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Government's Support on BBK FTZ (final)

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Uttarakhand 13mar 2008
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Government's Support on BBK FTZ (final)

  1. 1. INDONESIAN GOVERNMENT’S SUPPORT ON RIAU ISLANDS PROVINCE AND BATAM, BINTAN, KARIMUN (BBK) FREE TRADE ZONE INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE
  2. 2. BATAM, BINTAN, KARIMUN (BBK) FREE TRADE ZONE OUTLOOK INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE BBK is a main part of Riau Islands Province which situated in proximity to Singapore and Malaysia (Home to the world’s busiest and 6th busiest transshipment port respectively) Part of the Sijori (Singapore-Johor-Riau) Growth Triangle, undertaken since 1989 and to which Singapore’s growing limitation of land and affordable labours will be poured as investments to it’s vicinity. 9.48 6.05 5.69 5.29 3.73 3.55 2.85 2.59 0 1 2 3 4 5 6 7 8 9 10 Singapore Malaysia Batam Thailand Phillipines Vietnam India Indonesia Best Source: Processed Data from Political and Economic Risk Consultancy Report Physical Infrastructures The development of industry-sustaining infrastructures is highly supported by the government as depicted above where the score of Batam’s Physical Infrastructure is well above the average of Indonesia A range of tax and custom incentives is increasingly lucrative for investors after the legislation of BBK as Free Trade Zones in 2009
  3. 3. CENTRAL GOVERNMENT BUDGET ALLOCATIONS ON RIAU ISLANDS PROVINCE INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE Source: processed data from DG of Treasury *Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR) No Sector ALLOCATIONS 2014 2015 Increase/(Decrease) Initial Amendment 1 Public Service 1.3 trillion IDR / 95 million USD 1 trillion IDR / 73.1 million USD 1.1 trillion IDR / 81.1 million USD (190 billion IDR) / (14 million USD) 2 Defense 248 billion IDR / 18 million USD 336.4 billion IDR / 24.7 million USD 336.4 billion IDR / 24.7 million USD 88.3 billion IDR / 6.5 million USD 3 Public Order and Security 290 billion IDR / 21.3 million USD 409.7 billion IDR / 30.1 million USD 417.4 billion IDR / 30.7 million USD 127.6 billion IDR / 9.4 million USD 4 Economics 2.06 trillion IDR / 151 million USD 2.47 trillion IDR / 181.3 million USD 2.7 trillion IDR / 198.7 million USD 647.1 billion IDR / 47.5 million USD 5 Environment 87 billion IDR / 6.4 million USD 96 billion IDR / 7 million USD 82.65 billion IDR / 6 million USD (4.2 billion IDR) / (311 thousand USD) 6 Housing and Public Facilities 167 billion IDR / 12.2 million USD 159 billion IDR / 11.7 million USD 159 billion IDR / 11.7 million USD (8 billion IDR) / (588 thousand USD) 7 Health 114.3 billion IDR / 8.4 million USD 101.2 billion IDR / 7.4 million USD 109 billion IDR / 8 million USD (4.4 billion IDR) / (323 thousand USD) 8 Tourism and Culture 500 million IDR / 37 thousand USD 4 billion IDR / 300 thousand USD 4 billion IDR / 300 thousand USD 3.6 billion IDR / 263 thousand USD 9 Religion 31 billion IDR / 2.3 million USD 40 billion IDR / 2.937 million USD 52.59 billion IDR / 3.8 million USD 21.7 billion IDR / 1.6 million USD 10 Education 354 billion IDR / 26 million USD 377 billion IDR / 27.7 million USD 377.6 billion IDR / 27.8 million USD 23.6 billion IDR / 1.7 million USD 11 Social Security 12 billion IDr / 881 thousand USD 13 billion IDR / 958 thousand USD 12.7 billion IDR / 935 thousand USD 734 million IDR / 54 thousand USD T O T A L 4.65 trillion IDR / 342 million USD 5 trillion IDR / 367.4 million USD 5.4 trillion IDR / 395.6 million USD 729 billion IDR / 53.6 million USD
  4. 4. GOVERNMENT’S COMMITMENT ON INFRASTRUCTURE DEVELOPMENT IN RIAU ISLANDS INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE Year Central Government Spending Allocation on Infrastructures Public Service Buildings Roads and Bridges Airports Ports Utilities Total 2010 108.6 billion IDR / 8 million USD 102 billion IDR / 7.5 million USD 16.9 billion IDR / 1.2 million USD 94.7 billion IDR / 7 million USD 88.5 billion IDR / 6.5 million USD 410.7 billion IDR / 30.2 million USD 2011 75 billion IDR / 5.5 million USD 196 billion IDR / 14.4 million USD 21.3 billion IDR / 1.5 million USD 82 billion IDR / 6 million USD 125.8 billion IDR / 9.2 million USD 500 billion IDR / 36.7 million USD 2012 150 billion IDR / 11 million USD 264 billion IDR / 19.4 million USD 82.6 billion IDR / 6 million USD 138.6 billion IDR / 10.2 million USD 254 billion IDR / 18.7 million USD 889 billion IDR / 65.3 million USD 2013 123 billion IDR / 9 million USD 367.4 billion IDR / 27 million USD 51.5 billion IDR / 3.8 million USD 239 billion IDR / 17.6 million USD 285 billion IDR / 21 million USD 1.1 trillion IDR / 78.3 million USD 2014 224.5 billion IDR / 16.5 million USD 385.7 billion IDR / 28.3 million USD 127 billion IDR / 9.3 million USD 263 billion IDR / 19.3 million USD 290 billion IDR / 21.3 million USD 1.3 trillion IDR / 94.8 million USD 2015 315.5 billion IDR / 23.2 million USD 489 billion IDR / 36 million USD 312.2 billion IDR / 23 million USD 547.1 billion IDR / 40.2 million USD 449 billion IDR / 33 million USD 2.1 trillion IDR / 155.3 million USD Average Annual Growth 34.79% 39.58% 113.57% 49.21% 42.59% 40.86% Central Government spending allocation on infrastructures development in BBK and it’s surrounding areas has been growing remarkably since 2010 especially on 2015 as a result of Government’s commitment on reallocating unproductive spending into infrastructures Source: processed data from DG of Treasury *Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
  5. 5. GOVERNMENT’S COMMITMENT ON INFRASTRUCTURE DEVELOPMENT IN RIAU ISLANDS INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE 0 100 200 300 400 500 600 2010 2011 2012 2013 2014 2015 InbillionsIDR Source: processed data from DG of Treasury Government Spending Allocation on Infrastructures PSB Roads Airports Ports Utilities 34,79% 39,58% 113,57% 49,21% 42,59% 40,86% 0% 20% 40% 60% 80% 100% 120% PSB Roads Airports Ports Utilities Overall Source: processed data from DG of Treasury Average Annual Growth of Government Spending Allocations
  6. 6. PUBLIC SERVICE BUILDINGS DEVELOPMENT INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE 108,6 75 150 123 224,5 315,5 0 50 100 150 200 250 300 350 2010 2011 2012 2013 2014 2015 InbillionIDR Source: processed data from DG of Treasury CG Budget Allocations Indonesian Central Government has been committed to fulfill the needs of public service, public safety and public order in BBK and it’s surrounding areas, hence maintaining the business-friendly environment at place. Investment by Central Government on Public Service Buildings has been growing at an annual rate of 34.79% on average since 2010.
  7. 7. ROADS AND BRIDGES DEVELOPMENT INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE 102 196 264 367.4 385.7 489 0 100 200 300 400 500 600 2010 2011 2012 2013 2014 2015 InbillionIDR Source: processed data from DG of Treasury CG Budget Allocations Indonesian Central Government has been committed to keep improving interconnection between Industrial, Residential, Commercial and Export/Import shipment areas around BBK to minimize logistical costs and promote trades. Investment by Central Government on roads and bridges has been growing at an annual rate of 39.58% on average since 2010.
  8. 8. PROJECTION OF ROADS DEVELOPMENTS INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE 2009 2015 (Projected) Anambas 0 72,714 Lingga 0 65,26 Natuna 118,709 159,026 Karimun 26,641 96,381 Bintan 10,712 134,812 Tanjungpinang 29,724 42,671 Batam 148,209 169,322 0 100 200 300 400 500 600 700 800 Source:Processeddatafromtheministryofinfrastructure InKilometers CG’s Road Lengths The roads developed by the central government on Riau Islands Province (The province on which BBK Free Trade Zone is located) is about 334km in the year 2009 (excluding Anambas and Lingga Regencies which data is unavailabe). Based on the current development, the road lengths is projected to grow into 740km on the end of year 2015, approximately 121% increase on a 7 years period. 333,995 740,186 300 400 500 600 700 800 2009 2015 (Projected) InKilometers CG’s Road Lengths
  9. 9. CURRENT STATE OF ROADS IN RIAU ISLANDS PROVINCE INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE The road density indicator which is a ratio of road lengths to the land areas of the respective province shows that Riau Islands is among the best compared to other provinces and high above the national ratio. Meanwhile, the road length per 1,000 population indicator shows that Riau Islands is lagging behind several other provinces but still above the national ratio. Overall, the two indicators shows that Riau Islands land transportation infrastructure is much better than than the country as a whole, Central Government’s recent spike of budget allocations on Riau Islands will boost both indicators further. 0,36 0,27 0,21 0,39 0,49 0,55 0,25 0,00 0,10 0,20 0,30 0,40 0,50 0,60 Aceh Riau Jambi Bengkulu Lampung Riau Islands National Source: processed data from BPS (2012) Road Density by Province 0 1 2 3 4 5 Aceh Riau Jambi Bengkulu Lampung Riau Islands National 4,63 4,23 3,35 4,55 2,23 2,69 2,01 Source: processed data from BPS (2012) Road Lengths per 1,000 population by Province
  10. 10. ONGOING CG’s PROJECTS ON RIAU ISLANDS PROVINCE INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE City/Regency Volume (Road &Bridge Lengths) Budget Tanjungpinang Municipality 26.38 KM 26.1 billion IDR / 1.9 million USD Batam Municipality 121.2KM 237.6 billion IDR / 17.5 million USD Bintan Regency 2.42 KM 7 billion IDR / 515 thousand USD Karimun Regency 20.2 KM 16.6 billion IDR / 1.2 million USD Natuna Regency 65.57 KM 92.3 billion IDR / 6.8 million USD Lingga Regency 25.7 KM 5.5 billion IDR / 405 thousand USD 0 20 40 60 80 100 120 140 0 50 100 150 200 250 InbillionIDR Budget (IDR) Volume (KM) Source: processed data from DG of Treasury *Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
  11. 11. AIRPORTS DEVELOPMENT IN BBK INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE 16.9 21.3 82.6 51.5 127 312.2 0 100 200 300 400 2010 2011 2012 2013 2014 2015 InbillionIDR Source: processed data from DG of Treasury CG Budget Allocations As a province consists of 2,408 islands, Air Transportation has become the best alternative for people’s transportation in terms of time. The recent and planned developments of Airports by the Central Government will encourage travel between islands and boost trading in the province, BBK as the economic hub of the province will benefit the most. Investment by Central Government on Airports has been growing at an annual rate of 113.57% at average since 2010.
  12. 12. ONGOING AIRPORT PROJECTS INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE Karimun airport development will improve the flow of staple foods and basic needs which the island cannot self-sustain therefore reducing living costs and labour costs. Meanwhile, the development of airport in Dabo Singkep will broaden the opportunity to utilize the relatively more fertile land of Dabo Singkep to support the needs of staple foods in the Riau Islands Province hence sustaining the export-oriented zone in BBK
  13. 13. PORTS DEVELOPMENT INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE 94.7 82 138.6 239 263 547.1 0 100 200 300 400 500 600 2010 2011 2012 2013 2014 2015InbillionIDR Source: processed data from DG of Treasury CG Budget Allocations Riau Islands Province area consists of 5% Land and 95% water. Sea Transportation has therefore become the veins of Riau Islands, without it the province will definitely stagnate. In order to maximize the different range of potentials that each island has and harmonize the fulfillment of interdependent needs of each island, Central Government has been lavishly allocating spending on port developments. By developing the sea transportation, BBK can be focused on it’s industries while other parts of the province will support the basic needs of BBK, therefore creating an ever competitive export-oriented free trade zone . Investment by Central Government on ports has been growing at an annual rate of 49.21% on average since 2010.
  14. 14. ONGOING PORT DEVELOPMENT PROJECTS ON RIAU ISLANDS PROVINCE INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE City/Regency Port Budget Tanjungpinang Municipality Dompak 42.4 billion IDR / 3.1 million USD Tanjungpinang Municipality Tanjung Mocoh 22.5 billion IDR / 1.6 million USD Karimun Regency Malarko 5 billion IDR / 367 thousand USD Anambas Islands Regency Letung 31 billion IDR / 2.3 million USD Anambas Islands Regency Midai 23 billion IDR / 1.7 million USD Anambas Islands Regency Pulau Laut 24 billion IDR / 1.75 million USD Anambas Islands Regency Subi 76 billion IDR / 5.6 million USD Anambas Islands Regency Serasan 12.6 billion IDR / 927 thousand USD Lingga Regency Dabo Singkep 5 billion IDR / 367 thousand USD Source: processed data from DG of Treasury *Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
  15. 15. UTILITIES DEVELOPMENT IN BBK INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE 88.5 125.8 254 285 290 449 0 50 100 150 200 250 300 350 400 450 500 2010 2011 2012 2013 2014 2015 InbillionIDR Source: processed data from DG of Treasury CG Budget Allocations Utilities which includes Electricity, Water and Waste Treatment is fundamental to the development of cities and industries. In an attempt to keep up with the rapid industrial expansion in Riau Islands, Central Government has been increasing it’s Budged Allocations on utilities exponentially on an average annual growth of 42,59%
  16. 16. UTILITIES STATE ON RIAU ISLANDS PROVINCE INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE The commitment to develop Riau Islands Province as a competitive economic hub on the border of Indonesia has successfully increase the percentage of population having access to electricity by 24.47% in just a 2 years period, outpacing several other provinces in the region. Province Electrification Ratio 2009 2011 Increase Riau Islands 52.17% 76.64% 24.47% Riau 38.88% 54.8% 15.92% South Sumatra 56.11% 65.18% 9.07% Jambi 29.9% 32.74% 2.84% Bengkulu 52.74% 64.48% 11.74% Lampung 47.75% 61.88% 14.13% Source: processed data from PT. PLN (2012) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Riau Islands Riau South Sumatra Jambi Bengkulu Lampung Electrification Ratio by Province 2009 2011
  17. 17. Government Supports on FTZ Agency in Batam (BP BATAM) INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE Category Budget Allocations 2014 2015 Operational Expenditures 771.3 billion IDR / 57 million USD 747 billion IDR / 54.9 million USD Capital Expenditures 548 billion IDR / 40.3 million USD 500 billion IDR / 36.7 million USD Total 1.319 trillion IDR / 97 million USD 1.247 trillion IDR / 91.6 million USD 58,46% 41,54% Budget Proportion (2014) Operational Expenditures Capital Expenditures 59,90% 40,10% Budget Proportion (2015) Operational Expenditures Capital Expenditures As a part of it’s endeavour to attract investments and promote Riau Islands Province as a business-friendly zone, Central Government has been allocating significant budgets to support Batam Free Trade Zone Agency (BP Batam) which operation includes managing several strategic entities, developing prioritized areas and providing services for investors at ease Source: processed data from DG of Treasury *Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
  18. 18. Government Supports on Other FTZ Agencies INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE Regional Development Council 70.4 billion IDR / 5.2 million USD Secretariat 10.4 billion IDR / 764 hundred USD Operational 8.6 billion IDR / 651 hundred USD Promotions 830 million IDR / 61 hundred USD Equipments 451 million IDR / 33.1 hundred USD Infrastructures 254.5 million IDR / 18.7 hundred USD Bintan Development Agency 25.6 billion IDR / 1.9 million USD Operational 2.3 billion IDR / 167 hundred USD Promotions 504.5 million IDR / 37 hundred USD Infrastructures 22.8 billion IDR / 1.7 million USD Karimun Development Agency 27 billion IDR / 2 million USD Operational 3.2 billion IDR / 235.2 hundred USD Promotions 1.5 billion IDR / 110.7 hundred USD Equipments 241.2 million IDR / 17.7 hundred USD Infrastructures 22.4 billion IDR / 1.6 million USD Tanjungpinang Development Agency 7.3 billion IDR / 538 hundred USD Operational 3.4 billion IDR / 235.2 hundred USD Promotions 1.2 billion IDR / 91.3 hundred USD Equipments 359 million IDR / 26.3 hundred USD Ifnrastructures 2 billion IDR / 147.6 hundred USD Source: processed data from DG of Treasury *Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR) Aside from the significant support given to BP Batam, Central Government also develop several fledging FTZ agencies which are projected to thrive and hold strategic positions on promoting and developing it’s respective area into a competitive, investment- friendly zone
  19. 19. CONCLUSIONS INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE The implementation of Free Trade Zone supported by broad access between industrial, commercial, residential and shipment areas, clear labour policy and investment-friendly regulations will boost economics growth and employment rate on the particular area and trickle into it’s surrounding areas. The Central Government of Indonesia has been committed to build Batam, Bintan, Karimun (BBK) Free Trade Zone into a competitive investor-attracting region by establishing several FTZ Agencies and pouring investments into infrastructures into BBK. This commitment is proved by the average annual infrastructure budget allocations growth rate of 40.86% since 2010. In the future, the Central Government will be prioritizing even more to develop BBK as part of it’s policy to improve the competitiveness of the export-oriented zone. This priority is enhanced by the Central Government’s policy to focus construction on areas with high maritime potentials and border areas to which BBK qualified.
  20. 20. INDONESIAN MINISTRY OF FINANCE REGIONAL TREASURY OFFICE FOR RIAU ISLANDS PROVINCE THANK YOU

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