| Regional Affairs
Governors Ask Jokowi for Rp 1 Trillion in Aid Funds for Each Province The Jakarta Globe 24th Nov 2014
The Association of Indonesian Provincial Governments (APPSI) is asking the central government to allocate at least Rp 1 trillion ($82 million) in extra aid funds for each province, but President Joko Widodo says he is not very keen on such a splurge without further research. “We had [already] suggested to the previous administration [of president Susilo Bambang Yudhoyono] to cut the fuel subsidies and use the money for pro-people programs,” South Sulawesi Governor Syahrul Yasin Limpo, the chairman of APPSI, said during a meeting with the president and governors from across the country at the Bogor Palace on Monday.
National Affairs
Joko Welcomes New Investment, BNP2TKI Chiefs Amid Criticism The Jakarta Globe 28th Nov 2014
President Joko Widodo on Thursday swore in Franky Sibarani as the new chief of the Investment Coordinating Board, or BKPM, and Nusron Wahid as the new chief of the National Agency for the Placement and Protection of Indonesian Workers, or BNP2TKI. Secretary of the Cabinet Andi Widjajanto said Franky, a top figure in an influential business lobby, was picked because he has a strong business background and was put forward by the business community. Franky was a deputy secretary general of the Indonesian Employers Association, or Apindo.
BKPM vows to help investors The Jakarta Post 28th Nov 2014
Following his inauguration on Thursday, new Investment Coordinating Board (BKPM) head Franky Sibarani promised to further simplify investment permits as his top priority in a bid to attract more investment. Streamlining whole licensing procedures under the BKPM as the single body to handle investment permits is one of President Joko “Jokowi” Widodo’s targets, a service he expects to be in place within six months.
Golkar Split, a Proxy Fight for Leadership The Jakarta Globe 27th Nov 2014
A heated split inside the Golkar Party is seen as a proxy fight between the ruling coalition and opposition as the party is playing an unmatched role in determining the stability of the country’s political system and President Joko Widodo’s new government. Under Aburizal Bakrie as its chairman, Golkar strongly posits itself as the backbone of the Red-White Coalition, which previously supported Prabowo Subianto for president. But Golkar’s younger cadres and several senior members, represented by former people’s welfare minister Agung Laksono, want to end Aburizal’s reign, and join Joko’s coalition in the hope of receiving a cabinet seat.
Sour Grapes Are Election Victor’s Spoils for PDI-P The Jakarta Globe 27th Nov 2014
President Joko Widodo’s recent appointment of attorney general H.M. Prasetyo amid strident criticism for the new AG’s former membership in the National Democrat party, or Nasdem, suggests a significant shift in the political calculus on which the president has been relying. Analysts identify three “tremendous” political challenges Joko faces. Hanta Yudha, the executive director of Pol-tracking Institute, said Joko’s relations with his own party, the Indonesian Democratic Party of Struggle, (PDI-P) are changing. It’s been something of an open secret that his party’s elite have been less than happy with chairwoman Megawati Soekarnoputri’s decision to nominate Joko as the their party’s presidential candidate. At the time, Joko was — and remains in many’s eyes — a junior figure in the party, which he joined in 2005, the same year he ran for mayor of Solo.
Govt mulls Perppu to ensure full KPK roster The Jakarta Post 26th Nov 2014
The Law and Human Rights Ministry said on Tuesday that it was considering making a recommendation to President Joko “Jokowi” Widodo to issue a regulation in lieu of law (Perppu) that would enable him to appoint a new Corruption Eradication Commission (KPK) commissioner should the House of Representatives fail to select one by the Dec. 10 deadline. The ministry said that the government was looking into the move after the House, which is dominated by the opposition camp, the Red-and-White Coalition, hinted that it would reject the two government-proposed KPK commissioner candidates — both of whom have already undergone a lengthy vetting process by an independent panel under the supervision of the ministry — despite the absence of a legal basis to justify such a move.
Aburizal’s rivals to boycott Bali congress The Jakarta Post 26th Nov 2014
A Golkar Party plenary meeting was violently disrupted on Tuesday, and culminated in rivals of chairman Aburizal Bakrie joining forces to plan their own party chairmanship election and reject the one planned by Aburizal’s camp for Nov. 30. Party deputy chairman Agung Laksono, himself intending to run for chairman, announced the formation of a presidium for the salvation of Golkar at the party’s headquarters in West Jakarta.
Indonesian leader plans powerful "kitchen cabinet" to bolster reforms Reuters 25th Nov 2014
Indonesia's new president, Joko Widodo, aims to tighten his control over a potentially unruly cabinet with the introduction next month of a "kitchen cabinet" of trusted aides to help him push through reforms in Southeast Asia's biggest economy. Widodo, who won an election on promises to clean up corruption seen as deeply entrenched in political and commercial life, will give the four-member team extensive powers including designing key policies and setting targets for ministries.
As Golkar Chooses, So Goes the Opposition The Jakarta Globe 24th Nov 2014
Seven senior Golkar Party politicians have decided to join hands ahead of this Sunday’s national congress in a bid to prevent the re-election of chairman Aburizal Bakrie, as the squabbling that has riven the party turned even more fractious. Agun Gunandjar Sudarsa, one of the Golkar politicians pushing for an overhaul of the party’s leadership, claimed that the seven candidates — Agung Laksono, Airlangga Hartarto, M.S. Hidayat, Zainuddin Amali, Priyo Budi Santoso, Hajriyanto Y. Thohari and Agus Gumiwang Kartasasmita — wanted to work together and support a single candidate to go head-to-head against Aburizal in Bali on Sunday. “It’s all being done to save Golkar,” Agun said on Monday. “We want to combine our power to save Golkar from losing the 2019 elections.”
ASEAN
AEC creates opportunities for local products: Surveyor Indonesia The Jakarta Post 25th Nov 2014
The ASEAN Economic Community (AEC), which will take effect in 2015, provides wider opportunities for local products and services as long as they manage to compete with foreign products, an expert has said. State-owned surveyor PT Surveyor Indonesia (Persero) president director M. Arif Zainuddin said the AEC must be faced with optimism in which all parties were certain that Indonesian products could compete with other Southeast Asian countries and companies should be challenged to enter competition on the global level. “Facing the AEC 2015, Surveyor Indonesia has mapped out the potential of domestic businesses so that they can run more competitively,” he said as quoted by Antara news agency in Jakarta on Tuesday. Arif said strategies developed by Surveyor Indonesia were in line with companies’ competency strengthening and improvements through business transformation, human-resource strengthening, business development and work-performance improvement.
Customs
ASEAN single market to put pressure on food sovereignty The Jakarta Post 25th Nov 2014
The government’s aspiration of reaching food sovereignty may face a serious challenge in the form of the ASEAN single market, which will ease the flow of imports and will become effective next year. A freer flow of imports will be made possible with a reduction of import duties on most food commodities. Cheaper imports could drive Indonesia to source unprocessed food products from overseas, instead of pushing ahead with its plan to boost production and achieve self-sufficiency. The prices of some staple foods such as rice and soybean at the farmers’ level in Indonesia are relatively higher than prices in the majority of the country’s Southeast Asian neighbors. The local rice price, for instance, is 10 percent higher than the price of rice imported from Thailand and Vietnam, according to the State Logistics Agency (Bulog).
Coal shipments rise despite new export rule The Jakarta Post 25th Nov 2014
New Indonesian coal export rules had little impact in October, the first month they were in effect, as shipments from the world’s top thermal coal exporter increased 9.8 percent on the year, a mining ministry official said. Industry had warned that exports could fall by up to 20 percent in October and 5 percent this year as firms scrambled to obtain government export permits to comply with new rules from Oct. 1, designed to stamp out illegal mining and ensure ample domestic supplies, Reuters reported. Indonesia’s coal exports in October hit 31.4 million tons, up from 25.7 million in September and 28.6 million in October 2013, government data showed. “The registered exporter requirement has not had much of an impact on monthly output,” Bambang Tjahjono Setiabudi, the ministry’s coal mining director, told reporters on Monday.
Indonesia urged to issue sugar import permits soon New Straits Times 22nd Nov 2014
Indonesia must issue 2015 raw sugar import permits this month or face further closures of refineries and shutdowns at food and drinks businesses, an industry group in the world’s top importer said, warning the situation was at crisis point. Last week, Indonesia’s sugar-refining association said it expected a third of the country’s plants to shut temporarily by the end of the month after the government cut import quotas for the sweetener this year despite rising demand. A prolonged shortage of raw sugar may dent revenue at refinery owners such as Olam International and Wilmar International, leading to smuggling and push up domestic white sugar prices.
Defense & Security
Pollycarpus gets parole The Jakarta Post 28th Nov 2014
ormer Garuda pilot Pollycarpus Budihari Priyanto, who was sentenced to 14 years in prison over his role in the death of human rights campaigner Munir Said Thalib, has left Sukamiskin Penitentiary in Bandung on parole. “Pollycarpus is out of prison on parole,” penitentiary directorate-general spokesman Akbar Hadi said on Friday. He said Pollycarpus was considered as having fulfilled all the requirements necessary to receive parole. Justice and Human Rights Ministerial Regulation No. 1/2007 stipulates that a convict can receive parole after serving two thirds of his or her sentence.
Energy
Dwi Soetjipto Appointed to Lead Pertamina The Jakarta Globe 28th Nov 2014
The government has appointed Dwi Soetjipto as the new president-director of state-owned energy company Pertamina. The decision to appoint Dwi was made during a shareholder meeting held at the Ministry of State Owned Enterprises. “The shareholder meeting has decided to appoint Dwi Soetjipto as the Pertamina chairman for the 2014-19 period,” Minister Rini Soemarno told a press conference on Friday.
Indonesia's graft watchdog to target energy sector in 2015 Reuters 27th Nov 2014
Indonesia's anti-graft watchdog will launch an unprecedented investigation next year into the energy industry, as part of a stepped-up campaign to rid the sector of what President Joko Widodo's administration has called an "oil and gas mafia". Widodo and his team, even before he was sworn in last month, pledged to reform state energy firm Pertamina and audit its trading arm, Petral, in efforts to cut fuel spending - the main component of Indonesia's fiscal and current account deficits.
Total Indonesie’s Mahakam Block Revisited The Jakarta Globe 26th Nov 2014
As Total E&P Indonesie’s oil and gas contract with the government is set to cease in 2017, what’s on the horizon for the Mahakam block? Uncertainty looms over the future of the Mahakam block, with a failure of the previous government to make a decision on who will operate the field after Total E&P Indonesie ends its contract with the country in 2017. Mahakam is the archipelago’s most important producer of gas, with this year expecting to produce a daily average of 1.7 billion cubic feet of gas (bcfd).
Govt told to act fast as crisis looms The Jakarta Post 26th Nov 2014
Major oil and gas producers have called on the government to introduce a more flexible regulatory framework in order to prevent an energy crisis that could occur in the next five years if no serious efforts are made to prop up the country’s declining oil production. Indonesian Petroleum Association (IPA) president Lukman Mahfoedz said the production sharing contract (PSC) scheme applied to oil and gas exploration and production was among regulations that should be reviewed, as it was no longer attractive to new investors.
Indonesian govt plans switch to fixed fuel subsidy regime Reuters 25th Nov 2014
The Indonesian government wants to set fuel subsidies at a fixed amount at petrol stations to make government costs more predictable, the country's finance minister said on Tuesday. In his first month in office, President Joko Widodo slashed nearly 10 percent of planned budget spending next year by taking the politically risky move of raising subsidised gasoline and diesel prices.
Indonesian coal shipments rise despite new export rule -ministry Reuters 24th Nov 2014
New Indonesian coal export rules had little impact in October, the first month they were in effect, as shipments from the world's top thermal coal exporter increased 9.8 percent on the year, a mining ministry official said Industry had warned that exports could fall by up to 20 percent in October and 5 percent this year as firms scrambled to obtain government export permits to comply with new rules from Oct. 1, designed to stamp out illegal mining and ensure ample domestic supplies.
Higher fuel prices expected to put Indonesia auto sales on slower path Reuters 23rd Nov 2014
Indonesia's petrol-price hike could put the brakes on the speed at which consumers in Southeast Asia's biggest auto market buy cars and switch to four-wheels from two. President Joko Widodo last week cut subsidies and raised gasoline prices more than 30 percent to open the way for budget and other reforms. In the long-term, the change should strengthen the Indonesian economy, now growing at its slowest pace in five years. In the short-run, it may impact auto sales.
Financial Services
Finance Minister Reiterates Govt Plans to Introduce Fixed Subsidy Scheme The Jakarta Globe 26th Nov 2014
Indonesian Finance Minister Bambang Brodjonegoro re-affirmed the government’s intention to let the price of subsidized fuel float and keep the amount of the subsidy at a fixed amount. ”We still seriously think about a fixed subsidy regime, we plan to fix amount [of subsidy] per litter. From fiscal point of view, such scheme will allow the fuel subsidy budget [to] be much more manageable, it will not be easily affected by volatility and the fluctuations foreign exchange rate,” said the minister during Globe Asia’s Indonesia Economic Forum in Jakarta on Tuesday.
Bankers doubt Indonesia's liquidity rules will have desired effect Reuters 25th Nov 2014
Looser liquidity rules for banks in Indonesia are unlikely to have the intended effect of boosting lending growth as a simultaneous rise in interest rates at a time when the economy is slowing down will curb credit demand. The central bank last week said it will count bonds and securities issued by banks, alongside deposits, as part of a lender's loan-to-deposit ratio (LDR), which helps investors assess if a bank is overstretching itself.
Indonesia: Regulator establishing register of insurance agents Asia Insurance Review 26th Nov 2014
The Financial Services Authority (OJK) is compiling a database of individual insurance agents ahead of the implementation of insurance laws and to better protect customers against unlicensed agents. Amid the strong growth of microinsurance products in Indonesia, OJK noted that more than 100,000 marketing agents, comprising both life and general insurance agents, have yet to equip themselves with professional certifications, reported the Jakarta Post. Data from OJK show that there are 267 agency companies, 200 of which are licensed while the rest are not. There is a total of 435,605 agents in the country, of whom 329,142 are certified while 106,463 agents have yet to get their licences. This means that the number of unlicensed insurance agents is around 24% of the total number of life and general insurance agents.
Bankers Doubt Indonesia’s Liquidity Rules Will Have Desired Effect Jakarta Globe 25th Nov 2014
Looser liquidity rules for banks in Indonesia are unlikely to have the intended effect of boosting lending growth as a simultaneous rise in interest rates at a time when the economy is slowing down will curb credit demand. The central bank last week said it will count bonds and securities issued by banks, alongside deposits, as part of a lender’s loan-to-deposit ratio (LDR), which helps investors assess if a bank is overstretching itself. The new measure effectively frees up capital for lending because it increases the size of the assets counted as deposits in the LDR. But while giving with one hand, the Bank Indonesia, the central bank, took away with the other, senior bankers said. It raised its key interest rate by 25 basis points to 7.75 percent, the highest since 2009, to dampen the inflationary impact of a rise in domestic fuel prices.
OJK targets deeper financial market with new rules The Jakarta Post 24th Nov 2014
The Financial Services Authority (OJK) issued a total of 20 new and revised regulations — covering banking, non-banking and the capital market — that it expects will deepen and strengthen the current financial market. All of the regulations will become effective as of Jan. 1, 2015. In banking, the financial superbody introduced six regulations on integrated governance and integrated risk management for financial conglomerates, branchless banking (Laku Pandai), rural development banks (BPR), minimum capital requirements for sharia banks, and asset quality for sharia banks and sharia business units. According to OJK commissioner on banking supervision Nelson Tampubolon, major financial companies that have been identified as conglomerates will be required to address 10 risk types that may affect their businesses. Some of the risks include credit, market, liquidity and operations. “As a whole, these risks can entangle and affect financial services firms under one conglomerate,” he said during a press briefing on Wednesday. The OJK has so far identified 31 financial conglomerates, most of which are headed by banks. The conglomerates — such as Mandiri Group, Bank Central Asia (BCA) Group, Citibank Group and Permata Group — currently control around 70 percent of the banking industry’s total assets.
Credit card transactions to be made domestically The Jakarta Post 24th Nov 2014
Bank Indonesia (BI) is developing a system which will allow credit card transactions to be processed at home with the hope that it will help reduce the current account deficit (CAD) and lower transaction fees. In his remarks during the annual bankers’ dinner on Thursday evening, BI Governor Agus Martowardojo said the central bank was in the process of establishing a national credit-card switching platform. It is part of a bigger integrated payment infrastructure scheme to assist with the realization of the National Non-Cash Movement (GNNT), according to Agus. Farida Peranginangin, director of BI’s policy and payment system supervision department, said that BI expected to launch the platform in 2015. It would enable credit card transactions to be processed onshore. “At present, they are processed overseas, even though the transactions are carried out in Indonesia. The current process follows the systems applied by existing credit card principals, such as Visa and MasterCard,” she said. BI will be responsible for managing the platform’s early operations, according to Farida. The operations will be handed over to an independent, non-profit organization in the following years.
Banks welcome new policy allowing broader funding sources The Jakarta Post 24th Nov 2014
Banks have welcomed a new central bank policy that allows them to expand their sources of deposits not only from customers but also from funds that are generated from the capital market, as it can improve their liquidity and in turn their intermediary function for customers. The new policy, introduced last week on the sidelines of a Bank Indonesia (BI) benchmark interest rate announcement, will allow securities issued by banks as one of the components of deposits to expand funding sources for the lenders, BI Governor Agus Martowardojo said. The move, he said, was part of the central bank’s macro-prudential measures to deepen the financial market. Prior to the announcement, only customers’ savings, time deposits and demand deposits were categorized as components of deposits. The three, compared to the total amount of loans distributed by banks, make up the loan-to-deposit ratio (LDR).
Long way to go for prepaid to prevail The Jakarta Post 22nd Nov 2014
More than five years after introducing prepaid cards as a payment tool, major banks are still having a hard time expanding the card’s penetration as card usage remains low. Maikel Jefriando did not expect to be thought a fraudster when he handed out his prepaid bracelet issued by Bank Mandiri. The 25-year-old journalist meant to pay for his groceries using the bracelet at a minimarket in Cikini, Central Jakarta. To his surprise, the cashier said that the minimarket did not accept such a payment tool, even though Mandiri’s prepaid device was feasible at the counter, and accused Maikel of trying to commit fraud. “I tried explaining the bracelet’s function and asked her to try tapping it on the device, but she wouldn’t budge. So I left because I didn’t have any cash,” he said. Mandiri senior executive vice president for transaction banking Rico Usthavia Frans said that the number of its prepaid card—including those in the form of bracelet—had only reached 4.5 million since it was first introduced in 2009. “It is not easy to get people to grow accustomed to a non-cash payment tool, even though we carry out an awareness program about it to our merchant partners. It’s a matter of education and habit,” he said. At the moment, the majority of Mandiri’s prepaid card transactions occur in Jakarta, such as at tollgates, electric commuter train stations and Transjakarta bus shelters.
Food & Agriculture
Jokowi Pledges to Act Against Forest Fires The Jakarta Globe 27th Nov 2014
President Joko Widodo on Thursday verbalized his preference for farms owned by people, rather than corporations, to curb the haze crisis that stems from peatland fires in Riau and elsewhere in Sumatra and Kalimantan. During a visit to Sungai Tohor village in the Meranti Islands district, one of the regions in Riau often hit hard by forest fires and haze, Joko said people’s farming had a minimal impact to the environment, when compared to corporate monoculture plantations. “The best thing to do is to give the land to people so they can use it to plant sago. What’s made by people is usually environmentally friendly. They won’t do any harm to nature,” the president said on Thursday. “However, if we give the land to corporations, they will only switch it to monoculture plantations.”
Indonesia's palm revolution runs off track for smallholders Reuters 24th Nov 2014
A prolonged fall in the price of palm oil is hitting Indonesia's legions of smallholder farmers, forcing cutbacks that will reduce output in coming years and raising the prospect of a bout of sell-outs to major producers. Smallholder farmers account for about 40 percent of output from Indonesia's vast plantations that cover an area the size of South Korea. A drop in smallholder output could shave total production by around 5 percent from next year, say analysts.
Health & Life Sciences
Employees fear downgraded health benefits in BPJS Health The Jakarta Post 26th Nov 2014
Dessy Rosalina, 29, used to receive reimbursements from her company for her health care, but now she can only hope that her benefits will not be downgraded after her company enrolled her in the national health insurance (JKN) program starting in January next year. Her experience with the Healthcare and Social Security Agency (BPJS Kesehatan), which provides JKN services, had been unpleasant. It took her days to enroll her mother and she was left unattended to for three hours by a partnering private hospital only to be transferred to a public hospital for better services.
Infrastructure
Indonesia giving private sector first dibs for infrastructure projects Reuters 28th Nov 2014
Needing some $450 billion spent on Indonesia's infrastructure by 2019, new President Joko Widodo has ordered ministers to give private investors first pick of money-making projects rather than let state agencies grab them as they usually do. Widodo will have to change entrenched attitudes at government ministries and state-owned enterprises, who have a vested interest in keeping the best projects for themselves.
Market Regulation
USTR-Indonesia Trade Rows Rolled Up in Backroom MOU Cigar The Jakarta Globe 23rd Nov 2014
The Office of the US Trade Representative has released a memorandum of understanding between the United States and Indonesia that details how the two countries plan to resolves dispute related to vehicle wiring harnesses, mineral ore exports, intellectual property protection and cigars. The United States and Indonesia settled a WTO dispute over clove cigarettes back in October. Under the terms of the settlement, Indonesia will allow the US ban on flavored cigarettes to stand. The United States reportedly agreed to resolve several other disputes in exchange for the clove deal. The MOU, which was effective Oct. 3, outlines four areas of agreement.
|
