INDONESIA BUSINESS AND INVESTMENT DIALOGUE :

Focus on fisheries sector

MINISTRY OF MARINE AFFAIRS AND FISHERIES REPUBLIC OF INDONESIA

Jakarta, 9 March 2017

• Surveillance of marine and fishery resources;• Fish Quarantine, Quality control, food safety and bio

safety

• Marine spatial, conservation and bio diversity• Business Sustainability• Marine and fishery products competitiveness

• Human Resouces scaling up• Innovation in technology

SOVEREIGNTY

SUSTAINABILITY

PROSPERITY

SEA IS OUR FUTUREBANGSATo achieve sovereign, independent, and sustainable management of

marine and fisheries resources for the people’s prosperity

GOVERNMENT VISION : SEA IS OUR FUTURE

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…

Combating IUUF

…

Regulatory Reforms…

Investment and financial inclusion

…

Research & HRD

integration

Orientation for Fisheries GDP

Growth

…

Stages for Fisheries Reform

GOODGOVERNANCE

Moratorium for ex-foreign fishing vessel (Ministerial Regulation

No. 56/2014)

Establishment of PresidentialTask Force to Prevent and Eradicate Illegal Fishing(Presidential Decree No. 115/2015 - Task Force on Illegal Fishing Eradication)

• Analysis and Evaluation (AnEv)on 1,132 ex-foreign vessels (187 Companies) followed by administrative sanctions (revocation and suspension of business and fishing licenses

Acceleration of Fisheries IndustryPresident’s Instruction No.7/2016

Joint CommuniqueIndonesia – Papua New GuineaIndonesia – East TimorIndonesia – PalauIndonesia – New ZealandIndonesia – Australia

Demolition of

236 Illegal fishing vessels

• Investigation on human trafficking Benjina and Ambon

Kementerian Kelautan dan Perikanan Republik IndonesiaJl. Medan Merdeka Timur No. 16, Jakarta 10041 | www.kkp.go.id4

MMAF POLICIES

Ratification of Port State Measure Agreement (PSMA)

Ban on transshipment(Ministerial Regulation No. 57/2014)

Set on Live fish transport vessels and landing port Ministerial Regulation No. 15/2016

290188 Foreign fishing vessels102 Indonesian fishing vessels

Catched vessels

Capture fisheries business only for 100% domestic investorsPresidential Regulation No 44/2016

Improvement license services : (One Stop Services/PTSP), Licensing outlet & Online service

Ban on Using Unsustainable Fishing Gear (Ministerial Regulation No. 2/2015)

Regulation on catching lobster, crab and swimming crab with specific size and condition(Minister Regulation No. 1/2015)

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Need Reformation and Investment:1. Investment without reformation, will cause profit loss in long term

2. Reformation without investment will cause profit loss in short term, but keep long term profit because there are recovery of fish biomass.

3. Reformation and Investment, will prevent short term profit loss and to ensure fish resources will be better in long term

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Result of study : Impact of Fisheries Policy and Projection (UCSB-MMAF, 2016)

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1. Direct impact : IUU Fishing eradication policy eliminates 30-35% fisheries exploitation in Indonesia. Pairs with independent data from NOAA and Google Satellite figure in the same results.

2. Impact on 2035 : (1) Without IUU Fishing eradication policy from MMAF, 81% fish biomass will be decreased; (2) IUU policy without sustainable governance, will decrease fish biomass 26%; (3) IUU policy and governance, will increase 25% of fish biomass

Result of study : Impact of Fisheries Policy and Projection (UCSB-MMAF, 2016)

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Projection 2050: Consistent fisheries reformation policy, will increase fish biomass 224%, increase the catches 100%, and economic benefit USD 3,7 billion.

In 2050 global fish biomass will increase up to 619 million tones, catches 16 million tones, and fisheries profit US$ 53 billion.

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Result of study : Impact of Fisheries Policy and Projection (UCSB-MMAF, 2016)

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NATIONAL FISHERIES INDUSTRY ACCELERATION PROGRAME(Presidential Regulation No. 3/2017)

Sustainable Aquaculture

Fisheries Product Processing Industry

Sustainable Fishing

ACCELERATION TO DEVELOP NATIONAL FISHERIES INDUSTRY

(INPRES 7 / 2016)

Regulation, Institutional &

FinancingZoning and Region

Development

PROGRAM AND ACTION PLAN OF NATIONAL FISHERIES INDUSTRY

Sustainable Fishing

Sustainable Aquaculture

Fisheries Product

Processing Industry

• Revitalize national shipyard and increase local fishing vessel industries’ capacity

• Law enforcement and license transparency to prevent IUU Fishing• Complementary facilities and infrastructure in Fishing Port • Provide energy needs for domestic fishing vessels• Skills training and fishermen certification

• Reduce feed cost in aquaculture production component • Complementary facilities and infrastructure for increasing fishpond production• Building business relation with small medium scale farmer • Skills training and farmer certification

• Acces of electricity and cold chain for raw material supply of fisheries industry• Ease access of transportation, export and import • Ease access of skilled labor • Facilitate of tax and import tariff and export• Standardize business and fish processing industry • Optimalize warehouse receipt system for fisheries product and seaweed• Acceleration Roadmap of National Seaweed Industry • Increasing access and domestic fish consumption • Increase and expansion of foreign market • Diversification and improvement of marine and fisheries product quality

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Zoning and Region

Development

Regulation, Institutional &

Financial inclusion

• Transparency of location license & management license in coastal area and small islands

• Acceleration of national marine spatial planning to support sustainablility of fisheries industry

• Location determination and prepare facilities and infrastructure in Integrated Fisheries Industry (SKPT) as National Strategic Project

• Harmonize Fisheries Law with Shipping Law associated with integration of port management, port authority, license, certification of crew, berthing port freighter, and addition of special port in eastern part of Indonesia as a hub

• Financial support and capital access Acceleration of the procurement of goods and service, additional capital investment for fisheries state-own enterprises and dan expansion finance access non-National Budget (APBN) for business (BLU, KUR, Bank Credit)

• Improvement of data & information through One Data• Increase group’s status into a Cooperative• Minimize security risk of fisheries industry in the outermost island

Zoning and Region

Development

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PROGRAM AND ACTION PLAN OF NATIONAL FISHERIES INDUSTRY

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Develop new industry base on outer islands for export gateway

Location plan in 12 SKPT 2017 & sea toll roadmap 2017

12 location for SKPT 2017

1. Natuna2. Saumlaki3. Merauke4. Mentawai5. Nunukan6. Talaud7. Morotai8. Biak Numfor9. Mimika10. Rote Ndao11. Sumba Timur12. Sabang

Source: - Sea Toll Rute: Ministry of

Transportation, 2016- SKPT 2017: MMAF, 2016

Integrated Marine and Fisheries Zone

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Modernize 5 Existing Fishing Ports

• Place for fish auction• Ice flake machine• Integrated Cold Storage capacity 500 ton• Refrigerator vehicle

• Landing Center and shelter• Place for fish auction I and II• Modern Fish Market (for retail and wholesaler)• High grade fish market• Ice flake machine• Refrigerator vehicle

PPS Nizam ZachmanMuara Baru, Jakarta

• Place for fish auction• Ice flake machine• Refrigerator vehicle

PPP Sendang Biru Malang, Jawa Timur

• Place for fish auction• Ice flake machine• Integrated Cold Storage kapasitas 500 ton• Refrigerator vehicle

PPN PengambenganJembrana, Bali

Jayanti Cianjur

PPS Bitung, Bitung Sulawesi Utara

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2

3

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5• Port• Ice flake machine

EXISTING CONDITION

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TOTAL INVESTMENT IN FISHERIES SECTOR IN INDONESIA, 2016

Source : The Investment Coordinating Board of the Republic of Indonesia

Subsector Project Investment (Rp. Million)

Aquaculture 17 601,218.3 Fishery Capture 3 7,400.3 Fish Processing 72 2,571,152.9 Trade 19 79,611.9 Grand Total 111 3,259,383.4

Subsector Investment (Rp. Million)

Aquaculture 193,880Fishery Capture 574,571Fish Processing 269,865Trade 694,995Fishery Services 493,256Grand Total 2,226,568

Source : OJK

Investor Countries In Indonesia, 2016

1827991.7

488372

331593.1

238967.4

113737.1

96467.8

74986.5

39210.9

32029.7

8777.7

4000

3173.7

62.9

12.7

0.2

0 500000 1000000 1500000 2000000

Indonesia

Hongkong, RRT

Japan

Singapore

British Virgin Islands

R.R. Tiongkok

Philipina

South Korea

Taiwan

India

United States

Malaysia

Australia

Italia

Pakistan

Fisheries Sector Investment in Indonesia2016 (Rp. Million)

Source : The Investment Coordinating Board of the Republic of Indonesia

FISH PROCESSING Value (IDR. Million) Industry of fish processing and Preserved 125,518 Industry of Processing and Preserved for Aquatic Product 119,792 Smoked/grilled fish industry and other fish processing and preserved industry 15,000 Frozen Fish Industry 29 Fish Processing and Export Industry 29

Aquaculture21%

Fish Processing

78%

Trade1%

JAPANESE INVESTMENT PER SUB SECTOR IN INDONESIA, 2016

Detailed of Japanese Investment on Fish Processing Industry

SOURCE : TRADEMAP, 2017

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ASEAN – INDONESIA – JAPAN TRADE

381,745

453,151

384,202

458,533

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Japan's exports to Association ofSouth-East Asian Nations

(ASEAN)

Indonesia's exports toAssociation of South-East Asian

Nations (ASEAN)

ASEAN –Japan Trade in Fishery Sector , 2014-2015

2014 2015

466,236

564,886

836,910

474,876

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Japan Export to Indonesia Indonesia Export to Japan

Indonesia- Japan Trade in Fishery Sector , 2014-2015

2014 2015

PRAWNS AND TUNAS MAIN EXPORTERS TO JAPANYoY Kwartal 3 Tahun 2012-2016 (USD 000)

BUSINESS OPPORTUNITY

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Industries Demand on Cold Storage1,32 million tons (2015) ~ 1,7 million tons (2017)

970

2,532

383259

831

326

23 117 11 4 31 140

500

1,000

1,500

2,000

2,500

3,000

Sumatera Jawa Bali & NusaTenggara

Kalimantan Sulawesi Maluku &Papua

Ketersediaan (ribu ton)Demand (thousand tons) Availibility (Thousand tons)

• 200 thousand ton of CS are operated• 1,5 million ton of additional CS capacity are needed

• Additional power supply are needed• Power supply estimation:

Cold storage 200 ton = 142 KVA per unit UPI + Cold Storage 500 ton = 750 KVA per unit UPI + Cold Storage 1000 ton = 1.200 KVA per unit Ice Flake Machine 10 ton = 130 KVA per unit Ice Flake Machine 1,5 ton = 12,5 KVA per unit

Kementerian Kelautan dan Perikanan Republik IndonesiaJl. Medan Merdeka Timur No. 16, Jakarta 10041 | www.kkp.go.id

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FROZEN59%FRESH

10%CANNED

9%

SMOKED1%

DRIED8% SURIMI

2%

EXTRACTED5%

OTHERS6%

Jenis Pengolahan

Fishery Industries/

UPI(Unit)

Capacity(Ton/Year)

Frozen 421 1.572.515 Fresh 69 166.732 Canned 64 491.460 Smoked 10 31.268 Dried 58 83.764 Surimi 14 63.000 Extracted 35 90.480 Others 47 53.345 Total 718 2.552.564

Number of fishery industries byprocessing types (2015)

Volume of fishery products byprocessing types (2015)

SMOKED0%

FROZEN67%

KATSUOBUSHI2%

CANNED13%

DRIED2%

OTHERS6%

FRESH7%

SURIMI3%

Produk Olahan Volume (Ton)Frozen 414,735 Katsuobushi 12,383 Canned 80,752 Dried 11,574 Others 39,433 Fresh 42,814 Surimi 18,747 Smoked 382 Total 620,819

Cold Storage is the Main Key for Fishery Industries Fresh and frozen are precious products

Source : DG of Product Competitivenes , 2015

Kementerian Kelautan dan Perikanan Republik IndonesiaJl. Medan Merdeka Timur No. 16, Jakarta 10041 | www.kkp.go.id

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Cold Storages are Mostly Distributed in Western Indonesia

Sumber: Dirjen PDSPKP, 2016

Cold Storage (MMAF, 2009-2015) Single Cold Storage (MMAF, 2016) Cold Storage (Private/Importer)

INVESTMENT REGULATION

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Certain types of activities are fully opened for FDI, despite some investments arepartially restricted or closed. Key areas relevant to the fisheries sector are detailedbelow

Presidential Regulation 44 /2016: Foreign Direct Investment

II. Investments that require partnerships with SMEs :

1. Rearing of Fish2. Hatchery of Fish3. Processing of Fishery Products4. Manufacture of wooden ships5. Manufacture of device and fittings of

wooden ships for marine tourism and fishing

CLOSED to FDI1. Capture Fisheries2. Fishing of species listed in Convention

on International Trade in Endangered Species of Wild Fauna and Flora)

3. Salvage of Sunken Ship Treasure4. Sea Sand Quarrying

Subject to haverecommendation from

the Minister of Forestry and Environment

Coral/Ornamental Coral Culture

I. Business in fisheries sector that is fully opened for FDI is investment in Cold Storage

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Despite, for inclusive economy, some investments require SMEs’ partnerships

INCENTIVE AVAILABLE FOR FISHERIES SECTOR

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TAX ALLOWANCE

Government Regulation No.18/2015

Total net income reduction by 30% of the investment, that are charged respectively 5% per year in the 6

years period

Accelerated depreciation and

amortisation

Imposition of income tax on

dividends which paid to foreign tax

subject of 10% (ten percent), or a

lower rate according to the

avoidance of double taxation

agreement

Compensation losses longer than

5 (five) years

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Criteria and/or conditions of income tax facilities for investment

As per Decree of the Minister of Marine Affairs and Fisheries No. 17/PERMEN-KP/2015

*) Gov Reg No 18 /2015 jo Gov Reg No 9 /2016

BUSINESSES LOCATION RECEIVING TAX ALLOWANCE FOR PROCESSING*)

: FISH FREEZING INDUSTRY: OTHERS AQUATIC BIOTA FREEZING

INDUSTRY

Papua

Papua Barat

Maluku

MalutSulutGorontalo

Sultra

Sulteng

SulbarKalsel

Kaltim

Kaltara

NTTNTBBali

Jatim

DIY

JatengJabar

BantenDKI Jakarta

Lampung

SumselKep. Babel

Kep. Riau

NADSumut

Riau

Bengkulu

JambiKalteng

Kalbar

SulselDKI Jakarta

Jawa Timur

Jawa Tengah

Jambi

*) Gov Reg No 18 /2015 jo Gov Reg No 9 /2016

BUSINESSES LOCATION RECEIVING TAX ALLOWANCE FOR PROCESSING*)

: FISH PRODUCT PROCESSING INTO FLOSS, PASTE AND SURIMI

: PROCESSING AND PRESERVATION OF FISH AND OTHERS AQUATIC BIOTA (EXCEPT SHRIMP OR PRAWN) INDUSTRY

Papua

Papua Barat

Maluku

MalutSulutGorontalo

Sultra

Sulteng

SulbarKalsel

Kaltim

Kaltara

NTTNTBBali

Jatim

DIY

JatengJabar

BantenDKI Jakarta

Lampung

SumselKep. Babel

Kep. Riau

NADSumut

Riau

Bengkulu

JambiKalteng

Kalbar

SulselDKI Jakarta

Jawa Timur

Jawa Tengah

Jambi

*) Gov Reg No 18 /2015 jo Gov Reg No 9 /2016

BUSINESSES LOCATION RECEIVING TAX ALLOWANCE FOR PROCESSING*)

Papua

Papua Barat

Maluku

MalutSulutGorontalo

Sultra

Sulteng

SulbarKalsel

Kaltim

Kaltara

NTTNTBBali

Jatim

DIY

JatengJabar

BantenDKI Jakarta

Lampung

SumselKep. Babel

Kep. Riau

NADSumut

Riau

Bengkulu

JambiKalteng

Kalbar

SulselDKI Jakarta

Jawa Timur

Jawa Tengah

Jambi

: PROCESSING AND PRESERVATION OF SHRIMP/PRAWNS PACKAGED INTO CANS INDUSTRY

: OTHER PROCESSING AND PRESERVATION FOR OTHERS AQUATIC BIOTA INDUSTRY

*) Gov Reg No 18 /2015 jo Gov Reg No 9 /2016

BUSINESSES LOCATION RECEIVING TAX ALLOWANCE FOR AQUACULTURE*)

: MARINE FISH FARMING (GROUPER, SEABASS, SILVER POMPANO)

: FRESHWATER FISH FARMING IN FLOATING CAGE (TILAPIA AND PANGASIUS)

Papua

Papua Barat

Maluku

MalutSulutGorontalo

Sultra

Sulteng

SulbarKalsel

Kaltim

Kaltara

NTTNTBBali

Jatim

DIY

JatengJabar

BantenDKI Jakarta

Lampung

SumselKep. Babel

Kep. Riau

NADSumut

Riau

Bengkulu

JambiKalteng

Kalbar

SulselDKI Jakarta

Jawa Timur

Jawa Tengah

Jambi

THANK YOU

MINISTRY OF MARINE AFFAIRS AND FISHERIES REPUBLIC OF INDONESIA