A presentation delivered in Perth on the bilateral business relations between Indonesia and Australia.

2. • Population: 241 million
• Land area: 1.9 million square km
(25% of Australia)
• 17,500 islands
• 300 ethnic groups
2

3.  Population: 140 million, thereof approx. 90 million ethnic Javanese (largest ethnic group in
Southeast Asia).
 Size: 126.700 km2 (50% the size of New Zealand).
 1000-km northern route (great post road/groote postweg) constructed by Governor General
Herman Daendels in 1808 – 1810 in the service of France the island’s main artery to date that
produces 26% of Indonesia’s economy.
 Center of power and economy since colonial times.
 Javanese culture dominant, particularly during President Soeharto’s 32-year reign.
3

4. “Doing Business in Indonesia 2010” – The World Bank and IMF 4

5. “Lowy Institute Indonesia Poll 2012: Shattering Stereotypes, Public Opinion and Foreign Policy” – Fergus Hanson 5

6. POLITICAL
Governments
WILL
Political Attitude
GOAL:
Policies and
GOOD OF Strategies
COMMUNITY
(“Negotiating Mining Agreements: Past, Present and Future Trends,” Danièle Barberis, 1998) 6

7. 1. The economy shall be 2. Sectors of production
organized as a common that are important for the
endeavor based upon the country and affect the life
principles of the family of the People shall be
system controlled by the State
3. The land, the waters and
the natural riches
contained therein shall be
controlled by the State and
exploited to the greatest
benefit of the people
7

8. Year Era Economy
1945-1950 Revolution (War Non-existent
against the Dutch)
1950-1957 Proto-democracy In shambles
Guided Democracy In ruins –
1957-1966
(Revolution Ch. 2) inflation 650%
Excellent: 7- 8%
1966-1998 New Order
growth
Reformation – seeds
1998-2005
of democracy
In the Doldrums
Respectable: 6%
2005- now Nascent Democracy
+ growth 8

9. SECTOR
PROSPECTS CHARACTERISTICS SECTORS
Automotive, cigarettes,
High growth, Servicing retail consumers cement, leasing,
low risk directly and indirectly pharmaceuticals, packaging,
air transport
Heavily regulated, strong Infrastructure: toll roads,
High growth,
parliament roles, need electricity, ports, tap water
high risk
government guarantees
High potential, Palm oil, rubber, cocoa
Exported commodities
low risk
Heavily regulated, legal Oil & gas, mining
High potential,
uncertainty, regional
high risk
autonomy issues
Low growth, Trade, insurance
Steady “annuity” business
low risk
Low growth, Labor-intensive, competing Textiles, shoes, toys, low-end
high risk with China, India and Vietnam electronics
“Indonesia: The Road Ahead,” Fauzi Ichsan (June 2005) 9

10. 7 10

11. BANKING INSURANCE FMCG
ANZ, HSBC, CIMB, CIGNA, Prudential, Unilever, Arnott’s, P
Commonwealth Manulife, Allianz hillip Morris, BAT
LOGISTICS TECHNOLOGY TRAVEL
Schenker, DHL, Mae Axiata, RIM, Siemen Air Asia, Accor
rsk s, GE Group, Aston Group
AUTOMOTIVE
Toyota (market share
> 50%), Honda,
Mercedes
11

12. It definitely is, but you can
do (good) business in
Indonesia without
promoting and resorting to
bribery or being otherwise
involved in corruption.
12

13. Middle class group: 50 million +
27th biggest exporter in 2010
Inflation 5.4% (2011)
Economic growth in 2011 6.5% - 2012 revised downward
to 6.3%
Size of economy : US$ 846 billion in 2011, projected to
be a trillion dollar economy in 2014
16th largest economy in the world
13

14. Jakarta
Double track Airport served
railway 52.4 million
Growth of air between passengers in
travel in 2011 Jakarta – 2011
22% Surabaya
ready in 2013
800 new
pilots
needed Accor to double
annually US$ 2 billion number of
commuter line
from airport – hotels to 100 by
1200 air Jakarta
traffic end 2015
operational
controllers 2014
needed
Aston Hotels
Mobile to add 73 new
New car sales telephone hotels (20
in 2012 subscriptions in thereof this
projected at 1 Q1/2012 255 year) to
million units million numbers existing 45
14

15. • 16th-largest economy in the • 7th-largest economy in the
world world
• 45 million members of the • 135 million members of the
consuming class consuming class
• 53% of the population in cities • 71% of the population in cities
producing 74% of GDP producing 86% of GDP
• 55 million skilled workers in • 113 million skilled workers
the Indonesian Economy needed
• $0.5 trillion market opportunity • $1.8 trillion market opportunity
in consumer in consumer
services, agriculture and services, agriculture and
fisheries, resources, and fisheries, resources, and
education education
(“The archipelago economy: Unleashing Indonesia’s Potential – Executive Summary” – McKinsey Global Institute, September 2012) 15

16. MYTH # 1 MYTH # 2 MYTH # 3 MYTH # 4 MYTH # 5
The Economic Indonesia Resources Growth has
Indonesian growth follows are the come mainly
Economy is centres on export- economy’s from an
unstable Jakarta driven model main driver expanding
for growth workforce
Indonesia The fastest The main Indonesia’s Indonesia’s
had the growing drivers of economy is productiv-
lowest urban growth are becoming ity gain has
volatility centers are domestic more come
in cities with advanced, mostly
economic more than consumpt- so its large from
growth 2 million ion and endow- improve-
compared people services. ments of ment within
to OECD (Medan, Ba natural sectors and
and BRIC ndung, Bo resources not at the
countries. gor and no longer expense of
Surabaya). drive econ. employ-
developmt. ment.
(“The archipelago economy: Unleashing Indonesia’s Potential – Executive Summary” – McKinsey Global Institute, September 2012) 16

17. 17

18. Menara Karya, 10th Floor Suite H
Jl. HR Rasuna Said Blok X-5 Kav. 1-2
Jakarta 12950 – INDONESIA
T: +6221 5794 4694
F: +6221 5794 4696
info@kiroyan-partners.com
www.kiroyan-partners.com