Post on 13-Apr-2017
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
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
6.055.69
5.29
3.73 3.552.85 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
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
20142015
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
GOVERNMENT’S COMMITMENT ON INFRASTRUCTURE DEVELOPMENT IN RIAU ISLANDS
INDONESIAN MINISTRY OF
FINANCEREGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
YearCentral Government Spending Allocation on Infrastructures
Public ServiceBuildings
Roads and Bridges Airports Ports Utilities Total
2010108.6 billion IDR /
8 million USD102 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
201175 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
2012150 billion IDR /
11 million USD264 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
2013123 billion IDR /
9 million USD367.4 billion IDR /
27 million USD51.5 billion IDR /
3.8 million USD239 billion IDR / 17.6 million USD
285 billion IDR / 21 million USD
1.1 trillion IDR / 78.3 million USD
2014224.5 billion IDR /
16.5 million USD385.7 billion IDR /
28.3 million USD127 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
2015315.5 billion IDR /
23.2 million USD489 billion IDR /
36 million USD312.2 billion IDR /
23 million USD547.1 billion IDR /
40.2 million USD449 billion IDR /
33 million USD2.1 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)
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
In b
illio
ns
IDR
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
PUBLIC SERVICE BUILDINGS DEVELOPMENT
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
108,675
150123
224,5
315,5
0
50
100
150
200
250
300
350
2010 2011 2012 2013 2014 2015
In b
illio
n ID
R
Source: processed data from DG of Treasury
CG Budget Allocations
Indonesian Central Government has been committed to fulfill theneeds of public service, public safety and public order in BBK andit’s surrounding areas, hence maintaining the business-friendlyenvironment at place. Investment by Central Government on PublicService Buildings has been growing at an annual rate of 34.79% onaverage since 2010.
ROADS AND BRIDGES DEVELOPMENT
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
102
196264
367.4 385.7
489
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015
In b
illio
n ID
R
Source: processed data from DG of Treasury
CG Budget Allocations
Indonesian Central Government has been committed to keep improvinginterconnection between Industrial, Residential, Commercial andExport/Import shipment areas around BBK to minimize logistical costs andpromote trades. Investment by Central Government on roads and bridgeshas been growing at an annual rate of 39.58% on average since 2010.
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
Sou
rce
: P
roce
sse
d d
ata
fro
m t
he
min
istr
y o
f in
fras
tru
ctu
re
In K
ilom
ete
rs
CG’s Road Lengths
The roads developed by the central government on Riau IslandsProvince (The province on which BBK Free Trade Zone is located) isabout 334km in the year 2009 (excluding Anambas and LinggaRegencies which data is unavailabe). Based on the currentdevelopment, the road lengths is projected to grow into 740km on theend of year 2015, approximately 121% increase on a 7 years period.
333,995
740,186
300
400
500
600
700
800
2009 2015 (Projected)
In K
ilom
eter
s
CG’s Road Lengths
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 thebest compared to other provinces and high above the national ratio. Meanwhile, the road length per 1,000 population indicator shows thatRiau Islands is lagging behind several other provinces but still above the national ratio. Overall, the two indicators shows that Riau Islandsland transportation infrastructure is much better than than the country as a whole, Central Government’s recent spike of budget allocationson Riau Islands will boost both indicators further.
0,36
0,270,21
0,39
0,490,55
0,25
0,00
0,10
0,20
0,30
0,40
0,50
0,60
Aceh Riau Jambi Bengkulu Lampung RiauIslands
NationalSource: processed data from BPS (2012)
Road Density by Province
0
1
2
3
4
5
Aceh Riau Jambi Bengkulu Lampung RiauIslands
National
4,634,23
3,35
4,55
2,232,69
2,01
Source: processed data from BPS (2012)
Road Lengths per 1,000 population by Province
ONGOING CG’s PROJECTS ON RIAU ISLANDS PROVINCE
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
City/RegencyVolume (Road
&Bridge Lengths)Budget
Tanjungpinang Municipality
26.38 KM 26.1 billion IDR / 1.9 million USD
BatamMunicipality
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
In b
illio
n ID
R
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)
AIRPORTS DEVELOPMENT IN BBK
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
16.9 21.3
82.651.5
127
312.2
0
100
200
300
400
2010 2011 2012 2013 2014 2015
In b
illio
n ID
R
Source: processed data from DG of Treasury
CG Budget Allocations
As a province consists of 2,408 islands, Air Transportation hasbecome the best alternative for people’s transportation in termsof time. The recent and planned developments of Airports by theCentral Government will encourage travel between islands andboost trading in the province, BBK as the economic hub of theprovince will benefit the most. Investment by Central Governmenton Airports has been growing at an annual rate of 113.57% ataverage since 2010.
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 livingcosts and labour costs. Meanwhile, the development of airport in Dabo Singkep will broaden the opportunity to utilize the relatively more fertileland of Dabo Singkep to support the needs of staple foods in the Riau Islands Province hence sustaining the export-oriented zone in BBK
PORTS DEVELOPMENT
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
94.7 82138.6
239 263
547.1
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015In
bill
ion
IDR
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 theprovince will definitely stagnate. In order to maximize the different range of potentials that each island has and harmonize the fulfillment ofinterdependent needs of each island, Central Government has been lavishly allocating spending on port developments. By developing the seatransportation, BBK can be focused on it’s industries while other parts of the province will support the basic needs of BBK, therefore creating anever competitive export-oriented free trade zone . Investment by Central Government on ports has been growing at an annual rate of 49.21% onaverage since 2010.
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)
UTILITIES DEVELOPMENT IN BBK
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
88.5125.8
254285 290
449
050
100150200250300350400450500
2010 2011 2012 2013 2014 2015
In b
illio
n ID
R
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 tokeep up with the rapid industrial expansion in Riau Islands, Central Government has been increasing it’s Budged Allocations on utilitiesexponentially on an average annual growth of 42,59%
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 thepercentage of population having access to electricity by 24.47% in just a 2 years period, outpacing several other provinces in the region.
ProvinceElectrification Ratio
2009 2011 Increase
RiauIslands
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%
RiauIslands
Riau SouthSumatra
Jambi Bengkulu Lampung
Electrification Ratio by Province
2009
2011
Government Supports on FTZ Agency in Batam (BP BATAM)
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
CategoryBudget Allocations
2014 2015
Operational Expenditures771.3 billion IDR /
57 million USD747 billion IDR / 54.9 million USD
Capital Expenditures548 billion IDR / 40.3 million USD
500 billion IDR /36.7 million USD
Total1.319 trillion IDR /
97 million USD1.247 trillion IDR / 91.6 million USD
58,46%41,54%
Budget Proportion (2014)
OperationalExpenditures
CapitalExpenditures
59,90%40,10%
Budget Proportion (2015)
OperationalExpenditures
CapitalExpenditures
As a part of it’s endeavour to attract investments and promote Riau Islands Province as abusiness-friendly zone, Central Government has been allocating significant budgets tosupport Batam Free Trade Zone Agency (BP Batam) which operation includes managingseveral strategic entities, developing prioritized areas and providing services for investorsat 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)
Government Supports on Other FTZ Agencies
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
Regional Development Council70.4 billion IDR / 5.2 million USD
Secretariat10.4 billion IDR / 764 hundred USD
Operational8.6 billion IDR / 651 hundred USD
Promotions830 million IDR / 61 hundred USD
Equipments451 million IDR / 33.1 hundred USD
Infrastructures254.5 million IDR / 18.7 hundred
USD
Bintan Development Agency25.6 billion IDR / 1.9 million USD
Operational2.3 billion IDR / 167 hundred USD
Promotions504.5 million IDR / 37 hundred USD
Infrastructures22.8 billion IDR / 1.7 million USD
Karimun Development Agency27 billion IDR / 2 million USD
Operational3.2 billion IDR / 235.2 hundred USD
Promotions1.5 billion IDR / 110.7 hundred USD
Equipments241.2 million IDR / 17.7 hundred USD
Infrastructures22.4 billion IDR / 1.6 million USD
Tanjungpinang Development Agency7.3 billion IDR / 538 hundred USD
Operational3.4 billion IDR / 235.2 hundred USD
Promotions1.2 billion IDR / 91.3 hundred USD
Equipments359 million IDR / 26.3 hundred USD
Ifnrastructures2 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 significantsupport given to BP Batam,Central Government alsodevelop several fledgingFTZ agencies which areprojected to thrive andhold strategic positions onpromoting and developingit’s respective area into acompetitive, investment-friendly zone
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 andtrickle into it’s surrounding areas.
The Central Government of Indonesia has been committed to build Batam, Bintan, Karimun (BBK) Free Trade Zone into a competitiveinvestor-attracting region by establishing several FTZ Agencies and pouring investments into infrastructures into BBK. Thiscommitment 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 thecompetitiveness of the export-oriented zone. This priority is enhanced by the Central Government’s policy to focus construction onareas with high maritime potentials and border areas to which BBK qualified.
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
THANK YOU