INDUSTRY SECTOR (UNIT)

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he market for heavy equipment within the next five years is predicted to remain quite stable, the stakeholders of heavy equipments user sectors like heavy equipment contractors, heavy equipment rental service providers, and other heavy equipment user sectors are growing. This is mainly related to the growth of projects in related industries like mining sector, construction/infrastructure sector, agro-business sector and other related sectors.

Market Potential and Market Opportunity of Heavy equipment in Indonesia 2013 – 2018

Industry Description 2013 2014 2015 2016 2017 2018

Unit Unit Unit Unit Unit Unit Projection of Domestic Production 10.335 14.436 18.138 24.486 33.086 44.626

Import - - - - - -

Demand by Industry Sector

Construction/Infrastructure 5.066 6.080 7.296 8.755 10.506 12.607

Mining 12.212 14.427 17.052 20.165 23.856 28.237

Plantation 4.491 5.423 6.561 7.953 9.658 11.749

Forestry 1.321 1.462 1.621 1.800 2.002 2.231

Oil & Gas 2.032 2.529 3.165 3.982 5.030 6.380

Loading-Unloading & Stevedoring, Others 2.719 3.141 3.630 4.196 4.852 5.612 Heavy Equipment Potential 27.841 33.062 39.325 46.851 55.904 66.816 Equipped Capacity 11.480 11.480 11.480 11.480 11.480 11.480 Expansion on Heavy Equipment Industry

Company Name

1. PT. Komatsu Indonesia - - - - - -

2. PT. Caterpillar Indonesia 1.050 1.050 2.400 2.400 2.400 2.400 3. PT. Hitachi Construction Mach Ind - 1.000 1.000 1.000 1.000 1.000 4. PT. Sumitomo Construction Mach Ind 2.000 2.000 3.000 4.000 4.000 4.000 5. PT. Sany Heavy Industry Indonesia - 1.000 1.000 1.000 1.000 1.000

6. Hyundai Heavy Industries Co.Ltd - - - 3.000 3.000 3.000

7. PT. Daya Kobelco Manchenry Indonesia - - - - - -

8. PT. Kobexindo Traktors, Tbk - - - - - -

9. DOOSAN Heavy Industries Co. Ltd - - - - - -

10.Daiwoon - - - - - -

11.VOLVO Korea - - - - - -

12.Belarus - - - - - -

13.Relocation Plan (Japan) - - - - - -

Projection of Production Capacity 14.580 16.530 17.880 22.880 22.880 22.880 Potential Investment 4.245 2.094 -258 -1.606 -10.206 - 21.746 Source: Projection of CIC (PTCapricorn Indonesia Consult, Inc)

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Web Site : http://www.cic.co.id

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The business potential of heavy equipment rental is quite significant. By 2013 the total heavy equipment unit being rented is predicted to reach 15,394 units with a value of Rp 86,518 billion, then by 2015 it is predicted to reach 22,686 units worth Rp 127,501 billion and in 2018 is predicted to have reached Rp 218,835 billion. Other related sectors like heavy equipment financing services are also predicted to experience a positive growth.

Potential Business Value of Heavy Equipment Rental by Industry Sector, 2013-2018

INDUSTRY SECTOR (UNIT)

2013 2014 2015 2016 2017 2018

CONSTRUCTION 3.546 4.256 5.472 6.566 7.880 9.455

MINING 7.327 8.656 10.231 12.099 14.314 16.942

PLANTATION 2.021 2.712 3.281 3.977 4.829 5.875

FORESTRY 396 439 486 540 601 669

OIL & GAS 1.016 1.265 1.583 1.991 2.515 3.190

STEVEDORING DAN OTHER SECTORS 1.088 1.413 1.634 1.888 2.426 2.806

DEMAND OF HEAVY EQUIPMENT 15.394 18.740 22.686 27.061 32.564 38.937

INDUSTRY SECTOR BUSIBNESS VALUE OF HEAVY EQUIPMENT RENTAL (MILLION)

CONSTRUCTION 19.929 23.920 30.754 36.903 44.288 53.139

MINING 41.180 48.649 57.501 67.999 80.448 95.218

PLANTATION 11.359 15.242 18.440 22.352 27.140 33.019

FORESTRY 2.226 2.467 2.731 3.035 3.378 3.760

OIL & GAS 5.710 7.110 8.897 11.190 14.135 17.929

STEVEDORING & OTHER SECTORS 6.115 7.941 9.183 10.611 13.635 15.770 TOTAL RENTAL MARKET VALUE 86.518 105.323 127.501 152.089 183.018 218.835

SOURCE: CIC’s Prediction CIC

Government’s Policy

In addition to the Regulation of Finance Minister Number 130/PMK.011/2011, the goverment also provides the Tax Relieve or Tax Reduction for Commercial Organization or better known as tax holiday for a term of five to ten tax years since the beginning of a company’s commercial production, which is expected to attract foreign investment.

Heavy equipment industry is one of the five machinery and capital goods industries receiving tax holiday; such incentive is granted only to new investments made by new companies with a value of no less than Rp 1 trillion.

CIC, an independent consultant firm believes that the business and investment prospects in heavy equipemnt industry are good feasible. The conclusion is based on the following factors:

a. The government includes heavy equipment industry in its development priority in the next five years in a bid to support the country’s economic development program notably in the development of infrastructure;

b. Indonesia is still heavily dependent on imports for heavy equipment as the country’s capital goods industry has not grown as expected to support the process of industrialization;

c. The government plans to provide facilities and fiscal incentive such as in tax allowance, import duty exemption , tax holiday and access to bank credits in a bid to boost development of capital goods industry in the country;

d. Among obstacles slowing down the development of heavy equipment industry in the country is inadequate infrastructure, skilled human resources and technology;

e. Imports of capital goods in the past three years have grown 32.25% per year from US$26.9 billion in 2010;

f. The country’s manufacturing sector is expected to gain in competitiveness in the coming years. The manufacturing sector is expected to be the driving force for the country’s economic growth in line with the government program of developing six economic corridors with Java to be the center of industrial development.

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1.2. Goals and Scope of Study

CIC has carried out a study of development of heavy equipment industry in the country and business prospects and investment opportunities in the sector . The study covers all aspects including production, imports, exports , market and investment as well as rental and leasing or financing . This study report has been prepared and compiled based on the results of the study to give summary of the data collected in surveys.

1.3. Methodology

The study has been carried out through field research to collect primary data and library surveys or desk research to collect secondary data. Field research included through interviews with competent sources such as producers or business players in the industry and consumers.

Library surveys included collection of data and information from government agencies such as the Industry Ministry, the Capital Investment Coordinating Board (BKPM) , the Central Bureau of Statistics (BPS) and business associations such as the Indonesian Heavy Equipment Association (HINABI), and the Indonesian Association of Heavy Equipment Companies (APPAKSI) and the data bank of CIC.

Contribution of PT. CAPRICORN Indonesia Consult Inc. / PT. CIC.

PT. CIC as one of the leading independent consultants in Indonesia in terms of industrial research and company investigation services is always trying to continue to encourage business players with the availability of reliable information through the presentation of the company studies and reports which are comprehensive, accurate and reliable that can be directly utilized by all domestic and international business perpetrators.

Currently, PT. CIC has been successful in preparing and presenting Business Potential and Investment Prospect of HEAVY EQUIPMENT in Indonesia, 2013 – 2018.

This study can be obtained at CIC with a price of US$ 750 or Rupiah equivalent / copy for the English or Indonesian language edition. For Purchasing or more information, please feel free to contact out Marketing Executive, Ms. Qisti W.L either at her Mobile Phone +6281288692048, Phone +6221 29468491-92, 29486240- 41, 3101081, 29486239 Fax +62213101505, 4759155 Email : [email protected] , [email protected] , Website : www.cic.co.id , or filling out the order form below prepared and send it back to us.

Best Regards,

PT. CAPRICORN Indonesia Consult Inc.

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