KP3EI

COMMITTEE FOR ACCELERATION AND EXPANSION OF INDONESIA ECONOMIC DEVELOPMENT

MP3EI: THE WAY WE ARE

By: Eddy Satriya Head of International Cooperation Division, Secretariat of KPE3I

Presented In: German-Indonesia Business Meeting @Bappenas Jakarta, 11 Feburary 2013

Before, Now, and Then!!!

(China , German, America, and Indonesia)
China constructs Bridges
America exports Chopsticks

German sets up automobile trend

What can Indonesia do???

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most of them are still intact to be processed into higher VA products

Natural Gas Thermal Coal
Geothermal

Rich Natural Resources

Palm Oil Cocoa Tin

Nickel

Bauxite

Frequency Spectrum 700 MHz outside Java, Potential arrangeme nt for Java area 2300-2360 MHz urban nationwide

Key Metrics

About 165 TCF of reserves at production rate 3 TCF pa

World second largest exporter

Home of 40% of worlds resources (the largest in the world)

Worlds largest exporter; >19 mil tons per year

At 770 thou tons/year, worlds 2nd largest producer

At 65 thou tons/year, worlds 2nd largest producer

Own 12% of worlds reserves (4th largest)

Worlds 7th largest reserves; worlds 4th largest production

Abundant resources for gas-based energy and petrochemical industries Not including NonConventional Gases, from Coal Bed Methane and Coal Gassification

About 40% is assumed feasible. Up to now, 1.200 MW has been developed.

Will be at least partially processed domestically by 2013 (new mining law: 4/2009)

When Realizations meet Targets

2010 TARGET RPJM
REALIZATION

2011 TARGET RPJM

REALIZATION

2012 TARGET RPJM

REALIZATION*)

Economic Growth
Inflation Unemployment Poverty

5,5- 5,6
4-6 7,6 12,0 - 13,5

6,2
7 7,1 13,33

6,0 - 6,3
4,0 - 6,0 7,3 - 7,4 11,5 - 12,5

6,5
3,8 6,6 12,49

6,4 - 6,9
4,0 - 6,0 6,7 - 7,0 10,5 - 11,5

6,23
4,30 6,14 (Agt) 11,66 (Sept)

2013
TARGET RPJM Economic Growth Inflation Unemployment Poverty *) Tentaive figure 6,7 - 7,4 3,5 5,5 6,0 - 6,6 9,5 - 10,5 TARGET APBN 2013 6,8 4,9 5,8 6,1 9,5 10,5 TARGET RPJM

2014
TARGET RKP 6,8 7,2 4,5 + 1 5,0 6,0 8,0 10,0 STATUS 2 1 1 2
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7,0%-7,7% 3,5 5,5 5%-6% 8%-10%

On Track/on Trend

=Need Efforts

Source: Bappenas 2013

Political Stability: the worlds third largest democracy

% of appointed local government heads vs. directly elected 100% 80% 60%
Appointed Directly elected 62%

Directly elected

40% 20% 0% 2002

Source: World Bank, 2009

Appointed 38%

2007

2009

(election year 2009)

In election year 2009, President wins

Legislative
Demokrat
107 94 57
46

more than 60% votes from 176 million registered voters

Golkar PDI-P

37 148 17 26 28

PKS
PAN PPP

PKB Gerindra

(New) Democracy YES!

Just Recently (20 Sept 2012) An humble Major from small city Solo in Central Java, JOKO WIDODO paired with AHOK from Belitung (Sumatera), unsurprisingly won the most prestigious position as DKI Jaya - Jakarta governors.

Courtesy of Antara

Indonesia Economic Corridors:

Masterplan
Perpres 32/2011 27 May 2011

Basically MP3EI is based on these strategic initiatives: 1. Encourage a large scale investment realization in 22 main economic activities 2. Synchronization of national action plan to revitalize the real sector performance 3. The development of center of excellence in 6 (six) economic corridors Main strategy of MP3EI: 1. Economic potential development through economic corridor 2. Strengthening the national connectivity 3. Strengthening national human resources capability and science and technology
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MP3EI aims at accelerating Indonesias economic transformation through cross-entity synergy and collaboration
In creating economic transformation for Indonesia, MP3EI employs three pillars and revolves in the cross-entity efforts to ensure sound projects coordination, consisting of:
Coordinating Ministry of Economic Affairs, National Development and Planning Agency, Ministry of Finance, Ministry of Public Works, Ministry of Transportation, Ministry of Forestry, Ministry of Energy and Mineral Resources (other relevant Ministries), Governors, Chamber of Commerce leaders, experts, business players 9 Working Groups: 3 Cross-sector Working Groups (Regulation, Connectivity, HR & Tech) and 6 Working Groups of Economic Corridors)
Chairman : President Vice Chairman: Vice President

1 2 3

Developing economic potential through economic corridors Strengthening national connectivity Strengthening national human resources capability and science & technology

2025
2014 2010
GDP: US$ ~ 1,2 T GDP: US$ 3,8 4,5T GDP/c: 13.000 16.100 US$ 12 high income country

DAILY IMPLEMENTATION TEAM Chairman: Coordinating Minister of Economic Affair Vice Chairman 1: Minister of National Dev Planning Agency Vice Chairman 2: Chairman of National Economic Committee
SECRETARIAT

GDP ~ US$ 700 B GDP/c: US$ ~ 4.800 GDP/c US$ 3,005 14 major 17th major nation economy

REGULATION Working Group

CONNECTIVITY Working Group

HR & TECH Working Group

Sumatr a EC* Team

Java EC Team

Kalimant an EC Team

Sulawe si EC Team

Bali-NT EC Team

PapuaKep.Maluku

EC Team

Note *EC 9 Economic Corridor

MP3EI infrastructure project offers potential opportunity of ~USD 64 billion for private sector participation
MP3EI Infastructure Project Funding Source (Rp Trilion*):
300

MP3EI Infrastructure Project Funding Gap Identified (IDR Trillion)

0,1 Water, logistic Airport Energy Road & Bridges

Mixed Fund (358)

400 (19%) 24% PPP

536 (25%) SOE

Funding Gap (614) 152 250 (7%) APBN 599 200 (28%) Funding Gap 41%
150 100

19,4

Railway
170,7 4,8 0,0 35,0 0,1 50,5 Seaport

61,3

27%

50

11,9 47,2 48,4 15,5 Sumatera Jawa 30,0 7,7

0,3 2,6 6,9

19,8 Sulawesi

Private (402)

SOE (16) APBN (121)

1%

8%

0,2 1,0 0,0 4,6

12,1 Bali-NT

0,1 9,7 2,4 0,1 0,5

0,3 0,2 0,0 1,7 0,0 56,9

Kalimantan

PapuaKep.Maluku

Funding gap calculation based on: MP3EI Database per 31 August 2012 (477 Projects) Funding gap formula: Investment value (allocated budget from APBN + SOE). Private sector funded projects are assumed 100% fully covered. ICT sector is not included in the calculation as the projects list still under progress of validation Energy funding gap requires further validation with PLN 10

Samples of top down initiatives to debottleneck MP3EI infrastructure development facilitated by KP3EI (Secretariat of MP3EI program)
Project/ Investor Bottleneck issues
Delay in land acquisition process due to delay in the issuance of Provincial Spatial Planning State Law (Perda RTRWP) Infrastructure availability in time of the investment (Kuala Tanjung seaport expansion, road, railway and Kuala Namu airport) by local government due to different interpretations of the power plant Requires acceleration for land acquisition and certification area Delay in issuance of IPPKH (Forest land area use permit) discussed for ~20 years with no significant progress, while financial loss due to traffic has reached IDR 12.8 T in 2012

Debottlenecking effort and result

Sei Mangkei Industrial Estate

PTPN III

Enhance coordination between line ministries/agencies, other government entities and stakeholders, which resulted in acceleration of RTRW finalization KP3EI ensures additional budget is provided and allocated to support infrastructure projects implementation in timely manner
unlocked in 3 months following KP3EI involvement KP3EI continues support of de-bottlenecking for land acquisition process to reach financial close by Oct 2013 resulted in clearance of dispute settlement KP3EI facilitated the provision of ~9.881 ha forest area to be used by PT Bukit Asam with the plan as per initial timeline The recent development is that Central Government accelerating their support and plans to increase Central Government funding portion 11 from the current 42% to >48% for MRT project

Central Java IPP

Location permit has not been issued The location permit that was stuck for 20 months was

Bangko Tengah Railway for

coal transportation

Railway area overlaps with forest

Coordination is conducted up to Ministrial level,

Jakarta MRT

Jakarta MRT project has been

GOI encouraged Local Government to proceed

In addition to debottlenecking initiatives, KP3EI is currently leading the MP3EI priority project screening initiative by emphasizing on enablers for production centers development
Production centers with high investment readiness require commitment from government in the form of infrastructure accelleration.
SUMATERA Production center of natural resource and national energy source KALIMANTAN Production center of mining and national energy source

SULAWESI Production center of agriculture, plantation and fisheries

CPO industry in Sei Mangke PT Unilever Indonesia and PT Feroostat are investing USD $ 1 INTERNATIONAL HUB billions.
PORT WEST

CPO industry di East Kalimantan Existing 200 palm plantation companies and 42 CPO industries in East Kalimantan

Special Economic Zone Bitung and Palu Estimated investment interest of Rp 1.7 Trillion with potential GDP of Rp 13 Trillion
INTERNATIONAL HUB PORT EAST

Nickel industry in Halmahera 3 companies interested in investing Rp 96.6 Trillions

Coal Industry in Southern Sumatera 39% national coal reserve is in southern Sumatera, with estimated 18,13 billion tons stock.

Coal industry in Central Kalimantan Potential production of USD $4.5 billion/year, existing production is USD $750 millions

Karawang Industrial Area More than 7 industrial areas exporting 65% out of Indonesias total export. Loreal has invested USD $ 1 billion, PT Toyota Astra Motor is in the middle of Rp 15 Trillions worth of plant construction.
JAWA Industrial and services

Energy Intensive Industry in Nabire Potential PLTA Membramo of 14,000 MW is suitable to be the center of energy intensive industry, such as smelter, etc Agricultural Industry in Papua (MIFEE) Potential investment of Rp 57 Tourism Industry in Lombok Trillions. Sugar industry is Number of tourists to Lombok increased 35% per year from almost ready for operation in 2010 to 2012. Mandalika potentially attract Rp 3 Trillions of Merauke. investment and Sengigi attracts many foreign investors
BALI-NUSA TENGGARA Tourism and livestock PAPUA KEP. MALUKU Natural resources

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Top 38 MP3EI Priority Projects with Groundbreaking target (max) in 2014

Road and Toll Road Project Title 1. The Brigde of Balang Island Water and Sanitation Project Title 2. SPAM Jatiluhur 3. Jakarta Sewerage System 4. DAM Raknamo and DAM Kolhua 5. SPAM Umbulan Investment Value (IDR Bio) 1,890 4,319 1000 2,042 Target GB 2014 2014 2014 2014 Investment Value (IDR Bio) 1,572 Target GB 2014 Airport Project Title 11. Construction of Kertajati Airport Railway Project Title 12. Solo - Madiun Double Track Railway 13. Medan Kualanamu Double Track Investment Value (IDR Bio) 1,800 980 Target GB 2014 2014 Investment Value (IDR Bio) 1,125 Target GB 2014

ICT Seaport
Project Title 6. Makassar New Port 7. Kuala Tanjung Seaport 8. Maloy Seaport 9. Lembar Bay Seaport 10. Sorong Seaport Investment Value (IDR Bio) N/A 7,700 4,800 390 N/A Target GB 2014 2014 2014 2014 2014 Project Title 14. Palapa Ring Energy Project Title 15. PLTU Pangkalan Susu 2 x 200 MW 16. PLTU Takalar 2 x 100 MW Investment Value (IDR Bio) 4,300 2,800 Target GB 2014 2014 Investment Value (IDR Bio) 2,800 Target GB 2014

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Top 38 MP3EI Priority Projects with Groundbreaking target (max) in 2017

Road and Toll Road Project Title Investment Value (IDR Bio) 1,000 11,400 3,152 2,560 910 16,279 8,447 33,170 9,579 1,680 688 3,541 Target GB
Seaport Project Title 14.Kuala Tanjung International Hub Port 15. Bitung International Hub Port 16. Cilamaya Port and Access Road Airport Project Title 17. Construction of Karawang Airport and Access Road Railway Project Title 18. Madiun - Surabaya Double Track Railway 19. Construction of Railway Lane in Purukcahu-Bangkuang/MangkatipBatanjung, Central Kalimantan 20. Makassar - Pare-Pare Railway Energy Project Title Investment Value (IDR Bio) 16,500 3,200 Target GB 2015 2015 Investment Value (IDR Bio) 3,300 20,000 5,250 Target GB 2017 2017 2017 Investment Value (IDR Bio) 35,361 Target GB 2017 Investment Value (IDR Bio) 60,000 In calculation 40,303 Target GB 2017 2017 2017

1. Palu Parigi Hub 2. Balikpapan Samarinda Toll Road 3. Manado - Bitung Toll Road 4. Medan Binjai Toll Road 5. Palembang Indralaya Toll Road 6. Pekanbaru - Kandis Dumai Toll Road 7. Bakauheni - Terbanggi Besar Toll Road 8. Tebing Tinggi - Kisaran - Rantau Prapat Toll Road 9. Panimbang Serang Toll Road 10. Enarotali - Tiom Road 11. Access Road for Purwakarta Industrial Area 12. Lubuk Pakam Tebing Tinggi Toll Road
Water and Sanitation

2017 2017 2017 2017 2017 2017 2017

2017 2016 2016 2015 2015

Project Title

Investment Value (IDR Bio) 2,727

Target GB
2013 (SPAM Penet) 2016 (SPAM Ayung)

13. SPAM Bali Selatan

21. PLTU Indramayu 4 (1 x 1000 MW) 22. PLTU Asamasam 5-6 (2 x 100 MW)

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REPUBLIC Of INDONESIA COORDINATING MINISTRY FOR ECONOMIC AFFAIRS

Eddy Satriya
Head of International Cooperation Division, Secretariat of KP3EI

Jalan Medan Merdeka Barat No. 7, Jakarta Pusat - Indonesia Phone: +62 21 34832611; Fax: +62 21 34832609 email: satriyaeddy@gmail.com @EddySatriya

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Eddy Satriya
1989 :Graduated from Bandung Institute of Technology (Telecommunication Engineering) 1997 :Graduated from University of Connecticut (MA in Economics)

1989-90: Program Management Consultancy (PMC-IV) for Telecommunication Development

1990-2005: Working in Bappenas (The National Development Planning Agency). 1995 : Secretary to Board of Commissioners of PT.Telkomsel 1997- present: Visiting Lecturer in University of Indonesia, University of Pelita Harapan, and ITB
Contact: satriyaeddy@gmail.com 62.21.3511466 t

2002-present : Actively writes various article and column in national papers and magazines.

62.21.3511464 f

2005 (Dec)-present: Working in Coordinating Ministry for Economics Affairs

2011 - Present: Head of International Cooperation Division, Secretariat of KP3EI

Recent publications are available on:

eddysatriya.wordpress.com kolom.pacific.net.id
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