Investor Presentaiton
Investment Landscape
Regulatory changes have been introduced to strengthen
sustainable investment landscape
The OJK has raised ESG requirements for financial services players
and listed companies
Indonesia's financial services
providers have been
required to submit either a
sustainability report or a
sustainable finance action
plan (RAKB) since 2019,
and all other issuers and
public companies have been
required to do so from 2020
- as per OJK Regulation
(POJK) No. 51/POJK.03/2017.
Technical Guidelines for Banks for the Implementation of OJK
Regulation No. 51/POJK.03/2017 on sustainable finance
IDX's ESG leaders outperformed their peers,
February 4, 2014 - January 29, 2021
Released in 2018 by the OJK
OK
IDX
37.3%
Indonesia Stock Exchange
(IDX) ESG Leaders, index
comprised 30 constituents (as
of January 2021) from IDX80
with low ESG risk rating
%
34.7%
25.5%
IDX Composite
(IHSG)
LQ45, index of
45 most heavily
traded stocks
Improving investment
80 ecosystem &
business activity
60
MSMEs &
cooperatives
40
Other
20
Omnibus Law on
Job Creation aims
to improve ease of
doing business
and attract
investment
Enacted in November
2020. Aimed at
reducing red tape in
business and labour
laws, which were
viewed as
unnecessarily
complex. Amends
some 78 laws and
consists of 15 chapters.
Breakdown of substantive articles
amended by Omnibus Law on Job
Creation (by focus)
Government investment &
national strategic projects
Generally welcomed by the business community: optimism that a
more agile labour market and reduced red tape will attract investment
and facilitate socio-economic growth. However, amid concerns the
legislation undermines worker rights and weakens environmental
protections, in end-December 2021 the Constitutional Court ordered
the government to amend parts of the law within two years.
Land procurement
•
Classify 12 sustainable business
activities to help banks improve their
sustainable portfolio financing
Elaborate on Sustainability Report/RAKB
Among them:
•
Renewable energy
Sustainable water
and wastewater
management
Environmentally
friendly transportation
Environmentally
sound buildings
Investment business list was designed to welcome
increased foreign investment
-
Presidential Regulation No. 10/2021, as amended by Presidential Regulation
No. 49/2021, introduced an investment business list – sometimes referred to
as a positive investment list. Effective March 2021, this replaced a so-called
negative investment list of segments closed to foreign ownership.
Listed business lines are open for 100% foreign investment; investors can
enjoy tax facilities in the form of tax holidays, tax allowances or investment
allowances. Includes additional provisions to favour MSMEs.
Sectors with notable foreign investment growth potential, according to the Ministry
of Investment/Indonesia Investment Coordinating Board (BKPM)
Manufacturing
Infrastructure
Digital economy
•
FMCG
Downstream
natural resources
Government aims to invest Rp430bn in infrastructure
projects, in addition to the construction of the new
capital (see slide 29), 2020-24
Primarily nickel and other minerals used for batteries
Sustainable policies
OJK Regulation (POJK) No. 51/
POJK.03/2017 raised the ESG
requirements for financial services
providers and listed companies from
2019 and 2020, respectively.
Meanwhile, the bourse's ESG leaders
outperformed other indices from early
2017 to early 2021, underlining the
potential for ESG to preserve and
create value. Despite controversies
over the possible loss of workers'
rights, the Omnibus Law on Job
Creation simplified labour laws. This
aimed to create a more attractive
investment environment and increase
local opportunities.
To this end, the introduction of the
positive investment list reframed the
conversation around foreign
investment and opened 245 business
lines to wholly foreign investment.
PwC
OBG ESG Report
OXFORD
BUSINESS
GROUP
Sources: ASEAN Briefing; Cekindo; IFC; IDX; Ministry of Investment; OJK; PwC; SSE Initiative
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