BUSINESS FACILITIES IN INDONESIA
A. Industrial Estates
Industrial estates are available in almost all provinces of Indonesia. The large
scale industrial estates are found in Jakarta, West Java (Bekasi, Karawang,
Purwakarta), Banten (Tangerang, Serang), Central Java (Semarang, Cilacap),
Yogyakarta (Piyungan), East Java (Surabaya, Gresik, Sidoarjo, Pasuruan,
Probolinggo), North Sumatera (Medan), West Sumatera (Padang), Lampung, Riau (Batam
Island, Bintan Island), South Sulawesi (Makassar) and East Kalimantan (Bontang).
B. Bonded Zones
Bonded Zone means a zone with particular boundaries within which processing of
goods and materials, construction designing, engineering activity, sorting,
preliminary inspection, final inspection and packing of imported goods and
materials from the other areas within Indonesian Custom Territory (Daerah Pabean
Indonesia Lainnya/DPIL) are carried out with purpose mainly for export.
On the importation of goods and/or material for the production process in Bonded
Zone certain facilities can be granted such as postponement of import duties,
excise free, value added tax (PPN), sales tax on luxury goods and income tax of
article 22 shall not be collected
Foreign Investment (PMA) as well as Domestic Investment (PMDN) Companies,
Limited Companies of Non PMA/PMDN and Cooperatives with legal status are able to
obtain approval as an Operator of Bonded Zone and Companies Operating in Bonded
Operator of Bonded Zone (Penyelenggara Kawasan Berikat/PKB) shall be a limited
company, a cooperative with legal status or a foundation which owns, controls,
manages and provides facilities and infrastructure in the interest of other
parties in Bonded Zone he operates on the basis of an agreement.
Meanwhile, Companies Operating in Bonded Zone (Pengusaha Didalam Kawasan Berikat/PDKB)
shall be limited companies or Cooperatives undertaking a processing of goods and
materials in a Bonded Zone.
Up to February, 2003 there are 15 Operators of Bonded Zone (PKBs) spread in
Jakarta (Cakung, Marunda and Tanjung Priok operated by government), Bogor,
Purwakarta, Karawang, Semarang, Pasuruan, Medan, Mojokerto, Bintan Island, Aceh,
and Batam Island and 426 Companies Operating in Bonded Zone (PDKBs).
C. Banking, Insurance and Leasing
Bank Indonesia (BI) as an independent state institution is fully autonomous in
formulating and implementing each of its task and authority as stipulated in the
new Central Bank Act, Law No. 23/1999. As a central bank, BI has a single
objective of attaining and maintaining stability of the rupiah value. In the
pursuit of the objective, it is supported by 3 sectors of task which are
formulating and implementing monetary policy system, regulating and ensuring a
smooth payment system, developing sound banking and credit systems by building
and supervising banks.
BI does not perform the commercial activities of banks in general, of commercial
banks as well as of rural credit banks. Therefore, BI cannot serve saving and
checking accounts as well as deposits from the public. In addition the public
cannot directly request for credit from BI.
(Online : www.bi.go.id)
Relating to foreign investment, Bank Indonesia plays the following roles :
a. Issuing a letter of clearance for final draft loan agreement of Foreign
Direct Investment (FDI) companies.
b. Monitoring the FDI accounts.
c. Ensuring that the capital for FDI projects originates mostly from offshore.
d. Registering all offshore loans received by FDI companies.
To support business activities in Indonesia, there are foreign banks operating
in Indonesia such as ABN AMRO Bank, American Express Bank, Bank of America NA,
Citibank NA, Deutsche Bank AG, JP.Morgan Chase Bank, Standard Chartered Bank,
The Bangkok Bank Comp. Ltd., The Bank of Tokyo-Mitsubishi Ltd., The Hong Kong
and Shanghai Banking Corp.
Besides there are 5 (five) state-owned banks, namely PT. Bank Ekspor Indonesia (Persero),
PT.Bank Mandiri (Persero), PT.Bank Negara Indonesia (Persero),Tbk., PT. Bank
Rakyat Indonesia (Persero), and PT.Bank Tabungan Negara (Persero). In addition,
there are 36 (thirty six) Devisa National Private Banks, 40 (forty) Non Devisa
National Private Banks, 26 (twenty six) Region Development Banks, and 24 (twenty
four) Joint Ventures Banks.
Other financial institutions include 176 insurance companies both international
and national, and 145 leasing companies in Indonesia.
According to the Law concerning the Capital Market, the guidance, regulation,
and day-to-day supervision of capital market is provided by the Capital Market
Supervisory Agency (Badan Pengawas Pasar Modal/Bapepam). Also, it implements an
orderly, fair, and efficient capital market activity and protect the interest of
investor and public.
The functions of Bapepam are:
1. Drafting Capital Market rules and regulations;
2. Guiding and supervising any Person granted business license, approvals,
registration and other person related to Capital Market;
3. Establishing disclosure principles for Issuers and Public Companies;
4. Settlement of the objection by Person imposed sanction by Stock Exchange,
Clearing Guarantee Corporation, and Central Securities Depositary;
5. Establishing Capital Market accounting standards;
6. Protecting technical implementation of Bapepam main function according to the
policy required by Minister of Finance;
7. In implementing the function, Bapepam has the authority to grant licenses,
approvals, effective registration to capital market participants and provide
effective registration statement;
8. Up to present Bapepam has granted business licenses to 2 exchanges namely The
Jakarta Stock Exchange (JSX) and The Surabaya Stock Exchange (SSX), 117
Underwriters, 207 Broke-dealers and 70 Investment Managers.
E. Representative Office
A foreign company may establish a representative office in Indonesia in one of
province capitals. Its activity is limited to supervising and coordinating the
business of its principal and branches. This office is not allowed to make any
business transaction with companies or persons in Indonesia either for export or
import or domestic trading.
The representative office can :
a. Obtain work permits for expatriate managers.
b. Obtain multiple entry visas for its expatriate personnel as well as exemption
from exit-tax (SKFLN).
The representative office is led by one or more foreign or Indonesian citizens
who are appointed by a foreign company or joint foreign companies as their
representatives with the intention of :
a. Handling the company or its affiliates concerns, and or
b. Preparing the establishment and development of foreign direct investment
companies, in Indonesia or in other countries and Indonesia.
Installed capacity and the generating units of the state-owned electricity
enterprise/Perusahaan Listrik Negara (PLN) as Holding and sister companies
totaled 21,058.83 MW and 4,173 units , which was 15,494 MW (74%) concentrated in
Java. The biggest installed capacity generating unit is steam power plants
Suryalaya in West Java (600 MW). Total installed capacity comprised of Steam
power plants 6,900 MW (33%), Combine cycle power plants 6,863 MW (33%), Diesel
power plants 2,585 MW (12%), Hydropower plants 3,015 MW (15%), Gas turbine power
plants 1,225 MW (6%), and Geothermal power plants 380 MW (2%).
Peak load totaled 16,314 MW, while interconnection system peak load Java-Bali
reached 12,581 MW. In 2002, electric power totaled 88,355 GWh, increased 4.9%
compared with previous year. From this figures, 21% produced by PLN Holding, and
79% produced by the sister companies, namely PT. Indonesia Power, PT. PJB and
PT. PLN Batam.
Electric power percentage to primary energy are: Natural gas 25,853 GWh (29%),
coal 29,330 Gwh (33%), oil 19,539GWh (22%), hydropower 10,561 GWh (10%), and
2,982 GWh (3%) comes from geothermal. PLN total production (includes purchasing
from outhouse sourcing) in 2002 obtained 101,654 GWh. Electric power purchased
from outhouse is 13,299 GWh (13%). From the total purchased electric power, the
biggest of 4.040 GWh (30%) comes from PT. Paiton Energy Company, and 4,342 GWh
(33%) from PT. Jawa Power in East Jawa.
Electric power selling
Electric power selling to industrial group increased 5%, meanwhile household,
business and others has respectively increased 9%, 8% and 4%. The amount of
customer at the end of 2002 was 29,827,728. Basic Electricity Tariff in July -
September 2003 for industry usage 2200 Va - 14 KVA is set Monthly Subscription
Rp. 32,200 /kVa/month, Block I < 80 hours usage: Rp.455/kWh and Block II: > 80
hours, next usage Rp.460 /kWh.
(online : www.pln.co.id).
Telecommunication services are provided by state-owned enterprises, consisting
of PT.Telkom, which provides domestic telephone and telegraph services, and PT.
Indosat which provides international telecommunication services.
Perusahaan Perseroan (Persero PT.Telekomunikasi Indonesia Tbk. ("TELKOM) is a
majority state-owned company and it is the principal provider of fixed line and
cellular services in Indonesia. The company provides a wide range of
telecommunication network and telecommunication services including fixed-line,
mobile interconnection network, data and internet services, and other
Fixed-phone telecommunication services in 7 regional divisions covering all of
Indonesia mainly for local and domestic long-distance services. Fixed-phone
subscribers pay one time installation charges, ongoing monthly subscription
charges, and usage charges for local and domestic long-distance services. Usage
charges are generally uniform nationwide and based on call distance, call
duration and time band. In addition, subscribers are provided with a number of
value added features, which are billed on a monthly basis, such as voicemail and
Total number of fixed-lines in service in 2002 were, 5,965,568 for residential
customers, 1,361,810 for business customers, 19,788 for social customers, and
402,869 for public telephones, includes kiosk phones.
Another Indonesian state owned company in the field of telecommunication
services is PT. Indosat (Persero) Tbk, which connects Indonesia with more than
250 countries in the world. It serves the switching and non-switching
international telecommunication services. The switching telecommunication
services are phones, telex, telegrams, data-packet communications, facsimiles,
corporate digital networks and Inmarsat Global System. The non-switching
telecommunication services are international leasing circuit, international
video conference, live television transmit network and frame relay. The main
Indosat service is The Direct International Connection (SLI) with the
access-code 001. Indosat will transform the main activity from international
operator to Full Network and Service Provider (FNSP) by adapting strategy "4 in
1", namely the development of Backbone, Fixed Line Access, Mobile and Wireless,
Internet and Multimedia.
PT. Excelcomindo Pratama (Excelcom) was established in November 1995. The
company is a joint venture company and is the third cellular telephone operator
adopting the GSM (Global System for Mobile Communications) standard. On October
1996, it officially launched its mobile phone service to Indonesia public. The
company have built more than 600 BTS's (Base Transceiver Station) predominantly
distributed in Jakarta and in many of the primary business around Java, Bali and
Lombok. It has also installed over 4,000 kilometers of high-grade fiber optic
cable stretching from Jakarta to Surabaya as part of the strategy to be the best
cellular transmission network in Indonesia.
Indonesia's road network totaled 268,030 km including 103,430 km of roads in
Sumatera, 54,301 km in Java, and 5,653 km in Bali. Most cities is Java, Sumatera,
Sulawesi and Bali are connected by highways or secondary roads.
Nearly 90% of passenger transport and 50% of cargo transport are made by road.
Trunk roads are well developed and new toll highways are being developed by
Railways in Indonesia have a total track length 6,482 km in Java and Sumatera.
Railways are used for freight transportation and long-distance passenger
services. In the Jakarta-Bogor-Tangerang-Bekasi (Jabotabek) region railways are
used for commuter services.
Indonesia has 2,061 ports, among others have a container facility such as in
Belawan, Batam, Tanjung Priok, Tanjung Emas, Tanjung Perak and Makassar. Other
strategic ports in Indonesia are Dumai, Lhokseumawe, Pekanbaru, Panjang,
Palembang, Teluk Bayur, Pontianak, Jambi, Banjarmasin, Benoa, Tenau, Sampit,
Balikpapan, Samarinda, Bitung, Ambon and Sorong.
The largest ports, Tanjung Priok, serves the Jakarta area and handled 1,431,753
Twenty Feet Equivalent Units (TEU's) container in 2000. Tanjung Perak Container
Terminal accommodated 238,567 TEU's in 2000.
Among 150 airports in Indonesia, there are international airports including
Soekarno-Hatta and Halim Perdanakusuma in Jakarta, Husein Sastranegara in
Bandung, Adisumarmo in Surakarta, Juanda in Surabaya, Ngurah Rai in Bali, Sultan
Iskandarmuda in Banda Aceh, Polonia in Medan, Hang Nadim in Batam, Sultan Syarif
Kasim II in Pakanbaru, Tabing in Padang, Kijang in Tanjung Pinang, Supadio in
Pontianak, Sepinggan in Balikpapan, Hasanuddin in Makassar, Sam Ratulangi in
Manado, Frans Kaisiepo in Biak, and Selaparang in Mataram.
Among domestic airports are Sultan Mahmud Badaruddin II in Palembang,
Adisutjipto in Yogyakarta, Syamsudin Noor in Banjarmasin, Ahmad Yani in Semarang
and Pattimura in Ambon.