| Regional Affairs
Political Meddling Seen Holding Back SOEs Expanding Abroad The Jakarta Globe 27th Aug 2014
Political interference in the management and operations of Indonesian state-run companies are seen as a major hindrance of their potential to expand overseas. Tanri Abeng, a former state enterprise minister, said on Tuesday that state-owned firms needed an expansion blueprint that includes the establishment of sector-based holding companies, world-class chief executives and strong corporate governance if they were to expand overseas. “Of those three fundamental issues, we’ve already been heading toward number 2 and number 3. What we don’t have yet is [a policy] supporting the establishment of holding groups per sector, thanks to rampant politicizing,” Tanri said during a seminar titled “Encouraging State Enterprises to Go International,” organized by Investor Daily, a sister publication of the Jakarta Globe.
Japan to increase RI nurse quota in 2015 The Jakarta Post 26th Aug 2014
Agency for the Placement and Protection of Indonesian Migrant Workers (BNP2TKI) head Gatot Abdullah Mansyur says Japan will increase its quote for nurses from Indonesia. “Indonesian nurses in Japan have proven to be able to compete, in terms of quality of skills and patient care, with nurses from other countries such as the Philippines. Hospital patients and the elderly have often said that nurses from Indonesia are kindhearted,” said Gatot as quoted by Antara wire agency in Jakarta on Tuesday. According to BNP2TKI data, the quota for Indonesian nurses in Japan stands at only 185, but in 2015 it will be increased to 348 nurses for both hospitals and centers for the elderly.
Remote, Gas-Rich Islands on Indonesia’s South China Sea Frontline The Jakarta Globe 26th Aug 2014
The word “sleepy” could have been invented for Ranai, the largest town in Indonesia’s remote and sparsely populated Natuna archipelago. It has few cars and only two sets of traffic lights. The cloud-wreathed mountain looming over it resembles a slumbering volcano. Nearby beaches lie pristine and empty, waiting for tourists. From Ranai, it takes an imaginative leap to see Natuna — a scattering of 157 mostly uninhabited islands off the northwest coast of Borneo — as a future flashpoint in the escalating dispute over ownership of the South China Sea, one of the world’s busiest waterways. But that’s precisely what many people here fear. They know Natuna is quite a prize. Its fish-rich waters are routinely plundered by foreign trawlers. Lying just inside its 200-nautical-mile exclusive economic zone is the East Natuna gas field, one of the world’s largest untapped reserves.
National Affairs
Bank Bailout Probe May Complicate Indonesian Cabinet Selection The Wall Street 27th Aug 2014
JAKARTA, Indonesia—Potential investigations into a controversial Indonesian bank bailout six years ago could complicate efforts by Indonesia's president-elect to form a cabinet. Joko Widodo, the governor of Jakarta who won Indonesia's presidential elections in July, will take power in October. His supporters recently asked the public for suggestions of candidates to fill his new administration. However, some of the names popular with the public could be investigated by Indonesia's anticorruption body for their role in the government's $750 million bailout of Bank Century in 2008.
Parties push Jokowi to prioritize his allies The Jakarta Post 27th Aug 2014
As rival parties slowly crystallize into an opposition to match the incoming government of president-elect Joko “Jokowi” Widodo, his political allies are calling for a significant presence in the Cabinet. A politician from the Indonesian Democratic Party of Struggle (PDI-P), Puan Maharani, said the president-elect should pay attention to the parties that had nominated him in this year’s presidential election. “We understand that the president-elect has the right to design the Cabinet. But of course we hope that he will also pay attention to the candidates endorsed by the parties that officially supported him,” said the PDI-P lawmaker on the sidelines of a House of Representatives plenary meeting on Tuesday.
Jokowi to Announce Cabinet in Early October The Jakarta Globe 27th Aug 2014
Joko “Jokowi” Widodo will announce his cabinet team in early October, according to a senior adviser to the president-elect, as he steps up preparations to become the next leader of the world’s third largest democracy. All eyes are on Joko’s choices to head the main economic ministries, who will inherit problems in Southeast Asia’s biggest economy ranging from a widening current account deficit and cooling investment to the slowest growth since 2009. But the most pressing problem will be cutting big fuel subsidies, a politically sensitive issue that raises the specter of protests within weeks of the new administration taking office.
Rival camp may forge opposition The Jakarta Post 26th Aug 2014
President-elect Joko “Jokowi” Widodo’s camp continued on Monday to solicit support from members of Prabowo Subianto’s Red-and-White Coalition ahead of his inauguration in October. Senior Golkar Party member Luhut Binsar Pandjaitan, who went against his party to support the Jokowi-Jusuf Kalla ticket, said there was a chance that his party, currently still in the Red-and-White Coalition, would follow him in supporting the president-elect. “But I don’t know when, I cannot give an answer considering the political turbulence within the party,” said Luhut, who also serves as an adviser to Jokowi’s transition team. “[Golkar’s political shift] could occur before Jokowi’s inauguration or after. Anything is possible.”
Jostle for Places in Jokowi’s Cabinet Heats Up The Jakarta Globe 26th Aug 2014
The Constitutional Court’s confirmation last week of Joko Widodo’s presidential win has resulted in the quiet fight among his backers to get louder, with some beginning to complain about an “exclusive” team he has assembled to prepare for the transition to a new government. Officially, Joko’s presidential bid has been backed by five political parties — his Indonesian Democratic Party of Struggle (PDI-P), the National Awakening Party (PKB), the National Democratic (Nasdem) Party, the People’s Conscience (Hanura) Party and the Indonesian Justice and Unity Party (PKPI). But aside from those, Joko is known to have gained wide support from an army of volunteers — young activists, intellectuals and academics— often said to have played even more active roles behind the scenes, compared with the official party vehicles, in support of Joko’s campaign ahead of the July 9 presidential election.
Smartfren to invest Rp 10t in network, frequency The Jakarta Post 26th Aug 2014
Publicly listed cellular operator PT Smartfren Telecom (FREN) plans to spend around Rp 10 trillion (US$854.1 million) to migrate its 1.9 GHz-network frequency to 2.3 GHz, as requested by the government as well as to prepare the launch of its 4G network. Smartfren deputy CEO Djoko Tata Ibrahim said on Monday that the Rp 10 trillion expenditure would be funded from various sources, including through vendor financing and syndicated loans from China Development Bank (CDB). “We will probably also find other sources of funding,” he said, declining to reveal details of the proportions of the funding.
Jakarta Office Space to Increase, But Not Upscale Homes: Report The Jakarta Globe 26th Aug 2014
Foreign investors seeking to expand their presence in Indonesia over the next four years will find ample office options to chose from in Jakarta, but housing for their executives will be harder to come by, according to a report from global real estate services firm Colliers International. While total office space in Jakarta increased by just 1 percent in the first half this year, the capital will see a cumulative 10.7 million square meters of new office space built by 2018, up 51 percent from 7.1 million square meters today, Colliers said in its report on Wednesday. That projection assumes 74 buildings that are now under construction or being planned will be completed on time, Colliers said. The increase will result in drop in office occupancy to under 90 percent from 96 percent at the end of the first half.
Geothermal bill passed The Jakarta Post 26th Aug 2014
The House of Representatives passed the much anticipated-geothermal bill into law in a plenary meeting on Tuesday. In the meeting, all factions agreed to endorse the bill to replace Law No.27/2003 on geothermal energy. “Herewith, we agree to pass the geothermal bill into law,” said House Deputy Speaker Pramono Anang, who led the session. The bill was a government initiative proposed by President Susilo Bambang Yudhoyono to the House on Aug.13, 2013, Antara reported. Energy and Mineral Resources Minister Jero Wacik praised the passing of the law, saying that it would let geothermal-based development projects expand further.
Jokowi denies rift with Kalla over Cabinet structure The Jakarta Post 25th Aug 2014
President-elect Joko “Jokowi” Widodo denied a rumor on Sunday that a rift had occurred between him and his deputy Jusuf Kalla over the structure of the incoming Cabinet. “How is that possible? We meet and talk with each other every day. We are both on good terms,” Jokowi, who is slated to be sworn in as the country’s seventh president on Oct. 20, said in Jakarta. Jokowi said that as of Sunday he had not engaged in talks with either Kalla or members of his coalition on who would fill positions in his future administration, saying that such discussions would only take place after he was sworn in as president on Oct. 20.
Customs
Indonesia in talks to resume poultry shipments to Japan The Jakarta Post 25th Aug 2014
Indonesian trade officials are currently in talks with their Japanese counterparts over the possibility of resuming poultry exports to the East Asian country, which were halted in early 2004 following the avian flu outbreak that affected many local poultry breeders. Local poultry producers have expressed their readiness to ship processed poultry products to Japan, which could provide export earnings of at least US$200 million a year for Southeast Asia’s biggest economy. McDonald’s Japan stopped purchasing chicken from China’s Shanghai Husi Food Co. Ltd. after the exposure of a food safety scandal involving sales of expired meat to the fast food outlets at the end of July. As the food chain is seeking import substitutes, Indonesia may serve as an alternative source, apart from Thailand, which has been supplying the Japanese market. Indonesian poultry producers could meet standards applied in Japan and had already gained a competitive edge compared to rivals in China or Thailand thanks to efficient production, according to Indonesian Poultry Breeders Association (GAPPI) chairman Anton J. Supit.
Defense & Security
Australia, Indonesia Sign a Code of Conduct Over Intelligence Reuters 27th Aug 2014
A new intelligence code of conduct between Australia and Indonesia meant to soothe a diplomatic spat about spying will help increase cooperation and combat the threat of militants returning home from fighting in Syria and Iraq, Australia's government said. Australian Foreign Minister Julie Bishop flew to the Indonesian island of Bali on Wednesday to sign a code of conduct sought by Indonesian President Susilo Bambang Yudhoyono. Mr. Yudhoyono demanded that the accord be made last year, after revelations that Australian spy agencies in 2009 tried to tap his phone shortly after two Jakarta hotel bombings.
Economics
JCI Advances on US Economic Data, Hopes of a New Fuel Policy The Jakarta Globe 27th Aug 2014
Indonesian shares rose, ending three days of declines on the back of favorable economic US data and expectation the government will increase the fuel price soon. The Jakarta Composite index rose 0.4 percent to 5,162.25 on Wednesday, gaining some of its 1.4 percent loses in the previous three trading days. More than 5.6 billion shares worth Rp 5.7 trillion ($485 million) changed hands with foreign investors’ net buying at Rp 268 billion. “External sentiments and expectation of subsidized fuel price increase propped up the JCI,” said Betrand Reynaldi, an analysts at KDB Daewoo Securities. State energy company Pertamina stopped subsidized fuel rationing program after panic buying and queues crept up in many cities. President-elect Joko Widodo and President Susilo Bambang Yudhoyono met in Bali to discuss reportedly a possibility of the fuel price increase before October.
Fuel scarcity prevents fishermen from going out to sea The Jakarta Post 27th Aug 2014
Fuel scarcity nationwide has led to fishermen in a number of regions in the country being unable to go out to sea, forcing some to switch occupations. In Belawan Port, North Sumatra, hundreds of fishermen are reported to have been unable to catch fish for the last week due to diesel fuel shortages. Aceng, a skipper, said the shortage had lasted for three weeks and had worsened in the last week to the point where fishermen could not head out to sea to catch fish.
Rupiah rises to 11,681 per dollar at Tuesday's close The Jakarta Post 26th Aug 2014
The rupiah appreciated on Tuesday afternoon by 26 basis points to end the day at 11,681 per US dollar. Monex Investindo Futures research head Ariston Tjendra said that external factors, primarily the meeting between the Russian and Ukrainian presidents, had strengthened the global financial market, including Indonesia. "Market players are expecting the conflict in Ukraine to ease immediately," Ariston said in Jakarta on Tuesday as quoted by Antara news agency.
Telkom eyes Oz, NZ, Asia-Pacific market The Jakarta Post 26th Aug 2014
State-owned publicly listed telecommunication operator PT Telekomunikasi Indonesia (Telkom) through its subsidiary Telkom Internasional (Telin) is to expand its networks to four countries across the Asia-Pacific over the next few years. The firm plans to acquire telecommunication companies in Australia, New Zealand, and two other countries in Asia Pacific, kontan.co.id reported. Telin president director Syarif Syarial Ahmad said that in Australia, they wanted to acquire 75 percent of a business process outsourcing (BPO) firm with a total investment of US$8 million. Meanwhile in New Zealand, they were going to acquire 27 percent shares of a local telecommunication operator that controlled 60 percent of the telecommunication market in the country.
Businesses encouraged to embrace Millennial tourists The Jakarta Post 26th Aug 2014
As technology changes the tourist industry, with younger generations of tourists loving to use the Internet and social media, business players are being encouraged to better prepare their business models to tap into emerging travel demands. "There’s a huge explosion of young people in Asia and business players have to be prepared," Neeta Lachmandas, assistant chief executive at the Singapore Tourism Board (STB), said in Jakarta on Tuesday on the sidelines of an event that was a prelude to TravelRave 2014, Asia's premier tourism and travel week, which will be held from Oct. 27-31. According to a joint study by the STB, Visa and McKinsey & Company, approximately 60 percent of the world's so-called Millennial Generation (those born after 1980) reside in Asia, with a third originating from China or India.
Indonesian Coal Firms, Fearing Mass Failures, Want Trade Rules Reviewed The Jakarta Globe 26th Aug 2014
Indonesia’s coal industry is pushing the government to roll back new trade rules that it says will drive firms into the ground and rule out any chance of higher shipments next year from the world’s top exporter of thermal coal. The rules, intended to rein in illegal operations, force coal miners to register with the central government and make royalty payments upfront before they are allowed to export. But the change — coming as the Southeast Asian country pushes to limit coal output to safeguard future energy needs — is piling pressure on a sector that faces at least another year of depressed prices because of a global oversupply, the Indonesian Coal Mining Association said.
Market Falls Further Over Fuel Supply The Jakarta Globe 26th Aug 2014
Indonesia’s main stock index slid further on Tuesday, posting a 1.4 percent loss since last Thursday’s rally, reflecting growing concern among investors over the supply of subsidized fuel. The Jakarta Composite Index (JCI) slipped 0.74 percent, or 38.4 points, to 5,146.552. About 5.6 billion shares, or Rp 5.4 trillion ($461 million), changed hands on the Indonesia Stock Exchange (IDX). Decliners beat gainers by 211 by 91. Foreign investors made up 43 percent of the trading activity. They sold Rp 202.2 billion more in shares than they bought. Queues appeared in several cities after Pertamina reduced supplies to gas stations, in an effort maintain subsidized fuel stocks until the end of the year. Consumers paying for costlier non-subsidized fuel could stoke inflation, which in turn reduces the value of rupiah denominated assets such as stocks and bonds.
Long queues form as fuel shortage threatens The Jakarta Post 26th Aug 2014
A number of gas stations in cities and regencies across the country have run out of subsidized diesel and gasoline fuel stocks. Long queues of motorcycles and cars had formed since the morning at a number of gas stations in Sukabumi city on Monday, despite signboards saying they had run out of diesel fuel and gasoline. State oil and gas firm Pertamina’s Marketing and Trade Division head Hanung Budya said the long queues had taken place in a number of areas over the past few days, especially in Cirebon, Bandung city, Bandung regency, Bogor city and Sukabumi city.
Indonesian president-elect seeks new investments from Malaysia ASEAN Investor 25th Aug 2014
Indonesian president-elect Joko Widodo has invited Malaysian businessmen to invest in manufacturing, tourism and infrastructure which have been identified as three core areas of growth under his leadership. He said Indonesia needed massive investment and if domestic capital was not sufficient then Indonesia would need to look for investors abroad including Malaysia. “It is my task as president to balance out these pressures and my commitment to the Indonesian people is to create economic growth and jobs. “I am aware that there are domestic political pressures to limit foreign expansion, including in the financial services and plantations sectors. Still, to ensure future rapid economic growth we need massive investments,” he said in an interview with StarBiz.
Energy
Indonesia's Pertamina halts fuel subsidy programme after panic buying, queues Reuters 27th Aug 2014
Indonesia's state-owned Pertamina on Wednesday halted a week-old programme aimed at curtailing the use of subsidized fuel, after its implementation led to panic buying and long queues at petrol stations in Southeast Asia's largest economy. The former OPEC member is struggling to contain ballooning fuel subsidy costs, which have widened the current account deficit and left little room in the budget for president-elect Joko Widodo's much needed reforms.
New Bill Opens Room for Geothermal Power Development in Indonesia Indonesia Investments 27th Aug 2014
Indonesia’s House of Representatives (DPR) passed an important geothermal bill in a plenary session on Tuesday (26/08). This new bill is expected to be a great leap in the development of geothermal power in Southeast Asia’s largest economy. Indonesia contains the world's largest geothermal energy reserves. However the country only uses a small fraction of this geothermal potential. Meanwhile, amid robust economic growth, the country is in serious need to provide more electricity and power to its people and businesses.
Behind Indonesia mining deal, newly minted minister and U.S. mining legend Reuters 23rd Aug 2014
As negotiations to resolve an increasingly bitter dispute over Indonesian mining rules teetered on the brink of collapse, the chairman of Freeport-McMoRan Inc James "Jim Bob" Moffett flew to Jakarta for last-ditch talks. Indonesia's chief economics minister, Chairul Tanjung, said he had got to a point where he felt only talking directly to the 76-year-old U.S. mining legend might break a deadlock in the six-month row, which had already cost Southeast Asia's top economy more than $1 billion and put thousands of jobs at risk.
IAEA Supports Indonesia’s Plan for Reactor Jakarta Globe 22nd Aug 2014
The International Atomic Energy Agency, or IAEA, supports Indonesia’s plan to develop an experimental power reactor, or RED, as part of implementing nuclear technology in the country. “The IAEA will be a watchdog that will monitor the utilization of nuclear energy in the context of improving life quality and welfare [in Indonesia],” IAEA’s deputy director general Alexander Bychkov said in a meeting with Research and Technology Minister Muhammad Hatta in Jakarta on Thursday. They were accompanied by Djarot Sulistio Wisnubroto, head of the National Nuclear Energy Agency (Batan).
Financial Services
Indonesian firms explore M&As ASEAN Investor 27th Aug 2014
Vietnam and Indonesia are seeing big merger and acquisition opportunities. At last week’s conference on promoting investment in Vietnam, organised in Indonesia by the Ministry of Planning and Investment (MPI) in co-operation with Indonesia Investment Coordinating Board, Indonesian Cement CEO Dwi Soetipto said the group had acquired a 70 per cent stake in the Thang Long Cement Plant in the northern province of Quang Ninh several years ago. “This deal has been a success story, prompting many Indonesian investors to turn to the Vietnamese market now,” he said. The conference saw an impressive 150 Indonesian firms turn up. They were also joined by Vietnamese businesses such as the State Capital Investment Corporation – the state shareholder in Vietnamese enterprises, VPBank Securities (VPBS), PetroVietnam Power Corporation, PetroVietnam Exploration Production Corporation, Hanoi Housing Development and Investment Corporation, and Hanoi Urban Development, Construction and Investment Consulting Joint Stock Company.
RI credit growth will tend to slow down: Perbanas Jakarta Post 27th Aug 2014
Indonesian Banks Association (Perbanas) chairman Sigit Pramono said Indonesia’s credit growth will likely slow down in the next several years because of limited liquidity. “We expect from now on that the credit growth in the next years cannot be similar with the previous years because the loan-to-deposit ratio (LDR) has continued to increase and liquidity is getting tight,” he said in Jakarta on Wednesday, as quoted by Antara news agency. Sigit admitted that overall, banks would unlikely be able to stop issuing credit, but will instead adjust their credit growth to the liquidity available. “If the LDR stands at 90 percent, it is certain that banks would hold back the credit growth rate,” he said. The banking expert went on to say it was probable that the net interest margin on banks would become lower due to the credit growth slowdown.
OJK wants state-run lenders to work with regional development banks The Jakarta Post 27th Aug 2014
The Financial Services Authority (FSSA) recommends that state-owned banks team up with regional development banks (BPD) to better channel economic growth in the regions. OJK deputy commissioner for banking supervision Irwan Lubis said that one way to work together with the BPD was by acquiring some of their shares. "The state-owned banks do not have to acquire a lot of the BPD's shares. Around 20 to 30 percent [of] shares is enough," Irwan said in Jakarta on Wednesday, as quoted by kompas.com. Through the acquisition, he said that state-run banks could also disseminate education and information to the BPD on how to better manage their funds and minimize the effects of local political issues. "It will be a good collaboration and the BPD will learn some lessons from the state-owned banks," he said.
Stocks Falter on Lack of Fresh Incentives Jakarta Globe 25th Aug 2014
Jakarta stocks fell for the second day on Monday as foreign investors unload their stake in local investments. The Jakarta Composite Index (JCI) lost 13.94 points, or 0.3 percent, to 5,184.956 on Monday. Some 5.8 billion shares, worth Rp 4.7 trillion ($401 million), were traded on the Indonesia Stock Exchange (IDX), which was higher than the average daily transaction of 5.1 billion shares worth Rp 6.1 trillion. Foreign investors made up 44 percent of the trading activity, selling Rp 176.7 billion more in shares than they bought. All sectors fell, with the exception of mining and finance.
Indonesia: 800 actuaries needed over the next few years Asia Insurance Review 25th Aug 2014
Insurance industry executives believe that insurance companies in Indonesia need an estimated 800 actuarial experts over the next few years. Currently, there is a shortage of such expertise in the country. According to the Society of Actuaries of Indonesia (PAI), there are 180 fellows and 200 associates of actuarial professionals who have earned recognition from the Fellowship of the Society of Actuaries of Indonesia (FSAI), reported the Jakarta Post. Mr Kasman Ilyas, vice president of a major insurance company, said: “We are now hiring people from neighbouring countries.” One of the reasons for the shortage of actuaries in the insurance sector is that many actuarial graduates are not working in the insurance industry. This compounds the problem that there is an insufficient number of students who graduate each year from actuarial studies
Indonesia: Lawmakers to cut foreign investment ceiling in insurers Asia Insurance Review 25th Aug 2014
Indonesian lawmakers are looking into the possibility of reducing the stake foreign investors are allowed to hold in local insurers. The new law could be passed before the current government ends its term in October. At present, several foreign investors have a stake of more than 90% in insurance companies in the country. Mr Harry Azhar Azis, deputy chairman of the parliamentary commission overseeing finance and banking, told Reuters that lawmakers were hoping to pass a draft bill outlining a broad plan to lower the limit by the end of this month. "Foreign companies own the majority of the insurance business in Indonesia," he said. "We are looking to limit the ownership." Mr Azis said that some political parties have proposed a 49% ownership cap. It is not clear whether any revision to the limit would apply to investors already holding stakes in Indonesian insurers or just to new acquisitions. Mr Ngalim Sawega, deputy commissioner for the non-banking industry of the Financial Services Authority (OJK), said that the government and lawmakers at the House of Representatives were close to reaching consensus on the limit, reported the Jakarta Post.
Amendment to Banking Law likely to fail: Lawmaker The Jakarta Post 25th Aug 2014
The long-awaited amendment to the Banking Law faces the prospect of being dropped by the House of Representatives as lawmakers now only have one month left in office. Chairman of the House of Representatives' Legislation Body (Baleg) Ignatius Mulyono told The Jakarta Post recently that the amendment was among 40 bills that were unlikely to be passed by the current House, which is set to leave after Sept 30. "Around 40 bills are unlikely to be passed [...]that includes the amendment to the Banking Law," Ignatius said. As there exists no clear carry-over mechanism, incoming legislators will have to start from scratch should they wish to continue with the deliberation of the amendment. The amendment is aimed at restricting the operation of foreign banks, setting a deadline for them to become legal entities in the form of Perseroan Terbatas (PT), or limited liabilities company, and capping the level of foreign ownership.
Dubai Islamic Bank Seeks to Secure 40 Percent Stake in Panin’s Shariah Unit The Jakarta Globe 24th Aug 2014
Indonesia’s Financial Services Authority, or OJK, has received a proposal from the Dubai Islamic Bank to boost its stake in Bank Panin Syariah from 24.9 percent to 40 percent, an official said on Friday. Edy Setiadi, head of the shariah banking department at the OJK, said the agency was reviewing the offer made by the Middle Eastern lender. The OJK is currently in talks with its counterparts in the United Arab Emirates to sign a memorandum of understanding that will form a cooperative bond between the two economies. “We are reviewing the DIB’s proposal. The process includes a discussion on a possible MoU [with the UAE],” Edy said, adding that the OJK welcomed foreign investment in the nation’s financial sector, especially in shariah banking. DIB’s presence is expected to bolster growth for Bank Panin Syariah, amid the growing competition with its domestic commercial rivals.
Mandiri, Taspen, Pos Indonesia to Establish Joint Venture Jakarta Globe 22nd Aug 2014
Bank Mandiri, the country’s largest lender by asset, agreed on Thursday with state pension Taspen and state postal office Pos Indonesia to jointly own Bank Sinar Harapan Bali, a micro lender based in Bali, as part of their business plan to expand their reach in the region. Under the joint venture partnership, Sinar Harapan Bali will issue new shares to be bought by Pos Indonesia and Taspen, bringing down Mandiri share to 59.6 percent. Pos Indonesia and Taspen will have 20.2 percent each in Sinar Harapan Bali. Budi Sadikin, Mandiri’s president director, said that the cooperation will expand the lender customer and service points across the archipelago, particularly to provide service to small and medium enterprises. “Trough this joint venture, we support government program to provide access to financial services as widespread as possible,” Budi said.
Food & Agriculture
Indonesia revokes beef import ban on Japan to diversify supply Times of India 22nd Aug 2014
Indonesia has revoked a four-year ban on beef and cattle imports from Japan, in a move to reduce dependence on Australian shipments and diversify its supply sources, an official in the Southeast Asian nation's agriculture ministry said on Friday. The move follows the announcement this week of talks that will allow the resumption of Indonesian poultry exports to Japan, and after the Japanese foreign minister visited Jakarta last week. Indonesia banned Japanese beef imports in early 2010 following concerns over foot and mouth disease.
Infrastructure
Garuda Indonesia LCC subsidiary Citilink will focus on the domestic market as fleet growth slows CAPA Centre for Aviation 22nd Aug 2014
Garuda Indonesia budget subsidiary Citilink is focusing on further expanding in the domestic market, particularly at the capital as slots open up at both Jakarta airports. Citilink is adding seven A320s in 2H2014 but only five aircraft in 2015, nearly all of which will be allocated for domestic expansion. Citilink is currently entirely a domestic carrier as its initial foray into the international market in Mar-2014, with a route from Surabaya to Johor Bahru in southern Malaysia, was pulled after only one month. Citilink still plans to pursue international expansion, including to Singapore and Australia, but the focus over at least the next year will be on capitalising on domestic opportunities brought about by consolidation in the dynamic Indonesian airline sector.
Long-term projects to continue in transition The Jakarta Post 27th Aug 2014
The incumbent government has assured investors about the continuity of long-term infrastructure projects in Indonesia as the country enters a transition period. Deputy Coordinating Economic Minister for Infrastructure Luky Eko Wuryanto said Tuesday the current government would start the ground breaking on 15 infrastructure projects, whose development would continue under the administration of president-elect Joko “Jokowi” Widodo, which will begin in October. “If these projects are already in the ground-breaking phase, then they will be at a point of no return and they will continue despite the change in government,” Luky said.
China Investors Holding Back The Jakarta Globe 27th Aug 2014
The potential financial return of the infrastructure project offered by the Indonesian government to the private sector was viewed as not being attractive enough, which might keep the Chinese from making huge investments in the country’s massive infrastructure developments. “The financial term [of the infrastructure project in Indonesia] is not so attractive [that] I can share with you,” Li Yao, the chief executive of the China-Asean Investment Cooperation Fund (CAF) told the Jakarta Globe in an interview on Wednesday. “The reason for that is Indonesia’s very special legal system.” Yao said that the infrastructure projects in Indonesia, in which multiple stakeholders can be involved, provide huge hurdles for Chinese investors. “It would take a long time to complete,” he added. Infrastructure projects in Indonesia were frequently met by delays, mostly because of land acquisition issues or bureaucratic hurdles. The Indonesian government, driven by the lack of money, had offered many infrastructure projects to private investors through public and private partnership scheme. But as in the case of long delays in the construction of the 2,000 megawatt coal-fired power plant in Central Java, the country’s first and largest public-private partnership project, the scheme was far from ideal.
Market Regulation
Indonesia Steps Up Audits of Companies Operating in Rain Forests Bloomberg 27th Aug 2014
Indonesia’s latest tactic for slowing the world’s fastest rate of deforestation is to crack down on licensing of companies with concessions for agriculture on peat lands and rain forests. The agency for Reducing Emissions From Deforestation and Forest Degradation is auditing 18 companies to check for proper licensing, Heru Prasetyo, head of the REDD+ office in Jakarta, said in an interview. The country’s laws and the way they are enforced need to be changed, said Prasetyo. “After we review the licenses, we register them and we start doing the dirty things like revoking the licenses,” Prasetyo said on Aug. 18. “Three companies are being prosecuted,” he said, declining to identify them.
Indonesia Wants Smelter Supply Deal Before Newmont Can Resume Exports The Jakarta Globe 27th Aug 2014
Indonesia wants copper miners Newmont Mining and Freeport-McMoRan to hammer out a deal on concentrate supply for an upcoming smelter before allowing Newmont to resume exports, a mining ministry official said on Wednesday. US-based Newmont, which runs the Batu Hijau copper mine on remote Sumbawa island, withdrew its international arbitration filing against the Indonesian government this week, indicating a possible breakthrough in a seven-month dispute that has halted exports. Newmont declared force majeure at its Indonesian mine in June and then filed for arbitration in July, and has been in a dispute with the government over an export tax imposed in January that the miner says conflicts with its mining contract.
Newmont withdraws mining arbitration case against Indonesia Reuters 26th Aug 2014
Newmont Mining Corp has withdrawn an international arbitration filing against the Indonesian government, government and company officials said on Tuesday, indicating a possible breakthrough in a seven-month dispute that halted exports. Newmont's Indonesian Chief Executive Martiono Hadianto said the mining giant had reached a "constructive solution" over new mining rules and expected to resume production at its copper mine soon. "The decision to discontinue and withdraw arbitration comes after commitments from senior government officials to open formal negotiations to conclude a Memorandum of Understanding (MoU) with PTNNT (PT Newmont Nusa Tenggara) upon cessation of the arbitration claim," the company said in a statement late on Tuesday.
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