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Indonesian Market Focus

Mining Machinery and Parts

2013
Vol 3

Prepared for

Specially by

Mining Machinery
Table of Contents
Table of Contents ................................................................................................................ 2
List of Figures ......................................................................................................................... 3
1. Executive Summary ............................................................................................................ 4
2. Overall Market Environment and Trend ........................................................................... 7
3. Competitive Landscape .................................................................................................. 10
3.1 PT. Altrak 1978 / Berca Group .................................................................................... 10
3.2 PT. Katsushiro Machinery Indonesia (KMI) ................................................................ 11
3.3 PT. Barata Indonesia (PERSERO)................................................................................. 11
3.4 PT. Gaya Makmur Tractors (GM Tractors)................................................................. 12
3.5 PT. United Equipment Indonesia (UNIQUIP) .............................................................. 12
4. Future Development......................................................................................................... 13
5. Key Success Factors, Drivers and Inhibitors of the Industry ........................................ 15
5.1. Key Success Factors .................................................................................................... 15
5.2. Drivers ............................................................................................................................ 15
5.3. Inhibitors ........................................................................................................................ 16
6. Regulation and Government Concern.......................................................................... 16
6.1 Investment Facilities and Incentives .......................................................................... 17
7. Industry and Players Related News................................................................................ 18
7.1 Legal Uncertainty Remains Big Problem in RI Mining Sector .................................. 18
7.2. Anticipating the Weakening Revenues in Mining Sector, INTA Increases Heavy
Equipment Rental Business ................................................................................................... 19
7.3 Indonesian Cement Brings New Mining Equipments ............................................... 19
8. Opportunities in Mining Machineries Sector in Indonesia .......................................... 20
8.1 Trade Events related to the Mining Machineries Sector in Indonesia .................... 21

Korea International Trade Association (KITA)

2

.........Mining Machinery List of Figures Figure 1 – Minerals Production & Export (2009-2012) ....................... 21 Korea International Trade Association (KITA) 3 ......................................... 2015-2025) (In Million Tons) ............................ 13 Figure 5 – Estimated Market Value of Mining Equipment in 2013-2017 (in USD Million) .............. 7 Figure 2 .................................... 14 Figure 6 .............................. 9 Figure 4 – Production..........................................................................Investment Growth in the Mining Sector in Indonesia (2010-2012) ...... Export and Domestic Sales of Coal Mining (Future Estimation..........Project Lists of Smelting Plant in Indonesia ....Market Value of Mining Equipment in 2008-2012 (In Million USD) . 8 Figure 3 ..............................................................................................................................

with total export revenue for the coal sector dropping by 2. Katsushiro Machinery Indonesia (KMI) o PT.8% Though the export values declined. the mining machinery segment has absorbed around 61% of the total heavy equipment’s sales or as many as 12.2 Competitive Landscape More than half of total demand for heavy equipments in Indonesia comes from the mining equipments. bulldozers and mining trucks The production capability of mining machineries is still very limited in the country and unable to meet the domestic growing demand Largest importers of mining machineries are originated from Japan. Barata Indonesia (PERSERO) o PT. Altrak 1978/ Berca Group o PT. the sector has expanded rapidly over the past five years or so. Jakarta. followed by Thailand. Key players in mining machineries and parts in Indonesia.Mining Machinery 1. many other Indonesia cities are growing more rapidly Inflation has fallen from double to single figure in the country Indonesia certainly is an important global mining hub. mining machineries products available in Indonesia market are excavators. wheel loaders.186 units 1. Korea and China Some of the manufacturers plan to set up and establish an assembly plant for excavator machineries in the country to increase capacity of production The demand of heavy equipment in Indonesia is fueled by the development of small miners In 2011. in fact. coal output has continued on an upward trend Coal in particular has seen much interest from the ever increasing demand from China and India Currently. the US. Gaya Makmur Tractors (GM Tractors) o PT. include: o PT. supported by the boom in global commodities prices A slowdown in global demand and a drop in prices have affected revenues in recent quarters The decline in coal exports in 2011 was relatively shallow.1 Overall Market Environment and Trend Indonesia’s economic growth is not centered merely in its capital city. producing and exporting key commodities In terms of nominal in production growth. The overseas manufacturers are represented in Indonesia by dealers. backhoe loaders. Executive Summary 1. United Equipment Indonesia (UNIQUIP) Korea International Trade Association (KITA) 4 .

In early 2009. provincial and municipal levels of government in Indonesia.3 Future Development The dominant importance of the sector will add force to the assurance that the policies which would jeopardize growth in the mineral sector will not be applied. Korea International Trade Association (KITA) 5 . Upcoming ban on mineral exports drawing a wave of foreign investors and equipment suppliers as local miners are forced to beef up ore processing capability before a 2014 deadline and it is assumed that many processing factories will be needed in Indonesia.2% during 2010-2015. Indonesian mining sector’s investment spending will be mainly for replacement plant and acquisition of equipments to maintain or expand their existing operation.4 Key Success Factor. in line with the environment outlook in the mining sector The mining equipment market is set to grow at of 6. Indonesia has introduced and issued its Mining Law. 1.5 Regulations and Government Concern The Mining Industry itself is regulated by central. Drivers and Inhibitor of the Industry Key Success Factor: o Technology o Ability to Tailor and Localize the Products o Excellent Financial Management o Marketing & Distribution Strength o Technical Know-How and Qualified Human Resource Drivers: o Indonesia Mineral Prospectivity and Government’s Investment o National and Cross-National Infrastructure o Replacement Demand o Comprehensive Government Regulations Inhibitors: o Skill Shortage o Uncertainty of Mining Sector Regulatory in Indonesia o Slowdown Global Economic 1. It is believed that Indonesia will still remain a leading mineral exporter in the region The country will also own its status as the largest thermal coal and tin exporter in the world.Mining Machinery 1. The growth of the mining industry in Indonesia is forecasted at an annual rate of 11% over the next five years The demand for mining machinery is expected to grow as well.

This could be an opportunity for Korean Heavy Equipment Companies to have more partnerships with Indonesian mining companies in terms of supplying machineries and parts to support the operational process. PT Semen Indonesia brings in new mining equipment called crushing vehicles in order to reduce the noise caused by limestone mining activities.6 Industry News Legal Uncertainty Remains Big Problem in RI Mining Sector . 1. Intraco Penta. Korea International Trade Association (KITA) 6 .7 Opportunities in Construction Machineries Sector in Indonesia Supply of Mining Equipments or Parts and Services: Korean Companies have some significant opportunities to supply of various mining equipment and services to be utilized in a range of stages of mining operations. one of the key players in heavy equipment sector offers solution to clients to hire and eventually will let them buy after the business recovered.Mining Machinery For the import of machinery and equipment or services required in connection with mining activities. there are no material restrictions or limitations of any kind imposed under Indonesian law To facilitate foreign investors. The machineries sector is one of the sectors eligible for these facilities. Mining Plant Projects: The Government of Indonesia has received 19 proposals of investment projects to build smelting plants in Indonesia and 10 projects are projected to be operational in 2014. 1. Indonesian Cement Brings New Mining Equipments .The decentralization has become a major annoyance to miners attempting to do business in the country. INTA Increases Heavy Equipment Rental Business – PT. with most major regional administrators out of control in terms of issuing mining permits. the Investment Law introduced a number of investment facilities or incentives for qualifying investors. Anticipating the Weakening Revenues in Mining Sector.Listed cement producer.

accounting for 12% of total GDP in 2012. growing by 10% in 2009 and since then. as well as government debt as a share of GDP is now lower than the enormous majority of advanced economies. this dynamic archipelago has the potential to be the seventh biggest by 2030. Reflecting this. many other Indonesia cities are growing more rapidly. but growth averaged 5. producing and exporting key commodities. Indonesia certainly is an important global mining hub. although from a lower base. With a rate growth averaged 5% in 2006-2007 before shrinking by 1% in 2008 amid the downturn in the global economy. the mining sector (excluding oil and gas) remains a major driving force in the economy. However. Being the 16th-largest economy in the world. the sector has expanded rapidly over the past five years or so. Figure 1 – Minerals Production & Export (2009-2012) Production 45 Copper (000 ton) Export 40 35 Nickel Ore (million ton) 30 25 20 15 10 Bauxite (million ton) 5 Iron Ore (million ton) 0 2009 2010 2011 2012 Korea International Trade Association (KITA) 7 . The country’s economic growth is not centered merely in its capital city. it recovered quickly. supported by the boom in global commodities prices. Jakarta. there has been some instability on a quarterly basis. Another factor is inflation that has fallen from double to single figure.5% a year in 2010-2012. the fourth-largest producer of copper and a leading exporter of coal.Mining Machinery 2. Overall Market Environment and Trend It is an unquestionable truth that Indonesia’s economy has enormous promise. in fact. In terms of nominal in production growth. Resources become the country economy’s main driver and are substantial. It has driven the country being the world’s second largest producer and exporter of tin and nickel.

Figure 2 . Though the export values declined. typically contributing around a third of total export earnings. a slowdown in global demand and a drop in prices have affected revenues in recent quarters. However.Investment Growth in the Mining Sector in Indonesia (2010-2012) 4000 3500 Mineral Contract of Work (COW) 3000 2500 Coal Contract of Work (COW) 2000 1500 State-Owned Enterprise (SOE) 1000 Mining Services 500 0 2010 2011 2012 Korea International Trade Association (KITA) 8 . In 2012. total mining export revenue fell to USD 31. Coal in particular has seen much interest from the ever increasing demand from China and India. the Indonesia mining sector has seen continued investment growth despite the lack of regulatory certainty and the need for further clarification of the law.2 billion from USD 34. According to the estimation of the Ministry of Energy and Mineral Resources (ESDM) coal production rose to 386 million tons in 2012. with a 23% or 90 million tons was located for domestic use and the remaining 77% was exported. coal output has continued on an upward trend.2 in 2011. With three years having passed since the introduction of the Mining Law in early 2009.Mining Machinery 1200 Production Copper (000 ton) Export 1000 Copper (000 ton) 800 Copper (000 ton) 600 Production Copper (000 ton) 400 Silver (000 ton) 200 Gold (000 ton) Tin (000 ton) 0 2009 2010 2011 2012 The mining sector is an important source of export revenue to the country. up from 275 million tons in 2011.

followed by plantation sector for 3. local content of mining machineries and parts are also remained low. In line with that. This further step is believed will increase the capacity from 1. However. wheel loaders. Figure 3 .000 – 2. thus the need of imports remained high. Korea International Trade Association (KITA) 9 . bulldozers and mining trucks.Mining Machinery The production capability of mining machineries is still very limited in the country and not capable to meet the domestic growing demand. few of manufacturers are planning for expansion and invest more in the next few years. the production has grown up to 57% year over year. It is expected that demand for mining machineries in 2013-2016 will continue to increase with dominated mainly by the type of excavator which the biggest market value among the other equipments had used in the business. it is recorded that mining sector has absorbed around 61% or as many as 12. Seeing a potential market in the country. followed by Thailand. the production of mining machineries in 2009 was down by 69% in line with the decline in consumption of 31% in the period. In 2011. backhoe loaders. One of the key leaders in the industry.798 units (9%). During the global crisis. construction of 2. it only consists of 30% local content and 50% for excavators. plans to set up and establish an assembly plant for excavator machineries with an investment of USD 320 billion.Market Value of Mining Equipment in 2008-2012 (In Million USD) 1400 Mine Conveyors & Elevators 1200 1000 Excavators (Mining Use) 800 600 400 Loaders (Underground Use) 200 Mining Trucks 0 2008 2009 2010 Coal Cutting Machinery 2011 2012 The demand of heavy equipment fueled by the development of small miners has caused the heavy equipment market began to shift up as well. Korea and China. the US.186 units. In 2011. An excavator has the highest demand since it has range of functions from land clearing up to the extraction of natural resources in coal mining. Largest importers are originated from Japan. mining machineries products available in Indonesian market are excavators.796 units (19%).197 units (11%) and forestry 1. Sumitomo. it was still not able to cover the demand. For mining trucks.000 units per year. Currently.

Altrak 1978 is capable to perform supports in mining sector by repairing the mining machines and engines or rebuild with complete tools. mining and building material production and ensure that this sector remain competitive. Altrak 1978 is by enlarging its networks which involved more than 30 branches throughout Indonesia. The overseas manufacturers are represented in Indonesia by dealers. Through the comprehensive network. The Company continues to support the equipment by interfacing with the OEM and the mine operators by providing service updates and specific technical data when required. adequate parts stock and dynamometer facility in Balikpapan and Samarinda for 1800 – 6000 Hp. Major players have been extending their facilities in operation in the country. food industry and other non-oil and gas sectors. mining.000 people. An excellent support is one of the key success factors of the Company operation. particularly for large units. productivity and quality in all areas of construction. 1978. such as giant excavators. As stated on the previous industry report. the Company has ever since been handling the agency of world class products that have direct contribution to the government which involved across different industries including infrastructure. Korea International Trade Association (KITA) 10 . 3.Mining Machinery 3. as well as foreign operations looking to capitalize on the country’s vast mineral wealth. Their advance technology and the variety of products strengthen the performance. Competitive Landscape In line with the substantial growth of coal mining sector in Indonesia. with a total employee of about 35. prompt and adequate after-sales supports can be made readily available for every customer in line with the high standards imposed by the principals. The Company has been expanding its business under the umbrella of Central Cipta Murdaya (CCM) Group which also handles some 60 subsidiaries operating in various business sectors. for more than half of total demand for heavy equipments in Indonesia comes from the mining equipments. Marketing strategy of PT. It is an ongoing mission for the players in the sector to achieve for a higher quality and lower-production cost and a ceaseless challenge that is striving to be in the lead and be ahead of keen competitions. Altrak 1978 / Berca Group Founded on June 12. it has dismissedoff the gloomy economic outlook of the region and been promoting serious competition between domestic mining companies. PT. Others are now only about to enter the Indonesian market for the first time.1 PT.

During the first year of operation. Barata Indonesia decided to relocate all of its facilities to Korea International Trade Association (KITA) 11 . The shareholders of the Company are Katsushiro Matex Co.Mining Machinery 3. Katsushiro Machinery Indonesia is a joint venture company. the Company was established in 1971 as a merger between:    PN. integrated quality system management and the skillful labors. MM2100 Industrial Estate in Cibitung Bekasi. The Company is facilitated with a-68. Katsushiro Indonesia has able to export its products into several countries in Asia. Barata formerly known as NV Braat Machinefabriek. PT. In the beginning of operation. agricultural equipments as well as the customized components according to customer needs and demands. manufacturing and machineries. The company providing maintenance services for sugar plants and to manufacture bridges and other steel construction. the Company’s head office was located in Surabaya with total area of 6. 3. Peprida. Ltd who holds 90% of ownership and the remaining 10% goes to PT.. Molenvliet.880 m2 in Selayar Street.889 m2 in Jababeka XII Street Block I in Cikarang Bekasi and 40. with a capital of USD 7. civil works. PN. 4 million in Kawasan Industri Cikarang with a total area of 41.2 PT.7 Ha at Ngagel Street.000 square meter factory building. PT. latest technology machines. Katsushiro Indonesia has been able to perform and produce high-quality products such as steel plate for heavy equipment components. providing construction services for basic industry projects. industrial generals. Katsushiro Indonesia. specializing in maintenance for the other plantation industry and production of coaster and lighter. PN. a Government-own Company.3 PT. Sabang Merauke formerly known as Machinefabriek & Scheepswerf NV. Barata Metalworks & Engineering. Up to date. PT. but from time to time this area was growth to a solid downtown. Blok B-II. the Company’s annual production capacity has reached 80. As the result of success. the Company was able to expand the marketing export into European Countries and the United States. automotives. Katsushiro Machinery Indonesia (KMI) PT. Barata Indonesia (PERSERO) Under the name of PT.000 tons per year material consumption. 1995. was established on April 25.

specialized in heavy equipment manufacturing for mining and road construction. Gaya Makmur Tractors (GM Tractors) PT. 2005. 3.Mining Machinery Gresik in 2004 up to 2005 with an available area of 22 hectare.700 tons/year and for heavy equipment is amounted to 810 units / year. Korea International Trade Association (KITA) 12 . United Equipment Indonesia (UNIQUIP) Established in January 26. TGI welding machines. To support and perform consistently the Company’s service motto “We Assurance Your Machine”. Hamm and Vogele brands.5 PT. considering the Company’s development in the future expansion. 3. Some of the important machineries in the Company’s business operation are: Automatic welding machines. The said units have been known for quite a long time in the county. With the existing facilities. supplying Wirtgen. Gear maker completely supported with plating unit and Spectrophotometer. Rigid Dump Truck TR35.4 PT. JCB. it turned the tools. the ability of PT. Gaya Makmur Tractors’ key success factors is to provide a total after-sales service in every of its sale of heavy equipments. Ammann. Gaya Makmur Tractors (GM Tractors) was established on August 29. and Xuzhou Construction Machinery Group (XCMG) which produces a variety type of cranes. mining and much more. in order to achieve the customer satisfaction. The Company is also recorded as a sole distributor for some heavy equipment manufacturers from China. They are Construction Machinery (Shantui) with their range product on bulldozers. workshops and high mobilization of our technicians into corporate commitment. plantation. The types of equipment that have been officially approved to be marketed in Indonesia by PT. facilities. motor graders and wheel loaders. TR45. One of PT. forestry. 2005 in Jakarta as a wholesale supplier of range of brand new heavy equipments for road construction. United Equipment Indonesia or known as UNIQUIP is engaged in the field of heavy equipment businesses. Barata Indonesia in the field of machinery and construction is amounted to 14. The Company is an authorized dealer for product brand names such as Vibromax. It is a sole distributor of Wirtgen Group of Germany. TR60 and TR100 with a payload capacity ranging from 30 up to 100 tons. United Equipment Indonesia are the construction machinery for the mining sector in the form of Articulated Dump Truck TA 400. PT. Terex and Genie.

Future Development Recent changes to Indonesia’s mining code have undoubtedly reduced the overall level of attractiveness for investment in the country. United Equipment Indonesia distributes Tower Light RL4000. The growth of the mining industry in Indonesia is forecasted at an annual rate of 11% over the next five years to reach an estimated USD 123 billion in 2014. 4. It is believed that Indonesia will still remain a leading mineral exporter in the region and retain its status as the second largest thermal coal and tin exporter in the world. Nevertheless. tin. spare parts’ warehouse and unit’s storage in Jln. AL5000 and AL8000 with illumination power started from 4000 to 8000 watt. In conducting its marketing activities. 2012 Korea International Trade Association (KITA) 13 . the Company is supported with a three-storey building facilities that is used for running the sales activities which integrated with workshops. Cilincing.Mining Machinery In addition. Raya Cakung. PT. which has contributed 12% of Indonesia’s GDP. there is a possibility for further reforms. Other office branches are also built and located spread in all over cities of Indonesia namely Medan. It is also predicted that the demand for thermal coal will be increased in the next three years. Balikpapan. Figure 4 – Production. will strengthen the conviction that the policies which would jeopardize growth in the mineral sector will not be applied. Export and Domestic Sales of Coal Mining (Future Estimation. nickel and so on. especially in the run up to the 2014 general election that caused the mining sector does not expect significant policy changes in the near term. These tower light products are also well-known to coal mining sites. The dominant importance of the sector. gold. Banjarmasin and Pekanbaru areas. 2015-2025) (In Million Tons) Export Domestic Production 421 364 326 236 175 153 2015 180 184 2020 150 2025 Source: APBI-ICMA.

it is assumed that many processing factories will be needed in Indonesia.59 2.96 Excavators (Mining Use) 718. Indonesia’s upcoming ban on mineral exports drawing a wave of foreign investors and equipment suppliers as local miners are forced to beef up ore processing capability before a 2014 deadline. With so much volume of ore.68 784.47 3.62 791.18 3.87 3.93 113. in bid to offset a construction and investment downturn in their home market. we can easily foresee that the demand for mining machinery is expected to grow as well. with many expansion projects in the pipeline.42 641.54 3.23 870.87 4.34 Mine Conveyors & Elevators Coal Cutting Machinery The increase number of market value of mining equipments is also driven by the fact that.27 Loaders (Underground Use) 87.35 103. It is also stated that as a strategy to develop the performance in the future. The wave may be one of the few bright spots for aspiring foreign suppliers. increases in the sales of ultra-large hydraulic excavators and dump trucks are forecast beginning with coal. many of whom are venturing out of their home markets for the first time. It is also driven by many global mining firms entering the Indonesian market. The miners necessarily need to use mining machineries and parts for the extraction of the country’s rich underground resources. The mining equipment market is set to grow at of 6.49 1.67 124.083. On the other hand.82 3.83 Mining Trucks 583. market leaders in construction machineries sector are trying to increase their capacity for mining machinery.2% during 2010-2015. Indonesian mining sector’s investment spending will be mainly for replacement plant and acquisition of equipments to maintain or expand their existing operation.Mining Machinery In line with the above-mentioned facts. Korea International Trade Association (KITA) 14 .83 875.17 971. especially for ultra-large hydraulic excavators to respond to the rising market demand from the miners in the country. Based on the data.99 95.12 3. Figure 5 – Estimated Market Value of Mining Equipment (in USD Million) 2500 2000 1500 1000 500 0 2013 2014 2105 2016 2017 2.91 2.71 708.

Excellent Financial Management: The players in this sector need to focus on management in working capital. solid and trustworthy people as well as technical know-how played a key role in the operational field. In addition.Mining Machinery 5. Ability to Tailor and Localize the Products: Mining machineries players should be able to understand their market especially in Indonesia and localize of their product portfolios.1. Key Success Factors. Marketing & Distribution Strength: To be able to strengthen downstream marketing and distribution channels to accommodate the growing capacity and additional downstream products would help the players succeed in the business. which is the key success to the mining sector today. many of international mining companies continue to rank Indonesia highly in terms of mineral prospectivity and have attracted its fair share of investors. Government data also shows a positive trend in 2012 with a further increase in investment spending in the Indonesian mining sector. OEMs also have to meet some strict local requirements to be able to compete and succeed in the business. National and Cross-National Infrastructure: The majority of new reserves of coal and some other mining resources are expected to be located in the more remote locations that will be the one of the main reasons why mining projects rely on the transport of bulk over long distances. reliable. The abilities to have an effective forecast and cost efficiency will also help the players to perform well in the operation. Key Success Factors Technology: Technology does and will continue to play a vital role in maintaining the desired productivity and in supporting the concerns of environment-friendly mining. it will lead to a long-term success of the Company. People: A highly-skill. 5. asset utilization and gearing levels to be able to succeed in the business. Efficient transport corridors are indeed key driver to the sector growth and development. Drivers and Inhibitors of the Industry 5.2. When both factors are functioning very well in the long-term operation. Drivers Indonesia Mineral Prospectivity and Government’s Investment: Consistent to the previous years. These factors would be the one of the drivers in mining machineries project volume in the future. Trends need to be understood. Korea International Trade Association (KITA) 15 .

Regulation and Government Concern The Mining Industry itself is regulated by central. in this volatile environment. there are no material restrictions or limitations of any kind imposed Korea International Trade Association (KITA) 16 . Global Economic Slowdown: The continuing Eurozone sovereign debt problem has adversely impacted the global economy since 2011 and it decreases the commodity prices in 2012 and surely is a significant threat to the mining activities. provincial and municipal levels of government in Indonesia. 6. 5. In early 2009. OEMs should be able to identify. doubts and contention for investors. Moreover. This would be also one of the drivers of OEMs to earn more profits and grow their market segments. the sector has seen continued investment growth despite what some have seemed as a lack of regulatory certainty and the need for further clarification of the law. Inhibitors Skill Shortage: Significant risks associated with skill shortage include impact to production. project delays and increasing labor costs. not to mention mining industry. attract and retain mining machineries operator skills as one of the top priorities Uncertainty of Mining Sector Regulatory in Indonesia: Uncertain regulations will cause confusion. The future of Indonesia’s mining industry is heavily dependent on the attractiveness of the regulatory environment and resolution of the challenges arising from the Law and Mineral and Coal Mining as well as subsequent implementing regulations. Comprehensive Government Regulations: The mining sector is one of the most regulated sectors in the country. it is increasingly difficult to forecast and plan future workforce requirements. For the import of machinery and equipment or services required in connection with mining activities. The Government regulations will give a significant impact to the foreign investors and stakeholders to decide on how they would perform the business in the business. Indonesia has introduced and issued its Mining Law. Since then. Regulatory framework and regulations on foreign ownership has made the sector less competitive. The high bureaucratic costs in almost every sector in Indonesia and would remain as an obstacle for all industries.3.Mining Machinery Replacement Demand: Parts replacement demand has also been showing a positive growth in terms of value since the mining and contractor companies are eager to maintain the performance and availability at mine sites.

Bonded Zones This investment incentives is provided to the companies located in bonded area with facilities are as follow:    An exemption from import duty. The facilities which may be provided are:  A CIT exemption for a period of five to ten years from the beginning of commercial production. Import Duties All investments approved by BKPM would attract the following supports: a. materials or raw materials used to produce finished goods or to produce services for two years of production.1 Investment Facilities and Incentives Tax Holiday Based on the Ministry of Finance Regulation No. It defined as ‘industries that have extensive links. introduce new technologies and have strategic value for the country’s economy. An entitlement to divert up to 25% of exports (in terms of value) into the Indonesian customs area. equipment. An entitlement to sell scrap or waste into the Indonesian custom’s area in certain cases. A reduction from import duty rates to 0% on: o The importation of capital goods (machinery. VAT and Article 22 withholding tax on the importation of capital goods and equipment including raw materials required for a production process. give additional value and high externality. and  A 50% reduction in the CIT due for the period of two years after the end of the CIT exemption period. But the importation of such services is closely regulated to the extent that individual or corporate service providers establish a physical presence to have a permanent establishment for tax purposes in Indonesia. the Ministry of Industry maintains an unpublished list of qualifying activities and will generally confirm classifications on request. 130/PMK.Mining Machinery under Indonesian law. Korea International Trade Association (KITA) 17 .’ Currently.011/2011 the Government may grant Corporate Income Tax (CIT) holidays or reductions to companies investing in “pioneer industries”. a. b. The importation of goods. required services for mining activities may also be obtained and provided in Indonesia. An exemption from the Transfer of the Ownership Fee for ship registration deeds or certificates made for the first time in Indonesia. spare parts. 6. etc) for an import period of two years. auxiliary e equipments. investors in machinery are eligible however there are no implementing regulations yet issued which define what is included in “machinery”. Normally.

Newmont Nusa Tenggara expressed his concern with regards to the future of mining sector in the country.1 Legal Uncertainty Remains Big Problem in RI Mining Sector http://www. Moreover. with most major regional administrators out of control in terms of issuing mining permits. Industry and Players Related News 7. Susilo Siswoutomo commented that the government would keep on carrying out the implementation of the 2009 law and there would be a possibility for the new government would alter the law after next year’s election. which placed Southeast Asia’s largest economy at the bottom of 96 countries in terms of the policy potential index in 2012. Indonesia was ranked 96th down from 85th in 2011 by the survey recently published by Canadian think tank the Fraser Institute. Deputy Energy and Mineral Resources Minister.com/news/2013/06/17/legal-uncertainty-remains-big-problem-rimining-sector.Mining Machinery   An entitlement to transfer machinery and equipment to subcontractors located outside bonded zones for no longer than 2 (two) years in order to reprocess their products. and An exemption from VAT on the delivery of products for further processing from bonded zones to subcontractors outside the bonded zones (or vice versa) or to other companies in these areas. 7. The decentralization has become a major annoyance to miners attempting to do business in the country. A recent survey conducted by PricewaterhouseCoopers (PWC) entitled “Mine Indonesia 2013” deemed that Indonesia’s mining industry has become less attractive due to recent government actions.25% (straight-line) from the month of acquisition by the consistent use. Capital Allowances Depreciation Mining machineries falls in category as assets with beneficial life of 16 years and would be depreciated for 12.thejakartapost. Another point was also highlighted with regards to the export ban on mining firms for unprocessed ore from 2014 and requires the firms to build local smelters to process the ore. Korea International Trade Association (KITA) 18 .html A former deputy president director with US-based mining giant PT.5% (declining-balance) or 6.

2. agriculture. gold. East Java.89 billion.com/2013/05/10/antisipasi-pelemahan-bisnis-tambang-inta-tingkatkanbisnis-penyewaan-alat-berat/ One of the market leaders in heavy equipment sector. Imam Liyanto. PT Semen Indonesia (Persero) Tbk (SMGR) brings in new mining equipment such as limestone crushing vehicles in order to reduce the noise caused by limestone mining activities.8 billion. Head of Investor Relations and Corporate Finance Intraco added that. so it can reduce the cost of maintenance as well as crusher. 7. Anticipating the Weakening Revenues in Mining Sector. In the first quarter of 2013. which includes nickel. Dwi Soetjipto said before there are limestone crushers.5% decline in revenue to Rp 780. which are located near or around 500-700 meters from residential areas. it is difficult to do in the way of land mines.3 Indonesian Cement Brings New Mining Equipments http://www. Korea International Trade Association (KITA) 19 .tempo. "Because it is small. although the 1st quarter in 2013 revenue fell. Heavy equipment segment accounted for 72%. the President Director of the Company said that the Company offers solution to the miners to hire and eventually will let them buy after their business recovered. According to Dwi. and rental of 4%. the Intraco posted a net profit increase of 20. the crusher system will work faster and has minimal damage. limestone crusher is also improving the efficiency of the company since the upstream mine. INTA Increases Heavy Equipment Rental Business http://energitoday. Petrus Halim." he said.co/read/news/2013/06/27/088491761/Semen-Indonesia-Datangkan-AlatPertambangan-Baru Listed cement producer. In the first quarter of 2013. That new mining equipment formed by one unit of Wirtgen and one unit of Vermeer which today has been tested in Tuban. Intraco Penta (INTA) will increase the rental business of its heavy equipment products in order to anticipate the weakening mining business which impacted on the company’s sales. Intraco recorded a 13. In addition. the company will start diversifying businesses beyond coal mining. However. the company used to mine by blasting or detonate the mining areas.6% to Rp 61. and infrastructure. President Director of Semen Indonesia. 14% spare parts sales. but there was an increase of the EBITDA and profit before tax.Mining Machinery 7.5 billion from the realization of the first quarter of 2012 amounted to Rp 900.

This could be an opportunity for Korean Heavy Equipment Companies to have more partnerships with Indonesian mining companies in terms of supplying machineries and parts to support the operational process. The Government of Indonesia has received 19 proposals of investment projects to build smelting plants in Indonesia and 10 projects are projected to be operational in 2014. Moving and hauling equipment. The target volume of raw materials produced by each of the new equipment is 100 thousand tons per month. filtration equipment. Mining Plant Projects Several mining companies will continue to implement part of their investment plans in 2013. Consumables such as chemicals and reagents. Under the new law. explosives.Mining Machinery The capacity of new mining equipment is maximum 300 tons of material per hour. Milling and processing equipment such as conveyors. Opportunities in Mining Machineries Sector in Indonesia Supply of Mining Equipments or Parts and Services Korean Companies have some significant opportunities to supply of various mining equipment and services to be utilized in a range of stages of mining operations including but not limited to:        Drilling equipments and parts. sub-mills. mining companies must refine the raw materials in Indonesia before they ship it out overseas. The data is stated in below table: Korea International Trade Association (KITA) 20 . Mine safety equipments. crushers. front end loaders. normally only be used in the capacity of 200 tons per hour. 8. As of 2012. Replacement parts and Ancillary services such as equipment repair and maintenance and mine rehabilitation. cyclones. However.

Mining Machinery Figure 6 . South Sulawesi Cilegon. Korea International Trade Association (KITA) 21 . Indosmelt Pendopo Coal Gasification Pendopo Coal Up Grading PT.Project Lists of Smelting Plant in Indonesia No. Indonesia in February 2014. The Conference provides information to investors and miners for identifying mining investment opportunities for the coal and non-coal sectors in Indonesia. Company 1 PT. Indonesia Chemical Alumnia (ICA) PT. East Java Maros. Krakatau Steel Posco PT. NorthKonawe. Weda Bay Nikel Meratus Jaya Iron & Steel Indofero PT. Agincourt Resources PT. Bali. Aneka Tambang PT. The topics will be discussed include Global Trends in Financial Markets Affecting the Mining Industry in Indonesia. Sebuku Iron Lateritic PT. Vale Indonesia (INCO) PT. Aneka Tambang 3 PT.com/indonesiamining/ The 3rd Annual Indonesia Mining 2014 Conference will be held in Nusa Dua. this year will be held on September 4-7 in Jakarta International Expo Kemayoran. This event is recognized as the one that offers a networking opportunity and industry platform for suppliers to promote mining technologies to the Indonesia market. South Sulawesi Prabumulih. Recent Environmental Regulation Changes which Affect Mining Industry in Indonesia. East Kalimantan Gresik. Nusantara Smelting PT. Indonesia Annual Mining Conference . Aneka Tambang 2 PT. North Sumatra Morowali. North Sumatra South Tapanuli. West Kalimantan Operation 2014 Tayan. North Maluku Batu Licin. West Kalimantan 2014 Pormala. Banten 2017 2016 2014 2012 2014 2014 2014 2014 2016 2013 2014 2015 2015 2014 2014 Source: Energy and Mineral Resources Ministry 8.http://www. Timah 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Location Halmahera. South Kalimantan Cilegon. Jinhuang Indonesia PT.claridenglobal. North Maluku Mandiodo. with the best strategies to succeed while ensuring the security of their investments. South Kalimantan Cilegon.http://www. etc. Aneka Tambang PT. Banten Sebuku.com/events/5 Mining Indonesia is an annual event. South Sumatra Prabumulih.000 visitors. Assessing Infrastructure Developments to Unlock Mining Potential. Dairi Prima Mineral PT.1 Trade Events related to the Mining Machineries Sector in Indonesia Mining Indonesia . Southeast Sulawesi Mempawah. Last year’s event was attended by more than 700 exhibiting companies with more than 11.pamerindo. Banten Bontang. South Sumatra Dairi. Southeast Sulawesi Weda.