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Main Economic Indicators of the Republic of Indonesia

In recent years, Indonesia's economy has achieved rapid and stable development and maintained a good momentum of development. In 2008, Indonesia's GDP was US $516 billion, with per capita GDP of US $2,271. In 2008, its economic growth rate exceeded 6.3%. Its total import and export volume reached US $264.76 billion. In 2008, the inflation rate was 6.0% and the unemployment rate 9.8%.

Major industries in the Republic of Indonesia

Indonesia's main industries are oil and gas, agriculture, industry and services. Among them, agriculture and oil and gas industry are the traditional pillar industries. In the mid-1980s, the manufacturing industry rose rapidly, accounting for more than agriculture in GDP for the first time in 1991, which accounted for 30% of GDP in 2004. In the 1990s, the service industry developed rapidly, accounting for nearly 30% of GDP in 2004 and absorbing nearly one third of the employed population.

(1) Industry

Indonesia's industrial development direction is to strengthen export-oriented manufacturing. In recent years, the growth rate of the manufacturing industry has exceeded that of the economy. In 2006, the proportion of the manufacturing industry in the GDP was 27.8%, and the employed population was 11.066 million. The main sectors are mining, textile, light industry and so on. In 2005, the output of tin, coal, nickel, gold and silver was 69,400 tons of tin, 120 million tons of coal, 370.7 tons of nickel, 103.3 tons of gold and 262.6 tons of silver. In 2006, the export volume of textile products reached 9.597 billion US dollars. In 2006, the domestic automobile sales volume is 310,000.

(2) Oil and Natural Gas

As of 2003, proved oil reserves were 4.72 billion barrels and potential reserves were 5.024 billion barrels. Oil production in 2006 was 923,000 b/d; Indonesia also has huge natural gas reserves of about 123,589 Tcf (equivalent to 20.6 billion barrels of oil), of which 24,23 Tcf has been proven, mainly from Arun in Sumatra and Badak in East Kalimantan. In 2006, the export volume of oil and gas resources reached 22.2 billion US dollars, up 9.4% year on year.

(3) Agriculture, Fishery and Forestry

Agriculture, fishery and forestry: In 2007, agriculture, fishery and forestry accounted for 14.5 percent of GDP. Its arable land area is 33.84 million hectares (excluding Papua Province). Self-sufficiency in grain has not yet been achieved. Rice production in 2006 was 54.4 million tons, corn 11.61 million tons and soybeans 749,000 tons. It is rich in cash crops. Its output of palm oil, rubber and pepper ranked second in the world, reaching 16.09 million tons, 2.27 million tons and 78,000 tons in 2005. Coffee production is 321,000 tons and cocoa production is 590,000 tons in 2006. The government estimates the potential catch at 6.2 million tons per year, but the fishing capacity is seriously inadequate. In 2006, the actual catch was 4.16 million tons, a significant decline. In 2005, the forest area was 127 million hectares, accounting for about 53% of the total land area. To protect its forestry resources, Indonesia has banned the export of logs since 2002. In 2006, the export volume of wood products was $2.89 billion.

(4) Tourism Services

Tourism is the second largest foreign exchange earner in Indonesia's non-oil and gas sector. The government has long focused on developing tourist attractions, building hotels, training personnel and streamlining procedures. Since 1997, the tourism industry has been affected by the financial crisis, political turmoil, terrorist bombings, SARS and other adverse effects, and the development of tourism has been slow. Tourism declined in 2006 due to the impact of the Yogyakarta earthquake and bird flu. The number of foreign tourists was 4.8 million, down 4.11 percent from 2005. Foreign exchange revenue of the tourism industry was US $4.38 billion, down 3% year on year.

Relevant regulations and policies of the Indonesian government on foreign investment

1.Policies of the Indonesian Government to Encourage Foreign Investment

The Indonesian Government enacted a new Foreign Investment Law in March 2007. Indonesia is a member of Multilateral Investment Guarantee Association. To foster a sound international investment environment, China has signed the Convention on Investment Promotion and Safeguarding with 56 other countries, including China.

Indonesia's preferential policies for foreign enterprises include:

(1) Income tax relief;

(2) Foreign self-used machinery and equipment, spare parts and auxiliary equipment and other basic materials shall be exempted from import duty and value-added tax;

(3) Foreign enterprises shall be exempt from import duties and fees for their own production raw materials for 2 years; Raw materials used to produce export products are refundable import duties;

(4) Expenditures for research and development, scholarships, education and training, and waste disposal by foreign companies can be included in costs and deducted from gross revenue;

(5) For key areas encouraged by the government, 8-10 years of loss carry-over or increase the depreciation rate of equipment and buildings can be provided.

2.Indonesia Grants National Treatment to Foreign Investors

Since President Susilo Bambang Yudhoyono came to power, the Indonesian government has attached great importance to attract foreign investment. It has taken a series of measures to strengthen infrastructure construction, strengthen legal system construction and anti-corruption work, improve the investment environment, formulate preferential policies, and make efforts to reduce the approval time and cost required for foreign investors to invest in Indonesia. The approval time will be shortened from the current 97 days to 25 days, simplifying procedures and improving service efficiency. In March 2007, the new Foreign Investment Law passed by the Indonesian Parliament stipulates that foreign investors enjoy "national treatment"; Foreign investment can enter most industries in Indonesia; The maximum period for foreign investors to apply for commercial land use rights in Indonesia has been increased to 95 years. Once a foreign investor has a dispute with the Indonesian government, he can take it to the International Court of Justice for arbitration.

3.Preferential Land Policies in Indonesia

Under the Foreign Investment Law, the maximum period for foreign investors to apply for the right to use commercial land in Indonesia has increased to 95 years. Investment in eastern Indonesia, land and buildings tax halved for 8 years. Land, houses and permanent structures are taxed at a rate not exceeding 0.01% of the asset's value each year.

Indonesia's local management organization for foreign investment

The governing body for foreign investment in Indonesia is the Investment Coordination Board (BKPM), which is directly responsible to the President of Indonesia. Its main responsibilities are to evaluate and formulate national investment policies, and to coordinate and promote foreign investment. In August 2007, Indonesia's central and local governments implemented a one-stop service for investment approval. After the one-stop service was implemented, each department sent representatives to the investment coordinating body office to expedite the approval procedures.

Land Acquisition Law in Indonesia

(1) Land in Indonesia is administered in accordance with the Land Administration Act, Government Decree No. 5 of 1960. Land rights are further specified in Government Decree No. 24 of 8 July 1997. Only Indonesian nationals can acquire ownership of Indonesian land, and foreign-invested enterprises can hold various land use rights.

(2) The designation of areas, designation of land, approval of land use right and issuance of construction right permit for foreign-invested enterprises shall be exercised by Indonesia Investment Coordination Committee.

(3) If an enterprise is to be invested and set up in the bonded area, the land use right approval procedures shall be handled by the administration bureau of the bonded area.

Indonesian capital and foreign exchange regulations

Indonesia is a non-exchange control country and its currency is freely convertible into foreign currencies. Profits from foreign investment can be freely remitted after tax paid.

4. Restrictions on Import and Export Product Categories

The Indonesian government implements the import licensing management system for some products, which is divided into automatic licensing and non-automatic licensing. The Indonesian government implements automatic licensing management on nine categories of imported products, including chlorofluorocarbons, methane bromide, hazardous goods, alcoholic beverages and direct raw materials containing alcohol, industrial salts, ethylene and propylene, explosives and their direct raw materials, waste products and used clothes. Non-automatic licensing management shall be implemented for cloves, textiles, iron and steel, synthetic lubricating oil, sugar and agricultural hand tools. At the same time, the Indonesian government implements automatic licensing and non-automatic licensing management in the form of quotas and licenses. Only alcoholic beverages and direct raw materials containing alcohol are subject to quotas, while import quotas are only issued to approved domestic enterprises. Import license applies to industrial salt, ethylene and propylene, explosives, motor vehicles, waste products, dangerous goods, and licenses are issued to qualified manufacturing enterprises, which can only use these imported goods for their own production. Import licences for synthetic lubricants, artificial sweeteners and hand tools used in agriculture are issued only to approved importers.

5.Main Export Management Systems in Indonesia

Indonesia banned exports live fish products, poor quality rubber, rubber raw materials, raw crocodile, iron products (except originating in Batam peninsula), logs and woodchips, protected by the convention on international trade in endangered wild animals and plants of wildlife and natural plants, urea, in addition, Indonesia banned any product exports to Israel.

Indonesia mainly adopts "export guidance" and "export control" two forms of export restrictions. Export guidance products must meet the export approval requirements of Indonesia. Such export guidance products include live cattle, live fish, palm, nuts, iron ore containing lead and aluminum, petroleum, urea fertilizer, crocodile skin, unprotected wildlife, unprocessed gold and silver products, waste of various metal materials, etc. In addition, Indonesia applies both export licences and quotas for export-controlled products, which include coffee, textiles and clothing, rubber, plywood or similar composite wood boards, teak, mixed rattan and rattan semi-finished products.

6.Labor Force Level

In Indonesia, 28% of the workforce has a high school degree or above, and 72% have less than that.

7.Intellectual Property Rights

Indonesia is a member of the Paris Convention for the Protection of Industrial Property Rights. However, there is no trademark objection system in Indonesia, so foreign enterprises can only resort to legal remedies through litigation when their trademarks are squatted, and the costs are extremely high. The Indonesian Patent Law requires inventors to apply for a patent only after a new product has been manufactured in Indonesia.

8.Labor Costs

On November 20, 2012, the governor of Jakarta announced an increase in the minimum wage to $228 per month.

9.Labor Law

The provisions of the labor employment Indonesian congress on February 25, 2003 by 13/2003 "labor law", to provide fairly perfect labor protection, but because of some rules too bias in favor of the Labour party, a substantial increase in labor costs, affecting the competitiveness of products in Indonesia in 2006, the Indonesian government decided to modify the law, but by labor strongly protest, Efforts to amend the Labour law have come to nothing. The main points of Indonesia's Labour Law No. 13/2003 are as follows:

Severance pay: increase from 7 months of salary to 9 months.

Strikes: if a worker goes on strike against the company's policies, the employer shall still pay the worker who goes on strike, but the worker must notify the employer and the competent authority in advance, and must go on strike on the company's premises. If a worker violates the striking procedure, the strike is illegal and the employer may temporarily ban the worker from entering the factory and may not pay the strike wages.

Working time: 40 hours per week.

Resignation compensation: employers do not have to pay compensation to workers who leave voluntarily or who have violated the criminal law, but must pay benefits accumulated by the workers.

Child labor: permitted to employ child labor for a maximum of 3 hours per day.

Temporary workers: contract temporary workers are limited to 3 years.

Leave: Workers who have been employed continuously for more than 6 years are entitled to a special leave of 2 months (provided that after the 7th and 8th years of service, they are entitled to an annual leave of 1 month from the beginning, but they are not entitled to the original annual leave of 12 days during the two-year period, and only half pay can be paid during the 2 months of leave with special leave).

In addition, according to the regulations of the Indonesian government, foreigners investing in factories should be allowed to freely organize trade unions. The national trade union confederations are the All Indonesia Labor Federation (SPSI) and the Indonesian Workers' Welfare Federation (SBSI). The general labor policy of Indonesia aims to protect the labor force of Indonesia and solve the employment problem of Indonesia. Under this general policy, Indonesia is currently only allowed to bring in foreign professionals, not ordinary labor workers. For foreign professionals who are needed for Indonesia's economic construction and national development, foreign professionals are allowed to enter Indonesia through legal channels and obtain work permits on the premise that local professionals are given priority to be employed. Foreign technical personnel employed may apply for residence visas and work permits.

10.Work Visa

The Indonesian government provides foreign workers with a two-year residence permit and a two-year multiple-entry visa. Those who live in Indonesia for more than two consecutive years can apply for the right of permanent residence.

Chinese citizens who want to work in Indonesia must apply for relevant work visas from the Indonesian Embassy in China or the Consulate General in Guangzhou in advance, obtain a work permit from the Ministry of Labor of Indonesia through a guarantor (employer), and go through relevant procedures such as temporary residence within the prescribed time upon arrival in Indonesia. In addition, the Indonesian immigration laws do not allow foreign citizens to change employers (the guarantor) during the work, unless the written consent of the original underwriter, by the new sponsor (employer) more change in immigration JuBan completed procedures, at the same time the foreign citizen must exit is dealt with afresh again after work visa entry, can only work for a new sponsor (employer).

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