Coordinating Ministry for Maritime Affairs and Investment

Republic of Indonesia

Driving Sustainable Growth:

Indonesia Economic Transformation Post Pandemic

Jend. TNI (Purn) Luhut B. Pandjaitan

Coordinating Ministry for Maritime Affairs and Investment

2 September 2023
 Global Challenges: From China's Economic Slowdown To Extreme El Nino Event and Food
Supply Disruptions
Black Sea Grain Deal Collapse
Tight Financial Condition in Prolonged War in Ukraine
Russia ended the Ukraine grain-
USA export deal nearly a year into the
Federal Reserve Chair Jerome Kyiv’s allies worry the war - now into its
Powell signaled interest rates will agreement, heightening uncertainty
19th month - is dragging on with
stay high and could rise even over global food supplies.
hopes fading for Ukraine’s
further should the economy and counteroffensive to yield a definitive
inflation fail to cool. breakthrough.

China Economic Slowdown

Big Funding Squeeze in Sub- China’s economy was meant to
Saharan Africa drive a third of global economic
growth this year, so its dramatic
Persistent global inflation and slowdown in recent months is
tighter monetary policies have led to sounding alarm bells across the
higher borrowing costs for sub- world.
Saharan African countries.

Uncertainty
Food/Weather
War/Geopolitics
Economics
Hottest Winter Ever in South
America India’s Grain Export Restriction
Now should be South America’s
India, the world’s largest rice exporter,
bleak midwinter, but several parts of
has now implemented restrictions
the continent are experiencing an
on every variety of the grain that the
extraordinary unseasonal heatwave.
South Asian nation ships overseas.
2
Despite Global Challenges, ASEAN Showed Strong and Resilient Growth

GDP Growth, Major Country Groups GDP Growth, Select Asian Countries
(Percent) (Percent)

4.5 5.6
4.2
4.0 4.9 4.9
3.9
4.6
4.3 4.2

2.4
2.1

2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024
World EMDEs ASEAN China Indonesia Malaysia

Note: Aggregate growth rates are calculated using GDP weights at average 2010-2019 prices and market exchange rates.
June 2023 Global Economic Prospects Forecast
Source: World Bank 3
 Indonesia’s Macroeconomic Indicators are one of The Best in G20 Countries

Stable Stock Stable

Strong Economic Growth Low Inflation rate Low Government Debt Performance Exchange Rate

Latest Inflation% - G20 Stock Index YTD2023 Exchange Rate YTD2023

GDP Growth% 2Q23 - G20 Gov Debt to GDP% 2022 -
Countries - G20 Countries - G20 Countries
Countries G20 Countries
China Argentina
6.3 113.0 Turkiye 45.2
Japan 266 Mexico 14.4
Indonesia 5.2
Turkey 47.8 Japan 25.4
UK
Italy 151 Brazil 6.7
6.8 Vietnam 21.5
Russia 4.9 US 137 UK 4.8
Germany 6.1 Singapore 131
Italy 20.9
Philippines 4.3 Taiwan 17.7 Indonesia 2.3
Australia 6.0 Spain 118
US - S&P 17.4 Eurozone 1.3
*Turkiye 4.0 Italy 5.5 France 113
Spain 15.9 India 0.0
Mexico 3.7 Euro Area 5.3 Canada 113
Germany 14.6 Hong Kong -0.5
France 4.8 UK 96
US 2.6 South Korea 14.6 Singapore -0.8
Mexico 4.8
Euro Area 96 France 13.3
*Canada 2.2 India 89 Thailand -1.1
South Africa 4.7 Eurozone 12.9
Argentina 81 Philippines -1.4
Japan 2.0 Russia 4.3 Mexico 9.4
Brazil 80 Vietnam -1.9
Spain 1.8 Singapore 4.1 India 7.5
China 72 Brazil 5.5 Taiwan -3.8
France 0.9
Brazil 4.0 South Africa 70 US - Dow Jones 4.8 Souh Korea -4.7
Japan 3.3 Germany 69 Australia 3.7
South Korea 0.8 Netherlands 52 Australia -4.9
Canada 3.3 South Africa 2.3
Italy 0.6 Mexico 52 China -5.0
Indonesia 3.3 Indonesia 1.9
Euro Area 0.6
South Korea 47 China 1.4
Malaysia -5.1
US 3.2
Turkey 42 UK 0.3 South Africa -9.6
Singapore 0.5 Netherlands 3.0 Switzerland 41 Singapore -0.6 Japan -9.9
UK 0.4
Spain 2.6 Indonesia** 38 Malaysia -2.1 Russia -23.1
South Korea 2.3 Australia 36 Philippines -5.9
Germany -0.1 Turkey -29.9
Switzerland 1.6 Saudi Arabia 33 Thailand -6.5
Netherlands -0.3 Russia 18
Argentina -48.7
China -0.3 Hong Kong -7.1

*note: Q1-2023, **July 2023 Source: CEIC, Bloomberg, The Economist, European Commission, Consensus Economics, IMF; as of 01 September 4
2023
 Supported by Strong Consumption Recovery, Double Digit Investment Realization
Growth, and Increasing Manufacturing Output

Mandiri Spending Index Investment Realization PMI Manufacturing Indonesia

(Jan-20 = 100) (percent, yoy) (>50 = Expansion)
400 70
Value Frequency FDI 60
360.0
Total
350 53.3
DDI

50
300 50

250
30 17.6 40
200 165.4

15.7
150
10 30

14.2
100

20
50 -10

Apr

Apr

Apr

Apr
Jul
Okt

Jul
Okt

Jul
Okt

Jul
Jan

Jan

Jan

Jan
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
May-21
Aug-21
Nov-21
Feb-22
May-22
Aug-22
Nov-22
Feb-23
May-23

2019 2020 2021 2022 2023 2020 2021 2022 2023

Source: BPS, Bank Mandiri, MoI 5

 Accompanied by Healthy External Balance: Continued Trade Surplus and Well Managed
Current Account Deficit

The Indonesia maintains its trade surplus, for 39 consecutive The current account recorded a narrow deficit against a backdrop of
months lower international commodity prices and global economic
moderation

Export, Import, and Trade Balance of Indonesia Current Account

(USD Billion) (% of GDP)

Export Import Balance 2

25 1
20.9

15 0

5 -1
1.3 surplus
-5 -2

-15 -3

-19.6
-25 -4

Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Q1-21
Q2-21
Q3-21
Q4-21
Q1-22
Q2-22
Q3-22
Q4-22
Q1-23
Q2-23
Feb-20
Apr-20
Jun-20
Aug-20
Oct-20
Dec-20
Feb-21
Apr-21
Jun-21
Aug-21
Oct-21
Dec-21
Feb-22
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23

6
Solid Public Approval: 82% Of Indonesian are Satisfied with Current President Performance

1.6 0.5
15.9

Current President
82%
of the people
Performance satisfied
Generally, how do you rate
the President's
performance?
69.7 100.0

• Exceeding expectation
• Above expectation
• Below expectation
• Way below expectation

12.3
Exceeding Above Below Way below No response Total
expectatio expectatio expectatio expectatio
n n n n In %
7
 And High-Level of Economic Optimism – 2nd Highest

Edelman Economic Optimism1

0 +
- Significant
(Percent)
80
change 73 73
72
Developed Countries 68
64 65
61
58 58
55 55

43

35 36 36
30 31
28 28 29
26
23
18 19
15
12
9

Change, -6 -6 -7 -9 -10 -7 -10 -6 -11 n/a -11 -11 -20 -7 -4 -17 -13 -11 -15 -2 -22 -9 -+1 -19 -6 -7 -8 -11
2022 to 2023
Ja

Fr

Ge

Ita

Th

UK

Sp

Ca

S.

Sw

Au

Ire

Si

U.

Ar

S.

Br

Th

Co d

Sa

Ch

Ni

UA

Ind

Ind

Ke
an

ala

ng

S.

ex

az
ge

ge
pa

ny
lan
st
ly

eN

ain

na

Ko

Af

ail

lom

ud

ina

E
rm

ed

ia

on
ico
ce

il
ap

nt
ra

ria

a
n

ric
ys
da

an

iA
re

en

es
d
an

et

bia
lia

ina
or
a

ia

ra

ia
y

he

bia
rla
nd
s

1. Percent who say my family and I will be better off in five years
Source: Edelman Trust Barometer, 2023
8
To Maintain The Economic Growth in a Sustainable Way, Indonesia Has 6 Main Agendas

Continue to industrialize
Provide affordable high-
through down streaming for
quality education to produce
economic growth &
skillful human resources
resiliency
Industrialization

Decarbonize to accelerate
Digitalize services for an
net-zero, while capturing
efficient, transparent, and
green economy Decarbonization Digitalization inclusive government
opportunity
Education

Develop infrastructure to
Balance all fronts to be "just",
enable interconnection of
solving socio-economic Economic

inequality in Indonesia Interconnection people, goods, and
Distribution information

9
 Through Downstream Program - Indonesia is Transforming Its Economy, No Longer Rely
on Raw Commodities

Selected Nickel Derivatives Product Export of Indonesia

(USD Billion)
34.28
35

30

25 22.53

20 16.54
15 11.89
8.53
10 7.01
4.31
5 3.08 3.26 2.59 2.33 2.94 3.03 2.65

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1 2023 ytd
FeNi/NPI Iron and Steel Nickel Matte MHP/MSP Total

MHP, Ni, Co Chemical Components and Cells, Modules,

Nickel Ore EV, Power supply, ESS, and Infrastructure Recycle
Sulphate Battery Cells and Batteries

Nickel Ore Nickel and Battery Cathode Battery Cells and ESS Charging Station Battery Recycle
Cobalt Sulfate Precursor Pack

Source: Trademap 10
The Main Goal of Downstream Program is to Create Competitive Industrial Ecosystem
for Lithium Battery and EV

Nickel Mines Recycling

Green Hydro Power
Limonite and Saprolite with Reserves Life 20 Years Energy
Raw Used Li Battery
Materials
Geothermal Power
RKEF Ref inery Side Blowned
HPAL Project
Project 1 Furnace Green
Energy
MHP and Ni/Co Sulfate
Ref inery High Grade FeNI Ni Matte & Iron

Potential Battery Grade Ni Battery Grade

Li Ni Co
Industrial Park
Nickel Matte Co Chemicals
Chemicals
Battery
Materials Material
Facility Facility

EV Battery Nickel Based Iron Based Battery Battery Materials Supply Chain
Battery Aluminum, Cathode Anode
Electrolyte Copper Foil…

EV Manufacturers in Indonesia Incentive Policy for Investment and

Encouraging Domestic EV Demand:
a. Investment facilities (fiscal and non-fiscal)
b. Stimulus to encourage the use of EVs in
the country 11
The Downstream Also Promotes More Quality Investment Especially of the Eastern
Indonesia As the Largest Nickel Reserves in Indonesia
90% of Indonesia’s Nickel Reserves are spread across Central
FDI share outside Java
Sulawesi, South Sulawesi, Southeast Sulawesi and North
continues to increase
Maluku
FDI Share of Java vs Outside Java
(Persen)
100%

90%

80% 42%
70%

60%

50%

40%

30%
58%
20%

10% Resources: 11,7 Billion Tons

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 Reserves: 4.5 Billion Tons
Outside Java Java
Sources: Ministry of Energy and Mineral Resources, Ministry of Investment
12
 Contributing to Higher Regional Economic Growth Compared to the Period Before
Downstreaming Took Place

Central Sulawesi Economic Growth North Maluku Economic Growth

25 (%) (%) Average Economic Growth

Average Economic
Growth 2019-2022 = 12,9%
25
2015-2022 = 11,7% Average Economic
Before Downstreaming Downsreaming
Growth
Average Economic Growth 2001-2018 = 5,7%
20
2001-2014 = 7,5%
20

15
15

10
10

5 5

0 0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Source: Indonesia Central Bureau Statistics 13
There Is More Downstream Potential in Other Commodities and Derivatives From Existing
Downstream Products
Ore Exports, Million USD Iron and Steel Derivatives
628 623 Potential
13 555
467
Al 264
Transparent
Paper Nickel tubes &
Self adhesive plastic sheet 4806 HS4
pipes
26.981 3919 HS4
2918 HS4
Machines
Cellulose 8479 HS4
Bauxite 3912 HS4
Petoleum resins Fork-li trucks
Gaskets & similar joins
8484 HS4
(2023) 2018 2019 2020 2021 2022 3911 HS4 8427 HS4 X-rays machines
Sillicons in primary form 9022 HS4
3901 HS4
9,244 Instrument for physical/

Diagnostic lab reagents chemical analysis
29 3822 HS4 9027 HS4
5,386
Cu
Prepared culture media

4,187 for organisms Flat rolled products

2,412 3821 HS4 of stainless steel
63.546 1,280 of a width >600 mm
7219 HS4
Plastic floor coverings
3918 HS4
RCA = 12.2
Copper 2018 2019 2020 2021 2022
Phenols, phenol-alcohols
2907 HS4

(2023) 2,427 2,371

Transmission sha s Stainless steel

Flat-rolled products of
in ingots
8483 HS4
stainless steels 7218 HS4
Flat-rolled products of 7220 HS4
1,524 other alloy steel Titanium ore
50 1,255 1,115 7227 HS4 2614 HS4

Sn
Paper & paperboards
Lubricants
coated w/ kaolin 3403 HS4
Ion-exhanger Acrylic polymers
4810 HS4
3914 HS4 3906 HS4
118.711
2018 2019 2020 2021 2022
Tin Note: data presented for tin is raw tin (HS 8001), not tin Green text- Indonesia's exports are still not competitive at global level
(2023) ore
14
 Indonesia’s Next Big Downstream Program Will Be Located in Kalimantan Where Most
of Its Energy Will Come from Hydro Power Plant

Total Value Creation from Industry in KIPI:

Total Pipeline Investment for Battery Chain
Development (u.t. 2026): Petrochemical Iron and Stell
Industry (5 mio ton)
(4x16 mio ton)
US$ Kalimantan:
31.9 US$ 12.35 Bn North Maluku: Electronic Alumina Renewable Battery
Bn US$ 9.78 Bn (3 mio ton) (265 GWH)

Silicone Industry and

Polycrystalline
(1.4 mio ton)

Total Investment USD 132 Billion

Employee +/- 160,000

Sulawesi:
Solar Panel 10 GW
US$ 9.84 Bn
Hydro Power 10 GW
Source: Marves, BKPM
15
The Mentarang Induk Hydroelectric Power Plant (PLTA) Will Be Built and Integrated with
the Kalimantan Industrial Park Indonesia (KIPI) in North Kalimantan Province

35 km upstream of Kota Malinau, North

Location Kalimantan
On March 1st,2023, President Joko Widodo officially
laid the first stone or groundbreaking of the Installed Capacity 1,375 MW
Mentarang Hydroelectric Power Plant project
Potential Firm Power 925 MW

Construction Period 2024-2029

Target Commissioning 2029

Estimated Cost USD 2.6 billion

• 5,000 (at peak of dam construction)

and 100 (during dam operations)
Labor Absorption • At KIPI: projected job opportunities by
2028 is about 1 million

National Strategic Under the Coordinating Ministry for

Economy Affairs Regulation Number 21
Project of 2022

16
 The Government Embraces Digitalization to Provide Public Service in Order to Increase
Efficiency And Governance

Transparent Reliable Efficient Accurate

Goal
Create cost Accelerate
Improve data Improve efficiency Improve port
efficient and investment process
quality in mining in cooking oil efficiency and
transparent Gov't. and transparency
operations distribution connectivity
spending

eCatalogue Simbara Simirah National Logistic
OSS

Ecosystem

Digital
Digital government Digital platform Digital platform that National logistics Digitalizing licensing
government Digital systems
procurement Digital systems
that integrates all Digital
monitorssystems
processes Digital systems
system to monitors
Digital systems
application that
system system that brings mineral and coal from production to different processes accelerates the
more transparency resource distribution to in ports and licensing process for
and tracks management data identify bottlenecks identify efficiency business actors
domestic spending in Indonesia in cooking oil opportunities
supplies

17
For an Equal Economic Development Through Out The Nation, Indonesia Supports The
Micro-economy in The Smaller Rural Areas

Village Fund achievement

The funds are used to develop infrastructure
and other activities to improve village welfare
Village Fund 2015 2021
Program Increase in 173 3,269
independent
Street Bridge Village market villagee
308,490 km 1,583,000 m

4.7

12,244 unit

2015 2021
USD Bn for
Village Funds ~41,00 ~23,00
Decrease in
Clean water Irrigation Village business underdeveloped 0 0
1,307,423 unit 80,120 unit 42,317 activities village
2015 – 2023
Allocation

Mar 2015 Mar 2021

Sports facility Healthcare Decrease ~18 Mn ~15 Mn
29,210 unit 42,007 unit poverty
headcount

18
Indonesia Continues to Strengthen Interconnectivity by Debottlenecking Land Transport

Indonesia has a concrete toll road
…supported by solid programs for public transport
development plan… development
1
Indonesia has accelerated toll road development Indonesia continuing development of public transport
significantly in the past 9 years through Trans-Jawa and
Trans-Sumatra Toll
Indonesia toll road 1,848 km
development
775 km 2 Strategic National Projects to further develop
transportation modes across Indonesia
Non-exhaustive • High speed railway • MRT Jakarta North-South *
1978 - 2014 2014 - 2023 Jakarta – Bandung* • MRT Jakarta East-West *
• Railway KA Airport • LRT Jakarta, Bogor, Depok
Yogya – Kulon Progo *

• Railway KA Tebing Tinggi-Kuala Tanjung

Indonesia has a detailed development • Railway KA Prapat-Kota Pinang*
• LRT Metro Palembang
17,864

plan for a total of 18 thousand km toll
road connecting cities in Indonesia by
km total toll road • Railway KA Makassar –
2050 Parepare *under development

Source: Rencana Umum Jaringan Jalan Tol PUPR; Kemenkomarves

19
Indonesia Implements Sea Toll and Air Toll Programs to Connect and Drive Traffic
Growth in The Outer Rural Areas

Sea toll program grows the traffic in Eastern

Air toll program aims to grow the traffic and
Indonesia through interconnectivity and economic
transform pioneering into commercial flights
supports

Since 2019, the sea toll …and propelled the Since 2019, the air toll program has developed
program has connected… growth of cargo in the pioneering flights across Indonesia
east
130

+60% (157k)

21

220

41


seaports ton of cargo coordinating pioneering
pioneering

points passenger routes cargo routes

33

+68% (13)

main sea routes
Source: Kemenkomarves, Kemenhub
The government continues to subsidize flights operations
to transform pioneering into commercial flights (fuels,
fleet
labor, airport and navigation fee, ground handling,
training, etc.)
20
 We Need to Continue to Strengthen Investment Relation with Malaysia in Order to
Accelerate our Sustainable Growth Agenda
in USD
Sector 2019 2020 2021 2022Million
YTD 2023
Malaysia Ranked Fifth as the Major Investor to Primary 180.0 150.6 133.1 351.1 204.6
Indonesia Food Crops, Plantation, and Livestock 74.2 103.1 126.8 285.2 148.4
Forestry 0.4 0.1 0.0 50.8 40.8
(USD Billion) Fishery 0.0 0.0 0.0 0.0 0.0
Mining 105.4 47.4 6.3 15.0 15.4
50 Secondary 360.5 702.5 603.9 2166.5 923.4
Food Industry 131.1 246.7 403.2 319.5 120.9
Textile Industry 0.0 0.3 0.0 0.1 0.3
Leather Goods & Footwear Industry 0.0 0.0 66.4 0.1 0.0
40
Wood Industry 16.6 2.0 10.0 4.8 8.0
Paper and Printing Industry 1.8 0.5 0.0 313.5 161.0
Chemical and Pharmaceutical Industry 165.5 407.2 71.3 1434.9 610.2
30 Rubber and Plastic Industry 6.5 4.2 19.0 44.5 7.4
Non Metallic Mineral Industry 17.8 11.8 0.2 41.3 3.3
Metal Industry not Machinery & Electronic
Industry 5.4 9.9 1.9 5.2 5.8
20 Medical Preci. & Optical Instru, Watches &
Clock, Machinary, and Electronic Industry 3.4 10.5 0.9 1.7 2.1
Motor Vehicles & Other Transport Equip.
Industry 7.6 4.7 0.2 0.3 1.7
10 Other Industry 5.0 4.6 30.7 0.4 2.6
Tertiary 817.0 192.2 627.3 825.7 406.5
Electricity, Gas & Water Supply 14.0 7.8 18.5 36.1 18.1
Construction 24.3 88.9 64.8 2.8 0.5
0
Trade & Repair 4.3 7.1 21.3 53.9 16.0
2015 2016 2017 2018 2019 2020 2021 2022
Hotel & Restaurant 7.8 6.2 3.4 3.9 11.7
Singapore China Hong Kong Japan Transport, Storage & Communication 737.0 58.1 475.0 520.8 298.7
Real Estate, Ind. Estate & Business
Malaysia US South Korea Other Activities 15.3 15.3 37.1 178.8 23.4
Other Services 14.2 8.8 7.2 29.5 38.1
Source: BKPM; YTD2023 : Jan-Jun Total Malaysia 1357.5 1045.3 1364.3 3343.3 1534.5 21
We Also Need to Continue Building a Solid Trade Relations Between the Two Countries

Bilateral Trade Between Indonesia and Malaysia

(USD Billion)

Indonesia's Exports to Malaysia Indonesia's Imports from Malaysia

30 All Time High

25

20

15

10

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Trademap 22
Thank You