| Regional Affairs
Looking Beyond Jakarta: Mayors Promote Bandung, Surabaya as New Investment Havens Jakarta Globe 13th Nov 2014
As the Greater Jakarta area gets more developed and more crowded every year, mayors from across the country are trying to seize the opportunity by promoting their cities as the next haven for investment. At the US-Indonesia Investment Summit held in Jakarta on Wednesday, Bandung Mayor Ridwan Kamil and Surabaya Mayor Tri Rismaharini met with 41 major US investors as well as domestic businesspeople to share the story of their cities’ progress and plans for the future. “If you want to see typical growing cities in Indonesia, you have to see Surabaya and Bandung. These two are the new economic machines beyond Jakarta,” Ridwan said.
Jokowi to attend G20 Summit The Jakarta Post 5th Nov 2014
The Foreign Ministry has confirmed that President Joko “Jokowi” Widodo will attend the G20 Summit in Brisbane, Australia on Nov. 15 to 16, burying speculation about his attendance at the event. “After much deliberation, the president has decided to attend the G20 Summit, as he acknowledges the significance and strategic importance of attending a forum where various world economic leaders are meeting,” the Foreign Ministry’s director general of economic development and environmental affairs, Toffery P Soetikno, told the press in Jakarta on Wednesday.
Market Development
Indonesian Ministries Step Up for US Firms’ $61b Investments The Jakarta Globe 12th Nov 2014
US companies in Indonesia are prepared to invest as much as $61 billion in the country over the next five years amid President Joko Widodo’s pledges to improve the local business environment, a survey shows. The study, which questioned 35 firms from the United States on their investment plans in Indonesia, was conducted through a partnership among Jakarta-based Paramadina Public Policy Institute, American Chamber of Commerce in Indonesia (AmCham Indonesia), Yogyakarta’s Gadjah Mada University and Ernst & Young. “There’s tremendous optimism right now with the new cabinet, which we think is terrific,” Andrew White, managing director of Amcham Indonesia, told the Jakarta Globe on the sidelines of the US-Indonesia Investment Summit in Jakarta on Wednesday.
APEC
Did Jokowi’s APEC Speech Fall Short? Wall Street Journal 13th Nov 2014
The message Indonesian president Joko Widodo sent during his first international summit Monday morning was crystal clear: Now is the time to invest in Indonesia. The way he presented it, however, received mixed reactions, with some observers praising his address, delivered in English, and others saying it felt amateurish and focused too much on domestic concerns. “Basically, he was using a campaign speech for an international audience,” said Yohanes Sulaiman, a lecturer at Indonesian Defense University in Jakarta. “I mean, talking about cutting fuel subsidies for seeds for farmers?”
FULL SPEECH: Jokowi at APEC CEO Summit 2014 Rappler 10th Nov 2014
"Excellencies, distinguished guests, ladies and gentlemen, and CEOs, good morning. First, on behalf of the Indonesian Government and the people of Indonesia, I would like to thank you for coming to my presentation. Today, I am happy, I am very happy, to be with you, because you know I was a businessman years ago. So, this morning, I am very happy because we can talk about business, about investment with all of you."
Obama Meets Indonesian Leader Widodo at APEC Forum Wall Street Journal 10th Nov 2014
U.S. President Barack Obama and Indonesian President Joko Widodo met for the first time Monday, discussing security and other issues. Mr. Obama called Indonesia a model for other nations with large Muslim populations and invited Mr. Widodo, who was inaugurated as president last month, to visit Washington possibly next year. The presidents were in the Chinese capital to take part in a two-day summit of the Asia-Pacific Economic Cooperation forum, an annual meeting that is hosted this year by Beijing.
Obama invites Jokowi to visit Washington Antara 10th Nov 2014
US President Barack Obama has invited Indonesian President Joko Widodo (Jokowi) to visit Washington to discuss further cooperation between the two countries. Obama extended the invitation to Jokowi on the sidelines of the Asia Pacific Economic Cooperation (APEC) Summit here on Monday evening. "I am pleased to meet Mr President and I hope we can strengthen our cooperation as well as personal relations," he said.
Jokowi arrives in Beijing for APEC The Jakarta Post 8th Nov 2014
In his first official overseas trip since taking office on Oct. 20, President Joko "Jokowi" Widodo arrived in Beijing on Saturday evening to attend the annual Asia Pacific Economic Cooperation (APEC) summit, a prestigious powwow for 21 Asia-Pacific leaders on Nov. 10 and 11. He will also hold bilateral talks with Chinese leaders. Jokowi is scheduled to hold a bilateral meeting with China President Xi Jinping and Prime Minister Li Keqiang on Sunday, according to the President's itinerary.
ASEAN
Joko Widodo meets Thein Sein on sidelines of Asean Summit Antara 12th Nov 2014
The leaders of Indonesia and Myanmar met here Wednesday on the sidelines of the 25th ASEAN Summit with a common spirit of strengthening the two countries relations. At the bilateral meeting, President Joko Widodo was accompanied by Foreign Minister Retno L.P. Marsudi, Coordinating Economic Minister Sofyan Djalil, Trade Minister Rahmat Gobel, and Indonesian Ambassador to Myanmar Ito Sumardi. President of Myanmar Thein Sein thanked Joko Widodo for his presence at the ASEAN Summit and congratulated him on being elected as Indonesias seventh president.
Asean SMEs to have online access New Straits Times 5th Nov 2014
The Asean Online SME Academy will materialise in the not too distant future. The Academy will be a one-stop, open-access gateway that provides business information and training resources to support Asean SMEs’ start-up, development and internationalisation, as well as improve the business development services from their providers. As per demand and when needed, the business information and training resources posted in the Academy would be selectively translated into local languages to maximise reach and absorption, according to Asean News. The Asean SME Working Group (SMEWG) worked with the US-Asean Business Alliance for Competitive SMEs and other stakeholders on the design of the planned Asean Online SME Academy, during a regional consultation forum yesterday in Bangkok. This regional consultation was organised to update the SMEWG on the progress and development, particularly on the core elements of the Academy, that will serve targeted SMEs in the region. It also allowed the SMEWG, business alliance partners and other stakeholders to finalise a statement of the Academy’s mission, vision, and potential content.
Customs
RI demands trade ease for 5 commodities The Jakarta Post 13th Nov 2014
In his usual straightforward style, President Joko “Jokowi” Widodo demanded that 21 Pacific Rim countries and territories lift trade restrictions on Indonesia’s primary commodities: palm oil, paper, rubber, rattan and marine products. The President, who assumed office on Oct. 20, conveyed the request during the prestigious powwow of leaders at the Asia-Pacific Economic Cooperation (APEC) summit in Beijing, China, on Tuesday. Jokowi also conveyed his demand during several bilateral meetings with leaders of powerhouse nations, including US President Barack Obama, on the sidelines of the summit on Monday.
Govt considers scrapping ship component taxes Jakarta Post 11th Nov 2014
Industry Minister Saleh Husin said Monday that the government is mulling over the scrapping of import duties on ship components and the value-added tax (PPN) to spur growth in the local shipbuilding industry, which would be in line with the maritime-axis vision introduced by President Joko “Jokowi” Widodo. “Our shipbuilding industry outside Batam is still underdeveloped. We want to provide incentives for shipyards operating outside Batam so that they can expand,” he told reporters at his office. A meeting to discuss this issue with related ministries, such as the Finance Ministry, was scheduled for this week by Coordinating Maritime Affairs Minister, according to Saleh.
Defense & Security
Indonesia mulls replacing F-5 fighter jets People's Daily 13th Nov 2014
The Indonesian military is now weighing advanced fighter jets to replace the F-5 E/F Tiger II light attack planes which have been in service with its air forces in the last three decades. Three fighter jets originally produced in Russia, Sweden and the United States have been shortlisted to replace the Indonesian 14th Squadron based in Madiun, East Java. They were Sukhoi Su-35, JAS-39 Gripen and F-16 Block 52+.
UVZ tanks have become a subject of interest of Indonesian military RusBusiness News 11th Nov 2014
The Uralvagonzavod Research and Production Corporation, OJSC, debuted at the INDO Defence-2014 Exhibition, opened in the capital of Indonesia – Jakarta, on November 5. The Commander-in-Chief of Indonesian National Armed Forces – General Moeldoko, and the Chief of Army Staff of the Republic visited the Exhibition.
Indonesia receives helicopters from Airbus UPI 7th Nov 2014
Different model helicopters for combat search-and-rescue and light attack missions have been handed over to Indonesia's military by Airbus Helicopters. The aircraft are the EC725 Caracal and Fennec family of helicopters. The EC725 is a long-range tactical transport with a cruise speed of 177 miles per hour and a range of 533 miles.
TNI prioritizes local military weapon system Antara 6th Nov 2014
The Indonesian Military (TNI) Commander General Moeldoko has said his institution was prioritizing local military weapons through a transfer-of-technology system to improve national defense competency. "We cannot ignore the local products of our national defense system because they are our priority. We cannot overlook high technology either. Thus, we need a transfer of technology," Moeldoko stated during his visit to the Indo Defense Expo and Forum 2014 here on Thursday.
Indonesian military budget increases to 1.5 percent: minister Antara 6th Nov 2014
Joko Widodos government will step up military spending to 1.5 percent of the state budget, stated Indonesian Defense Minister Ryamizard Ryacudu. "President Jokowi will consistently modernize the defense weapon systems by increasing the military budget to 1.5 percent as part of his program," Ryamizard remarked during an international seminar titled, "Exploring Defense Offset in Indonesia: Expectation, Partnership and Strategy of Engagement" here on Thursday.
Roundup: Indonesian military demands deregulation to deter airspace intruders Global Post 6th Nov 2014
Responding to the frequent illegal flights intruding the nation's airspace lately, Indonesian military asked the government to deregulate the procedure so as to give sterner deterrence effects against those committed the wrongdoing. Indonesian Military Commander General Moeldoko expected government to authorize the air forces to undertake investigation process into illegal flights conducted by foreign planes in the nation's airspace as it has the power and capability to do so.
Panthers to assume ASW role in Indonesia Defense Update 5th Nov 2014
Airbus Helicopters has been selected to provide 11 AS-565 MBe Panther helicopters for the Indonesian Navy, Airbus announced today. These rotorcraft will to be used for naval anti-submarine warfare (ASW) missions, supporting operations from land bases and ships. The helicopters are scheduled for delivery within three years to Indonesia, where they will be outfitted for their ASW mission, before delivery to the Indonesian Navy. The mission equipment include the Helicopter Long-Range Active Sonar (HELRAS) dipping sonar and torpedo launching system.
Indonesia as a Maritime Power: Jokowi's Vision, Strategies, and Obstacles Ahead Brookings 10th Nov 2014
Earlier this year, electoral debate in Indonesia powered up a national discourse about the country’s intent, capabilities, and roadmap as a maritime power in the Indo-Pacific region. Indonesia’s newly installed president, Joko Widodo, popularly known as Jokowi, promised in his election manifesto in May 2014 to (1) focus on strengthening Indonesia’s maritime security, (2) expand the canvas of regional diplomacy to cover the entire region of the Indo-Pacific, and (3) project the Indonesian navy as a respected regional maritime power in East Asia.[1] He further announced in June 2014 that he aimed to transform Indonesia into a “global maritime axis” (poros maritim dunia).[2] He reaffirmed his vision after being declared victorious in July 2014 and called upon all citizens to “work together to develop Indonesia into a global maritime axis, a global civilizational hub.”[3] While taking the oath of office to become Indonesia’s seventh president on October 20, 2014, Jokowi reiterated his call to transform Indonesia into a maritime nation and invoked the slogan of “Jalesveva Jayamah” (in the ocean we triumph).[4] Jokowi’s articulations are an important step forward in Indonesia’s effort towards developing a grand maritime strategy. His vision goes beyond the idea of merely achieving maritime security and seeks to transform Indonesia into a maritime power. He is the first president in democratic Indonesia to publicly promulgate a maritime security doctrine, taking the debate out of the pages of the policy documents and placing it into the domain of a broader politico-strategic discourse. In light of these debates and discussions, this paper examines Jokowi’s ideas and what they mean for Indonesia’s grand maritime strategy in the coming years.
Economics
Indonesia’s Q3 Current Account Deficit Narrows to 3.07% of GDP The Jakarta Globe 13th Nov 2014
Indonesia’s current account deficit in the third quarter narrowed to 3.07 percent of gross domestic product compared with 4.27 percent in the second quarter and 3.9 percent in July-September 2013, Bank Indonesia’s governor said on Thursday. Between June and November last year, Bank Indonesia raised its benchmark interest rate 175 basis points to shrink the then- ballooning current account deficit. The tightening has contributed to a slowdown in this year’s economic growth rate.
Bank Indonesia Holds Key Interest Rate for 12th Month as Current Account Deficit Narrows The Jakarta Globe 13th Nov 2014
Indonesia’s central bank, Bank Indonesia, maintained the benchmark interest rate at 7.5 percent on Thursday for the 12 straight month in an ongoing effort to narrow the current account balance, despite the nation’s economic slowdown. The central bank decided to hold the lending facility rate at 7.5 percent and the deposit rate at 5.75 percent, Bank Indonesia governor Agus Martowardojo said after the monthly board meeting in Jakarta on Thursday. The governor said that Indonesia current account — which is the widest account for goods and services exchange, and income and remittance transfer across borders — narrowed to 3.07 percent of gross domestic product compared with 4.27 percent of GDP in the second quarter.
The Numbers: Adding Up Indonesia’s Fuel Subsidy Costs The Wall Street Journal 5th Nov 2014
Cutting fuel subsidies is one of the biggest decisions facing Indonesia’s new President, Joko Widodo, elected on a populist platform in one of the most closely fought elections ever in Southeast Asia’s largest economy. People familiar with the plan say Mr. Widodo’s administration is considering raising the price of subsidized gasoline and diesel fuel by up to 3,000 rupiah a liter, which could save the government up to 10 trillion rupiah ($828 million) for the remainder of this year and a whopping 141 trillion in 2015. It’s uncertain when the fuel price increase will happen, but the new Coordinating Minister for the Economy, Sofyan Djalil, said last week that the government would seek “to correct” the fuel subsidy system before the end of the year.
Indonesia Growth Misses Estimate, Raising Bar for Widodo Bloomberg 5th Nov 2014
Indonesia’s growth slowed to the weakest pace since the global financial crisis as commodity prices fell, increasing the challenge for President Joko Widodo as he seeks to revitalize Southeast Asia’s biggest economy. Gross domestic product rose 5.01 percent in the three months ended Sept. 30 from a year earlier, the statistics bureau said in Jakarta today. That compared with a median estimate of 5.1 percent in a Bloomberg News survey of 26 economists, and was the smallest gain since 2009 based on previously reported data compiled by Bloomberg. Widodo took charge of the world’s fourth-most populous nation last month, pledging to bolster growth to 7 percent in two years, a pace Indonesia hasn’t seen since the years before the 1997-98 Asian financial crisis. The president, known as Jokowi, plans to revive investor confidence by scaling back fuel subsidies to free up funds for infrastructure projects and curb a near-record current-account shortfall.
Energy
Ministry to continue biodiesel mixing despite low realization The Jakarta Post 13th Nov 2014
The Energy and Mineral Resources Ministry’s renewable energy directorate general is optimistic it can maintain its policy of blending biodiesel with diesel fuel, despite the program’s realization remaining below target. Figures from the renewable energy office show that only 1.2 million kiloliters of biodiesel were blended during the first nine months of the year, far below the government’s initial target of blending 4 million kiloliters by the year’s end.
Chevron Geothermal abandons Lampung project The Jakarta Post 13th Nov 2014
Chevron Geothermal Indonesia has handed over its working area in Lampung, Sumatra, to the local government, amid increasing concerns on the realization of the country’s extensive plans to tap into volcanic power. The director general for renewable energy at the Energy and Mineral Resources Ministry, Rida Mulyana, said that Chevron Geothermal had decided to return its working area in Suoh-Sekincau, Lampung, to the local administration.
Jokowi Signals Imminent Subsidized Fuel Price Increase The Jakarta Globe 5th Nov 2014
President Joko Widodo gave his strongest signal yet on Tuesday of his intention to raise the price of subsidized fuel, amid opposition from his own party and calls for better programs to cushion the impact on Indonesia’s poor. “Over the past five years, Rp 714.5 trillion [$59 billion] from the state budget have gone toward fuel subsidies,” Joko said at the start of a cabinet meeting at the State Palace in Jakarta. “Our spending for health and infrastructure is way below that.” Joko said that during this same period, only Rp 202.6 trillion was allotted for health, and Rp 577 trillion for infrastructure development. Citing the results of a study, he added that 71 percent of the fuel subsidy was enjoyed by the middle- and high-income earners. His statement came a day after he launched the Indonesia Health Card, Indonesia Smart Card and Prosperous Family Card programs — social safety nets that observers say are intended to take the sting out of the spike in inflation spurred by the fuel price hike.
Indonesia’s Skewed Case Against Chevron The Wall Street Journal 5th Nov 2014
When Indonesia’s President Joko Widodo took office on Oct. 20, investors were hopeful. Mr. Widodo’s campaign promise of reform suggested that a friendlier business climate was coming to the archipelago nation. Yet only two days later, Indonesia’s Supreme Court upheld a guilty verdict for corruption against an employee of U.S. energy giant Chevron and doubled his prison sentence to four years. The ruling comes after a raft of other troublesome court decisions and underscores the uncertain environment facing foreign investors in Indonesia. The natural-resources industry has been facing increasing economic protectionism and frequently changing regulations, putting a damper on operations. The country’s oil-and-gas industry, which needs investments from multinationals to reverse a 50% decline in production since the 1990s, was especially concerned over the prosecution of the Chevron employees. With the Supreme Court’s ruling, investors’ anxieties are likely to rise even higher.
Financial Services
Integration may hit bumpy roads: S&P The Jakarta Post 13th Nov 2014
Banking integration among members of the Association of Southeast Asian Nations (ASEAN) may hit bumpy roads approaching the 2020 deadline as gaps and uneven development remain, rating agency Standard and Poor’s (S&P) has said. According to the latest report by S&P, titled “ASEAN Financial Integration: the Long Road to Bank Consolidation”, the much-anticipated dream of financial system integration still has a long way to go.
Bond Investors’ Sentiment on India, Indonesia Diverge The Wall Street Journal 11th Nov 2014
Global bond investors are diving into India and losing interest in Indonesia, revealing a split in sentiment on two of this year’s most popular emerging markets. Fund managers have drawn close parallels between these two countries: they both elected reformist presidents, which drew in billions of dollars in cash on optimism that economic growth would charge higher. But only India has managed to maintain momentum. Investors are pulling back from Indonesia on worries President Joko Widodo will struggle to cut expensive fuel subsidies. His opposition is stronger than previously thought and that could hinder his ability to follow through on election promises.
AIG aims to be among top general insurers in RI Jakarta Post 8th Nov 2014
Private insurer PT AIG Insurance Indonesia, part of American giant multinational insurance corporation American International Group, Inc. (AIG), expects to become one of the top players in Indonesia’s general insurance market with a focus on consumer insurance and commercial insurance. CEO of AIG Insurance Indonesia, Jon-Paul Jones, said that the company aimed for 20 percent growth in premium revenues from its consumer and commercial products next year and 50 percent growth in other lines of business. “The importance of insurance will be very clear if we look at construction projects and infrastructure developments that are taking place in Indonesia. As we have seen growth in prior years, we certainly see growth ahead in many years to come,” he said in an interview with The Jakarta Post.
Indonesia: New law to spur takaful market Asia Insurance Review 7th Nov 2014
Indonesia's Islamic insurance market will be reshaped over the the next decade by a new law that requires conventional insurers to spin off their Shariah-compliant units, while encouraging more foreign investors to enter the market. Most insurance companies are likely to meet the spin-off requirement as late as possible and they will first expand their Shariah units to ensure these are big enough to be spun off easily, reported Reuters citing Jakarta-based Susandarini, partner at the law firm, Susandarini & Partners. "Larger firms are more likely to initiate spin-offs, assuming their sharia units have greater potential to be self-sustaining."
Indonesian banks to face ‘new normal’ next year Jakarta Post 7th Nov 2014
Indonesia’s banking industry will confront a “new normal” set of market conditions next year, as lending is estimated to grow at an even slower rate and profitability will undergo corrections, executives at major banks have said. Thanks to robust economic growth, over the past several years the industry enjoyed soaring domestic lending growth of between 20 and 25 percent annually. The situation generated hefty profits, with an average net interest margin (NIM) ratio hovering between 6 and 8 percent, making Indonesian banks some of the most profitable lenders in the world. However, all that is slowly changing, according to Citibank NA, Indonesia chief country officer, Tigor Siahaan. Tigor said that lending had begun to decelerate in line with the overall economic slowdown.
Analysis: Banking outlook: Riding the challenges The Jakarta Post 5th Nov 2014
The current trend of slower domestic economic growth has caused a deceleration of banks’ loan growth this year. In August, loan growth dropped to 14 percent year-on-year (y-o-y) as compared to 15.7 percent in July, decelerating for the 11th consecutive month. If we fix the exchange rate at the same level as a year ago (the rupiah has already depreciated by around 7 percent in the last year), we will have a rate of loan growth of around 12.7 percent y-o-y. The deceleration in loan growth has actually already been anticipated since the beginning of the year as an impact of Bank Indonesia’s (BI) tightening monetary policy, which has been conducted since last year.
Food & Agriculture
206 cases of misuse of permits involving fishermen from neighbouring countries brought to court, Dewan Rakyat told New Straits Times 6th Nov 2014
A total of 206 cases of misuse of licences and permits by fishermen from Thailand, Vietnam and Indonesia were brought to court from 2006 to 30 Sept this year, the Dewan Rakyat was told today. Minister in the Prime Minister's Department Datuk Seri Shahidan Kassim said from the 206 cases, 95 cases were from the north maritime zone, 11 in the southern zone, 26 in the eastern zone, 59 in Sabah and 15 in Sarawak. "The Malaysian Maritime Enforcement Agency (MMEA) had intensified their efforts to curb the invasion of foreign fishermen especially from Vietnam. Seven to 10 vessels are deployed every day to patrol our waters. Air surveillance have also been increased," he said in reply to a question by Ahmad Marzuk Shaary who asked the Prime Minister to state the actions taken by the government to address the intrusion of Vietnamese fishermen. Shahidan said from 2006 to 2014, 353 Vietnamese fishermen were charged in court and jailed.
ICT
Multipolar Kicks Off $200m Data Center Venture The Jakarta Globe 13th Nov 2014
Multipolar Technology, the information technology arm of the Lippo Group, plans to break ground on its first data center in West Java next month, marking a $200 million venture into the data center business. The move is part of the company’s effort to tap the growing demand for data storage in Indonesia, with the government urging Internet giants such as Google and Twitter and phone maker BlackBerry to set up their own data centers in Indonesia. Multipolar, through its subsidiary Graha Teknologi Nusantara, announced in July last year that it was building a data center with the capacity to house 8,000 server racks.
Lippo’s ‘Four Days of Family Fun’ Ready to Introduce New Products The Jakarta Globe 13th Nov 2014
The Lippo Group kicked off a four-day event on Thursday to introduce and promote its products and innovations across a wide range of businesses, including recently launched cinema chain Cinemaxx and satellite television provider Big TV. The “Family Fun Fair 2014” event takes on a family-friendly theme at Lippo Mall Kemang Village in South Jakarta, and runs through Sunday.
Infrastructure
Indonesia Needs to Focus on Infrastructure to Secure Growth, Strategist Says The Jakarta Globe 13th Nov 2014
Indonesia needs to develop its infrastructure in order for the economy to grow further, and newly elected President Joko Widodo is on the right path with a focus on building ports across the nation, a global strategist says. “I’ve noticed a trend towards democracies that get frustrated with their past performance starting to elect leaders on more explicitly technocratic kinds of mandates, and that’s happened here, in the Philippines and India,” Dr. Parag Khanna said in an interview with the Jakarta Globe on Thursday.
Lion Group to Start Building Lebak Airport Next Year The Jakarta Globe 13th Nov 2014
Lion Group, the parent company of Lion Air, is embarking on the development of a huge new airport in Banten province, not far from Indonesia’s capital, the group’s CEO announced on Wednesday. “We’ve received the permit from the Transportation Ministry,” Lion Group CEO Rusdi Kirana said at the headquarters of aircraft manufacturer Airbus, in a suburb of the French city of Toulouse.
Jokowi launches maritime doctrine to the world The Jakarta Post 13th Nov 2014
Before world leaders attending the East Asia summit on Thursday, President Joko “Jokowi” Widodo announced the much-awaited vision of his signature maritime-axis doctrine that will define his administration for the next five years. Jokowi said the summit was essential for security, stability and economic prosperity in the region, and he chose the forum to express the ideas about Indonesia as a global maritime fulcrum.
Jokowi sets out infrastructure stall to court investors Jakarta Post 11th Nov 2014
President Joko “Jokowi” Widodo has utilized his first overseas trip not only to introduce his future economic policies to potential foreign investors but also to resolve Indonesia’s most pressing issue: infrastructure. Before hundreds of businesspeople attending the prestigious APEC CEO forum in Beijing on Monday, Jokowi presented his ambitious infrastructure projects and his pledge to allocate most of his resources in the immediate term to facilitate their construction. Jokowi was among four world leaders, aside from Chinese President Xi Jinping, US President Barack Obama and Russian President Vladimir Putin, who was given the rare opportunity to deliver his keynote speech at the event.
Construction on Bandung Monorail to Start in July 2015 Jakarta Globe 10th Nov 2014
The first phase of construction of a planned monorail line for Bandung is expected to begin in mid-2015, pending the outcome of a feasibility study, an official says. “With the support of the central government and the local governments and residents of Bandung and surrounding areas, the ground-breaking will commence in July 2015,” said Iwa Karniwa, an official with the West Java provincial administration. The project, with an estimated total cost $1.84 billion, will be split into five phases and is scheduled to be completed in 2025. The first stage of the monorail line will run 29 kilometers from the Leuwipanjang to Tanjung Sari areas, at a cost of $578 million. Iwa said the soft launch of the project was held in September 2014 after an agreement was signed by the five local administrations through whose jurisdiction the monorail network will pass: Bandung municipality, Bandung district, Cimahi municipality, West Bandung district and Sumedang district.
KAI seals Rp 2.38t to develop RI's railway sector Jakarta Post 10th Nov 2014
State-owned train operator PT Kereta Api Indonesia (KAI) and its subsidiary PT KAI Commuter Jabodetabek (KCJ) have secured a Rp 2.38 trillion loan (US$196.07 million) with four state-run and privately owned banks to help develop the railway transportation system in the country. The banks are PT Bank Nasional Indonesia (BNI), PT Bank Rakyat Indonesia (BRI), PT Bank Mandiri (Mandiri) and PT Bank Central Asia (BCA). KAI financial director Kurniadi Atmosasmito said the loan would be used for a number of projects such as purchasing more train cars for PT KCJ, in a bid to increase the number of passengers it carries daily to 1.2 million people by 2019. “The commuter line transports 600,000 passengers a day at the moment,” Kurniadi said on Monday as quoted by Antara news agency.
Govt aims to boost infrastructure projects, tax revenue next year Jakarta Post 8th Nov 2014
The government expected to jump-start its long-delayed public-private partnership (PPP) infrastructure projects next year, including the mega-power plant project in Batang, Central Java, by easing their licensing and land-acquisition problems, Finance Minister Bambang Brodjonegoro said on Friday. Bambang said that with the implementation of the land-acquisition law next year and the government’s efforts to ease licensing procedures, a number of delayed infrastructure projects, which also include several other coal-fired power plants outside Java, could be resumed next year. The construction of the US$40 billion Batang coal-fired plant, with a capacity of 2,000 MW, which was initially scheduled for commencement three years ago, has been delayed due to land-acquisition problems.
Indonesian President Sets Maritime Ambition With $6 Billion Port Plans Bloomberg 7th Nov 2014
Indonesian President Joko Widodo is targeting almost $6 billion in projects to expand ports across the world’s biggest archipelago, where investors are deterred by logistics costs that amount to a quarter of the economy. Widodo, known as Jokowi, plans to expand five ports on the nation’s main islands, seeking to reduce shipping delays and boost trade in a country that would stretch from New York to London, Coordinating Minister for Maritime Affairs Indroyono Soesilo said in an interview this week. The government will also cut red tape that keeps yachts and cruise liners away, he said. Improving maritime and transport infrastructure is one of Jokowi’s main strategies to reinvigorate Southeast Asia’s No. 1 economy, which is growing at the slowest pace since the global financial crisis. At his inauguration on Oct. 20, Jokowi likened himself to a “captain trusted by the people” and said it was time for Indonesia to return to “Jalesveva Jayamahe,” the naval motto meaning “in the seas we will triumph.”
Jokowi Plans $6b Indonesia Ports Upgrade to Stoke Growth Jakarta Globe 7th Nov 2014
Indonesian President Joko Widodo is targeting almost $6 billion in projects to expand ports across the world’s biggest archipelago, where investors are deterred by logistics costs that amount to a quarter of the economy. Joko, known as Jokowi, plans to expand five ports on the nation’s main islands, seeking to reduce shipping delays and boost trade in a country that would stretch from New York to London, Coordinating Minister for Maritime Affairs Indroyono Soesilo said in an interview this week. The government will also cut red tape that keeps yachts and cruise liners away, he said. Improving maritime infrastructure is one of Jokowi’s main strategies to reinvigorate Southeast Asia’s No. 1 economy, which is growing at the slowest pace since the global financial crisis. At his inauguration on Oct. 20, Jokowi likened himself to a “captain trusted by the people” and said it was time for Indonesia to return to “Jalesveva Jayamahe,” the naval motto meaning “in the seas we will triumph.”
Indonesia to Offer PPP Projects Worth $52b Jakarta Globe 6th Nov 2014
The Indonesian government plans to offer 43 infrastructure projects worth $52 billion to private investors next year, according to an official of the National Development Planning Ministry. Bastari Panji Indra, a director at the ministry, said the projects will be offered under public-private partnership (PPP) schemes. The projects offered include airports, monorail and, light rail transits, toll roads, coal transportation trains, ports, and water supply. The government has published details regarding the projects in the Public Private Partnership Book 2015, which guides infrastructure development in the country. Speaking on the sideline of Indonesia Infrastructure Week late on Wednesday, Bastari said of the 43 projects, eight are classified as “ready” to be offered, 11 are “prospective” and 24 are marked as “potential.” Bastari said the government will offer 10 major airport projects to private investors, including Juwata in North Kalimantan, Tjilik Riwut in Central Kalimantan and Fatmawati Soekarno in Bengkulu.
Japan wants RI to ‘hurry’ construction of Cilamaya Port Jakarta Post 6th Nov 2014
apanese Ambassador to Indonesia Yasuaki Tanizaki has asked Industry Minister Saleh Husin to hurry the construction of the Cilamaya Port in Karawang, West Java, in order to facilitate the smooth flow of industrial goods in and out of Indonesia. “Japan is asking that the Indonesian government accelerate the construction of the Cilamaya Port and it says that more initiatives are needed to develop industrial infrastructure,” Industry Ministry director general for international industry cooperation Agus Tjahajana said on Thursday, as quoted by Antara news agency. Agus added that Japan was willing to assist in developing and constructing the port if it needed to, but there were as yet no plans to do so.
Ngurah Rai to Be Spun Off by Airport Operator Jakarta Globe 5th Nov 2014
State-owned airport operator Angkasa Pura I will spin off the management of six airports to private operators, as part of a push to open up Indonesia’s booming aviation sector. The affected airports include Bali’s Ngurah Rai International, the second-busiest airport in the country (after Soekarno-Hatta International, outside Jakarta). The others are Adi Sucipto in Yogyakarta; Juanda in Surabaya, East Java; Syamsuddin Noor in Banjarmasin, South Kalimantan; Sepinggan in Balikpapan, East Kalimantan; and Sultan Hasanuddin in Makassar, South Sulawesi. The operator, known as AP I, manages 13 airports in the central and eastern regions of Indonesia. “The goal is for these airports to become self-sufficient and independent,” Yudhaprana Sugarda, head of corporate planning and performance at AP I, said on Wednesday. He added that by spinning off, or creating incorporated subsidiaries to manage the airports, private investors would have an entry point into the aviation sector. Yudhaprana said that should AP I seek strategic partnerships with private investors, then airport management of the six airports must be spun off for the asset value to be examined by investors.
Malaysia
Malaysia to sign MoU with Indonesia on haze The Sun Daily 13th Nov 2014
The Natural Resources and Environment Ministry is set to sign a new Memorandum of Understanding with Indonesia on measures to curb peat soil fires which causes the haze pollution plaguing neighbouring countries. Its Deputy Minister Datuk Seri Dr James Dawos Mamit said the ministry, through the Environment Department, had carried out several peat soil restoration programmes in the Riau region in Sumatra, Indonesia, according to the agreement signed in 2008. The programme aims to control the water reduction in the peat soil by building barriers around the check dams, which could avoid peat soil fires during dry and hot seasons. "The time frame under the present MoU will end this year and we will be signing a new agreement soon," he said in reply to a question by Dr Michael Jeyakumar Devaraj (PSM-Sungai Siput) in the Dewan Rakyat today.
Regional Trade Agreements
Indonesia Says Proceed With Caution on China-Backed Free Trade Area Jakarta Globe 10th Nov 2014
Indonesian negotiators appear to have refrained from throwing their full support behind the Free Trade Area of the Asia Pacific, a proposed pact that may be discussed by leaders during this week’s meetings of the Asia-Pacific Economic Cooperation forum in Beijing. Indonesian officials cited concerns about regional disparities as a reason to regard such a free trade agreement with caution, notwithstanding the apparent enthusiasm top officials have expressed over other free trade pacts such as the Regional Comprehensive Economic Partnership, the Asean Economic Community, or the WTO’s Bali Package. The FTAAP is a proposed roadmap for a comprehensive free trade agreement among APEC members. The proposal is principally backed by China, which is pushing the FTAAP as an alternative to the Trans-Pacific Partnership, which is supported by the US and allied nations as a counterbalance to China’s economic power.
Prepare to Swallow Bitter Trade Pill: RCEP Jakarta Globe 5th Nov 2014
The proposed free-trade agreement known as the Regional Comprehensive Economic Partnership, or RCEP, will require difficult preparations beforehand if Indonesia is to benefit, officials said on Tuesday. Negotiations for the agreement began in November 2012 between 10 member states in the Association of Southeast Asian Nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six countries with which Asean has existing free-trade agreements — Australia, China, India, Japan, Korea and New Zealand. Negotiations on the RCEP are set to conclude by the end of 2015. Indonesia’s deputy permanent representative to the World Trade Organization, Iman Pambagyo, who leads the country’s RCEP negotiation team, said “Indonesia is better [off] joining the RCEP than not joining at all.” He added the trade agreement would offer opportunities to compete with other Asean member states, especially in the investment sector. “But we also have to prepare to compete with other countries,” he said. “It [won’t be] easy to gain benefits from the RCEP, but I can assure that it’s still better if we join early. We have to play a key role, while at the same time we must find exactly which industries will make up our nation’s economic backbone,” Iman said during a discussion at Pelita Harapan University in Jakarta.
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