British Chamber of Commerce in Indonesia (BritCham)

BKPM Badan Koordinasi Penanaman Modal National Investment Seminar

British Chamber of Commerce in Indonesia (BritCham)Chairman of BritCham: Malcolm Llewellyn

Background:
1960-1988: Blue Circle Cement
1978-1984: Project Director/President Director Andalas Cement – Banda Aceh
1994-1996: GM Djajanti Maluku & Brunei Cement
1997-1998: Gajah Tunggal Grobogan Cement Project
2003-2008: President Director of PT Boral Indonesia. Director of Boral Pipe and Precast

BritCham Business Activities
http://www.britcham.or.id

BritCham is the British Chamber of Commerce based in Jakarta
200 companies are members of BritCham
BritCham holds over 100 functions every year – networking, breakfast or afternoon briefing/presentations, seminars, lunches and social events for members and guests.
Britcham has specific sector groups to work on infrastructure, Manufacturing, HR, Food & Agriculture, Fuel & power priorities.
BritCham is managed by an executive team reporting to a board of unpaid businessmen and representatives of organisations such as The British Embassy, Kiki and ex British University Alumni.
BritCham welcomes any approach from Government and private organisations to involve them in the development Indonesia especially through Trade

TRADE & INVESTMENT SECTION
BRITISH EMBASSY – http://www.britain.or.id

UK Trade & Investment is the Government organisation that helps UK based companies work in international markets; and Indonesian companies to bring high quality investment to UK.

Her Majesties Ambassador drives the commercial effort.

UKTI team at the British Embassy Jakarta.
Counsellor, Director of Trade/ Investment, Jeremy Larner
Owen O’Connor (deputy), Lian Jap, Annetly Ngabito, Diah Noor, Peggy Gaspersz and six support staff

INDONESIA BRITISH TRADE BILATERAL TRADE

Main UK Exports to Indonesia :

Transport equipment,
Organic chemicals, metal ores and scrap metal
General industrial and specialised machinery and equipment
Electrical machinery, clothes & appliances
Medicinal & pharmaceutical products
Pulp & waste paper
Power generating machinery and equipment

UK Exports and Imports to/from Indonesia
(2003 – 2007)

BRITISH EXPORTS TO INDONESIA

Exports to Indonesia (2005)
EU Context

UK COMMERCIAL INTERESTS –
incentives, opportunities and actions

Indonesia is the largest economy in South East Asia. It has the largest population but in some cases the lowest per capita consumption – giving Indonesia the highest growth potential

Annual Business Plan : Current best “opportunity” sectors are Environment, Financial Services and Power; Indonesia is also a regional market sector for Ports.

Following Prime Minister Blair’s visit in March 2006, the first meeting of the Indonesia-UK Partnership Forum, chaired by the respective Foreign Ministers, was held in London at the end of January 2007 to discuss all aspects of the bilateral relationship.

PROMOTING COMMERCE

Indonesian British Business Council – Plenary meeting on 30 March 2006
British Chamber of Commerce executive office and monthly networking meetings and presentations in Jakarta
BritCham sector group meetings and seminars
Voluntary Principles Working Group – Oil & Extractive Industries. DFID promoting the Extractive Industries Transparency Initiative (EITI)
BritCham working with European Chamber & bilateral chambers

INVESTMENT INTO INDONESIA

Main opportunities:

Sectors that generate foreign currency such as oil, gas, mining and agriculture, but also privatisation (financial and corporate sector) and restructuring.
Technical expertise, project management, quality control consulting, education, good governance
Infrastructure Projects :
November 2006 Infrastructure Conference, the Indonesian government announced 10 model projects worth US$ 4.4 billion and 101 potential projects valued at US$ 14.7 billion. These are a priority for government but progress has been slow.

BARRIERS TO TRADE

Slow progress in addressing all levels of corruption.
Slow progress in restoring faith among business community after 1998 Asian meltdown.
Negotiable costs: e.g. regulations in the regions and arbitrary actions by government authorities which cause uncertainty.
Lack of more visible effort by Indonesian Government to improve perception of country’s business environment
No guarantees that investors get a fair legal hearing if they need to go to trial over labour, tax, or land disputes.
Lack of infrastructure: electricity, toll roads, fresh water, drainage, sewerage, traffic control and safe public transportation

Improvements needed

Regulations: Investors need clear rules which can be discussed but that are flexible for the right reasons
Security: Companies need tenure on property and minerals. Individuals must not be harassed by manpower, tax, immigration and police. If ownership was allowed, private investment would flood in as in most coutries.
Manpower: Expats must be used where needed and be able to move around in several jobs as long as there is training and technology transfer given. Stay Visa and all documents should be good for the duration of the job (2yr min) to stop wasting money and time with renewals.
Labour laws; Should be fair to both parties.
Infrastructure: While this is bad, investment is uneconomic

ENCOURAGING NEWS

Indonesia’s growth
– above average in comparison to neighbouring countries in 2007
so far not severely affected by US downturn
(Vietnam 8.3%, Indonesia 6.0%, Malaysia 5.4%,
Philippines 5.4%, Thailand 4.0%)
(Source : “Asian Development Outlook 2007 “ Report, ADB )

Total Exports set a new benchmark in 2007 at US$ 113.99 billion (an increase of 13% over 2006)

Increasingly affluent middle class estimated up to 20 million- larger than population of Australia are buying at a high rate

BRITISH INTEREST IN INDONESIA

Indonesia accorded High Growth Market status by UKTI

5-year strategy. Awareness of market potential raised by VVIP visits:
Prime Minister (March 2006),
Lord Mayor of the City of London (May 2006),
HRH The Duke of York (March 2008).
Britain’s first Asian Minister (June 2008).

Government determined to press ahead with infrastructure development regarded as crucial to promote economic activity, create much needed jobs and attract FDI

PT SEMEN ANDALAS A British managed and constructed project

First site visit September 1978
Land buying took 1.5 years
Construction started September 1981
Plant commissioned April 1983
Completed on time and within budget

PT.BORAL INDONESIA USD 400m cement project

Feasibility started March 2003
Project purchased/BKPM approval 2005
Geological exploration complete July 2005
Land purchase Nov 2005 – not complete yet
Access road and plant construction will take 5yrs
Completion for should be a ‘3 yr’ project – 2014
BKPM expansion approved 04 August 08.
BKPM time extension not approved yet – risk.

UK TRADE & INVESTMENT

Delivering business opportunities through our global network

BP investing US$ 2.5 Billion in huge LNG project in Papua
(Tangguh) – 80% construction is completed

Shell operates more than 10 petrol stations in Jakarta.
Target of 400 by 2013

Premier Oil signed Heads of Agreement for further gas
supplies to Singapore – which now power one in three
light bulbs there

Standard Chartered widening network of branches in Indonesia and acquisition of Permata Bank

RECENT UK SUCCESS STORIES

Debenhams opened (second) flagship store at prestigious Jakarta shopping mall

Harvey Nichols to open major store in August 2008 at
Grand Indonesia, Jakarta’s newest mall

Early Learning Centre (ELC) opened first store alongside
Mothercare at Pacific Place Mall in April 2008

Other UK Retailer with a strong presence include: Next,
Boots, Mothercare, Bodyshop Topshop, Miss Selfridge,
French Connection, Burberry, Ted Baker, Jimmy Choo

RECENT UK SUCCESS STORIES

Balfour Beatty : Construction and Java Bali power line

Rolls Royce power generation contracts in East Kalimantan,
Riau Province

Wedgewood/Royal Doulton manufacture “premium” products,
first time outside UK and expanding their operation

Dewhirst produces 10 million pieces per year of menswear and
ladieswear for M&S (US$ 17 million sales revenue)

Marks and Spencer have expanded their network of stores

RECENT UK SUCCESS STORIES

Barclays Capital was part of the lead consortium in Indonesia’s US$2 billion International Bonds issue in March 2006. Increasingly active in corporate lending.

Barclays Capital and HSBC are part of the lead consortium in Indonesia’s US$ 2 billion Global Bonds issued in January 2008.

Despite the market’s complexities and distance from UK, Indonesia offers real potential for determined UK exporters
Revised : March 2008

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