...According to the Indonesia Investment Coordinating Board, in the first half of 2015 capital expenditure on greenfield projects by foreign companies rose by some 62% year on year. In addition, in the last couple months, the government has launched six investment reform packages to ease the path for foreign investors looking to enter the Indonesian market, includes a new tax holiday scheme and plans for significant deregulation of key industries such as manufacturing, trade and agriculture. However, there are several remaining barriers that can be challenges both in the short term and long term foreign investment. First, regulations and policies. A lot of foreign investors worry about the length of time and the number of agencies that they have to deal with to obtain the necessary business permits/licenses. There are also many regulations that foreign investors are not necessary. Such complaints contributed negative perception to Indonesia investment environment. Second, the central bank’s decision to ban foreign currency transactions as of July 2015 makes companies’ financial planning more complicated. The central bank is prohibiting foreign currencies from being used in domestic transaction, including US dollar, to prevent Rupiah from depreciating. In addition to two reasons above, foreign investors also concern about worker productivity that is not keeping up with wage growth. Indonesia wage growth might be the fastest in Asia (12% per year), but productivity only improved...
Words: 278 - Pages: 2
...International Management Homework Completed by : Christiana Wijaya Kinshi Perdana Cari info 6 besar FDI di Indonesia ( 6 negara besar yang investasi di Indo & apa investasinya ) ! Being a developing country, Indonesia requires a substantial amount of cash for national development. This large amount of fund is there as there is a need to catch up with other developments, especially in developed countries, either regional or global. Indonesia is not being capable enough in providing the funds for those developments. Besides digging up domestic incomes, the government has also tried to invite financing from other countries which is called Foreign Direct Investment According to Krugman (1994), FDI is a flow of international capital whereby a company from a country sets up or widens its company in another country. Hence, not only there is a redeployment of resources, but also there is an implementation of control towards companies abroad. The main objectives of FDI are to look for resources, look for market, look for efficiency, and also to look for political security. In short, Foreign Direct Investment is known as an investment made by a company or entity based in one country, into a company or entity which is based in another country. * According to BKPM (Indonesia Investment Coordinating Board), the realization of Foreign Direct Investment, usually mentioned as FDI, could be differentiated based on several aspects, namely sector, location, and also country...
Words: 1277 - Pages: 6
...Indonesia Country Report Q1 2012 POLITICAL AND SOCIAL BACKGROUND Indonesia has excellent prospects for long term growth, based on macroeconomic stability, supported by strong domestic consumption and stable political conditions. President Susilo Bambang Yudhoyono’s reputation remains high in international circles, boosted by the country’s focus on re-establishing its leadership role within ASEAN and as the incoming Chair of APEC 2013. The country has a demonstrated desire to take on a global role by promoting itself as the world’s third largest democracy and largest moderate Muslim-majority country, but also as a new Asian economic powerhouse with stable economic growth and sound macroeconomic outlook. A more influential role in G20 highlights how Indonesia now is placed alongside giants China and India as one of the most important emerging economies in the world. Yudhoyono has two and a half years left in office and should further accelerate the reforms of the country, before his term ends in 2014. However, the most pressing reform on subsidised fuel price has yet again been postponed. In late March Indonesia’s revised 2012 budget was discussed in parliament. Following violent demonstrations, the President lost crucial support within his coalition failing to push the fuel price hike vote through parliament. The President’s Party has taken a hit in terms of popularity. A survey by the Indonesian Survey Institute showed that domestic support for the ruling Democratic Party...
Words: 3114 - Pages: 13
...result of differences in societal or sociocultural variables of culture such as religion and language. These variables affect cultural dimensions. Which in turn affect an individual’s motivation and expectations in the work place. The predominant religion in Indonesia is Islam, while Australia is considered to be Mixed Christian and New Zealand Roman Catholic (Deresky 2014). Companies operating in Muslim countries or that have a large Muslim workforce are expected to make provisions for pray time and religious commitments such as Ramadan. In Australia and New Zealand Christianity employees typically have a number of day off during religious holidays, and the respect for people not wanting to work on Sundays (Deresky 2014). The official language in Indonesia is Bahasa Indonesia (Riza 2008), and in Australia and it is English (Australian Bureau of Statistics 2011) The GLOBE project investigates how cultural variables are related to organizational practices. GLOBE dimension scores of Australia and Indonesia are as follows. Assertiveness: Australia 4.28 Indonesia 3.86 Future orientation: Australia 4.09 Indonesia 3.86 Performance orientation: Australia 4.36 Indonesia 4.41 Humane orientation over Australia 4.28 Indonesia 4.69 (Ashkanasy & Roberts 2000; Irawanto 2009) Ashkanasy, NM & Roberts, ET 2000, 'Leadership attributes and cultural values in Australia and New Zealand compared', International Journal of Organisational Behaviour, vol. 2, no. 37-45. Australian Bureau...
Words: 1440 - Pages: 6
...PRESIDENT OF THE REPUBLIC OF INDONESIA LAW OF THE REPUBLIC OF INDONESIA Number: 25 of 2007 CONCERNING INVESTMENT Logo BKPM THE INVESTMENT COORDINATING BOARD (BADAN KOORDINASI PENANAMAN MODAL) Jl. Gatot Subroto No 44, Jakarta 12190, Indonesia Tel.: (62-21) 5252008, 5254981, 5253866 Fax: (62-21) 5254945, 5253866 Website: http://www.bkpm.go.id E-mail: sysadm@bkpm.go.id PRESIDENT OF THE REPUBLIC OF INDONESIA LAW OF THE REPUBLIC OF INDONESIA Number: 25 of 2007 CONCERNING INVESTMENT IN THE NAME OF ALMIGHTY GOD PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering : a. that, to realise prosperous an community impartial, based on Pancasila (National Ideology) and the 1945 Constitution of the Republic of Indonesia, it is necessary to develop sustainable national economy based on economic democracy in order to achieve the objective of having a state; b. that, pursuant to mandate written in the Decision of the People Consultative Assembly of the Republic of Indonesia Number: XVI/MPR/1998 concerning Political Economic in the framework of Economic Democracy, investment policy should properly be -2- based on people economy by involving the development of micro, small and medium-sized enterprises, and cooperatives; c. that, to accelerate national economic development, as Indonesian well as political sovereignty, it to and is ...
Words: 8428 - Pages: 34
...on Growth Diagnostics of Indonesia February 6, 2013 I. Introduction The goal of every country is to achieve not only sustainable development but also inclusive growth. Sustainable development, as defined by the Brundtland Commission, is a "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". Inclusive growth on the other hand, pertains to an equitable allocation of resources to every sector of the society which in effect decreases the rapid growth rate of poverty, at the same time increasing the involvement of its people to the growth of the country. To be considered as an industrialized and developed country, one must take consideration on the political, social and most importantly the economic aspect in order for the country to be competitive in the market and also promote a high standard of living. Those prerequisites can be achieved by determining first the factors that trigger the economic growth of a country and that include infrastructures, human capital, literacy, safety, and other indicators. In layman’s term, an economy can be defined as the system that is used to manage the resources in a country. It is often used as an indicator to measure how rich or poor a country and its people are. When an economy is doing well, the government is able to meet the needs of the people and its country. In this paper, we will study the growth diagnostics of Indonesia to determine how far the...
Words: 2486 - Pages: 10
...CIMB- Entry into Indonesia WRITTEN BY ANUAR, A.Z, HARBAN, A.A., KOH, E., ROBBEN, G., & EDITED BY SEOW KIAN TAN Background CIMB Group is Malaysia’s second largest financial services provider. It is listed on Bursa Malaysia through Bumiputra-Commerce Holdings Berhad (BCHB). In 2004, the CIMB Group began the process of creating a strong and competitive universal bank anchored by Commerce International Merchant Bankers (CIMB), Malaysia’s largest investment bank. In line with CIMB's forward thinking philosophy, CIMB has acquired stakes in international banks and these subsidiaries have been integrated into the CIMB Group making the CIMB Group the leader in investment banking in Southeast Asia. The majority stakeholder (28.39%) of the CIMB Group is Khazanah Nasional, which is the investment holding arm of the Malaysian Government. Khazanah Nasional also owns a stake in CIMB-Niaga (Khazanah Nasional Berhad, 2010). In just 2 years, CIMB transformed itself from Malaysia’s no. 1 investment bank into a regional universal banking group. CIMB has grown from staff strength of 1,000 in Malaysia to 20,000 in 12 countries while market capitalization has increased from RM6.3 billion to RM19.5 billion. The Group’s total assets grew from RM14.7 billion to RM155 billion with a further RM18 billion being third party funds under management (CIMB, 2010). Objectives and Philosophy CIMB’s objective is to create value by serving the needs of its clients, and doing this with integrity...
Words: 2924 - Pages: 12
...Indonesia – Asia’s Stumbling Giant Case Prepared for Prepared by Case Analysis The political, economic, and legal systems are the most important implication for international business. Those systems influence each other and build the attractiveness of a country as an investment site. This attractiveness is connected with potential long-term benefits and costs, and related with both those sides risk of running business activity. The central issue of this case is solving the problem which is connected with inappropriate, low level of foreign investment in Indonesia which is strictly related with the current economic, legal, and a lesser extent political systems. Indonesia was under the strong, totalitarian leadership of President Suharto over 30 years and this country has still struggled with problems deriving from lack of free market and democracy. The political system in Indonesia was an example of right-wing totalitarianism where some individual economic freedom was permitted. The corruption was rampant and bribes were necessary to running any businesses. Investments in this totalitarian country were not effective because even the economics was growing up, most benefits were consumed by Suharto and his “crony capitalism”. Nowadays, Indonesia is a young democracy with the excessive red tape and the endemically high level of corruption. In my analysis, I would like to define Indonesia’s goals which can enhance the economic development. I will...
Words: 1758 - Pages: 8
...COUNTRY RISK ANALYSIS INDONESIA D Dr.H. Susilo Bambang Yudhoyono President (RI) Short facts : Short facts Official name Capital city Government type Currency Population Official language Geography The republic of Indonesia Jakarta Republic Rupiah (IDR) 236 million people Bahasa Indonesia 17,508 islands & 1,919,440 sq km of land area & coastline 54,716kms Continued... : Continued... Ethnicity GDP GDP per capita Revenues Expenses Inflation rate 85% muslims, 10% christians, 2% muslims US$932.1 billion US $3,900 $92.62 billion $98.88 billion 5.3% GDP growth : GDP growth Setting up Business Activities and a Company in Indonesia : Setting up Business Activities and a Company in Indonesia To establish a business in Indonesia, if you do not require a local legal entity for the investment proposed, you could choose to appoint an Agent or Distributor, or set up a Representative Office. Many foreign investors at the early stage of entering the Indonesia market choose to set up an Agency Agreement or Representative Office, then later after the business starts to grow they will apply for a Foreign Direct Investment Company (FDI) status. To establish a representative office, the company needs to issue 3 letters : To establish a representative office, the company needs to issue 3 letters Letter of Intent - stating the intention of the company to establish a representative office Letter of Appointment - stating the appointment of the chief representative Letter of...
Words: 1647 - Pages: 7
...term of productivity, efficiency and effectiveness. Besides that, we are also able to determine what is measured by Gross Domestic Product, Inflation and etc as well as know how the government policy could contribute to improved productivity of the country. The picture below shows the brief idea how does Indonesia looks like. Picture 1: Tourism in Indonesia’s island Picture 2: Place to travel in Indonesia Picture 3: City in Indonesia Picture 4: Map of Indonesia Choose one country of the world The chosen country was Indonesia. The reason of Indonesia been chosen because Indonesia is given public an image that Indonesia is a lag behind country than other since there was a tragic event happened in Indonesia in the middle of 1997 all along. This causing Indonesian suffered a great deal and many of them have experienced a very large decline in their living standard. It was irony in Indonesia’s case seen a country that achieved decades of rapid growth, stability and poverty reduction, is now near economic collapse. No country in recent history like Indonesia, let alone one size of large land suffered such a dramatic reversal of fortune. Ten years ago, the Indonesia’s economy stalled. After occur case of riots in May 1998, Suharto stepped down followed by the inflation rate jumped to 47%, the...
Words: 8104 - Pages: 33
...INDONESIA: The Causes, Effects and Lessons of the 1997 East Asian Financial Crisis by Zara Ahmed Julia Dreier Frank Ro April 9, 2007 FSPP 556: Macroeconomics Professor Kathryn Dominguez [pic] Introduction Following its independence in 1945, the Indonesia economy deteriorated drastically as a result of political instability, a young inexperienced government, and ill-disciplined economic nationalism. However, the New Order administration in the 1960s, brought about a new degree of discipline to economic policy that quickly brought inflation down, managed foreign debt, but more importantly, attracted foreign investment through financial liberalization. As massive inflows of foreign investment poured into the country, problems soon arose with regulation and oversight. These structural weaknesses created instability and ultimately multiplied the effects of the Asian Financial Crisis in 1997. With strong encouragement of the IMF, Indonesia adopted a set of policies to protect currency values and penalize insolvent companies, in order to restore investor and creditor confidence in the country. Despite assistance from the International Monetary Fund, the Crisis devastated the Indonesian economy and brought on massive social unrest. This paper consists of six parts. We intend to analyze pre, during, and post-crisis trends utilizing such macroeconomic models as the Mundell-Fleming model, the IS-LM model, and the open economy model for calculating...
Words: 4046 - Pages: 17
...MIXED ECONOMIC SYSTEM: INDONESIA Indonesian Economy Overview The largest economy in Southeast Asia, Indonesia – a diverse archipelago nation of more than 300 ethnic groups -- has charted impressive economic growth since overcoming the Asian financial crisis of the late 1990s. The country’s gross national income per capita has steadily risen, from $560 in the year 2000 to $3,630 in 2014. Today, Indonesia is the world’s fourth most populous nation, the world’s 10th largest economy in terms of purchasing power parity, and a member of the G-20. It has made enormous gains in poverty reduction, cutting the poverty rate to more than half since 1999, to 11.2% in 2015. Indonesia’s economic planning follows a 20-year development plan, spanning from 2005 to 2025. It is segmented into 5-year medium-term plans, called the RPJMN, each with different development priorities. The current medium-term development plan – the third phase of the long-term plan -- runs from 2015 to 2020, focusing, among others, on infrastructure development and improving social assistance programs in education and healthcare. Such shifts in public spending has been enabled by a reform of long-standing energy subsidies, allowing for more investments in programs that directly impact the poor and near-poor, as well as vast improvements in infrastructure investment. Considerable challenges remain in achieving Indonesia’s goals. Due to weaker demand for commodities – the fuel for Indonesia’s economic boom in the...
Words: 3524 - Pages: 15
...Indonesia—Asia’s Stumbling Giant Indonesia is a vast country. Its 220 million people are spread out over some 17,000 islands that span an arc 3,200 miles long from Sumatra in the west to Irian Jaya in the east. It is the world’s most populous Mus- lim nation—some 85 percent of the population count themselves as Muslims—but also one of the most eth- nically diverse. More than 500 languages are spoken in the country, and separatists are active in a number of provinces. For 30 years the strong arm of President Suharto held this sprawling nation together. Suharto was a virtual dictator who was backed by the military establishment. Under his rule, the Indonesian econ- omy grew steadily, but there was a cost. Suharto bru- tally repressed internal dissent. He was also famous for Market Potential Index (MPI) is a yearly study con- ducted by the Michigan State University Center for International Business Education and Research (MSU- CIBER) to compare emerging markets on a variety of dimensions. Provide a description of the indicators used in the index. Which of the indicators would have greater importance for a company that markets laptop computers? Considering the MPI rankings, which de- veloping countries would you advise such a company to enter first? “crony capitalism,” using his command of the political system to favor the business enterprises of his support- ers and family. In the end, Suharto was overtaken by massive debts that Indonesia had accumulated during the 1990s. In...
Words: 988 - Pages: 4
...2 Indonesia is a country that is known for its land mass and its natural resources. Indonesia is also the 4th most populated country in the world. Indonesia consists of a population of approximately a quarter billion people spread across 17500 islands. The Indonesian archipelago has been known to be somewhat a main trading hub ever since the 7th century. After gaining its independence post World War II, the country’s economy has suffered badly, especially during the Asian financial crisis of 97-98. Indonesia’s exports came up to about USD 187 billion in the year 2012. The major export commodities comprises of oil and gas, electrical appliances, plywood, rubber and textiles. The major exporting partners of Indonesia are China (14%), Japan (12%), United States (9.5%) and India (8%). Other minor exporting partners include Singapore, Malaysia and South Korea (Chamber International, ND). Source: Bloomberg As can be seen from the graph above, the Indonesian Rupiah (IDR) is depreciating gradually against the Chinese Yuan (CNY) for the past 3 years. If we were to take a look on a half yearly basis, in the first half of 2011, the IDR was appreciating against the CNY. This could be due to high foreign investments worth USD 20 billion coming in to the country. Moreover, exports from the previous year also contributed to this appreciation by reaching a high of USD 203.62 billion which surpassed the official target of USD 200 billion (Wibisono, 2012). High foreign investments and high...
Words: 2119 - Pages: 9
...Summary Report Executive Summary After analyzing PEST analysis of Indonesia and Saudi Arabia, I came to know it has some advantage and disadvantage in term of legal policy, economic factor, social, geographic and technological factor. Although GDP growth rate, labor force, and lending interest rate are more in Indonesia, they have unstable central government, huge population, high inflation, persistent corruption and natural disaster. Indonesia’s investment climate ranks poorly in international comparisons. The World Bank’s Doing Business 2007 report ranks Indonesia 135th out of 175 economies on ease of doing business. Macroeconomic instability is still viewed as the biggest obstacle, followed by poor transportation service and corruption in electricity such as stealing. Other major obstacles include labor skills, tax administration, cost of financing, and labor regulation which raise the cost and uncertainty of doing business. In Indonesia FDI is restricted in most of the sectors and the business environment is not good，so I recommend do not invest in Indonesia and Saudi Arabia has the strongest political, economic, legal systems providing the best opportunity and potential for overseas expansion. Friendly government business regulations and vast petroleum reserves might be indicative of low political and financial risk for foreign direct investment and therefore a strong candidate for overseas growth. The year over year increase in GDP might also indicate that the general...
Words: 1112 - Pages: 5
