Benefits of Making Business in Indonesia | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN INDONESIA WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN INDONESIA WWW.MERGERSCORP.COM

4. Country Overview Indonesia, country located off the coast of mainland Southeast Asia in the Indian and Pacific oceans. It is an archipelago that lies across the Equator and spans a distance equivalent to one- eighth of Earth’s circumference. Its islands can be grouped into the Greater Sunda Islands of Sumatra, Java , the southern extent of Borneo, and Celebes; the Lesser Sunda Islands of Bali and a chain of islands that runs eastward through Timor; the Moluccas between Celebes and the island of New Guinea; and the western extent of New Guinea. The capital, Jakarta, is located near the northwestern coast of Java. In the early 21st century Indonesia was the most populous country in Southeast Asia and the 4th most populous in the world.

5. Executive Summary Spread across a chain of thousands of islands between Asia and Australia, Indonesia has the world's largest Muslim population and Southeast Asia's biggest economy. Ethnically it is highly diverse, with more than 300 local languages. The people range from rural hunter-gatherers to a modern urban elite. The population of Indonesia accounts for 261 Million, covering an area of 1.9 million sq. km. The official language is Indonesian and the major religion followed is Islam. Sophisticated kingdoms existed before the arrival of the Dutch, who colonized the archipelago but gave in to an independence struggle in 1949. Indonesia has become one of the world's major emerging economies.

6. Introduction – Doing business in Indonesia Ease of Doing Business in Indonesia averaged 106.42 from 2008 until 2019, reaching an all time high of 129 in 2008 and a record low of 72 in 2017. Indonesia is the fourth most populous country in the world, with a population of almost 251 million. Its economic stability in recent years has also made it a hotbed for investment, both local and foreign. Indonesia is a country with the great of potential for its natural resources. Besides, the tremendous of economy growth in Indonesia could be one support to create a business in Indonesia. This country is also considered as one of the leading ASEAN markets.

7. Conducting business in Indonesia On average, it takes 52.5 days to start a business in Indonesia, with 10 steps involved. If you want to invest and engage in business here, there are two primary ways. The most common is to establish an Indonesian Limited Liability Company (PMA), where there must be two parties holding shares in the company. There's also the option to open a Representative Office, but this comes with several restrictions on the company's activities. Another possibility is through choosing an indirect presence, by appointing a local company as an agent or distributor to market and sell your products there.

8. Taxation in Indonesia The country has adopted a worldwide income taxation system, meaning that individuals considered as Indonesia tax residents pay tax to the government on the income they earned in Indonesia. Non-resident tax payers will only be liable to pay PIT for the income they earn in Indonesia, unless the country in which they are a tax resident has an applicable tax treaty with Indonesia. In these cases, the tax payer might not pay any tax in Indonesia or pay a reduced amount. Companies in Indonesia are taxed at a rate of 25%, for both domestic and international sourced income. Resident Indonesian companies are required to withhold tax at a rate of 20% from payments to foreign companies.

9. Trade Indonesia is the 25th largest export economy in the world and the 71st most complex economy according to the Economic Complexity Index (ECI). In 2017, Indonesia exported $188B and imported $153B, resulting in a positive trade balance of $35.1B. In 2017 the GDP of Indonesia was $1.02T and its GDP per capita was $12.3k. The top exports of Indonesia are Coal Briquettes ($18.9B), Palm Oil ($18.2B), Petroleum Gas ($8.99B), Rubber ($5.68B) and Crude Petroleum ($5.34B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($14.2B), Crude Petroleum ($7.44B), Telephones ($3.13B), Vehicle Parts ($3.01B) and Petroleum Gas ($2.71B).

10. Banking in Indonesia The Bank Indonesia (BI) with its Headquarters located in Jakarta, is the central bank of Indonesia and the issuer of Indonesia’s legal tender currency. Established in July 1953, the BI oversees the operations of banks in Indonesia. The main functions of the country’s central bank include: Formulating and implementing monetary policies, Regulating and ensuring a smooth payment system, Ensuring financial stability within the country. The other responsibilities and objectives include : the maintaining of the general stability of money and prices, to make sure the bank itself remains financial stable and sustainable, to continually increase and reassess the effectiveness of monetary management, to maintain an efficient banking system.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com