Presentation by Diyanto Imam

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Diyanto Imam, Country Director - New Ventures Indonesia - Indonesia.

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Presentation by Diyanto Imam

  1. 1. Diyanto Imam New Ventures Indonesia Sustainable Private Equity and Venture Capital The Indonesian Landscape
  2. 2. Overview <ul><li>Financial Resources for Sustainable SMEs </li></ul><ul><li>Public Policy and Regulatory Framework </li></ul><ul><li>Status of PE/VC </li></ul><ul><li>Investment in Sustainable SMEs </li></ul><ul><li>Concluding Thoughts </li></ul>
  3. 3. Financial Resources for Sustainable SMEs
  4. 4. Financial Resources for Sustainable SMEs <ul><li>PE/VC provide means and methods to improve Sustainable SMEs skill level and management capacity </li></ul><ul><li>PE/VC enable Sustainable SMEs to nurture and expand business network </li></ul><ul><li>Increase Sustainable SMEs credibility and business environment through reputable PE/VC partnerships </li></ul>Why PE/VC?
  5. 5. Public Policy and Regulatory Framework <ul><li>1988/1989 Decrees lay the foundation for finance companies and market behavior </li></ul><ul><li>Legal guidance in 1995/1999 provides for establishment and supervision of Venture Capital Companies (VCCs) </li></ul><ul><li>Licensing and capital requirements are standard practice with minimum capitalization between USD 300,000 - $ 1 million </li></ul><ul><li>Foreign ownership in joint venture VCCs capped at 85% in limited liability structure with registered operational agreement </li></ul>
  6. 6. Public Policy and Regulatory Framework <ul><li>Semi-annual operations and financial reports filed with the Ministry of Finance </li></ul><ul><li>VCCs in outlying provinces supervised by Directorate General of Financial Institutions and government VCC branches </li></ul><ul><li>VCC funds not allowed to be drawn from promissory notes or current, deposit or savings accounts </li></ul>
  7. 7. Status of PE and VC * in billions of Rupiah (Exchange rate: USD 1.00 : Rp 9000) Ministry of Finance 2,651 2,381 2,261 2,513 Total Assets * 627 670 623 577 Paid-in Capital * 12,622 11,044 10,276 9,545 Number of Investee Companies 1,788 1,799 1,622 1,825 Total Loans * 1,551 1,514 906 1,633 Total VC Investment * 63 (2) 42 50 Total Profit/Loss * 60 60 60 60 Number of Companies 2005 2004 2003 2002 Year Details
  8. 8. Status of PE and VC Note: * in billions of Rupiah (Exchange rate: USD 1.00 : Rp 9000) Ministry of Finance 26,612 M 137 Partnerships 126,140 M 437 Sole Proprietorships (CV) 417,992 M 4,903 Individuals 946,074 M 6,072 Total 113 482 Number of ICs 34,933 M Cooperatives 340,396 M L imited Liability Companies Amount of Investment (Rp) Legal Entity
  9. 9. Status of PE and VC Venture Capital Financial Instruments Note: * in billions of Rupiah (Exchange rate: USD 1.00 : Rp 9000) Ministry of Finance Amount of Investment (Rp) Number of ICs Financial Instruments 11,972 M 587 Profit Sharing 886,467 M 5,397 Loans 946,074 M 6,072 TOTAL 17 71 12,845 M Convertible Bonds 34,789 M Shares
  10. 10. Status of PE and VC Investee Companies (ICs) Sector Focus Note: * in billions of Rupiah (Exchange rate: USD 1.00 : Rp 9000) Ministry of Finance Amount of Investment (Rp) Number of ICs Sector 62,588 M 541 Agro-industry 262,313 M 2,422 Trade 44,607 M 202 Livestock 31,252 M 265 Others 946,074 M 6,072 Total 1,928 714 386,196 M Services 159,116 M Industry
  11. 11. Status of PE and VC Investee Companies (ICs) Investment Profile Note: * in billions of Rupiah (Exchange rate: USD 1.00 : Rp 9000) Ministry of Finance Amount of Investment (Rp) Number of ICs Level of Investment 518,470 M 865 500 million – 5 billion 64,961 M 11 > 5 billion 946,074 M 6,072 Total 2,619 2,577 316,016 M 50 million – 500 million 46,232 M < 50 million
  12. 12. Investment in Sustainable SMEs <ul><li>Natural resource depletion, poverty alleviation and climate change impacts create need for change </li></ul><ul><li>Growing interest in profitable investments and business transactions in developing countries that meet social and environmental criteria </li></ul><ul><li>Significant G-to-G and major NGO/non-profit program focus on transparency and SME economic growth </li></ul><ul><li>Alternative development paradigm that incorporates environmental and social considerations for sound economic growth </li></ul>Key Drivers
  13. 13. Investment in Sustainable SMEs Challenges Sustainable PE & VC GROWTH Limited exit mechanisms Inadequate deal flow Insufficient government support Regulation, supervision and taxation Limited financial instruments
  14. 14. Investment in Sustainable SMEs <ul><li>Limited number of new, rapidly growing sustainable SMEs </li></ul><ul><li>Finite list of exit mechanisms - undeveloped IPO appetite, few strategic sales </li></ul><ul><li>Outdated regulations, legal uncertainly, corrupt bureaucracy, tax structure, lack of incentives </li></ul><ul><li>More attractive sustainable investment options in other Asia Pacific markets </li></ul>Challenges
  15. 15. Concluding Thoughts <ul><li>Growing pipeline of quality Sustainable SMEs from business groups, NGOs/non-profits, multilateral donor programs </li></ul><ul><li>Pending macro policy initiatives bode well for political stability with more competitive investment, taxation, infrastructure </li></ul>
  16. 16. <ul><li>Thank You </li></ul>
  17. 17. <ul><ul><li>For further info: </li></ul></ul><ul><ul><li>Diyanto Imam </li></ul></ul><ul><ul><li>New Ventures Indonesia </li></ul></ul><ul><ul><li>E-mail: imam@ybul.or.id </li></ul></ul><ul><ul><li>www.new-ventures.or.id </li></ul></ul><ul><ul><li>www.new-ventures.org </li></ul></ul>

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