Indonesia’s vast geographical area with a population of nearly 250 million people presents a significant opportunity for investment in the energy industry. With the economy growing so fast in the last 10 years, Indonesia’s energy consumption has increased almost 150%. Electricity has become a form of energy with the fastest growing and has the high demand; with more than 5% increase in demand but less than 1% increase in the supply every year. Currently, the ratio of supply and demand in Indonesia is only 1.05, which means Indonesia only has 5% of the extra capacity to the installed system.
To meet the increasing demand with an average of 8.7% per year for the next 5 years (2015-2019), the Indonesia Government has launched the construction and development infrastructure in electrical energy through the power plant
procurement around 35 GW, of which 17.4 GW done by the State Electricity Company (PLN), while 24.6 GW initiated through the Independent Power Producer (IPP) and Public Private Partnership (PPP).
Strengths of Electricity Investment in Indonesia:
> Cost competitive labor in Asia
> A successful partnership between investors and PLN during the last 5 years
> Incentives investments through the tax relief and exemptions of imports duty
Indonesia plans to develop 24 ports in the next five years 2014-2019. The current plan includes the upgrades and improvement of the capacity of shipping containers and more feeder vessels, which move containers from the ports to terminals and then to the larger vessels for transit.
As many as 11 major and feeder ports are currently being modernized to ease passenger traffic from the western to eastern parts of Indonesia and vice versa. Besides passenger terminals, 13 ports will be specially designed to facilitate cargo handling. The ports are in two of the working regions of state-run port management firm PT Pelabuhan Indonesia (Pelindo).
The 11 seaports, which will be designed to facilitate passenger traffic in eastern Indonesia, are Tanjung Perak (Surabaya), Benoa (Bali), Makassar, Bitung, Manado, Tarakan, Pare-Pare, Sorong, Ambon, Biak and Ternate. The 13 ports designed to expedite freighting in eastern Indonesia are Tanjung Perak (Surabaya), Tenau (Kupang), Batulicin (Kotabaru) in South Kalimantan, Bagendang (Sampit) and Bumiharjo (Kumai) in Central Kalimantan and Lembar (Mataram), in addition to the seven ports of Bitung, Sorong, Makassar, Pare-Pare, Kendari, Pantoloan and Dede Tolitoli, all within the Pelindo IV Makassar jurisdiction.
Besides ports development, Eastern Indonesia is currently set to prepare for the acceleration of the “sea toll road” maritime program.
See news on The Jakarta Post
Cargo Flow in Indonesia:
8.8 million TEU in 2009 → 30 million TEU in 2020 (est.) → 48 million TEU in 2030 (est.)
TEU: Twenty-feet Equivalent Unit, an inexact unit of cargo capacity often used to describe the capacity of container ships and container terminals.
14 ports are designated ports for ASEAN Connectivity
Belawan, Dumai, Pangkal Pinang, Panjang, Tanjung Priok, Tanjung Emas, Tanjung Perak, Pontianak, Banjarmasin, Balikpapan, Bitung, Makassar, Sorong, Jayapura.
Source: BKPM, 2015; Ministry of Transportation, 2015; Jurnal Prakarsa Infrastruktur, 2012.
IMPROVEMENT ON INFRASTRUCTURE PROCUREMENT PROCESS
To simplify the procurement procedures of PPP Infrastructure projects, The foreign companies or business entities are eligible to follow the tender without setting up a local company first in Indonesia. They may also enter into the tender in the form of consortium with local or international partner. However, once they are announced as the winning bidder, they have to set up an Indonesia business entity; Pre-qualifacilitation process now will only be repeated once.
Procurement of land is also held by Contracting Agency prior to the inclusion of tender document.
Provided by Minister of Finance through Indonesia Infrastructure Guarantee Fund (IIGF)/PT Penjaminan Infrastruktur Indonesia (PT PII)
Viability Gap Fund (VGF), Land Fund, Geothermal Fund, Permits and Licensing, Land acquisition, Use of State Assets, Feed in Tariff for renewables energy.
Through PT. Sarana Multi Infrastruktur (PT. SMI) for preparing of pre-feasibility study; peparing of tender documents; providing assistance during the tender process; and providing support towards realization of financial close.
1.Tax allowance are eligible to infrastructure and renewable energy; Tax Holiday are eligible to Oil Refinery project
3.Feed in Tariff (Hydropower Energy, Solar Energy, and Solid Waste to Energy)