Warren Buffet, one of the world’s most successful investors, whose net worth is estimated to be in excess of USD 115-billion, once famously said “don’t pass up something that’s attractive today because you think you will find something better tomorrow.” This basically means seize opportunities while you can, and if you apply this maxim to Indonesia, there’s no better time than now to jump on board Indonesia’s investment train.
Why invest in Indonesia?
The latest report from the Asian Development Bank (ADB) quotes Country Director for Indonesia, Jiro Tominaga as saying, “Indonesia’s economy is expected to grow by 5.0% in 2022 and 5.2% in 2023 as domestic demand continues to recover. The Indonesian economy briskly rebounded from the downturn in the third quarter and ended 2021 with output higher than in pre-pandemic 2019. Growth was broad-based and should strengthen in 2022 as economic activity continues to normalize. Private consumption and investment entered 2022 with a strong momentum, and the third COVID-19 wave should have minimal impact on growth.” As a caveat to this optimistic outlook, “the Russian invasion of Ukraine, however, if prolonged, could significantly affect inflation and the fiscal balance.”
The Asian Development Outlook (ADO) 2022 says “Indonesia’s consumer spending and manufacturing activity have been consistently rising due to the pickup in incomes, jobs, and confidence. Investment is benefiting from expanding demand, improvements in the investment and business climate, and a recovery in credit.”
Thierry Sanders, Co-Founder of Mekar, Indonesia’s first peer-2-peer lending company, is also upbeat about Indonesia’s potential. His top reasons to invest in Indonesia include the ease of co-investing with like-minded local investors; the growing ease of doing business; better regulations for foreign investors; a growing and maturing incubator, accelerator and social enterprise ecosystem; more impact per dollar invested; a growing and efficient digital economy ecosystem, which is expected to hit USD 130-billion by 2025; growing government support for Sustainable Development Goals; a growing middle class, which is expected to top 90-million people by 2030; USD 23-billion in Impact Investing opportunities; and steady economic growth and monetary stability.
Connections, contacts and collaboration
The timing for us is perfect! For some time we’ve been thinking about the next steps on our epic journey, and for most of that time one of the ideas that kept coming back and making most sense, now more than ever, was to launch an investment company, which we’re now doing with old friends and contacts in Indonesia, Australia, SEA, and the Nordic countries.
It’s worth remembering that we’re also a partner of Norway Connect, supporting Norwegian business in Indonesia and Southeast Asia through its representatives and facilitate the provision of financing and investment through its networks which covers the areas of heavy industry, marine and fisheries, Information and Communication Technology (ICT), real estate, holistic tourism, the creative economy, green energy and Integrated Transport Systems (ITS); we’re partners with Budidjaja International Lawyers and Lawyerindo.com to offer a comprehensive range of international legal advice and support; and we’re developing SSI Estate to develop and/or rehabilitate sustainable real estate projects for commercial and private use in various wonderful locations.
In addition, we already have in place agreements and MoU’s with Sperton, one of the world’s leading recruitment agencies, to deliver cost effective and competence-focused solutions across a range of business sectors; with PT MAI for the export and import and development of Indonesian aquaculture products; with PT Sulsel Citra Indonesia to explore and develop marine, energy and minerals, agribusiness and tourism in South Sulawesi; with PINA Center for Creative Financing for a variety of strategic projects in several sectors including, tourism, solar energy, the environment, marine, fisheries and aquaculture; with Aker Biomarine Antarctic AS, the world’s leading supplier of krill; with Protectoria Venture AS to cooperate and develop digital identity businesses and services in Indonesia; with Minapoli to offer solutions to the development and marketing of Indonesia’s aquaculture industry; with OK OCE to assist micro, small and medium sized businesses (MSMEs) and the entrepreneurs that drive them; with PT Bintang Tirta Semesta to explore and develop business in Indonesia’s fisheries industry; with PT Pembangunan Sulteng to develop fisheries, farming and other agrobusinesses, energy, mining, property, trading, services, education and transportation in Central Sulawesi; with PT Lundin/ North Sea Boats and Norway Connect to cooperate and collaborate to build and produce high technology vessels for any kind of industry for Indonesian customers; and with Norway Connect and Asosiasi Pengusaha Pengolahan dan Pemasaran Produk Perikanan (AP5I) to cooperate with the processing and marketing of fishery products in Indonesia.
Indonesia’s Golden Age is here!
We’re building strong foundations to support Indonesia’s Golden Age and we’re convinced now’s the time to pick up on opportunities when it’s still relatively early and when the country, and especially Bali, are opening up again for tourism. If you follow the news and trends, you’ll know the Indonesian government is very much focused on tourism, aiming to make it the country’s number one foreign exchange earner with the Five Super Priority destinations in addition to Bali. These are Labuan Bajo in Flores, Mandalika in Lombok, Borobudur in Central Java, Lake Toba in North Sumatra and Likupang in Sulawesi. And there are many other destinations going beyond these into the future.
The drive with our investment company is to take advantage of our contacts and extensive knowledge of markets and where they’re heading, as well as our deep understanding of Indonesia and the amazing diversity the country has to offer, to set up and guarantee the best possible structures under full compliance with Indonesian rules and regulations.
Why partner with the Seven Stones Indonesia Investment Company?
The Seven Stones Indonesia team has in-depth experience in Indonesia and interestingly, most of our projections of where Indonesia was/ is heading have materialized. And now under the guidance of President Jokowi things are happening faster and with more structure, transparency and opportunities than ever before.
We’re seeing this positive momentum driving investments, and when combined with a change in investor mentality, which is more focused on core business streams and activities, it results in the need to identify safe and sound investments through simple plug-and-play structures and enjoy the returns coming in. The bottom line is that savvy investors know there are opportunities out there and they want to be part of the growth. And we’re the team that can make that happen.
A great advantage of the Seven Stones Indonesia Investment Company is that you can invest as little or as much as you want. This means those that may not want to, or who cannot afford to, for example buy land or a villa, can invest what they can afford depending on their needs while still benefiting from the fund’s overall ability to invest across a range of opportunities, particularly in the tourism, food and beverage and real estate sectors.
The Seven Stones Indonesia Investment Company sees opportunities in many areas. For example, we could start with some good deals that we’re identifying in Bali that have an almost instant ROI potential. We’re also seeing trends developing in upcoming areas such as Nusa Penida, Lombok, Laboan Bajo and even beyond. This strategy would ensure lower risk but also take advantage of strong capital gains happening in many of these new destinations.
Keeping things simple and transparent
Typically, the investment structure would go over a period of 7-years and then an exit. Through this time frame, assets would normally be bought and sold to maximize the performance and returns. A timeframe like this would also allow us to shift the weight of investment, step-by-step, with where the most potential uplift will come. ROI generated can be taken out or added back into the fund as we go along. Indonesia has a very good tax structure with a low corporate tax rate and a final 10% income tax from dividends. If the dividend is re-invested into the Indonesian economy over 3-years, the final income tax from the dividend is 0%.
The most common question we get asked when we talk about the Seven Stones Indonesia Investment Company, is “what kind of ROI could I expect from this?” We know a lot of people would measure the performance of an investment fund in terms of ROI, but it’s not exactly legal to promise or guarantee certain returns, but we do believe they will be very attractive and beyond the norms of Bali and Indonesia at this stage. And, with a strong set up, the fund could look at also leveraging with credits from banks and other financial institutions, even though we would not do this to start with.
The Seven Stones Indonesia Investment Company structure is pretty straight forward; we have a few Board Members, both expats and well established Indonesians, that have an extensive knowledge of Indonesia, investments and tourism/ real estate; then a good Chief Executive who has the ability to evaluate and execute on good deals. We also aim at having the entire bookkeeping system on an online platform so any investor can see the status and performance all the time. Needless to say, it will all be totally transparent and above board.
It’s not really complicated and doesn’t involve smoke and mirrors, which is why for us, the Seven Stones Investment Company makes so much sense. If you’d like more insights and details of how to be partners and invest in this exciting next phase of our journey, please get in touch with Terje H. Nilsen, Co-Founder and CEO of Seven Stones Indonesia via terje@sevenstonesindonesia.com
