rnal Debt bt Profile le
Short rt term non-ba bank nk corpo rporate debt (non affi filia liation) ion) repr pres esen ents ts
8.4%
total priva vate externa rnal debt
Priv ivate te Short-Term Term1 Priv ivate te Non-Bank Exter ernal Debt Positio tion
Af Affil iliat iation Non Af Affil iliat iation
US$145.2bn
72.8%
Debt US$26.7bn
13.4%
US$10.9 10.9bn
5.5% 5%
ate Ext. . Debt t US$16 16.8bn 8bn
8.4% 4%
ate Ext. . Debt t
Public ic Long Term 1 Priv ivate te Bank
US$27.7bn
13.9%
US$1 $199.6bn
51 51.3%
US$54.4bn
27.2%
External Debt Position as of April 2019
1 Based on remaining maturity
Source: External Debt Statistics of Indonesia, June 2019
US$389 89.3bn bn
US$189.7bn
48.7%
Debt
39
Integ tegrated ted Reform
to Prov
ide Higher her Quality ity
Econo
mic Growth wth
Struct ctur ural al reform rms to enhance ance potential ial growth wth and navig igate throug ugh chall lleng nges
State Budget that declines poverty and income inequality
competitive, and innovative real sectors
and investment policies that support growth, efficiency, and stability
policy to support macroeconomic stability
stability and sustainable current account deficit
and credible financial sector Fiscal al Real al Secto tor Mone netary ary & Finan ancial ial Sector tor
Sy Synergy gy in reform rm to boos
the more sustainab nable le and inclu lusiv ive growth wth
Source: Ministry of Finance
40
Growth th Momentum ntum is Expected cted to Contin tinue ue
Several al key drivers rs and strategie ies to accele lerate growt wth
Strateg egies ies to Encour
Growth
Key Driv iver ers
ion remains robust among
supported by benign inflation
estment ent grows stably supported by infrastructure acceleration, business climate improvement, rating upgrades, economic packages
and Import rt keeps improving driven by increasing demand and improving prices
from sever eral import rtan ant events ts such as Asian Games, Regional Elections, and IMF-WB annual meeting
intai tainin ning purchasing ing powe wer, r, boos
ing domestic ic demand and and support rting ing busines ess activity ity. Improve distribution channels Increased shopping events, creative industries and festivals in tourism areas Incentives for manufacture Developing e-commerce industry
uraging ing priv ivate te sector's r's role le in inves estment ent Strengthening and deepening financial markets Making a stable investment climate through political stability
nd servic ices es sector, especially ially touris urism Increasing foreign tourists arrival through cooperation with other countries by increasing the direct flight schedule Encouraging national creative industry growth
Risks & Challe halleng nges es
Globa bal econo nomic ic uncert rtain ainties ties: China economic rebalancing and its financial vulnerability, advanced countries policy normalization, geopolitic, and climate change
41
2019 State Bu Budget et (AP APBN BN 2019) 9)
Healthie hier, r, More Equit itable able, Self-Suf Sufficie icient nt
Healt althier hier
1.84%
GDP, the lowest since 2013
positive primary balance
to GDP ratio below 30%
GDP
More equitab uitable le
decentralization (increasing fiscal transfer to regions)
social protection programs
human capital quality improvement (inter-generational fairness)
Self lf suffic icie ient nt
tax revenue
the share
local currency bond issuance
financial deepening
export
Macroecono economic ic Assum umption ption
Growth th 5.3% Inflation tion 3.5% 3 months ths T-bill lls 5.3% Exchang nge Rate 15,000/US$ ICP 70/barrel Oil Lifting ing 775 thousands barrel/day Gas Lifting ing 1,250 thousands barrel/day
Dev evelop lopmen ent Target Unempl ploy
nt 4.8% – 5.2% Pov
erty ty 8.5 – 9.5 Gini ni ratio tio 0.38 – 0.39 HDI 71.98 REVENUE NUE Rp2,165.1 T Tax Rp1,786.4 T Non Tax Rp378.3 T Gran ant Rp0.4T EXPEND NDITURE ITURE Rp2,461.1 T Cen entr tral al Gov
ernmen ent Rp1,634.3T Tran ansfer er to Region gion Rp756.8 T Villag lage Fund nd Rp70.0 T
Deficit cit Rp296.0 T (1.84%
GDP) Prim imary ry Balance (Rp20.1 T) Debt Financing ing Rp359.3 T Inves estment ent Rp75.9T
Source: Ministry of Finance
42
Cred edible ible an and Health althier ier Budget et
…providing more certainty to all stakeholders
Indic icator 2017 17
2017
2018 18 2019 19 R-Budge Budget Realiz ization Budget dget Budget dget Economic ic growt wth (%, yoy)
5.2 5.1 5.4 5.3
Inflatio ion (%, yoy)
4.3 3.6 3.5 3.5
3-Mo Month Treasury y Bill (SPN PN) (%)
5.2 5.0 5.2 5.3
Exchang nge Rate e (Aver erage ge, IDR IDR/US USD)
13,400 13,384 13,400 15,000
ICP (USD/ba barrel)
48 51.2 48 70
Oil il Productio ction n (thousand nd barrel el/da day)
815 804 800 775
Gas Produ ductio ction n (mil illions ns barrel el/da day)
1.15 1.14 1.20 1.25 Macroeconomic Assum umptio ion for 2018 & 2019 Budget
Source: Ministry of Finance
Budget realization showed healthy and credible performances:
Descriptio ion (IDR Tril illio ion) 2016 Audit ited Realiza ization 2017 Audit ited Realizat ization 2018 2019 Budget Realizat ization (a.o. Dec 31) % % Realizat ization to Budget Proposed Budget Budget Realizat ization (a.o. May 31) % Realizat ization to Budget A. A. Revenue ues and Gran ants 1,555.9 1,666.4 1,894.7 1,942.3 102.5 2,142.5 2,165.1 728.5 33.6
1,546.9 1,654.8 1,893.5 1,928.4 101.8 2,142.1 2,164.7 727.7 33.6
1,285.0 1,343.5 1,618.1 1,521.4 94.0 1,781.0 1,786.4 569.3 31.9
262.0 311.2 275.4 407.0 147.8 361.1 378.3 158.4 41.9
9.0 11.6 1.2 13.9 1161.4 0.4 0.4 0.7 162.3 B. Expendit iture 1,864.3 2,007 07.3 2,220.7 2,202.2 99.2 2,439.7 2,461.1 855.9 34.8
1,154.0 1,265.3 1,454.5 1,444.4 99.3 1,607.3 1,634.3 530.8 32.5
684.2 765.1 847.4 836.2 98.7 840.3 855.4 288.2 33.7
469.8 500.2 607.1 608.2 100.2 767.1 778.9 242.6 31.1
710.3 742.0 766.2 757.8 98.9 832.3 826.8 325.1 39.3 C. C. Prim imar ary y Balan ance
2.1
1.9 D. Surplus us (Defic icit it)
40.9
% of GDP
E. Finan ancin ing 334.5 366.6 325.9 300.4 106.2 297.2 296.0 157.9 53.3
43
Increasing easing Tax ax Revenue ue Over er The Yea ears rs
Tax revenue in 2019 is expected to grow by 15,4% from 2018’s
supported by continuo inuous us tax reform rm
Source: Ministry of Finance
Tax Revenue nue (in IDR trilli lion) n)
1,146.9 1,240.4 1,285.0 1,343.5 1,548.5 1,786.4 13.7% 11.6% 10.8% 10.7% 11.6% 12.2%
1% 3% 5% 7% 9% 11% 13% 15%
200 400 600 800 1000 1200 1400 1600 1800 2000 2014 2015 2016 2017 2018 Outlook 2019 Budget
Ratio io to GDP (%) - RHSa
aTax ratio derived from tax revenue + revenue from natural resources/GDPto total revenue is increasing From 74% in 2014 to 82.5% in 2019
allowance, etc) are provided to maintain the sustainability of the investment climate and increase competitiveness
Improvin ving the dwelling time: Accelerating the service of Bonded Logistics Centre (Pusat Logistik Berikat) Simplifying the import procedure Import duty and tax payment 24x7 (with MPN G2) including customs service 24x7 Continuing the preve ventio ion of smug ugglin ing and controlling illegal al excise goods (cigarettes, alcohol) Effic icie ienc ncy of logistic ic costs Continuing the control of importers, exporters, and high risk excise policy (PIBT, PEBT and PCBT) synergy with DG Tax, army, police, and public prosecutor Developing/expanding Kemud udahan ahan Impor Tujua uan Ekspor (KITE TE) facility for SMEs Adding new excise goods (plas astic packag agin ing)
2019 CUSTOM OM AND EXCISE SE POLI LICY
Law enforcement a. Conducting fair law enforcement b. Improving audit quality by reforming governance Tax complian ance supervis visio ion a. Implementing the AEol and financial information access b. Extensification and enhancing supervision as a follow-up to tax amnesty c. Handling SMEs end-to-end by Business Development Services (BDS) approach d. Establishing DG Tax-DG Customs and Excise joint program e. Improving tax database f. Implementing the Compliance Risk Management (CRM) Strengthenin ing the taxat atio ion servic vice
2019 TAXATION ON POLICY ICY
44
Non-Tax ax Reven enue ue
Encour urag aged by rising ng in
prices, s, increas asing ing quali lity and volume me
service ices, s, and improving ing governan rnance ce (non-tax ax revenue nue in 2019)
Source: Ministry of Finance
Use of Integr grat ated ed Technol nology
system. Follo lowing ing-up up the amend ndment ment of non tax x revenu enue e law
service.
percent)
398.6 255.9 262.0 311.2 349.2 378.3 50 100 150 200 250 300 350 400 450 2014 2015 2016 2017 2018 Outlook 2019 Budget
Non-Tax ax Revenue nue (in IDR trillion) n)
Product uct Optimizat imization
expansion, environment sustainability, and business continuity. Improvin
g Services vices and Adjus usting ing Tariffs iffs
and optimizin imizing state e propert erty managem gemen ent. Incre reas asing ing Stat ate-Owned ned Enter erprises rises (BUM UMN) ) Divid vidend end
hflow low and financial ability by expanding business and executing government assignment.
Non-Tax ax Revenue nue General al Policy
45
Commitm tment nt to Contin tinue ue Streng ngth thenin ening Productive ductive Spending ing
Alloca cating ing budget to a more product uctive ive spending ing
2015 Rp1,183.3 T 20 2016 Rp1,154.0 T 2017 Rp1,259.6 T 2018 Outlook look
Rp1,453.6 T
Central Govern ernmen ent Spendin ing
Line Minis nistries ries
Non Line Mini nistries
Rp.
855,4 ,4 T Rp. Rp.77 778,9 T T
more targeted subsidies.
non- cash distribution.
the limited subsidies
diesel.
the use
renewable energy.
Ener ergy gy Subs bsidy idy Non Energy Subsidy idy Deb ebt Inte terest est
accountability
debt management.
choice
debt composition and utilization
hedging.
the growth
debt financing.
the quality
state apparatus by strengthening bureaucratic reform
social assistance
Expenditure
Expenditure management
subsidy policies that are more targeted.
Source: Ministry of Finance
2019
Rp1,634.3 T
and investment increase, followed by strengthening value for money.
disaster reconstruction rehabilitation, democratic agenda).
46
Investm estments ts in Huma man Cap apital tal Has as Been een Ra Rampe ped Up
20%
national nal budget is alloca cated for educa catio ion and anothe her 5% for healt lth
353.4 390.3 370.8 406.0 435.0 492.5
100 200 300 400 500 600
2014 Real 2015 Real 2016 Real 2017 Real 2018 Outlook 2019 Budget
IDR IDR tn
59.7 65.9 91.4 92.4 107.4 123.1
25 50 75 100 125
2014 Real 2015 Real 2016 Real 2017 Real 2018 Outlook 2019 Budget
IDR tn
Budg udget t for Educ ucatio tion n Program Budget t for Health lth Progra gram Quality and Access Improvement: a. Increasing the effectiveness of BOS (School Operations Aid) BOS is based on performance and affirmation. b. The continuity of Program Indonesia Pintar is followed by the increasing of target accuracy. c. Acceleration of the construction of school and university facilities (part of which is carried out by the Ministry of Public Works and DAK supervised by the Ministry of Public Works). d. Expansion of the affirmation/Bidik Misi Scholarship program. e. Allocating the endowment research. f. Enforcement fulfills the education budget by the Regional Government. g. Link and match vocational education.
Some Improvem ements ents are made for 2019 Educ ucatio ion Progr gram am Some Improvem ements ents are made for 2019 Health th Progr gram am
Quality and Access Improvement: a. Expansion of Contribution Aid Recipients (PBI) in the framework of National Health Insurance (JKN) (2015: 86.4 million people; 2019: 96.8 million people) followed by an increase in target accuracy. b. Improving services at first-level health facilities. c. Strengthening the stunting handling by specific and sensitive nutrition intervention in 160 regencies/cities (2018: 100 regencies/cities). d. Continuing the optimalization of BPJS health deficit handling policy:
47
Subsid bsidy Policy licy is Directed cted to be Better Targeted ted and nd Towar ward Non-cash cash Distribution tribution
throug ugh various us polici cies in energy and non-ene nergy subsid idy
Source: Ministry of Finance
(Tn IDR)
Ener ergy gy Subsidy idy increase ases, Part rtly ly due due to to the chang nge of
hang nge rate assum umption ption Oil and gas as subsidy idy Electr tric icit ity subsidy idy
100 100.7 59.3
Non Non-en ener ergy gy su subsi sidy dy amoun amount is is the he sam same wit ith government’s propos
al in in RAPB PBN 2019 Fert rtil iliz izer er sub ubsidy idy 29
29.5
el limit ited ed subsid sidy
mprovin ing the he tar arget et of
gas ben enef efic iciar iarie ies: households, micro businesses, and low- income fisherman
mprovin ing the he tar arget et sub subsi sidy accuracy for 450 and 900 VA users
ific icatio ion ratio io Supporting food security is fitted to the land area
119.1 106.8 97.6 163.5 160.0
100.0 150.0 200.0 2015 2016 2017 2018 Outlook APBN 2019
Energy Subsidy
BBM dan LPG 3 Kg Listrik
3.5% 67.4% 8.6% 10.3%
Tn IDR
66.9 67.4 68.8 64.7 64.3
40.0 60.0 80.0 2015 2016 2017 2018 Outlook APBN 2019
Non-energy Subsidy
Pupuk Pangan Benih PSO Bunga Kredit Program Pajak DTP
0.5% 6.0% 1.9% 0.8%
Busine iness credit dit (KUR UR) subsidy idy
12 12.0
KUR distribution target is Rp120 T with 7% interest rate for SMEs and Indonesian workers
Hous using ing inte terest est subs bsidy idy 3.5
For lo low-in inco come me popula pulatio ion with 100 thousand units publishing
Oil and Gas 3 Kg Electricity
Tn IDR
Fertilizer Food Crops Credit interest Tax borne
224 224.3
2019 Subsidy idy Budg dget et
48
Incr creas easing ing Tran ansfer sfer to Regions ions and nd Villag lage Fund nd (T (TKDD DD)
to support public ic service ice in the region
Source: Ministry of Finance
Increasing allocation
Transfer to Regions and Village Fund (TKDD) Budget proport
ionally ly (fits to the region’s needs and capacity, and also state financial capabilities) Supporting the regions financing needs (to provide services and developments) Focus
decrea easing ing ser ervic ice inequ equality lity between-region Sy Synchr hroniz nizin ing planning and budgeting
TKDD dengan belanja K/L Maintaining the 5 years sustainability development program (human resource development, connectivity, tourism destination, poverty reduction, village fund strengthening) Encourage eff effec ective, eff effic icie ient, an and pr produ
use
region’s budget with value for money as its principle.
573.7
623.1
710.3
742.0 763.6 826.8
11.8 8.6 14.0 4.5 2.9 8.3
04 06 08 10 12 14 16
200 300 400 500 600 700 800 900 2014 2015 2016 2017 2018 Outlook 2019 APBN DBH DAU DTK DID Otsus & DIY Dana Desa Growth (%)
Village Fund Trilion IDR %
49
2017 Achiev ievem ement ents
S State te Budget et
Value ue creatio ion
various us project cts and count ntry ry developmen ment
Health thcare and Socia ial Sec ecurity: ty:
92.1 million people
Educati tion:
million students
Infr frast structu ture: e:
Local Gover ernment ment Achi hievements ements Centr tral Gover ernmen ent Milest stones es
15.5% 101.7% 118 18.5% 7.4% 23.0% 27.8%
2016 (excluding Tax Amnesty and Asset Revaluation)
and excise over 2017 revised Budget, a 7.4% increase vs. 2016
2017 revised Budget, a growth of 17.7% vs 2016
government spending
growth vs. 2016, a 92.8% over 2017 revised Budget.
to village vs. 2016, 99.6% over 2017 revised Budget Roads: 1,033 km in development, 1,503 km maintenance, 9,789 km improvement Brid idges: 3,749 m bridge in development, 291 m maintenance, and 2,916m improvement Clas assroom: 1,351 new classrooms, 11,006 rehabilitation, 11,758 rural library collection Medic ical: Improved facilities in 347 hospitals and 3,873 clinics Tu Tuition: Reduced tuition costs for 46.6 million students and 5.6 million kindergarten- aged children Welfare: Increased welfare and work ethics of 1.7 million civil teachers in rural areas and compensated 41,000 teachers in special regions Rural al: 107,9 village roads, 89,200 health clinics, 178,800 toilets, and 107,700 connected clean water and 25,903 Ha irrigated lands Source: Ministry of Finance
50
Indonesia’s Tax Amnesty Program – A Succes ess Story ry
With more than 965, 965,900 taxpayers rs particip cipating ing in the program
Tax Amne nesty ty Resul ult (as of the end nd of March ch 31st
st, 2017)
Redemp mption tion Mone ney Assets ts Decla clared
114.2 4.2 18.8 .8
1.7 Preliminary Evidence Payment 1% Redemption Money 85% Tax Arrears Payment 14%
Reven enue IDR 134. 4.8t 8tn n (~1. 1.1% 1% GDP) P)
3,323.3 .36 861.8 .81 594.9 .99 85.59 Individuals 68% Individual SMEs 18% Companies 12% SMEs 2%
Compo posit ition n of Partic icipa ipants Based ed on Asset et Declared ed
0.04 0.15 0.20 0.62 1.10 0.58 0.17 0.12 0.04 Germany (2004) Belgium (2004) Italy (2009) Chile (2015) Indonesia (2016) India (1997) South Africa (2003) Spain (2012) Australia (2014) % of GDP 2.1 3.9 8.3 39.3 39.3 5.2 3.6 0.3
India (1997) Spain (2012) Chile (2015) Indonesia (2016) Italy (2009) South Africa (2003) Australia (2014)
% of GDP 3,698 1,036 147.1 .1
Onshore Declaration 76% Offshore Declaration 21%
Repatriation 3%
Asset Declared IDR 4,881tn (~39.4% of GDP) Source: Ministry of Finance
51
2019 Finan ancing cing Nee eeds
Fulfill lled from Governm rnment nt Securit uritie ies IDR 771.7 tn tn (92.5%) %) and Loan an IDR62.2 .2 tn tn (7.5%) %)
Source: Ministry of Finance
Financing need IDR833,94 T
Budget Deficit IDR296,0 T Non-Debt Financing (nett) IDR63,25 T
Investment Financing IDR75,9 T Lending IDR2,35 T Other Financing (IDR15,0 T)
Matured Debt IDR474,68 T
GS IDR382,74 T 80,63% Loan IDR91,94 T 19,37%
Financing Sources IDR833,94 T
Domestic Debt IDR653,66 T (78,38%)
Domestic GS IDR651,70 T (78,15%) Domestic Loan IDR1,96 T (0,24%)
Foreign Denominated Debt IDR180,28 T (21,62%)
Foreign Denominated Bonds IDR120,0 T (14,39%) Foreign Loan IDR60,28 T (7,23%)
2019 Matured T-Bills Issuance IDR54,0 T
Gross GS IDR825,70 T
GDS 70 – 75% Sukuk 25 – 30%
Debt to GDP ratio Projection
2018 2019
30,3% 30,0%
(Through auction & non-auction)
52
Gover ernment ment Securit urities ies
Indica icative ive Financi ncing ng Plan for 2019
Source: Ministry of Finance
SBN Neto [388,96] SBN Matures [382,74]
SBN Cash Management [54,00]
SBN Issuance Need [825,70]
Issuance
Composition
SBN N Rupiah piah Domestic [83% - 86%]
Auction [74% – 76%] Non-auction [9%
Foreign eign Denom
inated ted SBN SBN International [14% - 17%]
denominated SBN as co comple mplement nter Avoid id crowd wdin ing out
The tar target amo moun unt ca can be be adjust usted to the potential of other financing sources and financing needs.
*in triliun IDR
= 50% -60% of the gross target of SBN;
Semester I = 52% of the IDR SBN gross target.
53
Governm ernment ent Securit urities ies Reali liza zation ion
As
End
May 31, 2019 – in Trillio lion IDR
Government Securities realization as
May 31, 2019 IDR475.1 5.12 T T
57,5 ,54% 4% from the target From IDR4 R475 75,1 ,12 T T cons nsist ist
251.25 53% 66.59 14% 127.76 27% 29.52 6%
IDR Government Debt Securities FX Government Debt Securities IDR Sovereign Sharia Securities FX Sovereign Sharia Securities
Source: Ministry of Finance
388.96 825.7 187.53 (48.21%) 475.12 (57.54%) 200 400 600 800 1,000 Go Gover ernmen ment S t Securities N ities Net et Is Isuance N e Need eed f for 2 2019 Realization as of May 31, 2019 Budget 2019
54
Domestic Debt IDR595.5 tn (75%) Foreign Debt IDR197.8 tn (25%)
Domestic GS IDR591.0 tn Domestic Loan IDR4.5 tn Foreign Denominated Bonds (JPY, EUR, USD) IDR139.3 tn Foreign Loan (Program & Project) IDR58.5 tn
Financing Needs IDR793.3 tn
2018 Finan ancing cing Need eds
Fulfill lled from Governm rnment nt Securit uritie ies IDR 730.2 tn tn (92%) and Loan IDR6 R63.1 tn tn (8%)
Deficit it Rp325,9 T Debt t matu ture res Rp394,1 T (include clude Rp10,1 T of Priva ivate te Placem acemen ent) Inves estme tment t Financin ing g Rp65,7T Gov
ernmen ent t Guarant ntee Obliga igati tion Rp1,1T Other er financin ing g (Rp0,2T) T) Lendin ding g Rp6,7T
Source: Ministry of Finance
55
136.3 155.2 174.7 207.0 239.8 249.5 263.4 58.6 54.5 54.7 54.7 55.1 55.6 54.4 24.9% 24.7% 27.4% 28.3% 29.4% 29.8% 29.72% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
100.0 150.0 200.0 250.0 300.0 350.0 2013 2014 2015 2016 2017 2018 *) 2019**) Bond Loan Debt/GDP Ratio
1.0 3.3 1.3 0.5 1.1 2.1
2.1 2.7 4.8 5.6 9.0 3.3 3.8 USA Japan UK Brazil Italy S Africa Australia Turkey Indonesia China Korea Saudi Arabia Fiscal Deficit (% GDP) GDP Growth
Discipl sciplined ined an and Soph phist istica icated ted Debt ebt Port rtfolio lio Man anag ageme ement nt
Weig ighte ted Ave verage Debt bt Matur urity ity of ~8. 8.5 Years Defic icit it Produc uctivity tivity***
Source: MOF, World Economic Outlook – IMF October 2017
Well ll Dive versif ifie ied Across Different nt Currenc ncie ies
% of Yearly y Issuance ce Source: Ministry of Finance Source: Ministry of Finance Source: Ministry of Finance
Stable ble Debt bt to GDP Ratio Ove ver Rece cent nt Years
US$ bn Government Debt / GDP (%) Note: *Preliminary Data (unaudited) **as of end of May by using GDP assumption (interpolation), ***GDP growth and fiscal deficit numbers are average of 10 years (2007-2016) 9.8 9.4 9.1 8.7 8.4 8.5 2014 2015 2016 2017 2018 May 2019 ATM (in years) 53% 57% 55% 57% 59% 59% 60% 29% 29% 32% 31% 30% 30% 29% 12% 9% 8% 7% 6% 6% 6% 3% 3% 3% 4% 4% 4% 4% 3% 2% 2% 1% 1% 1% 1% 0% 20% 40% 60% 80% 100% 2013 2014 2015 2016 2017 2018 May-19 IDR USD JPY EUR OTHER
56
Well ll Bal alan anced ced Maturi rity ty Profile le With th Strong ng Resilie silience nce Again ainst st Exter ernal al Shocks cks
Declin clinin ing Inte terest t Rate te Risks ks Debt bt Maturity ity Profile ile Declin clinin ing Exch change Rate te Risks ks Upcomin ing Maturitie ities (Nex Next 5 Years)
IDR tn tn
Note: using GDP assumption
Source: Ministry of Finance
14.8 13.7 12.1 10.6 10.6 10.3 21.0 20.7 17.5 19.2 19.7 16.4 2014 2015 2016 2017 2018 May 2019 Variable rate ratio [%] Refixing [%] 10.7 12.2 12.1 12.1 12.3 11.9 43.4 44.5 42.6 41.3 41.0 39.9 2014 2015 2016 2017 2018 May 2019 FX Debt to GDP ratio (%) FX Debt to total debt ratio (%) 7.7 8.4 6.5 9.9 10.6 7.6 20.1 21.4 22.7 25.0 25.5 25.6 33.9 34.7 36.0 39.3 40.4 42.1 2014 2015 2016 2017 2018 May 2019 in 1 year (%) in 3 year (%) in 5 year (%)
116 217 238 187 191 253 52 140 144 135 191 33 145 96 91 143 4 99 27 88 42 12 21 18 15 28 -
71 130 151 168 161 156 151 105 102 120 68 29 25 24 21 15 34 8 27 32 3 2 2 34 23 30 30 19 37 26 19.8
100 150 200 250 300 350 400 450
IDR Denominated (Triliun Rp) Other Currencies (Triliun Rp)
57
Holders ers
Trad adab able le Centr ntral al Gover ernme nment nt Secu curi rities ies
More Balance nce Ownership rship In Terms
Holders rs and Tenors rs
Foreig eign Own wnership p of Gov’t Domestic Debt Secu ecuritie ities by Tenor Hold lders of
Source: Ministry of Finance
31.0% 23.9% 22.5% 23.4% 20.3% 20.1% 30.8% 37.8% 39.9% 36.8% 42.0% 42.0% 38.1% 38.2% 37.5% 39.8% 37.7% 37.9% Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 May-19 Foreign Holders Domestic Non-Banks Domestic Banks 4.6% 3.2% 3.5% 5.0% 4.3% 1.3% 3.7% 1.3% 5.3% 5.1% 1.9% 1.8% 15.2% 11.8% 17.8% 17.3% 18.4% 29.7% 33.6% 39.0% 37.4% 35.6% 36.8% 35.3% 42.8% 44.7% 36.0% 37.0% 38.6% 32.0% 38.1% 38.2% 37.5% 39.8% 37.7% 38.0% 0% 20% 40% 60% 80% 100% Dec 14 Dec 15 Dec-16 Dec-17 Dec-18 May-19 0-1 ≥1-2 ≥2-5 ≥5-10 ≥10 %Foreign Ownership of Total
58
Owner ersh ship ip of IDR R Tra rada dable ble Cen entr tral al Governm rnment t Securities urities
1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company and Pension Fund. 2) Others such as Securities Company, Corporation, and Foundation. *) Including the Government Securities used in monetary operation with Bank Indonesia. **) net, excluding Government Securities used in monetary operation with Banks.
(IDR DR tn) Descr criptio iption Dec-15 15 Dec-16 16 Dec-17 17 Dec-18 18 May-19 19 Banks* nks*
350. 0.07 07 23.9 .95% 5% 399. 9.46 46 22.5 .53% 3% 491.6 .61 23.4 .41% 1% 481. 1.33 33 20.3 .32% 503. 3.90 90 20.1 .10% 0%
Govt Institutio titutions ns (Bank nk Indone nesia ia**)
148. 8.91 91 10.1 .19% 9% 134. 4.25 25 7.57 57% 141.8 .83 6.75% 75% 253.47 3.47 10.70 .70% 252.30 2.30 10.07% .07%
Bank Indonesia (gross)
157.88 8.90% 179.84 8.56% 217.36 9.18% 233.44 9.31%
GS used for Monetary Operation
23.63 1.33% 38.01 1.81% (36.15) (1.52%) (18.85)
Non-Banks nks
962. 2.86 86 65.8 .87% 7% 1,239 39.5 .57 69.9 .90% 0% 1,466 66.33 .33 69.83% .83% 1,633 33.65 .65 68.98 .98% 1,750 50.24 .24 69.83% .83%
Mutual Funds
61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 107.08 4.27%
Insurance Company and Pension Fund
221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 449.13 17.92%
Foreig eign Hold lders
558. 8.52 52 38.2 .21% 1% 665. 5.81 81 37.5 .55% 5% 836.1 .15 39.8 .82% 2% 893. 3.25 25 37.7 .71% 949. 9.56 56 37.8 .88% 8% Foreign Govt's & Central Banks 110.32 7.55% 120.84 6.81% 146.88 6.99% 163.76 6.91% 159.58 6.37%
Individual
42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 84.20 3.36%
Others
78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 160.27 6.39%
Total
1,461.85 100.00% 1,773.28 100.00% 2,099.77 100.00% 2,368.45 100 100.00% 2,506.44 100.00%
Source: Ministry of Finance
60
To Maint ntain in Macroe
cono nomi mic and Fina nanc ncial ial Sy Syste tem Stabili lity ty
Source: Bank Indonesia
Implementing Macro prudential Intermediation Ratio (RIM) Implementing Macro prudential Liquidity Buffer (MLB) Electronification: Social program, e-payment for Government Financial technology National Payment Gateway (NPG) QRIS (QR Indonesia Standard) Expanding National Clearing System (SKNBI) services Developing market instruments for financing infrastructure Developing financial market infrastructures Rupiah Interest Rate Swaps (IRS) and Overnight Index Swap (OIS) Domestic non-Deliverable Forward (DNDF) Developing the Commercial Papers (Surat Berharga Komersial) Controlling inflation: TPIP, TPID Structural reforms: Government Financial deepening & stability: KSSK (Financial System Stability Committee), OJK (Financial Services Authority) Coordinating efforts in reducing Current Account Deficit Pre-emptive, front loading and ahead-of-the-curve policy rate response Stabilize exchange rate consistent with fundamentals Accelerate implementation of reserve requirement averaging Maintaining a monetary
towards increasing available liquidity (FX swap)
Moneta etary ry Polic licy Coordina inatio ion with
er Authorit ities ies Financ ncia ial Marke rket Deepening ning Macro- prude udentia ntial Polic licy Paymen ent Sy System Polic licy
61
Ban ank Indo donesia esia Policy cy Mix: x: June 2019
The BI Board of Governors ernors agreed eed on 19 19th
th and 20th th June
e 2019 9 to hold the BI 7-Day Rever erse e Repo
er Rupia iah Reserve rve Requ quirem iremen ent by 50bps ps.
Constantly monitors global financial market dynamics and the external stability of the national economy when considering reductions to the policy rate in line with low inflation and the current need to stimulate domestic economic growth. Holds the BI 7-Day Reverse Repo Rate at 6.00%. Bolsters payment system policy and financial market deepening efforts to support economic growth, while strengthening coordination with the Government and other relevant authorities to sustain economic stability, stimulate domestic demand, increase exports and tourism as well as attract foreign capital flows.
Source: Bank Indonesia
Continues to focus the monetary
strategy towards ensuring adequate liquidity is available in the money market. Maintains an accommodative macroprudential policy stance to catalyse bank lending and expand economic financing. Has decided to lower the rupiah reserve requirement for conventional and Islamic banks by 50bps to 6.0% and 4.5% respectively, with the average reserve requirements remaining at 3.0%, to ensure adequate liquidity in the banking industry in order to finance economic activity, effective from 1st July 2019.
*while also maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 5.25% and 6.75%, respectively.
62
Princi ciple les
Average ge Re Reserve erve Re Requi uireme rement nt Ra Ratios
vement ent
Substa tance Old Old New Effect ective ive Dat ate a. Additional rupiah average reserve requirement for conventional commercial banks Fixed RR: 5% Average RR: 1.5% RR: 6.5% Fixed RR: 4.5% Average RR: 2% RR: 6.5% 16th July 2018 b. Annulment of demand deposit renumeration 2.5% (from 1.5% RR) 0% 16th July 2018 c. Implementation of foreign exchange average reserve requirement for conventional commercial banks Fixed RR: 8% Average RR: 0% RR: 8% Fixed RR: 6% Average RR: 2% RR: 8%* 1st October 2018 d. Implementation of average reserve requirement for Islamic banks Fixed RR: 5% Average RR: 0% RR: 5% Fixed RR: 3% Average RR: 2% RR: 5%* 1st October 2018
* Complemented by harmonisation feature to align with the average reserve requirement in rupiah feature for conventional commercial banks (e.g. Calculation period, lag period, and Maintenance period of 2 weeks)
in average reserve requirement is a follow up to the monetary policy
framework reform implemented by Bank Indonesia since 2016.
policy
framework reform started in August 2016 as BI7DRR replaced BI Rate as policy rate. This was then strengthened in 1st July 2017, by the implementation
the average reserve requirement in rupiah for conventional commercial banks at 1.5% out of the total 6.5% of GDP reserve requirement in Rupiah. The reformulation is also backed by various efforts in financial market deepening.
banking liquidity management, enhance banking intermediation function, and support efforts in financial market deepening. This multiple targets will in turn improve the effectiveness of monetary policy transmission in maintaining economic stability.
Consid ider eratio tions for r the Average rage Reserv rve Requir irem ement ent Ratio ios Impro rovem emen ent t
Source: Bank Indonesia
63
Pri rincipl iples
Mac acropr prudential dential Inter termedia mediatio tion Ra Ratio (MIR) R) an and Mac acropru rudentia dential Li Liqu quidity idity Buffer er (MLB LB)
Striving to stimulate the bank intermediation function and liquidity management, Bank Indonesia issued Bank Indonesia Regulation (PBI) No. 20/4/PBI/2018 and Board
Governors Regulation (PADG) No. 20/11/PADG/2018 concerning the Macroprudential Intermediation Ratio (MIR) and Macroprudential Liquidity Buffer (MLB) for Conventional Commercial Banks, Sharia Banks and Sharia Business Units. The policy is expected to stimulate the bank intermediation function to the real sector congruent with sectoral capacity and the economic growth target in compliance with prudential principles, while also
the issue
liquidity procyclicality. The regulation is effective for conventional commercial banks from 16th July 2018 and for sharia banks from 1st October 2018.
Consider sideratio ions for Macr croprudential ial Instr trument ments Macr cropr prudenti tial Intermedia mediatio ion Ratio io (MIR) IR) and Macr cropr prudenti tial Liquid idit ity Buff ffer (MLB) B)
1 2 3 4
This macroprudential policy instrument is countercyclical and can be adjusted in line with prevailing economic and financial dynamics.
Source: Bank Indonesia
64
Pri rincipl iples
Mac acropr prudential dential Inter termedia mediatio tion Ra Ratio (MIR)
Regu gula lation ion MIR (Con
entio tional al Com
ercial ial Bank) nk) MIR Shar aria ia (Shar Sharia ia Banks nks and Sharia aria Busine iness Units) ts)
1 MIR Accounting Formula Credit + Owned Bond Deposit + Issued Bond Financing + Owned Sharia Bond Deposit + Issued Sharia Bond 2 Rate and Parameters Ceiling 92% 94%* Floor 80% 84%* Minimum Capital Adequacy Requirement 14% Upper disincentive parameter 0.2 Lower disincentive parameter 0.1 Ceiling 92% 94%* Floor 80% 84%* Minimum Capital Adequacy Requirement 14% For Sharia business units, the Minimum Capital Adequacy Requirement is the same as that of the parent conventional commercial bank Upper disincentive parameter 0.2 Lower disincentive parameter 0.1 3 Scope of credit/financing and deposits to calculate MIR / MIR Sharia Credit: rupiah and foreign currency Deposits in rupiah and a foreign currency: (i) demand deposits, (ii) savings deposits; and (iii) term deposits, excluding interbank funds Financing: rupiah and foreign currency Deposits in rupiah and a foreign currency: (i) wadiah savings; and (ii) unrestricted investment funds, excluding interbank funds 4 Source of Data Monthly Commercial Bank Reports Monthly Sharia Bank Reports 5 Criteria for securities held Corporate bonds and/or corporate sukuk Corporate bonds and/or corporate sukuk Issued by a nonbank corporation and by a resident Offered to the public through a public offering Equivalent to investment grade rating affirmed by a rating agency Administrated by an authorised securities institution
*Effective on July 1st, 2019
65
Pri rincipl iples
Mac acropr prudential dential Inter termedia mediatio tion Ra Ratio (MIR)
Regu gula lation ion MIR (Con
entio tional al Com
ercial ial Bank) nk) MIR Shar aria ia (Shar Sharia ia Banks ks and Shar aria ia Busine iness Units) ts)
6 Percentage
the securities held 100% 7 Criteria for securities issued medium-term notes (MTN), floating rate notes (FRN) and/or bonds other than subordinated bonds sharia-compliant medium-term notes (MTN) and/or sukuk other than subordinated sukuk Issued by a nonbank corporation and by a resident Offered to the public through a public offering Equivalent to investment grade rating affirmed by a rating agency Administrated by an authorised securities institution 8 Securities Reporting Offline delivery mechanism (email) 9 Scope of deposits to meet DD MIR /DD MIR Sharia Average daily total deposits in rupiah at all branch offices in Indonesia Including rupiah liabilities to a resident and non-resident third-party nonbank, consisting
(iii) term deposits, and (iv) other liabilities Average daily total deposits in rupiah at all branch
and sharia business units in Indonesia Including rupiah liabilities to a resident and non- resident third-party nonbank, consisting
(i) wadiah savings; (ii) unrestricted investment funds, and (iii) other liabilities 10 Relaxation of DD MIR/Sharia DD MIR Bank Indonesia may relax the provisions of the DD MIR/Sharia DD MIR based on credit/financing disbursement and fund accumulation The provisions may be relaxed based on a request from a conventional commercial bank, Sharia bank or Sharia business unit or a recommendation from the Financial Services Authority (OJK) Conventional commercial banks, Sharia banks or Sharia business units that receive the relaxed policy are exempt from sanctions
66
Pri rincipl iples
Mac acropr prudential dential Li Liqu quidi idity ty Buffer er (MLB) LB)
Regu gula lation ion MLB (Con
entiona ional Commercial ial Bank nk) MLB Sharia aria (Sha haria ria Bank nks)
1 Rate 4% of rupiah deposits (including Sharia Business Units deposits) 4% of rupiah deposits 2 Components Securities denominated in rupiah held by a conventional commercial bank that may be used for monetary operations (including SBI/SDBI/SBN); and Sharia-complaint securities denominated in rupiah held by an Sharia business unit that may be used for sharia-compliant monetary operations (including SBIS/SBSN) Sharia-complaint securities denominated in rupiah held by an Sharia bank that may be used for sharia-compliant monetary operations (including SBIS/SBSN) 3 Calculation Formula Percentage of rupiah securities held by a conventional commercial bank to rupiah deposits Percentage of sharia-compliant rupiah securities held by an Sharia bank to rupiah deposits 4 Flexibility Under certain conditions, the securities used to meet the MLB may be used for repo transactions to Bank Indonesia for
market
totalling no more than 2% of rupiah deposits Under certain conditions, the securities used to meet the sharia MLB may be used for repo transactions to Bank Indonesia for open market
deposits 5 Sources
Data
Deposits Monthly Commercial Bank Reports Rupiah deposits to calculate MLB are the average daily total deposits at all branches in Indonesia Rupiah deposits include: (i) demand deposits, (ii) savings deposits; (iii) term deposits, and (iv) other liabilities Monthly Sharia Bank Reports Rupiah deposits to calculate sharia MLB are the average daily total deposits at all branches in Indonesia Rupiah deposits include: (i) wadiah savings; (ii) unrestricted investment funds, and (iii)
liabilities
67
Relaxing ing the Loan-to to-Value lue (LTV) and Financi ncing-to to-Val alue ue (FTV) Ratios
The LTV/FTV TV relaxa axati tion
is conducte ducted while taking into to accoun count aspect pects
pruden dential al and consumer mer prot
ection
needs through housing loan, specifically by adjusting the LTV ratio for property loan and the FTV ratio for property financing for the 1st facility, 2nd facility, etc., making the largest LTV ratio for property credit and FTV ratio for property financing as shown in the table below.
“-“= The LTV rate depends on each bank’s risk management
mechanism to a maximum of 5 facilities without taking account of the orders
loan/financing disbursement of indent property:
Source: Bank Indonesia
68
Prudent ntial ial aspect cts
Relaxin xing the Loan-to to-Value alue (LTV) V) and Financi ncing ng-to to-Value alue (FTV) V) Ratios
1. The requirements
the LTV ratio for property credit and FTV ratio for property financing are as follows: i. The net ratio
NPL to total credit
NPF to total financing must not exceed 5%; and ii. The gross ratio
property NPL to total property credit
property NPF to total financing must not exceed 5%. 2. Banks must make sure that there is no loan transfer to another borrower at the same bank
different bank for tenors
less than 1
requirements are valid for banks that will disburse pre-order property loan/financing. 3. Banks are required to comply with prudential principles when disbursing loans. 4. Gradual loan liquidation is
allowed for developers that comply with bank’s risk management policy (e.g.the business feasibility
the developer). 5. Banks are required to ensure that transactions to disburse loans (including down payment) and gradual liquidation must be processed through the debitor and developer/seller’s bank account.
LTV / FTV Exemptio ions ns
Central government
government loan / financing programs are exempt from this regulation.
Relaxing ing the Loan-to to-Value lue (LTV) and Financi ncing-to to-Val alue ue (FTV) Ratios
Source: Bank Indonesia
69
Pri rincip iples les
Dome mestic stic Non Del eliv iver erable able Forw rwar ard (DND NDF) F) Tran ansac actio tion
Purpo poses
1. To support the effort
stabilizing the Rupiah exchange rate through the additional
alternative hedging instruments 2. To support the development and deepening
the domestic financial market 3. To increase the confidence
exporters, importers, and investors in conducting economic and investment activities through the flexibility
hedging transactions against Rupiah currency risk
Ge General Provision visions
Domestic ic Non-Deliv liverable le Forwar ard Tran ansaction action (DND NDF Tran ansaction) action)
Plain vanilla derivatif transaction
foreign exchange against rupiah in the form
forward transaction with fixing mechanism in the domestic market
Forwar ard Tran ansactio tions ns
Forward Transactions are sell/purchase foreign currencies againts rupiah whereas the delivery
funds shall be performed in more than 2 days after the transaction date
Fixing ing Mecha hanis nism
Transaction settlement mechanism without full movement
funds by calculating the difference between rate
the transaction date and reference rate in JISDOR
a specified future time agreed in the contract (fixing date)
Other her Def efin initions itions
The definition
derivative transaction
foreign exchange againts rupiah, Forward Transaction, Spot Transaction, Customers, Foreign Party is referring to Bank Indonesia regulations regarding foreign exchange transaction againts rupiah
Source: Bank Indonesia
70
Pri rincip iples les
Dome mestic stic Non Del eliv iver erable able Forw rwar ard (DND NDF) F) Tran ansac actio tion
Bank can perform rm DNDF Trans nsact actio ions ns as follows:
Bank – Customer Bank – Foreign Party
Bank – Bank
Tran ansaction action betwe tween en:
Can
be performed to hedge rupiah exchange rate risk.
have Under erly lyin ing Tran ansa sact ctio ions:
Inclu ludin ing all l fol
lowin ing g activit tivities ies : a. Trade of goods and services b. Investments, loans, capital, and other investements. c. Banks credit or financing in foreign currencies (specifically for transactions between bank and customers) Exclu cludin ing foll llowin ing activit tivities ies: a. Bank Indonesia certificates; b. Placement of funds with bank; c. Unwithdrawn credit facilities; d. Documents of foreign currencies sales againts rupiah; e. Money transfer by fund transfer companies f. Intercompany loan g. Money changer activities.
2. Nominal
DNDF Transactions ≤ Nominal
Underlying Transactions 3. Tenor of DNDF Transactions ≤ Tenor of Underlying Transactions
Source: Bank Indonesia
71
Pri rincip iples les
Dome mestic stic Non Del eliv iver erable able Forw rwar ard (DND NDF) F) Tran ansac actio tion
Trans nsacti action Settlement nt
Fixing mechanism
rate: JISDOR for USD/IDR and BI FX Transaction MidRate for non-USD/IDR
currency : IDR
and early termination are not allowed Roll
er and early rly termina
nation for
DNDF NDF is prohib hibite ited However, unwind can be done by
the reverse DNDF transactions
Cover Hedging ing
Bank may conduct DNDF Transactions with Bank Overseas for cover hedging purpose.
Transactions: DNDF Transaction between Bank and Customer/Foreign
Hedging Cus usto tomer er / / Foreig eign Part rty
Bank Overseas seas Bank
Hedging
Notes: Customer A conduct DNDF transactions with Bank B, and so Bank B can conduct DNDF transactions with
Bank for the purpose
cover hedge.
Cover Hedging
Source: Bank Indonesia
72
Overnight rnight Inde dex Swap aps (OIS) IS) & I Inter erest est Ra Rate Swap aps (IRS RS)
Source: Bank Indonesia
As hedg dging ing instrum rument nts against ainst Rupiah iah inte tere rest t rate te chang nges es
IR IRS is a contract between two parties to periodically exchange rupiah interest rate flows during the contract period or at the completion of the contract based on certain notional amount. IRS pricing is based on JIBOR. OI OIS is an interest rate swap agreement based
Encourage price transparency in the rupiah money market Strengthen monetary policy transmission Provide alternative hedging instruments against rupiah interest rate changes Support securities market deepening in Indonesia
1 2 3 4
IndoNIA & JIBOR OIS transaction with IndoNIA as benchmark rate Alignment between JIBOR and OIS interest rate Improvement of IRS transaction liquidity
Strengthening reference rate based on real transactions
73
OIS an and IRS RS Tran ansac actio tions: ns: Gener neral al Provisio ions ns
Source: Bank Indonesia
Market Pl Players
and non-bank institutions, and also foreign parties. Transa sact ctio ion Ne Needs An Analys lysis
IRS or OIS transaction with a customer and/or foreign party on behalf of the customer and/or foreign party is required to have an analysis on the need of rupiah interest rate derivative transactions. Market Co Conventi
transactions, the respective bank is bound by market conventions agreed upon by market players through industry association including the Indonesian Foreign Exchange Market Committee. Sett ttlement ment. Settlement can be performed as a netting payment and every transaction has to be settled in Rupiah. Clos Close-out netting can be applied under predetermined conditions.
Market Conventions
Calcu cula lati tion Base ACT/36 360 IndONI NIA Index ex with 5 5 decimal als Compound Floatin ing Rates (CFR) based
5 decimal als Inte terest Payment based
Nettin ing Notio ional al
Net inter erest st payment in in IDR with decimal als Settle lemen ent Date = 1 busin iness ess days after er Maturit ity Date (MD) OIS Quota tati tion rates es based
2 decimal als Quotatio ion : 1W, 2W, 1M, 2M, 3M, 4M, 5M, 6M At the 1st phase, OIS settle lemen ment will
be done at the end
the OIS tenor (MD+1bd). ).
74
Ban ank Ind ndonesia
Policy icy Mix: 201 015 – 201 017
property loans (Sept)
surveillance & Crisis Management Protocol (April)
(Nov)
(FinTech) Office (Nov)
domestic transaction (March)
(GNNT)
time of distress (capital reversal) or large mis-alignment
25bps to 4.50% (Aug)
cut of 25 bps to 4.25% (Sept)
100bps to 6.5% (Feb)
7.5% (Nov)
month) to BI 7-day Reverse Repo Rate (Aug) 1. 1. Monetary y Polic icy Polic icy Rate Reser erve e Requir ireme ement 2. 2. Excha hange ge Rate Polic icy 3. 3. Macropr pruden entia tial Polic icy
property and automotive loans (June)
Averaging (Aug): RR fixed 5%; RR Averaging 1.5%
macroprudential regulation
Ratio (FFR) 4. 4. Payme ment System em Polic icy
(June)
management underway 2015 2015 2016 2016 2017 2017
Source: Bank Indonesia
75
3.00 4.00 5.00 6.00 7.00 8.00
Stabl able Monetary tary Environment ment Despite spite Chal alleng lenges es
Rupia iah Exc xchang nge Rate Rema main ins Compar parable ble to Peers Well ll Mainta ntain ined Inflatio lation Ensur ured Price ce Stability bility Streng ngth thene ned Monet netary Polic icy Frame mewo work Credit Growth th Profile ile
BI 7Day RR Rate: 6.00
(%)
LF Rate: 7.00 LF Rate: 6.75 75 BI Rate: 6.50 DF Rate: 5.25
19 August 2016 16
The New Monetary Operation ion Framewo work Source: Bank Indonesia
YTD 201 2019 vs 201 018
8.38 8.36 3.35 3.02 3.61 3.13 2.82 2.57 2.48 2.83 3.32
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00
2 4 6 8 10 12 14 16 18 20 2013 2014 2015 2016 2017 2018 Jan-19 Feb-19 Mar-19 Apr-19 May-19 (%) CPI (%, yoy) - rhs Volatile Food (%, yoy) - lhs Administered (%, yoy) - lhs Core (%, yoy) - lhs 11.0 10.5 14.3 9.1 2 4 6 8 10 12 14 16 18 20 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 2015 2016 2017 2018 2019 %,yoy Total Growth Working Capital Loans Investment Loans Consumption Loans
2.08 0.20 0.83 0.37
3.51 1.51 1.28 0.77 0.54 0.06
0.0 2.0 4.0 6.0 THB JPY PHP IDR BRL INR CNY SGD MYR ZAR EUR KRW TRY point-to-point average
%
Data as of June 19th, 2019
76
Re Regio gional al Inflatio tion unde der Control
On May 2019, all provinc inces es record rded ed inflat latio ion (yoy) within in natio ional al infla latio tion targe get corr rrid idor and lowe wer r than the historic ical al average rage of the past three ee years
west t infla latio tion n was recorded ed in Bali-Nus usa a Tengga gara ra (2.74%, yoy), Java a (3.27%, %, yoy), and Sumatr tra a (2.28%, %, yoy).
Source: Bank Indonesia
77
4 Strategies gies to Ac Achi hieve ve the Infl flation tion Target
Achieving inflation at 3,5%±1%
core inflation
volatile food stability at 4-5%
administered price inflation
2018-20 2019 Target et
Stabilizing the price
rdabilit bility Achieving inflation at 3,0%±1%
core inflation
volatile food inflation less than 4%
administered price inflation
20 2020 20-20 2021 Target et
Managing demand side Strengthening production, Government food reserves and food export-import management
lability bility
Strengthening institution Encouraging trade cooperation between regions
tribu ibution ion
Improving trade infrastructure Improving data quality
tive Communi nication ion
Strengthening central-regional coordination
Source: Bank Indonesia
4 Strateg egies ies
78
Impr proving ving the Effectiveness ectiveness
Moneta tary ry Polic icy Tran ansmissio smission
Bank nk Indones nesia ia has instit tituted ted a Reformulat latio ion n of Moneta netary ry Policy licy Operat ratio ions ns Fra ramework k which ich cons nsis ists ts of 3 pill llars; ; (1 (1) implem plemen entatio tation of BI 7da day Rever erse e Repo po Rate; e; (2 (2) implem plemen entatio tation of reser erve e requir irem emen ent t aver eragin ging; g; and (3) ) contin inue e to implem plemen ent t money ey marke rket t deepen penin ing g prog
Enhancement
monetary policy signal Enhancement
banking liquidity management Implemen ementa tatio tion
BI 7 Day Revers erse Repo Rate Implem emen enta tatio tion
Reserve Requir iremen ent (RR) Averag aging ing Refor
ulatio ion
Moneta etary ry Polic licy Operatio iona nal Framew ework rk Enhancement
instruments and transactions Implem emen enta tatio tion
Money ney Mark rket et Deepen ening ing Progr gram am
Source: Bank Indonesia
79
Enhan anceme cement nt
Monetary tary Oper eratio tions ns Fram amew ework
minutes.
minutes.
CURR RREN ENT JIBOR BOR (as per June 1st, 2016) PREVIOUS IOUS JIBOR BOR
Source: Bank Indonesia
80
Intermedia ermediatio tion is Exp xpecte cted to Contin tinue ue Exp xpan anding ding in 2019
Ba Bankin king in inter termedi ediation tion is is re rela lative tively ly stable, table, while hile multif ltifin inance fin inancin ing gro rows 4.52 52% (yoy) in in April pril 2019. At At the the same peri period
domes estic tic capit pital mark rkets ets capit pital is is rais isin ing (partic icularly ly right issues es and corpo rporate te bond nd issuance) e).
Source: Financial Service Authority (OJK)
Financin ing distr trib ibute ted by multif tifin inance compa panies grows ws at 4.52% (yoy). ). The gross premi mium um reve venu nue of the dome mestic tic insur uranc nce indust ustry mainta ntain ins its growth th. Capita ital l raisin ing throug ugh rights ts issue ues and corpor porate te bond nd issua uanc nce is picki cking ng up. Banki nking ng inte termediatio tion n grows ws 11.05% (yoy) as of April il 2019.
5306 11.05% 0% 2% 4% 6% 8% 10% 12% 14% 16% 1,000 2,000 3,000 4,000 5,000 6,000 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 IDR Tn Bank Loans Growth (yoy) - rhs 1.3 5.49 31 20 40 60 80 100 120 140 160 180 2012 2013 2014 2015 2016 2017 2018 May 2019 IDR Tn IPO Rights Issue Corporate Bond & Sukuk 36 71 110 148 50 100 150 200 250 300 350 400 450 500 2012 2013 2014 2015 2016 2017 2018 Jan'19 Feb'19 Mar'19 Apr'19 IDR Tn 441 4.52% 0% 2% 4% 6% 8% 10% 350 375 400 425 450 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 yoy IDR tn Financing Growth (rhs)
81
Finan ancia cial Institutio titutions ns Re Remain ain Ro Robust
CAR of the e banking g secto tor rema mained ed stable e at a high h level
19, , CAR & Tier-1 Capit ital was 23.78% & & 21.98% respec ectiv tivel ely. Risk-based ed capita tal (RBC) C) of the insurance e industr try sligh ghtl tly y increa eased sed, well above the mi minimu mum m thres eshol hold (120%). Gearin ing g ratio of mu multifi finance comp mpanies es was 2.82 time mes, provid idin ing g amp mple room m for future e growth. h. Profita itabil ility ty of the e banking g secto tor was relativ tivel ely stable. e.
Dom
estic tic financial instit titutio tions main inta tain ined ed a gener erall lly robust t conditio dition capit pital is stea eadily dily well ll abov
e the minim imum req equire remen ents ts, while ile prof
itability ility and d lever erage ge are re still ll consta tantly tly at a suffic icien ient t level el.
Source: Financial Service Authority (OJK) 23.78 21.98 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 CAR Tier 1 4.87 2.42 1.0 2.0 3.0 4.0 5.0 6.0 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 % Net Interest Margin Return on Assets 2.82 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 437% 310% 200% 230% 260% 290% 320% 350% 350% 400% 450% 500% 550% Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 Life Insurance (Lhs) General Insurance (rhs)
82
Man anag ageable eable Credit dit Ri Risks ks with Sufficie icient Li Liqu quidi idity ty
Ban Banks ks are re eq equip ipped ed wit ith suffic icien ient li liquid id assets
eanwhile, while, in insurance ce in indu dustry try al also de demon
trates ates ade adequate ate lev level el of
inves vestme
redit it risk is is also managed ged at at a low
el as as non-per perfor
ing loa
performin ing financin ing remains ns belo low the thres esho hold ld.
The ratio of liquid id assets to deposit it and LA/NCD CD in the banking g secto tor was ma maintained ed at a suffic icient ient level el. As of Apr-19 19, the gross & net NPL L ratios of the banking g secto tor were e 2.57% & & 1.15% respe pectiv tively, still well ma maintained below the thres esho hold. NPF ratio of the mu multifi finance industr try rema mained ed low at 2.76% as of Apr-19. 19. Inves estmen tment t adequacy ratio in the insurance e industr try y was steadly above 100 100%. %.
Source: Financial Service Authority (OJK) 96.51 20.15 6 10 14 18 22 26 30 60 70 80 90 100 110 120 130 140 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 % % Liquid Assets to Non-Core Deposits (lhs) Liquid Assets to Deposit (rhs) 1.15 2.57 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 % NPL Net NPL Gross 2.76% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 116.94 173.76 90 110 130 150 170 190 210 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 % Life Insurance General Insurance
83
Man anag ageable eable Mar arket et Ri Risks
Fin inan ancial al institutions’ ri risk pro rofile ile are re sti till ll manage ageable
Inves vestme ment val alue of
dome mesti tic in insti tituti tion
inve vesto tors rs (m (mutual al funds ds, in insure rers rs, an and pensio ion funds ds) is is relat lative ively ly stable le, and the Net Open Positi ition of
ks are re main intain tained ed at at a safe level. Net open po positio ition in in the ba banki nking secto ctor kept pt far be belo low th the ma maxim imum um limi mit (20 20%). The inve vestme tment nt value lue of insur uranc nce & pens nsio ion n fund nds were still ill in increasing ng trend nd. Multif tifin inanc nce companies’ exposures to foreign debt has generally been mitig igate ted through compa pany hed edgin ing measures es. Mu Mutua tual funds’ net asset va valu lue (NAV) AV) wa was at at a ste teady level with ith low low volatili tility ty.
Source: Financial Service Authority (OJK) 2.04 1 2 3 4 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 % 1072.1 268.2 200 225 250 275 300 800 850 900 950 1,000 1,050 1,100 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 IDR Tn IDR Tn Insurance Pension Funds (rhs) 174.483 102.849 60 80 100 120 140 160 180 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 IDR tn Domestic Debt Foreign Debt 5,000 5,200 5,400 5,600 5,800 6,000 6,200 6,400 6,600 6,800 260 290 320 350 380 410 440 470 500 530 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 IDR Tn NAV Mutual Funds IDX (rhs)
84
Domes mestic tic Cap apital ital Mar arkets ets Mai aintained tained Positive tive Growth th
Capit pital markets kets is is still ll gro rowin ing despit pite the ongo goin ing global pres essure.
Source: Bloomberg, IBPA, Indonesia Stock Exchange, Ministry of Finance
Domes mestic tic capit pital marke kets ts performa manc nce is contr tracte cted, due ue to globa bal l pressur ure, but mainta ntain in to stabiliz bilize Nonresid ident nt reco corded net inflow low in the marke ket t starte ted from m begin inni ning ng of June ne 2019 afte ter the publi lic c holid liday The IDX Stock Composit ite e Index dex has main intai ained ed posi sitive e growth h since e early y 2019 While ile gove vernm nment nt bond nd yields rema main ins stable ble
Stock ck Index ex Perfo formance ce 10 Jun 2019 (compared to 31 Dec’18)
3.10 10.90 15.76 11.73 13.28 5.59
14.36 7.76 3.89 6.70 1.54 2.87 6.45 12.44
2 4 6 8 10 12 14 16 18 TURK BRAZ RUS AS EURO JPN MAL CHIN PHIL SIN HKN INDO KOREA THAI WORLD %
0.360 0.480
20 40 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 10 June-19 IDR Tn Gov't Debt Securities Equity 4,500 5,000 5,500 6,000 6,500 7,000 180 200 220 240 260 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Comp Bond Index Comp Stock Index (rhs) 13,000 13,500 14,000 14,500 15,000 15,500 5 6 7 8 9 10 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Yield (%) 5-yr Yield 10-yr Yield 20-yr Yield IDR (rhs)
85
Strate tegic gic Policies cies in Finan ancial cial Secto ctor
Source: Financial Service Authority (OJK)
Supporting rting infrast struc ructur ture financi ncing ng and deepeni ning ng the capital ital mark market
Enhan hancin ing variab riabil ilit ity
finan inancing ing instr trum umen ents ts
bonds, green bonds, municipal bonds
products for mortgage
Simpl plif ific ication ion
issuan uance proces
in the capita tal mark rket et
issuance process
debt securities and sukuk for professional investors
Expand nding ing the investo estor base
the access
domestic retail investors to the capital market
the participation
local financial institutions through the establishment
local securities companies
Stren engt gthen enin ing the role
NBFIs Is in infrastructu ructure develop lopment nt
products by credit guarantee companies & insurers
Supporting rting inno nova vation tions in digital ital financ nance
Issuing the guiding principles for the providers
digital financial services, including for registering, licensing, and the crowdfunding scheme Directing financial institutions to synergize with the fintech sector
establish a fintech business line Promoting the role
fintech lending in supporting government programs, including in
retail sales
government debt securities
86
Strate tegic gic Policies cies in Finan ancial cial Secto ctor
Enhan Enhancing financ nancial ial liter terac acy & inc inclus lusio ion
Source: Financial Service Authority (OJK), June 2017
OJ OJK has as als lso built uilt a str trong foun
for
fina inancial inclu inclusio ion pr prog
to to en ensure access ess to to fin financial produ
& & serv ervic ices es by In Indo donesia ians
all social al clas asses. . Suc uch init initia iatives also lso in include the the en enhancement
fina inancial lite teracy and nd fin inanci cial con consumer pr prot
Developing financial education models utilizing various delivery channels Enhancing the role
the “Investment Alert Taskforce” The he res esult lt
OJK’s 201 016 nationa tional surv urvey ey dem emonstrated an improveme ment in fina nancia ial lite teracy & & inclusion ion amon
Ind ndon
ians compa pared to tha hat
201 013, but ther here is sti till ll room
for furth ther er impr provement.
Financ ncial l Lite teracy Financ ncial l Inclu lusion
21.8% 29.7%
2013 2016
59.7% 67.8%
2013 2016
Developing micro-credit products with additional business support (“KUR Klaster”) Promoting the establishment
Islamic microfinance institutions (“Bank Wakaf Mikro”) Strengthening the role
Financial Access Acceleration Taskforce (TPAKD) in local areas
87
A A Compr preh ehens ensive ive Finan ancial cial Dee eepen pening ing Program am …strateg
tegy to tackle challenges in deepening Indonesia’s financial markets
Source: Bank Indonesia
In Apr-2016 2016, the Minis ister ter of Finance, e, the Gov
ernor r of Bank k Indo dones esia ia, and d the Chair irman of the Board d of Com
issio ioner ers of
nanc ncia ial l Serv rvic ices es Author thority ity launched hed a Coo
dinatio ion For
velopm pmen ent t Financin ing g thro rough gh Financia ial l Marke rket t (FK-PP PPPK). PK). The he thre ree autho thoriti ities es have ve agr greed eed to for
late e “The Natio tional l Stra rategy tegy of Financia ial l Marke rket t Devel velopm pmen ent”
Vision: To Establish Deep, Liquid, Efficient, Inclusive, and Safe Financial Market
ECONOMIC FUNDING & RISK MANAGEMENT MARKET INFRASTRUCTURE DEVELOPMENT POLICY COORDINATION, HARMONIZATION & EDUCATION Benchmark Rate & Standardization Instrument Fund Regulatory Framework Market Infrastructure Intermediaries Coordination & Education
Mission: Financial Market as Sources of National Development Financing
1 2 3
Money Market FX Market Bond Market Stock Market Syariah Market Structure Product Market
3 Pilars 6 Markets 7 Elements
Financial Market Ecosystem
TARGET KEY PERFORMANCE INDICATOR STRATEGIC ACTION PLAN
88
Contin tinuou
Program am
Cap apital ital Mar arket et Dee eepen pening ing
…continuously strengthened, including through capital market deepening initiative ives
Stren engt gthen enin ing mark rket infras astructu ructure
Single Investor Identification (SID) coverage
electronic trading platform (ETP) in the debt market
Integrated Investment Management System (S-INVEST)
the clearing and settlement process
capital market data warehouse
Extensible Business Reporting Language (XBRL) for issuers
Enhan hancin ing the supply ly-side ide
public-offering requirements and procedures
debt market
mutual fund industry
products, including those to support infrastructure development (private equity funds, REITs, ABS)
Islamic capital market
municipal bonds
Enhan hancin ing the deman and-side ide Stren engt gthen enin ing govern rnance nce
Source: Financial Service Authority (OJK)
the role
the domestic institutional investors (insurers & pension funds) in capital markets
the domestic investor base (conducting investor education programs)
distribution channels
market products
89
BI’s Roles in Supporting Distribution
Non-Cas Cash Socia ial As Assist istance ance (NCSA) A)
BI supports ports govern rnment nt’s progr gram am
iftin ting social ial assist istan ance to tar arget eted ed non cash social ial assis ista tance nce disb sburs rsem emen ent throug
the electr tronic nic payme ment nt syst stem
the futur ure, electr ectron
ic mechan hanism ism disb sburs rsem ement nt will be also applied ied to LPG subsidy. idy. NCSA SA Prog
Family ly Hope Progr gram am (Progr gram am Keluar arga ga Harapan an
KH) Smart rt Indones esia ia Progr gram am (Progr gram am Indones nesia ia Pintar tar-PIP IP) Non Cash Food Assistanc nce (Bantua uan Panga gan Non Tunai – BPNT)
2016-2020
Pilot
Project
Gradu adual Implem lemen entatio tion
Inter erconnecte cted & inter eroper erable le payment syste tem
LPG Subsid idy
Full Imple lementation ion
XXYYZZ 12345678
9876543210
Source: Bank Indonesia
90
Progr
ss
NCSA Progr
ams
Famil ily Hope Program am (Program am Keluar uarga ga Harapa apan
H) Non Cash Food Assis ista tanc nce (Bantu ntuan an Pangan gan Non Tunai nai - BPNT)
Family Hope Program (PKH) is a program that provides cash to very poor households. Rp 1,89 million /year will be granted for each
will be granted every February, May, August, and November.
December 2017, PKH has been distributed to 6,0 million households on non- cash basis.
million households on non-cash basis.
is a poverty alleviation and social protection program that is managed by the central government. It provides subsidized rice and eggs to low-income households. Rp 110 thousand/month will be granted for each household as BPNT that can be used in certain stores which called e-warong.
1,2 million households in 44 cities.
million households (65.1% of the target of 15.5 million households target).
Source: Bank Indonesia
10 million households on non-cash basis with realization of 37.41% of the 2019 budget.
Q1-2019, BPNT has been distributed to 10 million households with realization of 20.43% of the 2019 budget.
91
Strong nger er Funda damen mentals tals Fac acing ng the he Headw adwinds inds
82.4 .4 12.1 .1 6.8 1998 2008 Sep-15 30 30 3.8 2.8 1998 2008 Aug-15 17.4 .4 50.2 .2 1998 2008 Sep-15
Inflatio lation n Rate te (%) %) IDR Move veme ment nt (%) Non-Pe Performi ming ng Loan/NPL PL (% (%) Governm nment nt Debt bt/G /GDP Foreig ign n Reserve ves (USD bn)
100.0% 1998 27.4% 2008 08 30.1% Q1 - 201 2019 8.6x 1998 3.1x 2008 3.1x Q1 - 201 2019 116.8% 1998 33.2% 2008 36.9% Q1 - 2019
More Liqui uid Marke ket (%) %) Exte xterna nal l Debt t (Pub ubli lic c & Priva vate te) to FX Reserve ve Ratio io Exte xterna nal l Debt/GD t/GDP
Inflation controll lled ed within the target et range IDR appreciated year-to to-da date e in June 2019 19 NPL lev evel el (gross) s) is below the maximum thres eshold ld of 5% Consisten ently ly well-maintained ned Significa cantly ly higher er than 1998 98 & 2008, 08, ample to cover er 6.7 7 months of import and external al debt repay payment Significa cantly ly lower er than 1998 98 crisi sis Sligh ghtly ly high gher er than 2008, 08, but significa cantly ly lower er than 1998 98 May ‘19 120.3 .3
May ‘19
3.32 (yoy)
Apr ‘19 2.6 62 62 10.5 .5 5.7 1998 2008 Jul-15
Over ernigh ght interbank nk money market rate is rela latively ly lower er
May ‘19
5.9 (ytd)
0.77
19-Jun-19 2008 1998
92
Outlo look
Dome mesti stic Economy Remain ains Robust st
...d ...domes mestic ic econo nomic ic growt wth is predict icted to be highe her in 201 2019
201 2019 Econo nomic ic Outlo tlook
Bank Indonesia projects national economic growth in the 5.0-5.4% range in 2019, buoyed by domestic demand and
improvements in terms of net exports.
Bank Indonesia will consistently maintain price stability and strengthen policy coordination with the Central Government and
Local Administrations to maintain low and stable inflation, which is projected within the inflation target of 3.5±1% in 2019.
Bank Indonesia projects credit growth in 2019 at 10-12% (yoy), while predicting deposit growth in the 8-10% (yoy) range.
Bank Indonesia will continue to monitor liquidity adequacy and distribution in the banking system in conjunction with the
Econom nomic ic Growth Infl flation ion CAD AD (% (% of
Credit it Growth
Source : Bank Indonesia
2018 18 Realiz alization ation 5.17% 7% 3.13% 3% 2.98 98% 11.75 .75% 201 2019 5.0–5. 5.4 % 3.5±1% ±2.5% .5% 10 10.0 .0-12 12.0% .0%
94
IIGF has the potential to provide project guarantee for non-PPP projects
The he Governm rnment ent has as Enac acte ted Var arious us Reform rms to Accel eler erate te Infrast astru ructur cture Provisio ion
Fiscal al Reform
Instit titut utio iona nal Reform
Regu gula latory
Reform
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Viabi ability lity Gap ap Fundin ding (VGF) KPPIP IP Dire rect t Lendin ding Increase project financial feasibility by contributing up to 49% of the construction cost (MoF Reg. No. 223/2012) Availa ilability ility Paymen ent Land d Revo volv lvin ing g Fund Issuance of regulatory framework to allow annuity payment by the Government during concession period to concessionaire since project operation based on infrastructure service availability (MoF Reg. No. 190/2015 for Central Gov’r and MoHA Reg. No. 96/2016 for Regional Gov’t.) A revolving-fund sourced from State Budget, to accelerate land acquisition (MoF Reg. No. 220/2010) KPPIP is actively involved in accelerating delivery of priority infrastructure projects
rana Multi lti Infra rastr truktu ktur Merging between PT. SMI and Gov’t Investment Center (PIP) to become an infrastructure funding company Indo dones esia ia Infras. . Guara rantee tee Fund d (IIGF IGF) PPP Unit Provide facilities to help GCA on preparing PPP project (PDF/TA) BLU LMAN The State Asset Management Agency (BLU LMAN) is mandated to provide land fund for National Strategic Projects to ensure timely land acquisition process Allow guarantee for direct lending to SOE to accelerate financial close process for infrastructure projects (Presidential Reg. No. 82/2015) Land d Acquis isiti ition Stipulate land acquisition acceleration based on Law No. 2/2012 (Presidential Reg.
payment for impacted community (Presidential Reg. No.56/2017) Econo
kages ges Conduct deregulation for issues hindering infrastructure delivery and develop a task force under CMEA to ensure the effectiveness of economic packages implementation Risk-sha harin ing g Guidel elin ines es IIGF has issued risk allocation and mitigation guidelines for PPP project Tax x Incen entives tives (Tax x Holida liday) MoF Reg. No.35/2018 allowed 100% Tax Holiday for 17 Pioneering Industries for 5 – 20 years depending on the investment value Indo dones esia ia Infrastru tructu ture re Guarantee tee Fund d (IIGF IGF) IIGF has the potential to provide project guarantee for non-PPP projects
95
Some
Most Recent ent Reforms
Policy cy reform rms are aiming ng to create te a more conducive ucive invest stmen ment clima mate for infras astruc ructur ure delivery very
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Pres esid iden ential tial
Use
Foreign ign Labor – released
March 2018
This regulation aims at simpl plif ifying ng the permi mit t applic licatio tion n proce cess for foreig ign n worke kers, hence making the process more efficient and faster, in order to rise foreign direct investment in Indonesia
Pres esid iden ential tial
Socia ial Impact ct Handlin ling in Land Acquis isit itio ion Proce cess for PSN – released
June 2017
This Presidential Reg. allows the Exe xecu cuting ting Agenc ncy to pay land nd acqui uisitio tion n compe pensatio nsation n to the impacte ted commu muni nity ty who does not have offic icia ial l rights ts over the land nd requi uired for PSN.
MoF No. 60/2017
Procedur edures es for the Provis isio ion
Central al Governm ernment ent Guarant antee ee for the Acceler leratio tion
the Natio iona nal Strategic egic Proje jects cts Implem ementa entatio ion – released
May 2017
The supporting regulation for Presidential Reg. No. 3/2016 on the Acceleration of the National Strategic Projects Implementat ion. This is regulation ulation regulate ulates the scope
neral al requ quir ireme ments nts and proce cedur ures to propos
ant guar arante antees, as well ll as alloc
ate te state te budget t oblig ligatio ation n on gove vernme nment nt guar arante antees to all l PSN.
trust of investors to participate in the implementation of PSN.
Govern ernmen ment
Natio ional al Spatia ial Plan (RTRWN) WN) – released
April 2017
The issuance of RTRWN can resolve spatial planning mismatch in the implementation of infrastructure projects listed in the an nex of Government Reg. No. 13/2017. A number of breakthroughs were developed, and one of them is that the Mini niste ter of Agraria ian n and Spati atial al can issue a reco comm mmend ndati ation
tial l utiliz lizati ation
; so that at the proce cess of obtaini ining ng project ct permi missio ion n can be done ne.
MoF No. 21/2017
Procedur edures es for Land Acquis isitio ition for Natio iona nal Strateg egic ic Projects ts and Asset Manag agem ement ent
Land Acquis isitio ition by State Asset Manag agem ement ent Agency cy – released
February 2017
The implementing regulation of Presidential Reg. No. 102/2016 on Financing of Land Acquisition for the Development of Public Interest in the Framework of the National Strategic Implementation. This regulation becomes the legal basis for the financing of the procurement of National Strategic and Priority Projects by BLU LMAN.
96
Reforms Along the Project’s Life Cycle
...to enco cour urag age and accele lerate te infras astruc ructur ure project ct using ng PPP scheme me Governm rnment nt
Indone nesia sia
Proje
ct Dev evelop lopmen ent Facility lity (PDF) PDF) Viab abil ilit ity Fundin ding Gap (VGF) F) Guar uarant ntee Fund Tax Facilitie lities Availab ailabil ilit ity Payment yment Land nd Acquis uisition ition Preparation Bidding Process Construction
Project development facility contributing to assist GCA on PPP project preparation (PDF&TA) Managing entity: KPPIP, PT SMI PT IIF, and Ministry of Finance A facility with contribution to construction cost to increase project financial viability Managing Entitiy: Ministry of Finance based
proposal Gov’t. commitment: 49% max. Per project cost
Guaranteeing Govt. contractual
under infrastructure concession agreements and Mof Regulation No 130/PMK. 08/2016 re: Govt guarantee for electricity project acceleration Managing entity: IIGF and MoF Govt’s comitment: US$ 450 mn
MoF Reg. No. 159/PMK. 010/2015 re: tax holiday for pioneer sector, such as base metal, oil refinery, basic petrochemical, machinery, renewable energy, & telco equipment
will be further expanded Managing entitiy: Ministry of Finance A scheme in which concessionaires receive sum of money periodically from central or regional government after the completion of an asset. MoF Regulation, and MoHA Regulation on Availability Payment has been ratified. Managing entity: Ministry of Finance & Ministry of Home Affairs A facility to support land acquisition for infrastructure projects particularly projects that involve private sector Managing enitiy: Ministry of Finance, Ministry of Agrarian and Land Spatial/BPN and BLU-LMAN Gov’t. commitment: US$ 12 mn (2016) Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
97
Effort rts to Accel elerate te Infras astructu tructure Provisio sion
Regu gula latio ion improveme ement to to accel elerate land procu curemen ment proce cess ss
about the land acquisition duration for the Government Contracting Agencies and the Investors. The Law sets an estimated 583 days maximum time to complete the land acquisition process.
Regulation No. 71 of 2012 on Land Acquisition Implementation for Developing Public Facilities, which has been revised into the Presidential Regulation No. 30
funding for a land acquisition which can be reimbursed by the Government following the completion of land acquisition process. With this Regulation, the land acquisition process is expected not to be delayed by the unallocated budget or the delay on the budget disbursement.
Land Procurem rement t Proces ess s as Stipula lated ted in Law No. 2 of 2012
Law No
was succes essfull lly applied plied in in: 1. 1. Pa Pale lembang ng – In Indr dralaya sect ection ion of
the Tr Trans Sumatera Toll ll Roa
2. 2. Java va Nor
th Line Dou
le Track ack Rail il Projec
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
98
Effort rts to Accel eler erate te Infras astru tructu cture Provisio sion
…the establishment
Indone nesia ia Asset Manag agemen ment Agency ncy (LMAN) AN)
Source: Ministry of Finance
Governm rnment nt has establi blished shed State Asset Manag agemen ment Unit (LMA MAN) N) as a solution to accele lerate te the land acquisi uisitio ion throug ugh the provisi sion
land acquis uisit itio ion fund
1. Unutilized fund can be allocated for the following year 2. Non-project-specific land acquisition fund
allocated fund can flexibly be made available for the other project 3. Land acquisition fund for PSN projects is managed under
agency
was established in December 2015 through the issuance
MoF Reg. 219/2015 concerning State Assets Management
2016, BLU LMAN was mandated to provide land acquisition fund as a support to Ministry
Public Works due to US$ 1,081 Mio shortage
fund to acquire land for priority toll roads
scope
support is broaden for all National Strategic Projects through the issuance
MoF Reg. 21/2017 concerning land acquisition financing guideline for PSN
January 2018, LMAN has disbursed up to US$ 881.48 Million (IDR 11.9 Trillion) through bridging finance scheme for 27 toll road projects, and planned to start the implementation
direct payment scheme
Land Acqui uisi siti tion Budgeting ng Scheme me LMAN at a Glance ce This LMAN initiative ive provides ides better flexibi bili lity ty, coordina inatio ion and manag agement nt
land acquis uisit itio ion fund provisi sion for National nal Strategic ic Project cts (PSN)
99
New ew Fundam ament ental al Regu gula latio tions ns Hav ave Been een Initia tiate ted in 2017
to accele lerate te infras astruc ructur ture project cts delivery ry
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Governm ernmen ent
Natio ional al Spatia ial Plan (RTRWN) WN) The issuance
RTRWN can resolve spatial planning mismatch in the implementation
infrastructure projects listed in the annex
Government
number
breakthroughs were developed, and
them is that the Minister
and Spatial can issue a recommendation
spatial utilization; so that the process
project permission can be done.
MoF
Proc
dures for the Prov
isio ion
Central Governm rnment nt Guarant ntee for the Acceler leratio tion
the National nal Strate tegic gic Proje jects Implem emen enta tatio tion The supporting regulation for Presidential
the Acceleration
the National Strategic Projects Implementation. This regulation regulates the scope and general requirements and procedures to propose and grant guarantees, as well as allocate state budget
government guarantees to all
guarantee provision is expected to increase the feasibility and trust
investors to participate in the implementation
PSN.
Presid identia tial
Socia ial Impact Handl dlin ing in Land Acquis isit itio ion Proc
for PSN This Presidential
the Executing Agency to pay land acquisition compensation to the impacted community who does not have
rights
the land required for
regulation helps to solve the land acquisition problem due to community
the land use.
MoF No. 21/2017
Procedur edures es for Land Acquis isitio ition for Natio iona nal Strateg egic ic Projects ts and Asset Management nt
Land Acquis isition ition by State Asset Management nt Agency The implementing regulation
Presidential
Financing
Land Acquisition for the Development
Public Interest in the Framework
the National Strategic
regulation becomes the legal basis for the financing
procurement
National Strategic and Priority Projects by BLU LMAN
100
Under Presidentia idential Reg.
56/2 /201 018, , PSN list has as been en revise sed into 223 23 Proje jects cts an and 3 Program ams
projects
26 26
Projects53 53
Projects18 18
Projects12 12
ProjectsSulawesi esi
US$22.8 B
Kalim imanta ntan
US$35.6 B
Suma matra
US$40.4 B
Maluku & Papu pua
US$34.4 B
89 89 3
Programs
ProjectsNatio ional
Projects
1 2
Projects
Java
US$73.8 B US$99.7 B
13 13
Bali i & Nusa a Tenggar ara US$0.7 B
Exchange rate: US$ 1 = IDR 13,500
Road 69 Projects Dams 51 Projects SEZs & IEs 29 Projects Railway 16 Projects Energy 11 Projects Ports 10 Projects Clean Water & Sanitation 8 Projects Airports 7 Projects Irigation 6 Projects Smelter 6 Projects Electricity 1 Program Technology 4 Projects Housing 3 Projects Fisheries/Farming 1 Projects Sea Dike 1 Projects Education 1 Projects Economic Equality 1 Program Aeroplane Industry 1 Program
Projec ject Progr gram am
PSN includ udes es 15 s sectors
at projec ect level el and 3 sectors
at program am level el
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Projects 101
PSN may ay receiv ive privil ileg eges es as stipula pulated ted in the Presiden sidential ial Reg. No.
2016 j.o j.o. . the Presid sidential ential Reg. . No.
/2017
01 01 02 03
Determination of National Strategic Projects
04 05 06 07 08 09 10 10 11 12
Permit & Non- permit Completion Spatial Planning Land clearing acceleration Local Content Utilization Government Guarantee Provision Projects Monitoring via KPPIP IT System SOE’s Assignment Problems and Hindrance Completion Accelerate Goods and Service Procurement Settlement of Legal Issues Acceleration of Non- State Budget Projects
Additional Facilities Existing Facilities Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
102
Progress ess
223 23 Proje jects ts an and 3 Program ams PSN
Prog
ess of Nationa ional l Strat rateg egic ic Project
ams (per er Decem ember r 2018 18)2
The Estima timated ted Inves estme tment nt Value ue for 22 223 3 Projects ects + 3 3 Program ams PSN1
1Exclude 7 projects which investment value are still unknownExchange rate : US$ 1 = IDR 13,500
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
2) Excluding the economic equality program that will be reported separatelyState Budget 10% SOEs/ RSOEs 31% Private 59%
Tota tal Investm estment nt Value lue2
US$ 307.4 7.4 Billio lion
State Budget US$ 31.6 Bn Bn SOEs/RSOEs US$ 96.6 Bn Bn Private US$ 179.2 Bn Bn
5 S Secto tors rs with Highest Invest stment nt Value
Energy 11 Projects US$ 89.8 Bn Electr tric icit ity 1 Program US$ 76.7 Bn Roads ads 69 Projects US$ 49.7 Bn Railwa lways ys 16 Projects US$ 29.2 Bn SEZs and IEs 31 Projects US$ 31 Bn
32 projects already completed 32 projects and 1 electricity program are in construction and partial-operation phase 48 projects are in construction and will start
52 projects are in construction and will start
14% 14% 14% 14% 22% 22% 23% 23% 3% 3% 24% 24% 6 projects in transaction 53 projects and 1 Aircraft Industry Program in preparation
103
In 2016
, 62 PSNs have been Compl mpleted ted with Total al Estim imated ed Inve vestment stment Value lue
USD23. 23.7 Bi Billion ion
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
104
Progress ess
3 37 Pri riori rity ty Proje jects cts
From the revise ised Nationa ional Str trate tegic gic Projec
ts, the he Gov
rnment nt has as sele lecte ted a list st
37 Priorit iority Projec
ts to be the focus us
astr tructur ucture prov
ision. n.
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
1. Balikpapan-Samarinda Toll Road 2. Manado-Bitung Toll Road 3. Panimbang-Serang Toll Road 4. 15 Segments of Trans – Sumatera Toll Road 5. Probolinggo – Banyuwangi Toll Road 6. Yogyakarta – Bawean Toll Road 7. SHIA Express Railway 8. MRT Jakarta South-North Line 9. Makassar-Parepare Railway 10. Light Rail Transit (LRT) of Jakarta- Depok-Bogor-Bekasi 11. LRT of South Sumatera 12. East Kalimantan Railway 13. LRT of DKI Jakarta 14. Kuala Tanjung International Hub Seaport 15. Bitung International Hub Seaport 16. Patimban Port 17. Inland Waterways Cikarang-Bekasi-Laut (CBL) 18. Palapa Ring Broadband 19. Batang, Central Java Power Plant (CJPP) 20. Central – West Java Transmission Line 500 kV 21. Indramayu Coal-fired Power Plant 22. Sumatera 500 kV Transmission (4 Provinces) 23. Mulut Tambang Coal-fired Power Plant (6 Provinces) 24. PLTGU (16 Provinces) 25. Bontang Oil Refinery 26. Tuban Oil Refinery 27. RDMP/Revitalization of the Existing Refineries (Balikpapan, Cilacap, Balongan, Dumai, Plaju) 28. Abadi WK Masela Field 29. Unilization Field Has Jambaran-Tiung Biru 30. Indonesian Deepwater Development (IDD) 31. Tangguh LNG Train 3 Development 32. West Semarang Drinking Water Supply System 33. Jakarta Sewerage System 34. National Capital Integrated Coastal Development (NCICD) Phase A 35. Jatiluhur Drinking Water Supply 36. Lampung Drinking Water Supply 37. Waste to Energy Program in 8 cities
105
Progress ess
37 Pri riori rity ty Proje jects cts
Recen ent t Miles esto tones es Prog
ess of 37 Prio iori rity Project
er March rch 5, 2019) Fundin ding g Schem eme e of 37 Prio iority ity Project
Loan Agreement has been signed on 15 November 2017. On March 2018, pre-qualification stage has resulted 4 shortlisted bidders Allocation of repayment liability on additional-loan for Phase I and Phase II has been decided in the KPPIP Ministerial meeting – 49% will be borne by Central Government and 51% will be borne Provincial Government of DKI Jakarta.
Patimb mban an Port
West Semaran ang Water er Supply ly Sy System:
Mass Rapid Tran ansit sit (MRT) Jakarta South-Nort North
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
66% 66% 26% 26% 8% 8%
US$120.7 billion from Private/ PPP US$47.7 billion from SOE/ Regional SOE US$15.5 billion State/ Regional Budget (including G-to-G loan)
Exchange rate : US$ 1 = IDR 13,500
Total Investment Value US$ 183.9 Billion
West package has been fully operasional since April 2018.
Palapa Ring
Note: This data is still going to be verified by The Executive Office of President (KSP) and Indonesia’s National Government Internal Auditor (BPKP)
Outline Business Case has been done on December 2017.
Yogyakar arta-Ba Bawen en Toll Road
3% 3% 11% 11% 43% 43% 16% 16% 8% 8% 19% 19% 3 projects in transaction 7 projects in preparation 4 projects in construction and partial operation phase 1 project is completed 16 projects in construction and will start operating in 2019 6 projects in construction and will start operating after 2019
106
Energy gy Secto ctor: r: the he Progress ess
35.000 000 MW Program am
No No Phase MW MW % 1 Operating 3,009 8 2 Construction 20,416 58 3 Signed Power-purchase Agreement 9,507 27 4 Procurement 1,383 4 5 Planning 954 3
17 Dec ‘14
Cabinet t Meeting ing “There’s electricity crisis in Indonesia, requires construction
Jan ‘15
Average economi mic growth th of 6.7% % requir ires es 7,000 MW / year or 35,000 MW / 5 y years (Kepmen ESDM No. 0074/2015 on RUPTL 2015-2024)
Jan ‘15
Debottl tlen enec eckin ing g through gh regulatio tion:
supply cooperation & joint utilization of the electrical network among license holders.
No.3/2015, concerning Procedures
Purchasing Electrical Power and benchmark prices for Electrical Power through the Direct Selection & Appointment.
16 Mar ‘15 4 May ‘15 June‘17
Cabinet t Meeting ing Progress of 35,000 MW Launchin hing g 35.000 MW by the President in Goa Beach Sanden DIY The progres ess so far:
Sulawesi si PLN: 2,000 MW Private: 1,470 MW Transmission: 5,275 ckt.km Substation: 4,390 MVA Maluku PLN: 260 MW Private: 12 MW Transmission: 653 ckt.km Substation: 620 MVA Papua PLN : 220 MW Private: 0 MW Transmission: 364 ckt.km Substation: 460 MVA Kalima imanta tan PLN: 900 MW Private: 1,735 MW Transmission: 5,604 ckt.km Substation: 3,500 MVA Nusa Tenggara PLN: 670 MW Private: 0 MW Transmission: 2,347 ckt.km Substation: 1,410 MVA Sumate tera PLN: 1,100 MW Private: 8,990 MW Transmission: 18,729 ckt.km Substation: 35,521 MVA Jawa & Bali PLN: 5,000 MW Private: 13,697 MW Transmission: 9,185 ckt.km Substation: 66,265 MVA
35,000 MW Prog
tributio tion
Source: PLN
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Note : Progress of 35,000 MW Electricity Program as of January 2019
107
Accel eleratio tion
35.000 000 MW Program am
Gov
ernm nmen ent PT PLN
EPC C Power erpla plant t and d Transmis issio ion PLN Subsidi idiar ary (Joint
ture) e) Indepen ependen ent Power er Prod
er
Stren ength gthen Equity ty 2B 2B 1
Gov
ernmen ent t Supp ppor
t (outs tside ide Guara rantee) tee)
Local l Con
tent t Obligation on the usage of local content through an open book system, price guideline, reverse engineering or other methods to maximise the local content.
2A 2A
Assign ignmen ent SJKU* U* Minis istry try of Finance
Stren ength gthen PLN‘s Balanc nce Sheet
*)SJKU=Surat Jaminan Kelayakan Usaha/ Business Viability Guarantee Letter The Governm rnment nt has issued Preside ident ntia ial l Regulat latio ion n No. . 4/2 /2016 on Elect ctricit icity Infrastru truct cture Accele lerat ratio ion n to accel celerat rate power proj roject ects Prov
isio ion of Electri tricity ity Refin inancin ing Hedgin ging Finan ancia ial l Asset et Optim imiz izatio ion Direct Lending Direct Lending Bond issuance by PT PLN Company Tax Holiday PT PLN’s divident allocation Loan from independent lenders Asset Revaluation Other types
Equity Injection by the Government
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
108
Sign gnificant ificant Progress ess
I Infrast astructu ructure Proje jects cts
Databas ase Project information such as map, track, existing study and latest project status. An integr grated ted IT system with monitoring capacity for stakeholders, so that they can have real time data ta. Platform rm data
that is efficient and functional using a user-friendly framework. Record decisions related to projects and synchronize ize the implementation schedule that can be utilized by stakeholders.
KPPIP developed an integrated IT System for monitoring
national strategic and priority projects, providing database on projects’ latest status which can be effectively utilized for monitoring and decision-making purposes. Impr prov
ing g Monitor itorin ing g System tem on Infrastru tructu ture e Project
Roads
Trans-Sumatr tra Toll Road Merah h Putih ih Bridge idge, Ambon
Dams
Jatige igede de Dam (Operatio tional)
Transp nsportatio tion
Jakarta ta MRT Project2
Drinki king Wate ter Processin ing
Umbulan Drinkin king Water Provi visio sion System, East t Java
1 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 2 Not funded from National Budget
Terminal 3 Ultima imate te Soeka karno-Hatta tta2 New Tanjung Priok k Port t Project2 Nop Golia iat t Dekai, i, Papua
109
Infras astr tructur cture Projects ts an and Finan ancing cing Sche hemes mes
Promoti tion
Infras astruc ructur ture Develo lopmen ment to Acce celerate te Econo nomic mic Growth th
Esta tabli blishment shment of PPP PPP Unit
Broad ad Objective Champion project preparation and acceleration of the PPP agenda in Indonesia Core Manda dates Improve quality of project selection under KPPIP – OBC criteria Support project preparation through PDF support and highly qualified transaction advisors Act on behalf the Minister of Finance in providing government support and approvals for projects Addit itio ional al Man andates Coordinate all public finance instruments Provide input for PPP Policy program Development and Regulations Implement capacity building for Govt. Contracting Agency (GCAs) One stop shop for PPP promotion & Information
Budget get Public Priv ivate te Partn tner ershi ship SOE E & Priv ivate te Sec ecto tor
Central & regio ional budget (special allocatio ion fun und & rur ural tran ansfer) Primarily to to support bas asic ic infrastruct ucture projects: – Food secur urity: Irrigation, dams etc. – Mar aritime: Seaports, shipyards etc. – Connectivi vity: y: Village roads, public transportation etc. Certain in infrastruct ucture projects to to be funded and operat ated throug ugh a par artnership ip between the Indonesian an government and the priva vate sector – Projects ready for auction under the PPP Scheme: – Toll roads projects such as Balikpapan-Samarinda and Manado-Bitung – Railway projects such as an express line into Soekarno-Hatta International Airport – Water supply projects such as the West Semarang Project Var ario ious government nt sup upport for PPP: PPP: – Project Development Facilit ity y (PDF): Helps Government Contracting Agencies (GCAs) in project preparation and transaction – Viab iabil ility y Gap ap Fund: improves financial viability of PPP projects – Government Gua uaran antees: Supports PPP projects’ bankability by providing sovereign guarantees – Infrastruct ucture Fin inan ancing Fund: Provided through PT SMI and IIGF – Avai ailab ability Payment (AP): GCA pays private partner based of availability
Governme ment to to inject capital al into SOEs: Intended multiplier effect to develop more infrastructure projects Key focus cus ar areas: as: – Infrastructure and maritime development – Transportation and connectivity – Food security Mediu ium m term infrastruct cture develop velopments to focus cus on: – Water Supply – Airports – Seaports – Electricity and power plants – Housing – Mining
Source : Ministry of Finance; Bappenas; KPPIP: “Komite Kebijakan Percepatan Penyediaan Infrastruktur” or National Committee for the Acceleration of Infrastructure Delivery Note: OBC: Outline Business Case; PDF: Project Development Facility; GCA: Government Contracting Activity
Infras astructur ure Development in order to: 1. Accelerate growth particularly in rural areas 2. Support industrial development and tourism 3. Reduce unemployment and poverty Infras astructur ure fundraisin aising needs: $357.9 bn bn (or equivalent to IDR4,796.2 tn) 245 Natio ional Strategy y Projects under National Medium Term Plan for 2015 – 2019 with an estimated total cost of IDR 4,197 tn (USD 313 bn) 37 prio iorit ity infrastruct uctur ure projects with an estimated cost of IDR 2,490 tn (USD 180 billion) Majority of 37 priority projects are expected to commence commercial operation by 2018 - 2022
Infrast structure e Devel elopme pment t is a Key Priority ity
110
Gover ernment ment Guar aran antee tee For Bas asic ic Infras astr tructu ucture Devel velopment pment
Reflect cts strong ng commit itment nt to national nal developmen ment plannin ning
Source: Ministry of Finance No. Central al Government Guar aran antee for Infrast astruc ucture Programs Exposur ure/ Outstanding (USD bn bn) 1 Coal Power Plant 10,000 MW Fast Track Program (FTP 1) 2.49 2 Clean Water Supply Program 0.01 3 Direct Lending from International Financial Institution to SOEs 0.56 4 Sumatra Toll Road 0.48 5 Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP 2) 1.59 6 Public-Private Partnerships (PPP) 1.42 7 Regional Infrastructure Financing 0.09 8 Light Rail Transit (LRT) Jakarta Bogor Depok Bekasi
al 6. 6.63 63
Conting tingent nt Liabili bilitie ties from m Governm nment nt Guarante ntees Governm nment nt Guarantee tee Program
Credit it Guarantee ee PPP PPP Guarantee
Busin iness Viab abil ilit ity y Guar arant antee (BVG) G) Power (Elect ctricit icity) – Full credit guarantee for PLN’s debt payment obligation under FTP 1 10,000 MW and 35GW Celan Water – Guarantee for 70% of PDAM’s debt principal payment obligations Infrastructure - Full credit guarantee on SOE’s borrowing from international financial institution & guarantee for PT SMI’s local infrastructure financing Toll road ad – Full credit guarantee for PT Hutama Karya’s debt payment obligation (Sumatra Toll Road Development) Public ic Transportation (Light Rail Transit it) – Full credit guarantee for PT Kereta Api Indonesia’s debt payment obligations for the development of LRT Jabodebek Power (Electric icit ity) – Guarantee for PT PLN’s
with IPPs (off-take and political risk) under FTP-2 10.000MW and 35GW programs* Infras astructur ure – Guarantee for Government-related entities obligations (line ministries, local governments, SOEs, local SOEs) under PPP contracts/agreements From 2008 to Q1-2018, the Government has issued 75 guarantee documents with total value of USD28.84 billion, 5 of which (worth USD0.05 billion) have expired. The Maximum Guarantee Limit for the period 2018 – 2021 is set at 6% of GDP. The space for guarantee issuance for the period 2018-2021 is approximately IDR 1,200 trillion (cumulative). As of end of March 2018; currency conversion of IDR 13,756/USD1 (March 29, 2018)
Politi tical Risk Guarantee ee
Infras astructur ure – Guarantee against infrastructure risks for National Strategic Projects (Presidential Decree No.58/2017) which are not covered by
*) MOF provides both credit guarantees and BVGs for 35GW program
111
Gover ernment ment Finan ancia cial Fac acilities ilities for PPP Proje jects cts
Financ ncial ial Facilit ilities ies to Attrac act More Priv ivate te Part rtic icip ipatio tion
Those financial facilities were instrumental in supporting the execution of PPP projects, indicated by the signing of financial close
Viabilit ility Gap Fund (VGF) Proje ject Develo lopment ent Facilit ility (PDF) Governm ernmen ent Guarante ntees es (dir irec ectly ly by MoF or through gh IIGF) Financ ncing ing from PT
and
Availabilit lability Paymen ent Schemes es More Fundin ing Schemes es are
the Pipelines lines
Project Financing funded by the priv ivate te secto tor through the granting of concessions for an
Government/SOE (based on the policy of the Government) to the private sector to be
Project Financing funded by any source of funds other than Government’s budget, e.g. long term management funds (insurance, repatriated funds from tax amnesty, pension funds, etc.), private equity investors and infrastructure funds. Supported & facilitated by National Development Planning Ministry/Bappenas.
several years
Sche heme me Character teristic istics Sche heme me Character teristic istics
LCS (Limited ited Concessio ion Scheme) e) PINA (Non-Gov Governm ernment nt Budget et Infrastruc tructur ure Financ ncing) ing)
Source: Ministry of Finance
112
Progress ess
P PPP Infrast astru ructur cture Proje jects ts
No No Projec ect Name me Projec ect Cost (IDR R tn tn) Financia ial Facil ilities ities Status 1 Central Java Power Plant 40 Guarantee (MoF & IIGF) FC on June 6th, 2016; Construction 30%; COD Target: May 2020 2 Palapa Ring – West Package 1.28 PDF, IIGF Guarantee & AP FC on August 11th, 2016; COD target: February 2018 3 Palapa Ring – Central Package 1.38 PDF, IIGF Guarantee & AP FC on September 29th, 2016; COD target: March 2018 4 Palapa Ring – East Package 5.13 PDF, IIGF Guarantee & AP FC on March 29th, 2017; COD target: September 2018 5 Umbulan Water 2.1 PDF, VGF & IIGF Guarantee FC on August 30th, 2016; COD target: July 2019
Succes essful ful Proje jects ts Reaching ing Finan ancial ial Close in 2016 and 2017
No No Projec ect Name me Project Cost (IDR R tn tn) Financia ial Facil ilities ities Status 1 Batang–Semarang Toll Road 11 IIGF Guarantee PPP & guarantee contracts signed on April 27th, 2016 2 Manado–Bitung Toll Road 5.1 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016 3 Samarinda–Balikpapan Toll Road 9.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016 4 Pandaan–Malang Toll Road 5.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016 5 Serpong–Balaraja Toll Road 6.0
6 Jakarta–Cikampek Elevated Toll Road 14.8 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th, 2016 and February 22nd, 2017 7 Krian–Legundi-Krian Toll Road 9.0 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th, 2016 and February 22nd, 2017 8 Serang–Panimbang Toll Road 5.3 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017 9 Cileunyi–Sumedang-Dawuan Toll Road 8.2 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
Signed ed PPP Proje jects in 2016 and 2017
Source: Ministry of Finance, as of July 2017
113
New Guar aran antee tee Schem hemes for Non-PPP PP Proje jects cts
The Government had issued Pr Presiden identi tial Regula ulation tion No No 82 82/2015 and Minis inistry try of
inanc nce Regula ulation tion No No 189/2015 to provide guarantee for SOE Direct Lending from IFIs for the Development of Infrastructure Projects. Guarant antee ee
SOE Direc ect Lending ing from Interna rnatio tional nal Financ ancial ial Institut tutio ions ns (IFIs Is) Guarant antee ee for Regio ional al Infrastr tructur ture Financ ncin ing Provis isio ion State finan ance soundnes ness Fiscal al sustainabiliy nabiliy Best practic tice
fiscal al risk managem ement ent The
this guarantee is to provid ide credit edit enhanc ncem emen ent in terms
low inter erest rate and long tenor finan ancing ing, with 3 main prin incip iples les:
The Government had issued Min inis istry try
Fin inance Regu egulati tion
No No 174 174 of
2016 to provide guarantee to PT SMI
the assignment
regional infrastructure financing provision, by loan to local governments that is transferred from PIP to PT SMI, and new loan channeled by PT SMI to the local government. Based
Gov Govern rnmen ent Regu egulation tion No No. 95 95/2015 2015 and Min inis istry try
Fin inance Reg egulation tion No No. 232 232/2015 2015, Minister of Finance assigns PT SMI (Sarana Multi Infrastruktur) to carry
local government, as previously carried
by PIP (Government Investment Center). The objective is to give give sti timulus to to the the acc accele elerat ation ion
lo local in infrastr tructure re dev devel elop
ent through the ease of access to infrastructure financing and to boost local economic growth, as well as to provide alternative financing schemes in
to meet local infrastructure development needs and to reduce reliance
state/local budget.